Modesto considers entering high-speed internet business

City leaders are interested in taking at least the initial steps in having Modesto create its own fiber optic network, which officials say would offer super-fast internet service and be an economic boon for the city in attracting and keeping businesses.

The City Council held a workshop last week regarding a master plan that lays out how the city could create the network. The city hired the consulting firm of Kimley-Horn to create the plan at a cost of $167,365. One of the firm’s employees took part in the workshop.

The big question is the cost.

The master plan states at build-out the city would create the network at a cost of $10.8 million. But that could be many years from completion. Modesto envisions starting with a $1.8 million pilot project from Tenth Street Place in downtown to Fire Station No. 6 near Vintage Faire Mall. The city would then extend the network through much of the city at an additional cost of nearly $5.2 million, according to the master plan.

Council members expressed enthusiasm for at least considering the project as long as Modesto can figure out how to pay for it. “If this doesn’t happen, (Modesto will) keep struggling economically,” Councilman Doug Ridenour said. “I hope we are allowed to pursue this.”

All council members spoke except for Mayor Ted Brandvold.

The council directed staff to look into applying for a federal grant of as much as $3 million and to look to local businesses that would use the network to help pay for it.

Interim City Manager Joe Lopez told council members that staff should come back to the council soon seeking approval to apply for the grant. Chief Information Officer Charlie Haase, who is the city’s top IT official, said in an interview that he believes the federal grant requires a dollar for dollar match.

Haase said the network would provide internet speeds 10 to 100 times faster than what the typical business in Modesto now has. Businesses would pay for using the network, and the city says the pricing would be low, and it eventually would make money from the network. The city is not looking at providing residential service.

The network also would help the city with its own initiatives and operations.

Councilman Bill Zoslocki said Modesto needs to look for a private-sector partner to bear some of the project’s costs and risks and provide the expertise the city may not have to ensure the system remains competitive with other internet service providers. (The city is considering this because it says it can provide faster service than what private companies now offer.)

“I’m a little cautious about a government-run operation,” Zoslocki said.

The presentation showcased the project’s positives, which Lopez said include supercharging the city’s economic development efforts and attracting industries that normally would not even look at Modesto. “Providing high-speed internet is a big deal,” he said.

But the presentation did not include any discussion of the risks associated with the project, including the potential of losing money or not attracting enough customers.

Haase said in the interview this was a high-level, conceptional presentation and not a deep dive into the details. “I think those risks will come out as we come further into the project,” he said.

This story was originally published March 11, 2018 at 4:13 PM with the headline "Modesto considers entering high-speed internet business."