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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 28, 2005 AFN provides economic benefit to city, residents By Katie Yasui Ashland As I walked by Ann Marie Huston’s initiative table, I took note of the fact that she and her husband are retired. They want an initiative to sell Ashland Fiber Network. I am a working Ashland resident and I use AFN at both of my businesses. A retired person or a person that doesn’t need to work for income might forget what an asset AFN is to our community. Having AFN keeps Charter from becoming a monopoly and keeps the monthly rates down. Having a local company has created jobs for families, (yes, with small children) and people in Ashland are always touting that we need families. The most important issue is that it makes Ashland a viable interconnected place to attract more business. Selling AFN is a lose-lose situation. There would be approximately 10 million in debt to pay off, meaning the entire purpose of selling AFN is an oxymoron. Also, on the competitive scale, the monthly cost could go up considerably, and what about the business climate? For me, the most important and crucial issue is that the twenty or so families would have to leave the valley to find their very specialized work elsewhere. There goes the heart and soul of Ashland. The people gathering signatures are focusing on the “what” (AFN) not the “who” (city council). These residents are feeling burned because of the Russ Silbiger-led council decision to force all residents to pay a $7.50 subsidy. So these angry citizens are taking it out on the hard-working AFN staff? Imagine what it must feel like to work 50-60 hours a week for AFN and read and hear all these awful things. It’s not like AFN is run like a private company and people working there can make decisions on their own! Why isn’t AFN making money? When AFN was created, council directed AFN to be an Open Access Network so that AFN would not compete against local private Internet businesses. What does that mean to AFN’s revenue? A lot. Since AFN can only wholesale Internet to the local ISPs, AFN makes approximately half the revenue it could if it were run like the private business all the arm-chair-business-expert quarterbacks are judging it by. And the AFN Internet-only customers have no on going relationship with AFN after the installation. How’s that good business? How’s it good business for AFN to have to pay the entire cost of building the network and the ISPs reselling AFN’s services didn’t have to pay a dime to use the network? Why isn’t AFN making money? Because AFN has to pay the city almost a fourth of its gross revenue to help run the city. AFN makes $2.5 million a year and then has to fork over close to $500,000 a year to run City Hall. Are any of these AFN critics looking at City Hall for cost savings? Oddly no. Calculate AFN’s $15 million dollar debt. We borrowed most of that money from ourselves. That $500,000 payment to the city to run the city cost close to $3 million dollars over AFN’s six-year life. Why isn’t AFN making money? Once again, when AFN was created the city council determined that appointed residents should select all of AFN’s cable TV programming. The cable TV programming expense ($800,000) is AFN’s most significant single operating expense out of a $2.6 million dollar budget. Not to mention AFN’s staff is charged with selling a product they have no say in creating. Why isn’t AFN making money? The city council sets AFN’s retail pricing. So if you have appointed citizens spending the money, $800,000 in cable TV programming annually, and elected council setting the price, how does the blame get directed at the “what” of AFN? Shouldn’t all this be directed at the “who” in the council and the bureaucratic process? AFN is entangled in a bureaucratic mess. AFN critics forget this and attack AFN as if it has been run like a business. Somehow the AFN staff is doing a remarkable job in spite of the bureaucratic mess and all the negative news cloud. AFN is behind, and falling further behind every day By John Gaffey Ashland To say that AFN is close to breaking even, as recent press coverage has it (if we agree to overlook the debt payment) is to say that AFN is, in fact, still losing money. Rather like being almost a virgin. And, as the bondholders are soon to remind us, the debt payment can’t be ignored. Another $432,000 is due this January, and the city doesn’t have the money to pay it. Suspending the $7.50 utility tax was a wise move, but that money was earmarked for the upcoming payments. Adding to it’s woes, the ‘06 budget had a projected 10 percent revenue increase for AFN arising from things like a hike in the CATV fees. That increase hasn’t materialized either. So, the AFN will have to borrow, probably from the utility fund, to make January’s payment. That too will have to be paid back. Looking past January, there is no money to slap so much as a new coat of paint on AFN. The $15.5 million is spent money; good times all in the past. Additionally, at the July ‘06 budget committee meetings, supporters of AFN warned that there was no money for maintenance, upgrades, new technology, or marketing. They suggested a minimum of $200,000 needed to be added annually to the budget to keep AFN competitive. Neither the city nor the committee was in the mood to increase AFN red ink, so the future will have to wait. The city has three plans to address these and similar woes. One is to strong-arm new tax money from less sympathetic patsies than the last crowd. The second is up and running: encourage population growth through an affordable housing program. More residents means more potential customers. Whether lower income families can afford AFN is another question — a dubious proposition, as we’ve recently heard from utility tax protesters. The other plan, to hire a new, hard-charging city employee who can grow this into a profitable business is on hold. No loss there; it’s pissing up a rope. See the Tidings’ “On Computers” column, (Oct. 10). It explores the national potential for growth of broadband (known locally as AFN). Here’s the column’s money graf: “A [2002-2005] survey by the Pew Internet and American Life Project ... shows that the pace of growth in broadband is slowing dramatically. And those who don’t already have broadband are less likely to want it – or have the resources to pay for it.” The survey points out various demographic stats regarding age, education, income, and interest-levels that lead to the conclusion that “Almost everyone who really wants full-blown broadband – and can afford it – already has it.” Hello, Ashland. (http://www.pewinternet.org/pdfs/PIP_Broadband.TPRC_Sept05.pdf) The column goes on to note “This analysis may explain why some broadband providers have recently cut prices in an attempt to lure more subscribers.” Interestingly the city tried just the opposite by increasing CATV rates. AFN supporters have to provide convincing data to show that there are any untapped, profitable market segments in Ashland to build on. Certainly, members of the AFN Options Committee should provide such relevant data if their report to the council is to offer more than wishful thinking that one option is better than another. And as any seasoned gambler or competent businessperson will tell you, breaking even on a high-risk $15.5m bet isn’t nearly enough return for the heartburn involved. 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