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- Subscribe - Contact Us - Rate Card - Place an Ad Archives Revels Classifieds Real Estate Menu Guide Wedding Weather Subscribe Contact Us October 18, 2005 AFN group still working on option list Everything’s still on the table for future of city’s cable utility By Vickie Aldous Ashland Daily Tidings Each alternative for the future of the Ashland Fiber Network has benefits and risks, according to AFN Options Committee members. The committee met Monday morning to discuss the various alternatives for the city’s financially struggling cable television and high-speed Internet service. Appointed by the Ashland City Council this summer, the committee has been mainly in the information-gathering stage until now. Some residents, frustrated by the council’s imposition of a $7.50 monthly fee on electric bills to help pay off AFN’s $15.5 million debt, have said the city should simply stop operating AFN. Tonight the council will consider delaying the imposition of the fee until January 2006. Option committee member Kevin Shultz said pulling the plug on AFN would be the worst alternative from a financial perspective. “It would be like taking a multi-million dollar asset and putting it in the trash can,” said committee member Paul Collins. Halting the service would mean there are no revenues from operations or the sale of AFN’s infrastructure to help pay off the debt, but it would prevent possible future losses. With the loss of its main rival in Ashland, Charter Communi-cations likely would raise its prices, impacting consumers, committee members said. To recoup some of the city’s $15.5 million investment, AFN could be sold for approximately $5 million to $10 million, according to Shultz and fellow committee member Don Mackin, who researched the issue. The city might be able to get a higher bid than that if more than one party competed to buy AFN, they said. If the city did not receive a high enough offer to cover a significant portion of the debt, it could refuse to sell AFN, Mackin said. The city possibly could sell to Charter, which would lead to less competition in the city. Another company, such as Qwest or Hunter Communi-cations, also might be interested in buying AFN, which would help preserve competition, committee members said. A risk in selling AFN could be that customers would stop buying the service when they learned AFN was on the market, leading to a decline in customer numbers and its devaluation, according to committee members. Spinning off AFN, possibly as a nonprofit entity controlled by a local board of directors, would have the advantage of allowing the community to retain some control. AFN also would be able to operate in a more agile, business-like way, without having to publicly release its business plans and information about finances and customers. One major draw-back to a nonprofit spin-off could be the cost. A nonprofit probably could not survive saddled with the full $15.5 million, leaving residents to pay off some or all of the debt, committee member Paul Mace said. Unlike a privately owned enterprise, an AFN nonprofit might be able to tap into local desires to keep money spent on cable television and Internet services in the community. The nonprofit would need a marketing plan to benefit from that sentiment, he said. “If a spin-off utility does not pursue something like that in marketing, then it’s nothing more than the world’s smallest cable company,” Mace said. On the down side, a spin-off nonprofit would require cash for its start-up operations and could need money to invest in new technology, members said. Mackin suggested the city could retain ownership of AFN’s infrastructure, but essentially lease use of the facility to another entity. Lease payments could be used to pay all or some portion of the debt. The outside entity could make the investments to provide new services, such as long distance phone service over the Internet and video-on-demand. Keeping AFN under city ownership and continuing operations is another option, but the service would have to be enhanced in order to make additional revenues. The city would hire a new AFN director and the city council could perhaps give that director more authority to respond to market forces, Mackin said. But the new AFN director could be hampered by city councilors and residents who are averse to investing any more money to gain revenues from new services. Mace said he could envision a scenario where the director would go to the council with a proposal to launch new services, but councilors could say, “How can you be talking to us about spending more money?” Under the “keep and enhance” option, the city council also might consider changing AFN’s operating structure to increase revenues, perhaps by retailing Internet services directly to customers rather than selling the services wholesale through the businesses known as Internet service providers. The options committee is working on a report to deliver to the city council in November. It meets each Monday at 7:30 a.m. in the Ashland Community Development Building, on Winburn Way across from the entrance to Lithia Park. The committee does not plan to take public input next Monday as it continues drafting its report to the city council. Staff writer Vickie Aldous can be reached at 482-3456 x 3018 or [email protected]. 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