Ashland is looking to hire a consultant to help rescue the city’s debt-ridden fiber network.
“It’s time to bring someone in with industry experience to overlook and see what we’re doing,” Wanderscheid said. “It’s a reality check on our assumptions to see if they’re reasonable.”
Since the beginning, AFN has fallen short of all predictions of profitability and has been mired in increasing debt. The debt – from interfund and capital loans – is forecasted to grow to about $14 million by next summer.
Four years after Ashland’s first technology assessment, Ashland Fiber Network is far from reaching its goals. When construction of the new system was just beginning, the City was worried that there would not be sufficient demand for the network to generate the necessary revenues to meet its goals.
In 1999, the City Administrator wrote a report on the assessment and presented it to the City Council. The report was also circulated to workshop participants and the Chamber of Commerce. The workshop revealed that the infrastructure was good, and when the Ashland Fiber Network came on-line, the infrastructure would be exceptional. But the use of the network was lagging.
Consultants for The Communication Group used existing research to develop an 18-month launch campaign for the new AFN municipal services. The report also proposed various improvements in the area of marketing. Specifically, the report called for implementing a direct sales team, revising the pricing structure, developing targeted marketing campaigns, promoting bundled cable TV and Internet packages, and marketing the advantages of a publicly owned advanced telecommunications network. Despite a one-year delay and intense price competition, the results were successful. High-speed data and Internet hook-ups exceeded goals.
In April 2002, AFN was forced to revise its business plan due to several issues: revenues were not meeting projections, capital expenditures were exceeding the amount originally financed, the buildout was taking longer than anticipated, and some managerial problems were identified.
An advisory committee was appointed to (1) revise the business plan, (2) develop a communication system with the council, and (3) evaluate ways to enhance the network’s performance.
In January, 2003 conerns were raised about whether the city council received accurate information. Auditor’s hadn’t reported on the “going concern” of AFN. The committee requested the auditors’ determine whether it is in their scope to do a “going concern” review of AFN. Apparently, a management audit or review of the business plan was not within the purview of the Committee.
It is crucial for AFN to increase the number of users to the network if it hopes to build value into the network. Real sustainable economic growth and security will come from expanding the information revolution to all parts of society. It is the creation of quality content that drives growth.
Unfortunately current business plan focusing primarily on revenue generation and little emphasis placed on creating quality content or usability. Furthermore, AFN has yet to finance the support staff, education and outreach programs that allows the community greater access .
Finding a local ISP that can meet users needs can prove challenging. Ashland fiber will not work with large providers such as AOL. Charter’s network, on the other hand, allows AOL access over their networks, and at greatly reduced prices.
When a local private school wanted to install a fiber network the prices quoted from the local ISP’s almost stopped the project. Not only were the setup costs extravagant, but the monthly charges were less than competitive. Throw in a charge for a pipeline and the price for AFN could cost over $395 a month and more than $1000 to set-up..
In contrast, Charter Cable offered their services for much less cost. Charter did it all for $100 and with a monthly charge of $59 with free TV and 10 emails. Another benefit to the school is that Charter supports AOL. Their cost for AOL dropped from $35 to $7.95 month as they no longer needed the dial up. And as an added bonus Charter wired and setup the building for them.