NextLight Municipal Gigabit Network Gets 8% Take Rates on Day One

Day one take rates for the Longmont Power and Communications NextLight gigabit Internet access network, being built in Longmont, Colo.,  seemed to be about eight percent on Nov. 3, 2014.

NextLight service will be available to residents at about $50 a month for one gigabit speeds if they sign up in the first three months the service is available to their home. Regular price for those that sign up after three months will be roughly $100 a month.

Comcast, which serves Longmont, sells 25 Mbps Internet access on a stand-alone basis at introductory prices of $40 a month. But that is a promotional price that rises after a year.

Comcast’s fastest current offer is 150 Mbps, sold for $90 a month for a year, rising after that introductory period.

So NextLight will be able to underprice Comcast, unless there is a price reaction from the cable company.

Those “charter members” will keep the introductory price as long as they keep their service and will take that rate to their new home, while also reserving that rate for the home they leave, according to a Times Call report.

Customers who miss the charter member window also can qualify for the same rate as a customer loyalty reward after one year, knocking the regular price down from $100 a month to $60 a month.

The city also sells a symmetrical 25 Mbps service for about $40 a month. So the big question, longer term, is what percentage of customers opt for the 25 Mbps service rather than a gigabit service.

Longmont, it is safe to say, was able to undertake building and operating its own Internet access service because it also owns its own power company, Longmont Power & Communications.

The network will be built in phases, with completion slated for 20127.  The new community-owned broadband network will cost $20 million.

The business plan commissioned in 2013 predicted the network would pay for itself in about 10 years, assuming that 35 percent of Longmont residents became LPC telecom customers.

Longmont voters approved a $45.3 million bond issue in 2013 to build the network and get operations up and running.

NextLight expects to settle in at about 27 employees by 2017. Longmont has a population of about 90,000. So capital investment amounts to about $222 per home. It is not clear whether that figure includes installation of active drops, which might add about $300 in per-customer costs. At 33 percent adoption, the NextLight network costs $667 per customer.

And Longmont is not the only community looking at ways to do something similar. The Northwest Colorado Council of Governments, Boulder, Yuma, Wray, Colo., Cherry Hills Village, Red Cliff, San Miguel County and Rio Blanco County also are looking at municipal networks.

Though many obstacles remain, the notion that there is not enough competition in the high speed access business might not hold for much longer, in parts of Colorado, as Google Fiber has created a three-way supplier market across markets in the United States.