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City approves lease with fiber optic provider

Posted: June 29, 2016 7:45 p.m.
Updated: June 29, 2016 7:45 p.m.
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In an effort to improve high-speed internet connections for businesses in the city, the Santa Clarita City Council approved a 10-year lease agreement with a Los Angeles-based private company Tuesday evening.

Wilcon, a provider of fiber optic and data center infrastructure, has previously utilized existing connections to provide better cellular service to carriers in Santa Clarita. The company is exploring the possibility of servicing the business community through high-speed internet service in the future, said Benny Ives, a technology specialist with the city of Santa Clarita.

Wilcon is leasing “dark fiber,” the unused portions of a fiber optic network already installed underground in the city, he said.

The fiber optic network was gradually installed over 10 years to interconnect and manage all traffic signals and cameras in Santa Clarita from the traffic operation center at City Hall. Since the installation is expensive, additional capacity was included to account for growth.

The fiber cabling has 96 strands of fiber at the moment, but there is room for up to 144 strands, Ives said. Of the existing strands, Wilcon will use between two and eight strands in various sections totaling 86.02 fiber miles.

After adding in the leased fibers, about 50 percent of the existing fiber optic system will be unused, Ives said. 

Though Ives does not know of another company interested in the city’s dark fiber, he said it is possible other companies may want to follow Wilcon’s example.

For now, the city can continue to generate revenue from Wilcon’s use of dark fiber. Santa Clarita has already received $113,653.80 in revenue as well as internet service valued at $67,200 and construction valued at $102,821 for the expansion of the city’s fiber structure.

Annual revenue is expected to be $72,256 for the next 10 years. The agreement with Wilcon and the city can be renewed three times, for five years each – resulting in an agreement up to 25 years.

Additionally, if Santa Clarita can attract businesses to the city with enhanced internet coverage, the sales tax base will grow generating more revenue for the city, Ives said.

“This sounds like a good opportunity for our businesses,” said Councilwoman Marsha McLean. “And I’m happy for the income.”

However, she wondered about the possibility of renegotiating the amount of money the city receives if it becomes extremely profitable for Wilcon.

“Are we giving them a really good deal for a long time without giving us a benefit we should be getting?” she asked.

Ives said he believes what they negotiated is fair. He said prices vary on a number of factors and the rate provided is competitive. The city can also opt out of the contract after 10 years without cause.

“Obviously it’s a good step forward,” said Councilwoman Laurene Weste. “VIA (Valley Industry Association) is very concerned that we move ahead with this.”

The Valley Industry Association has made attempts in the past to get fiber connections to larger businesses, but it did not work out because of funding issues.

“I think this opens up the council to have a discussion on the future with staff,” Weste said, adding that public utility companies such as Time Warner and AT&T have not been providing business customers what they need.

She suggested there are probably more ways to use what the city has and tie it into other resources.

“I really think there needs to be a push to give businesses an opportunity for this accessibility … sooner rather than later,” she added. 

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