Government : VMEU to meet tonight to discuss pricing of the new Utility

The board of the Vinton Municipal Utility in charge of the long-standing electric utility and the communications utility formed in 2015, met in a special meeting at the Vinton City Hall on Tuesday, March 19th to hear updates on a potential partnership with Cedar Rapids-based ImOn, a provider of internet, phone and cable TV services, and a proposal from SmartSource Consulting. The board heard information from ImOn and approved a contract with SmartSource for $48,000.

Tonight the Board meets to discuss service prices for the new utility. The prices for internet, phone and TV services will partially depend on the investment made in the new utility, the amount of money to be borrowed for construction, and the terms of the loan the electric utility board establishes for repayment of borrowing.

In a recent article appearing in the Gazette, a representative of one of Vinton’s current service providers claimed that consultants had overestimated the market share Vinton’s new utility could achieve. According to research conducted before the feasibility study by iVinton, established municipal utilities have market shares well above the 62% required for a successful Vinton municipal utility project. The Vinton feasibility study assumes achieving a 62% market share in five years.

Construction will begin in the spring on a fiber communications system available to all residential and business customers within in the city’s boundaries. The plan is to offer voice, cable TV and internet services through a state-of-the-art fiber optic system. Systems made of fiber optic cable capable of reliably delivering speeds as fast as 1,000 gigabits per second (Gbps), also known as gigabit connections, have become essential for attracting new industry and attracting residents relying on the internet for telecommuting, entertainment, and education.

ImOn representative, Cory Carpenter shared the steps his company has taken to prepare an estimate for the company’s partnership with Vinton’s communications utility. ImOn’s proposal will include five wholesale components: voice service (telephone), internet transport, video, billing, and operations.  The wholesale components have little impact on end customers, but billing and operations support do.

ImOn already has the billing system for phone, TV and internet services. The current Vinton system cannot add those services and upgrading to a new system would be much more expensive than using ImOn. Though the plan is for Vinton to have a local office staffed with local employees, ImOn would provide overflow and after-hours, 24-hour customer service and support. “We would not only provide training to local customer service representatives, but we would also support them with Tier 2 and Tier 3 troubleshooting if the problem the customer encountered were more complex,” explained Carpenter. “The company we rely on to be our backup is also based in Cedar Rapids, and they’re thoroughly familiar with ImOn systems; the same systems we would train your local service reps on. What we think everyone should keep in mind is how important it is to us that every customer has a great experience with Vinton’s communications utility. We will be playing a support role for Vinton, but by moving forward with this project, our reputation will depend in part on how well you perform, just as yours will depend in part on us.”

Carpenter also made clear how important it is to provide a significantly better experience for customers. “When it comes to municipal communications utilities, the price is good, but what makes for success is whether the quality is outstanding. If you’re just as terrible as everyone already providing service then you’re going to get 20% market share, and you won’t be successful, and you’ll fail. If you’re really good, and the price is right, you will succeed in a big way, and that’s what we want to make happen for Vinton.”

The Board heard next from Curtis Dean, President of SmartSource Consulting.  Mr. Dean provided more detail concerning his proposal to provide expertise in oversight and project coordination, product development, marketing and community engagement, and partnership coordination.

A key component to the marketing plan is allowing potential customers to access information online and through an app. The website and app will also provide the potential customer with the ability to subscribe to services.

Vinton’s communications utility project will provide what’s known as last mile service. There are three components to internet services; backhaul, middle mile, and last mile. All backhaul and middle mile services in the U.S. are carried over fiber optic cable. Last mile service or the connection to individual residences and businesses in the U.S. is carried through copper wire or DSL cable. China, South Korea and much of the remaining countries of the industrialized world have last mile service on fiber optic cable. For the U.S. the result is like trying to send the water from a firehose through a garden hose.