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Could debts, wireless kill AFN'

ASHLAND ' Like cell phones replacing land lines, wireless Internet technology could put the Ashland Fiber Network in a tough place seven to nine years from now, says a critic of the system.

With a debt growing beyond &

36;14 million next year and likely to increase, Don Montgomery thinks the town needs to ask some hard questions about the future of its 3-year-old fiber-optic high speed Internet and cable TV system ' and emerging competition.

There's a lack of concern at AFN on the next generation of Internet access, said Montgomery. It's basically mature now, but the marketplace isn't ready for satellite broadband. It's going to overtake the AFN and it will start losing subscribers.

Montgomery worked in satellite technology for 35 years at the Jet Propulsion Laboratory in Pasadena, Calif., and keeps up on developments.

— We may be so far into (the network) that we may not find a buyer to take it on and carry the debt, said Montgomery.

Frequencies for ground-based wireless transmissions are pretty well used up, said AFN Director Dick Wanderscheid. If the entire city were wireless, hookup speeds would be slower than dial-up connections, he says.

The only threat is satellite, and it has drawbacks, said Wanderscheid. I don't think we'll see satellite dishes popping up in Ashland.

Satellites would have high costs, capacity problems and lag time for connection, said Seth Fearey, president of Connected Communities in Menlo Park, Calif. Loading satellite circuits with video would be expensive, he said.

Fiber's fantastic. It's going to have unbelievable amounts of capacity, said Fearey. It's always going to be here.

Despite fiber's enthusiasts, Ashland resident Jack Blackburn thinks the city should sell the network.

I don't think we should keep doing it, said Blackburn. They haven't done a good job of marketing it. If they can't make it work by the end of this year or the next they will probably sell it, he predicted.

City budget committee members also have expressed worry over the growing size of AFN's debt during meetings this spring. The committee decided to approve a budget for the next fiscal year but to reconvene and possibly update it when a new AFN business plan emerges in August.

Early plans predicted network profitability in the coming year. A revised plan showed positive income by 2006-07. That target may be in doubt as AFN high-speed business hookups lag below projections.

Loans from other city departments were projected to top out at &

36;8.9 million in 2008. Next year's debt of &

36;14 million reflects both interfund and capital loans.

When we review the plan, that number will change, said Lee Tuneberg, city finance director. It may peak higher and later.

But the new plan could include strategies to cut the numbers, said Tuneberg.

Wanderscheid points to several moves that will help the system. Up to &

36;100,000 will be saved next year through elimination of some city electrical department positions. The network pays a franchise fee of up to &

36;50,000 per year to the city for cable modem services, but the Federal Communication Commission has ruled they are not subject to the fees. Rates have increased more than the — percent annual projection in the business plan, boosting revenues.

But the latest quarterly report issued May 6 shows the system isn't meeting projections, even though cable, residential modem and hotel/motel hookup numbers are above projections.

Total revenue through the first nine months of 2002-03 lag &

36;83,000 behind projections, while expenses are &

36;32,000 over estimates. The network was projected to bring in &

36;2,112,000 this year.

Ashland residentRuss Silbiger, a consistent critic of the network, says AFN has not followed specific suggestions of the advisory committee.

They've done a good job on residential Internet and television, and an absolutely horrible job on selling the commercial arena, said Silbiger. That's where the growth needs to be.

Wanderscheid and Silbiger both say there are opportunities for more revenue through telephone and video on-demand services. Security services, like for home alarm systems, are a possibility, Silbiger says. Councilwoman Cate Hartzell has suggested selling services outside city limits.

I would not like to see (the network) sold. I would like to see the city make it work, said Silbiger. I don't think we'd get a good offer from anybody.

Reach Ashland bureau reporter Tony Boom at 482-4651, or e-mail