Toronto to decide this spring if city-owned fibre is beneficial, and potentially profitable

The City of Toronto plans to decide in late spring whether a business case exists for developing a municipal-owned dark fibre network. As the article in this current issue reports, the public and private sectors are not seeing eye-to-eye on this issue. Earlier this month, Steven Byrd, the manager of Toronto’s telecommunications office, provided the Policy and Finance Committee with a status report on this issue. It also announced that Lemay-Yates Associates Inc had won the contract to conduct a feasibility study for a municipal dark fibre network, which will be a key component of staff’s business case analysis. The study is expected to be finished by the end of April. A summary of Byrd’s Jan. 2 presentation to the committee appears below: Fibre optic networks are rapidly being built in most major cities. The use of fibre optics allow for greater capacity than the existing copper wire or coaxial cable. Numerous companies are competing in the field, and are focusing on the key business areas where there is currently the greatest market demand. Significant installation of fibre optic systems is now underway in our downtown core. The city is also a major user of telecommunications services. The city and its various agencies, boards and commissions currently own some fibre, and have options to low-cost fibre from companies with whom the city has signed Municipal Access Agreements, or equivalent. However, most of the city’s telecommunications traffic is carried by private companies at a cost estimated to be approximately $19M per annum. Given this situation, it is appropriate for the city to examine the feasibility of building a fibre network to meet our future needs. Should this be feasible, public sector organizations who are also considering their own fibre builds, may be interested in partnering with the city to avoid duplicate builds and to share and/or reduce costs. The business case will include a plan to address existing and future, city corporate/ABC telecommunications needs, and it will integrate, to the extent possible, the city/ABC’s current inventory of fibre. The business case will also include details of the design, capacity, costs, potential revenues, other funding, social and economic benefits, public and private sector partnership opportunities, financing, legal issues, any required government (i.e., provincial or federal) approvals and organizational options. The business case will also include details of the design, capacity, costs, potential revenues, other funding, social and economic benefits, public and private sector partnership opportunities, financing, legal issues, any required government approvals and organizational options (to be completed by Lemay-Yates). At the core of the business case will also be a decision by city council on whether it wishes to engage in the fibre field on a profit or not-for-profit basis. This decision has significant implications for the city. Should the network be open access and non-profit, and/or should revenues from leasing be used to offset capital and/or maintenance costs? Should the city establish a for-profit fibre network which will be in direct competition with the private sector? This, in turn, creates a more complex set of risk management and legal issues. Even if the city undertakes a municipal fibre optics build, it has no legal authority to require companies to use city-owned fibre. Private sector companies will continue to deploy their own networks. It is expected that work on the feasibility study will be completed by the end of April. Concurrent with the feasibility study, staff are working on the business case analysis. It is anticipated that the business case analysis will be completed by staff in the late spring.

Toronto to decide this spring if city-owned fibre is beneficial, and potentially profitable

News | 01/29/2001 5:00 am EST

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