The Indianola Communications Agency has invested more than $1 million in a public-private partnership to expand the city’s fiber-optic telecommunications system. The endeavor has benefited local businesses, but city officials hope the investment will also pay off by attracting new employers to Warren County’s largest community.

The ICA, a joint venture of Osceola-based Mahaska Communications Group and Indianola Municipal Utilities, completed an expansion of the city’s fiber-optic communications system in March, allowing the city’s telecommunications services to be greatly improved. One of more than 30 cities across the state that have formed a municipal-owned telecommunications utility, Indianola is so far the only Greater Des Moines community with such a venture.

Phase I of the project, now completed, provides high-speed Internet, telephone and cable television services to Indianola’s public schools, Simpson College, Indianola Municipal Utilities and the city’s industrial park, as well as a small number of residential phone and Internet users. Phase II, which is expected to begin in 2008, will expand the services to all residential and business areas of Indianola. Phase II could also expand the service to nearby towns, including Carlisle and Norwalk.

“The real advantage of this service is economic development,” said Frank Hansen, general manager of MCG, which has funded a design and feasibility study for the project’s second phase. “Not only will the residents and existing businesses realize better services for less money, but new businesses looking to relocate or expand are seeking reliable high-speed networks to connect to. With its almost limitless capacity, fiber ‘future-proofs’ communities.”

The creation of community-based telecommunication utilities is a relatively new effort in the state of Iowa. According to the Iowa Association of Municipal Utilities, there are currently 31 community telecommunications utilities, although only two-thirds have begun offering services. About half of those utilities were formed through city referendums last year.

Of the 32 communities that held referendums in November 2005, residents in 17 municipalities approved moving forward with new telecommunications utilities. However, a majority of residents in 15 communities, among them Altoona, Carlisle, Nevada, Norwalk and Windsor Heights, voted against forming municipal utilities.

Earlier this year, competing private-sector telecommunications companies, including Qwest Communications International Inc., lobbied the Legislature to pass measures that would have prevented additional municipalities from voting to form telecommunications utilities. However, they were not successful in getting any measures passed.

Opponents of municipal-owned utilities cite the potential financial risks, saying cities may not have the expertise needed to efficiently operate the business and may have more difficulties if the business were to fail. Others question whether city-owned broadband utilities are the best use of local tax dollars.

In Indianola, MCG’s base Internet package is roughly 18 times faster than a 56 kbps dial-up connection, but customers have the option to upgrade Internet speeds to more than 700 times faster than dial-up. Fiber has almost limitless potential, and if faster speeds are desired, MCG is able to accommodate.

The $16 million needed to complete Phase II of the project must still be raised. That funding could come from a variety of potential investors, among them rural telecommunications companies, venture capital firms and U.S. Department of Agriculture loan guarantees. The findings of the design and feasibility study will be used to raise the additional funds needed to carry out Phase II.

IMU’s board of directors will also use the study findings to determine if the utility wants to make additional investments in the project. At this point, no final decisions have been made.

Downing Construction Co. Inc. is among 20 Indianola businesses that have switched from commercial Internet providers to the municipal utility service.

According to Downing Vice President Denis Frischmeyer, the increased speed of the system’s Internet connection is just one benefit that has come from the introduction of fiber-optic cable to Indianola.

“We have been satisfied with the quality of service we receive and the reliability of the service we now have,” Frischmeyer said. “The switch to ICA is an investment in Indianola. We are a viable partner for Indianola in economic development and we receive cost savings on our service.”

Faster speeds are not the only advantage to this new project. The 20 businesses that have switched services are paying about 20 percent less than they previously paid for similar services. Residential pricing has yet to be determined in Indianola, but customers in Oskaloosa, where Mahaska has already established residential service, pay a fee of $75 per month for 150 digital channels, high-speed Internet, and local phone service.

Tiffany Coleman, executive director of Warren County Economic Development Corp., said, “The fiber-optic communication system gives Indianola and potentially surrounding communities an attractive communications infrastructure in a very competitive business environment.”

No businesses have expanded or relocated because of the new system, but the city’s industrial park has been visited recently by two companies considering a move.

MCG, however, does have plans to expand its Iowa employment base to include an office in Indianola.

Todd Kielkopf, Indianola city clerk and clerk of the IMU board of trustees, said, “We hope that these capabilities will be attractive to businesses that require medium to large amounts of telecommunication services since we can provide redundant services both within the community and into the community.”

Indianola’s effort began in 1997, when residents voted to form a municipal communications utility. By 1999 the project had begun with the initial installation of fiber-optic trunk lines. The $650,000 project was then expanded upon with the establishment of the ICA and the commitment of $375,000 from private partners. Another $100,000 was committed by IMU to remodel buildings to accommodate a point of presence facility.

“Conventional telecommunication systems use copper wires, which provide a single path to a customer’s location at slower speeds than what can be achieved by using fiber-optic lines,” Kielkopf said. “The design of the fiber network ensures higher speed capacities and redundant paths both from a customer’s location and into the community as a whole.”

Mahaska Communications was a strong candidate to be a private-sector partner on the project because it had just completed a similar project in Oskaloosa, where the 7-year-old company is based. MCG currently provides services to more than 1,500 residents and more than 200 businesses in Oskaloosa.

MCG has played a large role in the Indianola project, providing the labor and expertise needed to generate the program.

“With redundancy in electric service, a highly capable workforce and progressive economic development strategies, IMU and the Indianola Communication Agency are very optimistic about this project and the potential to develop Indianola and south-central Iowa into a leading technological region,” IMU General Manager Mark Ramthun said.

A wide variety of providers offer Internet services to the people of Indianola, including Mediacom Communications Corp., Qwest, Dynamic Broadband, Prairie iNet LLC and now the community-based utility through MCG. Although there has not been opposition from Indianola residents, opposition has taken shape in a different form against community-based telecommunication utilities. A bill introduced in the Iowa Legislature in May 2005 would have placed many restraints upon communities attempting to form city telecommunication utilities. The bill passed in the Iowa House, but expired in the Senate when the Legislature adjourned.

The Iowa Cable and Telecommunications Association, Qwest and Sprint/Sprint PCS were among the organizations that lobbied for the measure to curb municipal-owned utilities. Mediacom spent more than $1.4 million on an advertising campaign aimed to discourage citizens from voting for the community-based utilities. Qwest has also spent more than $90,000 to oppose city-owned telecommunication systems.

Mark Andrejevic, assistant professor of media studies at the University of Iowa, offered an outside view of this project.

“Access to this kind of information provides enhanced opportunities for community education projects and for the use of the network by citizens to become content producers rather than just information consumers,” he said. “Down the road, it is likely that the large media corporations will attempt to monopolize the access channels — a municipal project provides an alternative to commercial control of information and treats information access as a truly public good.”

Indianola Mayor Jerry Kelley said the introduction of a city-based fiber-optic communications utility has been an investment in the community, and that the true benefits of the project may be yet to come.

“Fiber-optic communication is connecting businesses, schools and cities,” Kelley said. “The future opportunities are endless.”

–Nicole Cleveringa is a Simpson College junior majoring in English and communications