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<br />I . enues. The city, accordingly, may have search Institute estimates that sub- ~ ty network subscribers using the new
<br /> to wait until some of the debt is paid scribers could cut their telephone bills utility would total 13,230 residential
<br />I before realizing significant revenues, by a third when using city-owned and 12,250 business.
<br /> telecommunications networks. Not wanting to overcharge new net-
<br />Revenue stream. Such savings would attract a large work customers, public policy makers
<br /> Of course, at some point, an infor- number of subscribers to switch from could set monthly local service fees at
<br />I mation partnership must generate rev- a for-profit telephone system to a non- $9 per residential line and $15 per
<br />enues. These revenue sources are Bub- profit information partnership. business line. An estimated 20 percent
<br />stantial and varied. Information part- Perhaps the best way to illustrate of residential customers and about half
<br /> nerships derive their income from a the potential revenues to be derived of busine88 customers would demand
<br />I number of sources. from an information partnership is to enhanced services, which the city-
<br />· Local telephone service: The city set up a hypothetical example of a owned telecommunications utility
<br />offers the most basic service, local tele- new, public1y-owned telephone utility could offer at a fee of $8 per month per
<br /> phone service, and contracts with the in a mid-sized U.S. city (see tables). line to residential customers and $10
<br />I existing telephone company to operate per month per line to businesses.
<br />an alternative telephone service on the -'ne Revenues AB for long-distance service, the po-
<br />unregulated, city-owned network. Or tential economies of scale achieved is
<br /> the city-led utility provides the tremendous when cities pool long dis-
<br />I telecommunications service itself and tance services. The information part-
<br />contracts with telecommunications Local U,," nersrup could be expected to offer <ira-
<br />manag~ment companies to supervise (R...) 13,230 x $9- $119,070 matic savings in long-distance rates,
<br /> the networks. (IuS.) 12,250 x $15 - '113,710 particularly to smaller subscribers.
<br /> Inhaneed $efvfcft
<br />I · Adding, moving or changing *(R...) 13,230 x 20% x "-S21,161 Studies indicate that long distance
<br />telecommunications service: Although *(IUI.) 12,210 x 10% x $10-$61,210 charges are usually double to triple 10-
<br />normally considered a prob]em with Long Dlltance eaI phone charges among the heavy
<br /> delivering telephone service, flexibili- *(R...) 13,230 x no. $132,300 users which the network would target.
<br />I ty can generate tremendous r~venues. *(IuI.) 12,250 x $22 · 269,100 Again conservatively estimating long
<br />· Phone number listing: Individual Total Yearty Revenu.. - $',444,006 distance charges, the city could place
<br />busineas or residence lines could be average month]y long distance tolls at
<br /> listed at no charge. (Current local tele- ..... "- aIIeot 00II. $10 per residential Hne and $22 per
<br />I phone companies charge a fee for the 'Ii Network Cost business line.
<br />listing service.) The Yellow Pages Tele- What would a system of this size
<br />phone Book Division does not charge ~d capability cost to finance, install,
<br /> phone companies for listing telephone Conduit Infrallructure - $7,100,000 operate and maintain? Specifics would
<br />I numbers nor dOO8 it charge private ex- '.nnJnCll:lon Eq&ñpment - $9,ÐOO,ooo depend on the type of services the city
<br />changes for the same service. Addi- Engineering- $1,710,000 wanted to install, current interest
<br />tionally, local telephone companies Cable Materials - $160,000 rates, contracts which would be nego·
<br /> charge a fee to perform a phone,num- Test equipment, jIgS, fIXtures -$400,000 tiated with private telecommunica-
<br />I ber search or for new subscribers to se- Total- $1',"0,000 tions providers.
<br />lect vanity phone numbers, Im.r.t iIxþenIe (10 v-are). ",410,000 Anycity's network stands to earn
<br />· Excess capacity: Advanced fiber- Total Network costa - 821,260,000 $3.6 million a year. What mid-sized
<br /> optic cables coupled with advanced Yearly paymenta (10 years) $2,'26,ÐOO city in the country would be wining to
<br />I switching equipment are capable of Network Revenues - 9,44t,416 turn down an extra revenues to apply
<br />carrying hundreds of simultaneous Debt Retirement - (U,'26,OOO) to its citizens' needs?
<br />teleco:mmunications transmissions. In Network Maintenance. ($1,100,000) Information partnerships present a
<br /> some ca.ses, all of this capacity may not Network Management - ($1,100,000) unique opportunity for cities to great-
<br />I be needed. Being an "open network," Total Netto City - $3,61',006 ly enhance the delivery of telecommu-
<br />privatE! companies can bid for use of nications services to their citizens,
<br />this "dark fiber" or excess capacity. while reducing costs to subscribers and
<br /> Any "private" telecommunications generating badly-needed city rev-
<br />I users and suppliers could bid to take For example, Anycity, U.S.A., has a to- enues. The breakup of the telephone
<br />advantage of this excess capacity. tal of 35,000 houseµolds with a work- monopoly and the development of ad-
<br />· Trunk service: Dedicated 24-cir- force of 70,000 people. Assuming that vanced technologies have given cities
<br /> cuit service that users can bundle from 90 percent of the households have tele- this window of opportunity to form
<br />I the network to allow subscribers to phones and using an industry stan- public-private partnerships for the de-
<br />reach further economies of Bcale. This dard of 2.4 employed persons per sin- livery of telephone services. State laws
<br />service is normally used to pool long gle business line, the city would cater put cities in the unique position to de-
<br /> distan~e usage access from companies to 31,500 residential subscribers and liver utility services to their citizens,
<br />I that have high-volume use, or when a 29,167 business lines. By concentrat- as they have done efficiently and at
<br />company or building has its own ing on serving high-density business low cost for decades in the delivery of
<br />switching capabilities or requires a cir- and residential areas (multi-family water, electricity, natural gas and
<br /> cuit for dedicated data transmission. dwelling zones), the new utility could sewage treatment services.
<br />I · Pay phones: With a city·governed garner access to large segments of The information partnership is not
<br />netwo:l;'k, nothing precludes the city these subscribers. a public vs. private issue. Rather, pri-
<br />from supplying pay phones and gener- A study conducted by Arthur Ander- vate telecommunication providers are
<br /> ating revenues. sen reports that 42 percent of tele- empowering local governments. 0
<br />I WhHe local service needs and costs phone subscribers would switch ven-
<br />would vary from city to city (and cities dare for reduced cost, enhanced service
<br />would have to detennine what level of features Dr the opportunity to partici- Herbert Lindsay is the director of
<br /> revenue they wanted to derive from pate in an organization that con- business development for Industrial
<br />I their information partnershipih, a tributes to the community. Based on Construction Service, Inc., Westmin·
<br />study by the National Regulatory Re- that percentage, the number of Anyci- ster, Colo.
<br />46 July "" AMERICAN CITY. COUNTY
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