September 2010 Tower Update

On Friday September 17 the Gustavus Community Network (GCN) committee opened bids for construction of the proposed Gustavus Telecommunications Facility. Three bids were received, with the lowest responsive bid exceeding available funds by $8,672. The committee voted to request the City Council to fund the $8,672 difference. The council is expected to take up the question at its October 7 work session. The council may publish a budget amendment at its October general meeting with a public hearing and decision at its November 11 general meeting. This latest delay in awarding a contract makes it unlikely the tower will be built this fall or winter.

The Gustavus City Council already committed $15,000 from city reserves for the project, adding to the $5,000 available from GCN reserves. The total $20,000 available falls short of the lowest bid of $28,671.25 from Glacier Bay Construction Inc. Peak Construction, Inc. submitted a bid for $33,781.50. Another bid had no contractor name, RFQ number, or opening date on the outside of the envelope as stipulated by the RFQ, so was judged not responsive and was not opened. An audience member at the meeting said her company had submitted the bid and it was higher than the others.

The GCN committee received testimony from two members of the public and one GCN staff member, then discussed various funding options and issues before voting to request the additional $8,672 from the city.

Business Case For The Facility

GCN Co-Administrator Nathan Borson asserted the communications facility is a good investment for the city even if it is never used for a community-wide wireless broadband network.

• Improved health and safety will result from improved emergency radio communications for the Gustavus Volunteer Fire Department and ham radio operators.
• The tower makes it possible to extend cellular phone coverage to western Gustavus and probably Bartlett Cove, though no cellular company has yet expressed interest in using the site.
• There has been interest in the site from the FAA contractor installing ADS-B, the next-generation national air-traffic surveillance system.
• The State of Alaska may be interested in using the tower for its new statewide radio communications system.
• KTOO has expressed interest in relocating their repeater to the tower site, which would greatly improve reception throughout Gustavus. Stereo!
  
• Return on investment: GCN currently pays AT&T $320/month, their minimum charge for space and power on the AT&T tower in the compound area near the Gustavus airport. If the city could charge the same amount to one commercial tenant such as a cell phone provider, the resulting revenue of $3,840/year would represent a 16% annual return on the $23,672 investment from city reserves.

Borson could only speculate whether a paying tenant will take advantage of the tower facility but suggested that health, safety, improved communications, and resulting economic benefits to the community justify the additional investment from the city even if there is no monetary return.

No Tower Means No Community-Wide Broadband

Borson also asserted that any economically feasible community-wide broadband network will be mostly wireless and will require a communications tower above town. Whether the community-wide broadband network is owned and operated by the city (as GCN is now) or by some other entity, no progress can be made until the tower is built.

Funding Options

The GCN Committee discussed various funding options before voting to request additional city funds.

• GCN Reserves
• • Remaining GCN reserves are only $2,902.17, not enough to build the tower.
  • Remaining GCN reserves might be needed to cover operating shortfalls until additional revenues accrue from the community-wide broadband network.
  • Aside from its contribution of $5,000 for construction, GCN has already paid $2,500 for the tower design and will pay $5,000 for an engineer/project manager to oversee construction.
    
• Use some of the $150,000 that will be available if Ballot Measure 1 passes next month.
• • Given our experience with faulty cost estimates on the tower project, the entire $150,000 or more might be needed to build the community-wide broadband network, so taking any of that money for the tower might jeopardize the broadband project.
  • If the community-wide broadband project is not built for any reason, GCN will not have revenue to repay money borrowed from the endowment fund to complete the tower.
  • Per the ballot measure, money borrowed from the endowment fund must be repaid from GCN subscriber fees. If GCN is paying for the tower from subscriber fees it should probably also keep any tower lease revenues, instead of having those revenues go back to city reserves.
    
• State Capital Improvement Project (CIP) funds
• • CIP funds will be available July, 2011 at the earliest and we would like to begin construction of the tower as soon as possible.
  • CIP funding depends on the council prioritizing broadband above other community needs (something it has never done), and for the state legislature to approve funds and the governor to not veto them.
  • CIP funds should still be sought for the community-wide broadband project. The additional funding would provide a hedge in case the endowment fund loan amount requested in the ballot measure is insufficient to build the community-wide network. Even if the estimate is accurate, using less from the endowment fund means repaying less from subscriber fees, making the community network faster and/or cheaper for subscribers.
• Private funds
• • City ownership of the tower is in the public interest because of the functions it will serve. Our experience seeking tower space on ACS and AT&T towers has ranged from expensive to being completely stonewalled. The city will be best able to promote public health, safety, communications, and economic development if it manages the facility itself.
    
  • Gustavus Electric Company has agreed to let the city site a tower in the Falls Creek hydroelectric project area, over which it has management authority. That agreement is valid only as long as the tower is owned by the city. A different agreement would have to be negotiated by a private party, likely with lease charges and profit which would be passed on to the users of the tower.
    
  • Private capital is in short supply in the current economic situation; one potential bidder has said they cannot get a bank loan in the current climate.