Traverse City Light & Power’s high-speed fiber optic Internet service, nicknamed “TCLPfiber”, became available last fall in thousands of homes in the city of Traverse City. Almost six months into the rollout, however, city-owned utility fiber service is below expectations. Is it just due to the COVID-19 upheaval, or something more?
Data provided to The teleprinter by TCLP indicates that the public service has 383 fiber customers as of March 31. This number includes four categories of customers: “active” or customers who are currently receiving the service; “Provision and programming”, or customers who have received equipment and are waiting to be connected; “Potential” or customers who have signed up and are in the queue to be scheduled and installed; and “deferred”, or customers who have registered but cannot yet be installed due to city laws that limit underground work in winter.
TCLP previously indicated that its Phase 1 construction and Phase 1.1 expansion project would bring fiber access to approximately 3,220 clients in and around downtown Traverse City. With 383 registered customers, TCLPfiber so far reaches approximately 11.8% of its total addressable market.
While the service has not yet completed its first year, the current shortfall against projections raises questions about demand in Traverse City, as well as TCLP’s ability to recoup its investment and repay the loans used to fund. the initiative.
TCLP’s current customer base of 383 users would generate annual revenue of $ 339,856, compared to initial targets of 1,551 customers for projected annual revenue of $ 1.511 million, which means TCLPfiber reaches 25 % of its enrollment target and 22% of its revenue target. .
Tim Arends, executive director of TCLP, says the numbers don’t tell the whole story.
“The board wants us to report this data to them on a monthly basis,” Arends said. “But I think the data gives the impression, the way we record it, that [TCLPfiber] does not do what we expected, based on our projections. These projections were based on a full year of deployment. We are only six months away from our deployment. People, I think, compare our current numbers to what we had planned in our business plan, and they see that we are far from us. But to be fair, we haven’t had a year yet. So that’s what’s not understood when people look at the numbers – maybe even by our board members – and we need to remind people of that. “
There are other factors at play as well. TCLP Chief Information Officer Scott Menhart notes that TCLP construction “always slows down at a terrific rate” during the winter months. This is due to a city-wide moratorium that bans underground construction between November 15 and April 15. So while TCLPfiber only registered a dozen new registrations in February, Menhart believes such a slow adoption rate “was certainly expected and expected” because of the moratorium. .
Arends suggests that COVID-19 has complicated matters as well – first by delaying construction and pushing deployment from summer to late fall, very close to the date of the city’s moratorium; and also by creating some uncertainty in the commercial market.
“I think a lot of companies are still trying to find a way to reopen,” Arends said. “On the residential side, we are seeing higher figures than expected. We thought commercial would overtake residential, but it works the other way around. And I think it’s because of COVID and a lot of people who work from home. “
TCLPfiber has 293 residential customers (37% of first year target) and 55 commercial accounts (14% of target).
The utility is considering several strategies to fill these gaps, with the hope that spring construction and a more widespread “back to work” trend will boost both visibility and interest. According to Kelli Schroeder – who is responsible for human resources and communications for TCLP, the utility is working with the Traverse City Downtown Development Authority (DDA) to organize a “Stakeholder Zoom event” to raise awareness among businesses and owners. and answer questions about TCLPfiber. TCLP is also considering “subsequent sessions with realtors, restaurants, retailers, small businesses and financial institutions” to continue to spread the word.
Regarding future developments of the TCLPfiber network, Arends says there are plans to tackle Phase 2 – which would bring the availability of fiber service to the rest of TCLP’s customer network – by “this time. next year”. This depends on the approval of a loan that TCLP seeks from the United States Department of Agriculture (USDA). Arends notes that the loan would not only finance the full deployment of the TCLPfiber network, it would also be used to consolidate the utility debt for the project, by repaying an interfund loan that the utility received from the City of Economic Development Fund. Traverse City, and another loan interfund that transferred money from the TCLP power company fund to the fiber fund.
After reviewing the numbers, Traverse City Mayor Tem Amy Shamroe said she was “actually quite happy” with the progress of the project. In addition to serving on the Traverse City Council of Commissioners, Shamroe is one of the two City Commissioners who sit on the TCLP Council. She says The teleprinter that, given COVID-19 delays and the city’s winter moratorium, TCLPfiber may actually be exceeding expectations at this time.
“Overall I’m just really happy that we were able to get started a bit on schedule,” Shamroe said. “I am delighted that the work restrictions are lifted in a few weeks and that we continue to roll out this project, which has been very well received by the public in Traverse City.”