Someone on social media asked me for alternative ideas for funding a $25m city run fiber internet business. 😀
Here’s a good one, and it starts with an offer to the residents of Lucas:
“For the one time price of $19,763 today, Lucas will give you 14 years and 3 months of free fiber internet service. You’ll be able to start using that service in about 3 years and for those 14 years and 3 months after, you won’t have to pay another dime for your internet service.
As an added bonus to you as a resident of Lucas, the city will not have to take on any financial risk, nor raise bonds. Also, because you’ve paid your money, you’ll get to help make sure it’s done correctly, on time and on budget.
Of course this offer will be contingent on you getting 1,264 other households to join in and also pay $19,763 before the project starts. Don’t worry though, read the Magellan study. It says this is totally doable.
Also too, if the project goes over budget, you’ll have to make additional payments. In return for your additional payments, we think we can offer you free months of service.
We’re still working out the cancellation fees and what happens if too many people decide to cancel before they receive the full amount of their pre-paid services.
If you sign up right now, we’ll give you priority in picking your city email address. Imagine how cool it will be to get “firstname.lastname@example.org” or “email@example.com” as your email address? We’ll also give you a badge on your profile you can display to let everyone know you paid upfront.
Sign up now!!!!! It’s only $19,763 for a service that starts 3 years from now and you will get 14+ years of free fiber internet service to your home. ”
Here’s where that idea came from:
One of the alternatives I was thinking of, and also @brian howard raised in his conversation on why the bond money was not a tax, was the possibility of collecting subscriber fees up front to fund the planning, then implementation of a fiber network.
This would avoid doubling the city’s debt and locked down REAL commitment from people to sign up for the $115 monthly fee. Think Kickstarter or Tesla or any other crowd-funding.
Was this investigated by the tech committee or city council? Or anyone?
The math (check me because it’s late and I did it quickly):
For $24M+ (19m bond + 4.7m rainy day fund), let’s round this to $25m. To cover $25m in planning, design, development and initial operating costs, we would need 217,391 months of $115 payments.
Thinking about who would make these payments, I’ve been told that we only need 55% of the roughly 2300 households in Lucas to sign up. So we would need to split up the 217,391 months of payments across 1,265 people.
This works out to be 171 months ( 14 years and 3 month) of payments per person. Or about 4 years of payments. These 171 payments work out to be $19,763.
I know the Yes people will raise the point that businesses will also need to chip in, as will the schools. What would be reasonable for those folks to cover some of the $25 million fees? Would this take 10% off the total? 15%? help me out here.
Of course there would have to be rules about getting refunds if someone wants to cancel and also that they’ll have to pay more if the project runs late or goes over budget, but that’s okay because we can just extend the number of months of service they are pre-buying.
Looking at this now, the offer sort of reminds me of timeshare offers I’ve heard in the past. “Pay now, we’ll build a property, and you can vacation there for free for the next 20 years”. Of course, each year comes with an annual fee, whether you use it or not.
One last thought, this sort of thing happens all the time when people raise money to start or raise funds for a business. They get stockholders. Maybe we can just find someone to do this as a private business, raise the money themselves and get Lucas residents to be stockholders? The Magellan study says it’s feasible, so companies should want to sign up to do it to make money right?