The Johnson City Power Board is taking the next step in its plan to get into the telecommunications business, announcing Tuesday it has begun seeking qualified companies to be the third-party service provider for commercial Internet and telephone services administered over the utility’s fiber optic network.
“This request for qualifications will identify interested companies that demonstrate the potential to achieve the goals of JCPB in their fiber network venture and who will be invited to submit proposals to JCPB for consideration as its service provider partner,” according to a Power Board release.
Interested parties should contact the JCPB for details. The deadline for questions is Dec. 19 at 5 p.m.; the RFQ response deadline is Jan. 13 at 4 p.m.
In late October, the utility, a community-owned nonprofit, approved looking into offering commercial voice and high-speed data services through a third-party vendor by mid-2012. What allows the JCPB to do so is the extra capacity on the fiber network it recently installed as part of its switch to advanced metering infrastructure, which allows meters to be read remotely, among other system communication updates.
JCPB officials said the utility could use the existing extra capacity to create a new revenue stream and enhance local economic development.
According to a feasibility study by the utility, the third-party vendor approach would give the JCPB the best return on investment, balancing low risk with possible profits. The Power Board would provide the “backbone,” while the vendor, working under JCPB’s brand, would provide the “last mile” services and equipment to the commercial customers. The utility’s telecommunications division would be self-sustaining, and have absolutely no effect on electric rates.
Initially, according to the 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. On the flip side, revenues from the extra service could reach $1.3 million over 10 years, depending on the agreement with the third-party vendor.
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.