Sundre's council will determine later this month the fate of community-owned broadband Internet infrastructure in the municipality.
Elected officials were presented last week during a Sept. 5 workshop with a detailed update on the broadband feasibility study.
Setting the stage for discussion on the project's future direction, Vic Pirie, director of finance and administration, provided a recap followed by an update.
At the June 26 meeting, elected officials were presented with the results of a community-wide survey conducted by Banister Research and Consulting. The results obtained from that process indicated significant statistical support for broadband in general, Pirie reminded council.
Additionally, an average of residential and commercial support of about 75 per cent favoured pursuing revenue generating Internet infrastructure that companies such as O-NET and Telus could access through a municipally-owned network to provide residents and businesses with access to the web, he said.
Based on those results, administration had then recommended continuing the feasibility study, which involved contacting FortisAlberta to obtain a better understanding of the condition of the poles upon which the broadband fibre optic lines would be mounted, he said.
"Determining the cost of utilizing existing Fortis poles is a crucial next step in determining the cost and feasibility of a Town owned network structure," outlined administration's report to council.
Although the study was at the time almost axed, council narrowly defeated a motion to cease further pursuing the project and proceeded to approve administration's recommendation to approach Fortis to obtain more information on the poles.
As it turns out, Pirie told council on Sept. 5, Fortis determined that about 900 poles would need to be replaced to accommodate aerially mounted fibre optic lines for broadband.
"The best-case scenario is you're looking at about a cost to replace poles of about $1.3 million," he said.
"Worst case scenario, you're looking at having to replace poles that might cost $1.9 million. So we were kind of, as you can imagine, taken aback by the kind of costs that they were proposing."
So administrative staff requested a face-to-face meeting with Fortis representatives, whose main justification for replacing existing poles is newer engineering standards, said Pirie.
However, that discussion also determined that Fortis had overestimated its figure of 900 poles, having included in that count poles that were outside the municipality's boundaries as well as rural areas within the town that would not require servicing. That meant the actual total number of poles needing to be replaced would be closer to approximately 600. And the older the pole being replaced, the less it would cost the municipality courtesy of a replacement program, he said.
"The older the pole that we would be looking at, the more of a rebate we would get because Fortis would be picking up more of the cost simply because they would have been replacing it (in the coming years anyway)."
Upon crunching the new numbers, administration was then able to determine the cost to replace 600 poles would cost as much as $560,000 and potentially as little as $380,000, he said.
However, those costs were not included in the capital cost estimate previously provided to council. Whereas initial estimates called for debenture borrowing to the tune of about $2.7 million to develop and deploy broadband infrastructure ó which included a 20 per cent cost contingency ó the worst-case scenario would now represent the need for closer to $3.3 million, outlined administration's report.
In a best-case situation, "it would take approximately three years to begin to produce an operational surplus excluding debt servicing and approximately six years to produce an operational surplus including debt servicing."
The worst-case scenario would take approximately eight years to produce an operational surplus including debt servicing, indicates the report.
The municipality's debt limit currently sits at about $12.5 million, of which roughly $4.5 million is being used, including the $1 million debenture for the Centre Street North project. Proceeding with broadband would require borrowing an additional $3 million-plus, or approximately 26 per cent of the debt level. While that would not constrain projected debenture borrowings in the approved 2017-2021 capital plan, it could potentially restrict future borrowing beyond 2021 or for unexpected projects that might be identified in a proposed 2018-2022 plan, said Pirie.
The direction administration was seeking from council was whether to proceed with initiating a more detailed pole survey to determine a precise number of poles that would have to be replaced. That next step would come at a cost of about $66,000, which would be covered through reallocation of infrastructure reserve funding, council heard.
The request for decision is scheduled for the Sept. 25 meeting.
