Red Deer County has hit refresh to keep its broadband roll-out on track.
Council voted on Tuesday to approve a revised business case by Rural Connect Ltd., a municipally controlled corporation (MCC) that will oversee the county's multi-year effort to provide high-speed internet to under-served areas of the county. Village of Delburne and Paintearth County are partners in the corporation and others are being pursued.
It was necessary to take another look at the business case, partly because a delay in expected federal-provincial Universal Broadband Funding pushed back timelines to build the broadband network and sign up customers. The county only got word about a month ago it would get $8 million from the fund.
The revised plan provides much more conservative subscriber number estimates and provides a financial strategy to build the next phase of the broadband project, which is key to expanding its reach to more subscribers.
To pay for the next phase, the county is turning over $13.5 million worth of broadband infrastructure to Rural Connect, which will use those assets to borrow $10.5 million to complete the next expansion. The original business case did not include the borrowing.
"The financing of that debt all goes into the corporation and has to be funded by the business model. Rather than incurring big profit, we'll be more on the break-even aspect," said county corporate services director Dave Dittrick.
"But in terms of the operating basis, we'll be operating on a positive cash flow."
By leaving borrowing to Rural Connect, the county does not have to inject more money into broadband, which will see its assets increase to $40 million from $30 million when the next phase is completed.
The county had the option of borrowing to develop the broadband infrastructure, similar to the way land development is approached, said Dittrick.
"We could fund it, but through the last few months, council really gave us the guidance that they didn't want to see more cash going out."
Partner EQUS REA Ltd., an Alberta-based member-owned electricity provider, is providing $2 million in start-up capital and VALO Networks, which specializes in operating next-generation fibre-optic and wireless networks will build and operate Rural Connect’s system.
Mayor Jim Wood said adopting a cooperative model was the only way to expand broadband in the county when private businesses were not interested.
The county had to balance the risks against rewards when choosing how to expand broadband.
"Going with the MCC is the least risk and most reward," said Wood.
"I truly believe we today are going to set an example for other municipalities to follow when we pass this motion today," he said.
Not all on council, were completely comfortable with the business plan changes and the proposed borrowing.
Coun. Christine Moore proposed an unsuccessful motion to call in third-party experts to assess the direction being taken with broadband.
"I know other organizations have done this when they faced a crossroads," said Moore, whose motion was supported by Coun. Lonny Kennett.
The main motion to accept the business plan changes passed with Moore and Coun. Dana Depalme opposed.