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Nelson Fibre remains ‘utility’ despite showing profitability: manager

Timothy Schafer
By Timothy Schafer
March 1st, 2019

Don’t be afraid of the dark.

At least that is message that the city’s IT department has been trying to convey in Nelson about its dark fibre utility offering.

The fibre, offered through the city-owned and operated Nelson Fibre, has been experiencing slow growth in the last few years, noted city IT and Nelson Fibre manager Allison Sutherland in the annual update of the service to Nelson city council.

She cited a long sales cycle and “complex business relationships” as part of the reasons for sluggish sales, as well as the high cost to construct the service.

“It’s not a typical service that municipalities provide so it can get complicated at times,” she explained.

A dark fibre is an unused optical fibre, available for use in fibre-optic communication, and is leased from a network service provider like the city. The term “dark fibre” originally referred to the network’s potential capacity.

The city’s service is managed part-time by two city IT employees, Sutherland explained, which means it doesn’t receive the full promotional attention of a dedicated staff.

Coun. Jesse Woodward wondered if there were plans at Nelson Fibre to become more aggressive in “selling” the service.

“It’s a very expensive service to install … and I do still see it as a utility for the City of Nelson and an additional service that is a niche market that competitive service providers don’t provide,” said Sutherland.

In 2015, the city started to provide the benefits of fibre optic technology to the local business community. Although the city has residential rates for potential downtown residents, the city has no current financial plans, or service providers, to deliver municipal fibre to residential neighbourhoods in Nelson, said Sutherland.

“The target customer emphasis remains the business community, non-profit associations and strategic partners,” she said.

Although the dark fibre model is challenging to sell, it is well positioned for open access customers, to save money and create local technology jobs, she noted in her presentation to council.

Despite the understaffing and high cost of the service, it has been proving profitable for the city. Sutherland noted that between Nelson Fibre and the co-location centre revenues of $623,00 have been generated over the last six years, against $123,000 in costs.

A co-location centre is a data centre where equipment, space and bandwidth are available for rental to retail customers.

And growth throughout the city is limited, Sutherland explained. Although residential rates are available, existing Nelson Fibre service providers do not target the residential market, she said. 

“Nelson Fibre is not available in residential neighbourhoods,” she said.

However, three years ago Nelson Fibre established a multi-tenant rate for mixed use buildings in anticipation of larger, more dense developments being created in the city and an eye toward Nelson Fibre serving them.

Woodward asked Sutherland where she saw the service heading in five years.

“I don’t think we can ignore the fact that there is going to be lots of competition over the next five years, so I think that competition will offer our residents some great broadband connectivity,” she said.

“And so I think we still have a niche market with Nelson Fibre, so open access, attracting technology companies and serving those companies here … (we) have a great footprint to do that.”

Despite its challenges, the utility plans to “work closely with (Nelson) Hydro and Public Works on developments and site preparations, to reduce after-construction installation costs,” noted Sutherland.

As well, the application process for the service needs to be simplified and rates versus the competition need to be adjusted to encourage more business.

Currently the city has 61 active ports.

The expansion of the service really became possible when Nelson Hydro migrated their downtown primary overhead distribution power lines to underground.

At the time the city installed additional communications condui that now provide downtown businesses the opportunity to connect to Nelson Fibre.

Network savings costs

Between 1998 and 2005 the city had the insight to connect Nelson Fire Rescue, Nelson Police, Touchstones Museum, public works, Nelson Hydro, the Nelson Public Library and City Hall with fibre optics. 

This enabled the centralization of the phone systems, servers, and internet access, resulting in a savings of over $100,000 per year.

— Source: City of Nelson website

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