Siloam Springs, Arkansas, Considers Broadband to Bolster Town Funds

With approximately 150 municipal-owned broadband networks across the country, it hardly seems shocking when we hear of yet another town that wants to lay fiber. Usually these small and rural communities site few choices for high-speed Internet or say that high-speed access is simply nonexistent for residents. But when speaking about fiber plans in Siloam Springs, Arkansas, city administrator David Cameron is a bit more honest about the reasons for offering such a service: added revenue for the town. In an interview with The City Wire, based in Arkansas, Cameron said that plans to build out a 100-mile FTTP network was not so much motivated by residents' “dissatisfaction with current providers as it is about finding new revenue for the city.”

Cable and Internet would not be the first utilities owned and operated by Siloam Springs. The city-owned electric utility has operated for years and, according to Cameron, has been a key source of funding for various projects and town necessities. But he says that “enterprise” fund is quickly depleting and the town is looking for new revenue streams. This is where cable and Internet services could bring in more money and bolster municipal funds. “We have done a good job managing accounts, building a reserve,” Cameron said. “We want to keep building on the programs we have. It takes money and funds to do that.” Such motivation could spell trouble for the town of about 15k, where providers like Cox Communications and CenturyLink already offer phone, Internet and cable to residents.

The city considered adding cable services back in the late 1990s, but the possibility was struck down by the city officials who felt it was too risky.

Now the proposed 100-mile fiber network would bring broadband to every home and business in Siloam Springs, with a price tag of $8.3m. The city estimates it could repay this debt in about 12 years and likely begin making a profit after just 3 years—according to a feasibility study conducted in January.

But former city board member and state rep Mike Kenney believes the plan is just too risky and argues that the city cannot take the same risks as a private enterprise. “This is not like a private business where if I start a cupcake company and it fails, I’m out the money,” Kenney said. Instead, town residents would be left “holding the bag” for a failed venture. He went on to say that, after considering the plan's details, he felt “the up-front money was significant, the return was questionable, and some board members had a real concern about competing with private business.... For me, that was a big part of voting against it.”

Like so many cities and towns, the question for Siloam Springs is one of public versus private: could a public broadband network actually compete with those owned by private companies, could a municipality take the same risks as a private company, and could public broadband survive in the already competitive telecommunications world, as companies line up to protest municipal “trespassing.” Just last week Cox Communications formed a coalition in Little Rock to protest the city's efforts, with more pressure on the way to stop such municipalities from infringing on the telecommunications sector.

Then there is the question of profitability. Even while towns such as Siloam Springs announce plans for a new network, municipalities in other states backtrack on their plans or shut down networks that aren't cost-effective.

Mike Flynn, also a former city board member, told The City Wire that he thought the fiber plans might follow the path of similar, unsuccessful networks, adding, “I called and talked to several cities (that had built out fiber networks). Several of those said, ‘We aren’t making any money on it.’ I just think the pie in Siloam Springs is very small.”

In contrast, however, city electric director Art Farine, said now is the time—that city broadband is an essential way for the town to move forward. “I think the community may be more progressive (than in the 1990s),” Farine said. “But the big difference is we’re looking at fiber-to-the-home versus a cable system. We’re offering something completely different than our competitors.”

This Friday, March 29, city officials will begin a series of three town hall meetings, to make their case for the broadband network. The proposed plan will go to a referendum and voters will decide the issue on May 22.