The Johnson City Power Board plans to get into the telecommunications business next year by offering commercial voice and high-speed data services through a third-party vendor. As Press Business Writer Kate Prahlad reported earlier this month, the JCPB has prepared for the move by adding capacity to the fiber network it recently installed as part an advanced metering infrastructure that will allow meters to be read remotely.
JCPB officials say they plan to use the existing extra capacity to create a new revenue stream and enhance local economic development. Robert White, a spokesman for the Power Board, said working with a third-party vendor gives the JCPB the best return on its investment, while balancing low risk with possible profits.
The voice and high-speed data services will first be available only to businesses, but the JCPB has the option to someday offer that service to residential customers or take over the third-party vendor’s operations. “We feel the products we would be offering aren’t being offered right now, based on price, speed and reliability,” White said. “We are also a brand in the community.”
He also said the publicly owned utility’s telecommunications division would be self-sustaining and would have absolutely no impact on electric rates.
According to a feasibility study, the Power Board would most likely make a capital investment of $1.5 million over five years, which could include installing more of a fiber backbone to reach businesses if needed. At the same time, revenues from the extra service could reach $1.3 million over 10 years.
To reach its revenue and return on investment projections, the JCPB would need to capture about 20 percent of the area’s total market for data services, about 15 percent of the market in phone services and about 5 percent of private data services over five years — based on a market of 3,000 commercial users.
The Power Board’s decision to get into the business telecommunications market will see it compete for customers that are currently doing business with a number of private companies. Current market surveys show CenturyLink has 41.1 percent of commercial customers, Charter with 24.3 percent, and Comcast holding 21.5 percent. CenturyLink issued the following statement in regards to the JCPB’s move: “CenturyLink and other broadband companies provide a full range of broadband services, so there is no need for power companies to enter the marketplace and compete with private industry,” said Patricia H. Elmore, CenturyLink’s manager of market development for Western North Carolina and Tennessee. “CenturyLink has a worldwide communications network and a work force with the technical experience and expertise that are necessary for delivering broadband services to a wide range of customers, from residential consumers to Fortune 500 businesses. It would be challenging for power companies to match these resources and keep pace with the rapidly evolving technology in the communications industry.”
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