Calling Alameda
It’s Friday! And the sun is blazing….it’s a gorgeous day. And I get to walk around outside for work today! Woohoo! Which means that this is an awesome time to talk about the public utilities board (PUB) and their upcoming meeting on Monday. (I wasn’t even going to attempt to find a meaningful lead in to this issue).
As everyone knows (or should if they are paying attention), the “telecom” in Alameda Power and Telecom never really performed the way it was suppose to. It took longer to get the wires connected to all the homes in Alameda (I think there are still a few areas that don’t have access to the service), the start-up costs were much higher, Comcast entered what looked to be a monopoly market and the revenues didn’t perform as well as expected.
Intertwined in this history, are interagency loans (made from the electric side of AP&T’s business) worth about $44 million that were made while the system was trying to get started and which were on top of the approx. $33 million in voter approved bonds and about $8 million dollars in smaller loans and outstanding debt. At the end of last fall, it became clear that some decisions were going to need to be made on the telecom side of things, and first among them was whether or not AP&T should jump into the Telephone side of the Telecom Business and compete directly with Vonage, etc.
Personally, as much as I like the idea of Municipal-owned utilities and see telecom as an essential community service which in the right environmental makes complete sense to be publicly run, the fast-changing, high-cost aspect of the business makes it very difficult for a city the size of Alameda to compete in. Especially when behemoths like Comcast, who is also struggling of late, are competing head to head with the small city. I’ve advocated looking at exit strategies for a while now.
So I was pleasantly surprised to find in the PUB meeting packet (Here for the Agenda) for next Monday’s meeting, this paragraph in a discussion about entering the telephony business (Item #6b, pg 6-7):
“The analysis undertaken so far on voice has demonstrated that prior to making a decision to enter the voice business numerous tasks should be completed. The complexity associated with the voice business is significant compared to the resources available within Alameda P&T. Based on customer surveys, the potential for voice penetration is high. Though entering the voice business in Alameda may have opportunities to increase revenues, entering the voice business at this time may expose the enterprise to financial, operational and opportunity-cost risk. Therefore, at this time, the staff is focused on stabilizing the existing business lines. Therefore, unless directed otherwise by the Board, staff does not intend to spend any significant amount of time or effort on evaluating the voice business until the existing business lines have been stabilized.”
I wouldn’t dare speculate on the long-term meaning of this decision (ok I might, but I won’t right now), but this appears to be a wise acknowledgement that we cannot continue to play “keeping up with the Jones” versus AT&T, Comcast, etc. Where this decision leads us is probably anyone’s guess, but it’s the right one. The $2 million infrastructure cost for implementing Telephone services is large, when one realizes that the existing service is just barely (if at all) breaking even.
Monday’s meeting of the PUB is going to be an important one, even if you can’t attend, I’d suggest emailing your thoughts to the members of the board. (I’d provide links, I guess the city’s “Access Alameda” system is suppose to provide “access” but my browser won’t accept it right now)
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