CU to launch telecommunications study
by RICK NORTON Associate Editor
Jul 25, 2014 | 1815 views | 0 0 comments | 28 28 recommendations | email to a friend | print

If a study says it’s feasible and number crunchers believe it’s affordable, Cleveland Utilities could be adding another key element to its portfolio of electric, water, wastewater and traffic signal services: telecommunications.

On a unanimous 5-0 vote Thursday, members of the Cleveland Board of Public Utilities plugged in to a staff recommendation to launch a feasibility study to determine the practicality, the affordability and the territorial need for entering the diverse field of Internet, cable and telephone providers.

“You all know as well as I do that Internet connection now is the electric connection of the 1930s and 1940s,” CU President and CEO Ken Webb told board members during a formal monthly session in the Tom Wheeler Training Center.

In many respects, providing Internet service throughout a community is almost mandatory, he added.

But broadband connection is just the appetizer. Using its complex system of modern fiberoptics, CU could conceivably jump into the telephone and cable TV provider arenas, joining telecommunications giants like Charter Communications, Comcast, AT&T and the Electric Power Board of Chattanooga — all of whom offer their own version of telecommunications packages.

It’s not the first time Cleveland Utilities has pondered the move. Webb said it has been studied twice before. The most recent reportedly came about eight years ago.

“The staff of Cleveland Utilities recommends to the board we be allowed to engage in a study regarding the feasibility of ... pursuing a telecommunications operation,” Webb told the governing board. “This study would determine the economic cost and impact of developing such a system, both initially and into the future.”

A second purpose of the study would be to explore the possibility of synergies with existing providers.

“Additionally, to the extent possible, the study will determine the feasibility of cooperating with any existing telecommunications system in adjoining areas owned and operated by other utilities for the purpose of providing service to customers,” Webb cited, both verbally and in a printed statement provided to news media representatives.

Front-end costs now and projected expenses in the future, as well as potential revenue, will be critical factors in making such a commitment, Webb stressed.

“We think it’s time to take another look at [entering the telecommunications business],” the CEO told board members. “Obviously, before we did anything in choosing someone to do the study we would bring it back to the board. But we needed to know today if the board supported this concept.”

Board Vice Chairman Eddie Cartwright, who later made the motion authorizing the study, asked if this type service is comparable to what Chattanooga’s Electric Power Board is providing in its service territory.

“The Chattanooga Power Board has their system going now ... and they have some interest in expanding outside their service area,” Webb answered. “There are certain [geographical] areas out there where nobody is serving with anything.”

Webb pointed out EPB has approached the Federal Communications Commission for permission “... to extend their services outside their footprint.” In other words, EPB wants the authority to expand its telecommunications services to customers not currently receiving utilities from the Chattanooga-based company.

Of the proposed study, Cartwright asked if it would go beyond just Internet connection.

“... Let the study go wherever it takes us?” the vice chairman asked.

“Wherever it takes us,” Webb confirmed. “That’s what the study would determine ... what the costs are, what the estimated revenues would be.”

He added, “Of course, it would have to be financially feasible for us to do this. Ultimately, you’re looking at TV, Internet and phone. And the result of the study might be that we choose only Internet service.”

Cleveland Mayor Tom Rowland, who represents the City Council on the utility board, endorsed the idea of a study.

“I think we owe it to our citizens to at least explore the best service we can possibly find,” Rowland, who later seconded Cartwright’s motion, said.

After the board’s unanimous vote approving the launch of a study, Rowland told Webb, “That’s a great move, ‘Mr. Manager.’”

Rowland pointed out no telecommunications provider holds an exclusive contract inside the city of Cleveland. He said his office periodically receives inquiries about the number of area vendors providing this service.

Cartwright asked if CU’s expansion into telecommunications could benefit industrial recruitment and entice new companies to come to Cleveland.

“I think it would be a tremendous benefit for recruitment to the area,” Webb responded.

Asked by board member Chari Buckner about upfront costs for the study, Webb stressed even ballpark numbers are uncertain at this point.

“We are in such early stages, I can’t answer that question,” Webb said.

However, the CEO assured that once a study contractor has been secured, project updates will be brought to the board before any action is taken.

“We’ll come back to the board every step of the way,” Webb stressed.

Cartwright worded his motion thusly: “We allow a study to be made and then report back to the board.”

Along with Rowland’s second, board members supporting the idea of a study were Buckner, Joe Cate and board chairman Aubrey Ector.

With the board’s blessings, Webb said CU will begin interviewing vendors to conduct the study.