story by Pamela Hill, special to The City Wire
Editor’s note: This is the second in a three-part series about the May 22 vote in Siloam Springs asking voters to decide on the construction of a municipal cable/Internet system. Link here for the first story in the series.
Cox Communications and CenturyLink are just two companies who question the numbers used by Siloam Springs officials to encourage voters to approve the construction of a city-owned cable and Internet services system.
City officials discussed the issue for the last 18 months and decided to put it to a referendum. Voters will decide the issue May 22.
Len Pitcock, director of government affairs for Cox Communications, said Cox has the fastest residential Internet speeds available in Arkansas. The company runs signal from fiber-fed nodes via copper to homes. Cox provides direct fiber connections to businesses that request it for higher-bandwidth needs.
“This is the result of our continued re-investment in the communities we serve,” Pitcock said. “Cox will continue to make upgrades to its network in the coming months based on a sound business model and customer needs.”
Pitcock said he doesn’t think the proposal is a proper use of government money and he doesn’t think $8.3 million will be enough to do what the city wants to do.
“We believe it would be very hard to meet the current standard of service that customers are accustomed to seeing from the telecommunication providers they already have in Siloam Springs,” Pitcock said, based on the current plan outlined by the city. “If Cox were to try to operate under a model similar to what the city is proposing, it is very unlikely we could offer the level of service and array of programming our customers enjoy now.”
Pitcock said Cox, a service provider in Siloam for more than a decade, would be “highly aggressive” to keep its current customers and bring in new customers.
Jeff Jones, manager of market development for CenturyLink, said the company disagrees with both the cost estimates of the city’s study and the estimate for attracting and retaining customers in a market with existing and proven competitors.
Jones said CenturyLink runs fiber from its main office in Siloam Springs to remote hubs throughout the city, and then uses copper to complete the connection to the home. CenturyLink is against public ownership of communications infrastructure, Jones said. Private investment brings long-term advantages to the city and its citizens, grows the tax base and exposes taxpayers to less risk, he said. The company also supports local initiatives establishing public-private partnerships to maximize existing infrastructure and public assets to extend broadband service to underserved areas, said Jones.
Jones made the public-private partnership suggestion during a public board meeting in January. He said he was asked to repeat what he said about partnerships, but no one has contacted him further.
“They’re springing up all over the nation,” Jones said.
In a public-private partnership, a city pays a certain percentage of costs for new or upgraded services and an established private company does the work and provides the service.
Siloam Springs City Administrator David Cameron said a public-private partnership is interesting, but it won’t help fund other city projects.
Pitcock said Cox Communications has never taken public monies for joint ventures, and probably wouldn’t take part in a public-private venture in Siloam Springs.
Opposition for the proposal extends beyond city borders. Cox is a member of Arkansans for Limited Government, the coalition established to push back against the city’s efforts.
The Secretary of State’s office shows incorporation papers were filed Nov. 7 for Arkansans for Limited Government. The paperwork lists Clint Reed of Little Rock as the incorporator.
Reed said while the coalition is a direct response to the Siloam Springs situation, it could also stand against other measures elsewhere, if necessary.
Reed, former executive director of the Republican Party of Arkansas, said there is a history of cities who attempted to add telecommunications services but didn’t meet expectations. Taxpayers were left with the burden, he said.
“The city has stated that the purpose of this endeavor is to ‘create an additional revenue stream to help relieve the economic pressures on the City,’” Reed wrote in the press release. “This is code for ‘We need more tax dollars to grow government.’”
Cameron said he understands the argument against bigger government.
“I would agree with that same concept. Government doesn’t need to get bigger,” Cameron said. But he claims that Siloam Springs has been very responsible to live within its means and maintain a balanced budget while maintaining services.
Living within its means in tough economic times meant city officials cut $700,000 from its $40 million budget for 2012 and trimmed 12 positions. The city employs 211 full-time workers.
Siloam Springs’ population grew 32% in the last 10 years.
“Our staff did not,” Cameron said. “Our operating budget did not.”
The Siloam Springs’ mayor’s office also has received letters of opposition from Arkansas Lt. Gov. Mark Darr and from Randy Zook, president and CEO of the Arkansas State Chamber of Commerce.
“What we ought to let happen is let people who are in the business and do this all the time do it,” Darr said in a telephone interview.
He said when technology changes, he can envision a scenario where new businesses would be discouraged from coming in.
“Do I want to open up a new marketplace or keep them out until I pay off the debt,” Darr asked. “We need to create an environment where others will feel free to invest instead of the city creating a monopoly.”
He said creating a new government service would require more city staff, paid by tax dollars, instead of creating more private industry jobs that would add to the tax base.
Darr wrote in his letter to Mayor David Allen, written Sept. 29, that Siloam Springs could be overstepping its bounds into the private sector.
“By creating and deploying a government-sponsored network, the city will not only jeopardize existing private sector jobs, but it will also send a cautionary signal to businesses who might consider locating in Siloam Springs that don’t want to have to face government-owned competition,” Darr wrote. “Furthermore, this undertaking will undoubtedly cost tens of millions of dollars, meaning that if it is not successful, Siloam Springs’ taxpayers will be the ones who have to cover the financial losses through higher taxes or increased costs.”
Darr said citizens could be in debt and still be behind the times when technology changes.