AFN cables to be conduit for new phone service

The Ashland Fiber Network has teamed with a Southern Oregon business to provide telephone service.

Ashland Information Technology Director Joe Franell announced today that Rio Communications, a subsidiary of the Roseburg-based Cow Creek Indian Tribe, will offer telephone service over AFN's cable and fiber optic lines.

The arrangement will mean more choices for consumers, he said.

Rio Communications is offering local residential service for $19.95 per month. Long distance rates will vary from three to five cents a minute, Franell said.

Taxes, fees and surcharges will add about $10 to the monthly charge, according to a Rio Communications staff member.

The company will have three levels of business service at $20, $25 and $30 per month, Franell said.

The City of Ashland will receive a share of the revenue — without having to invest in telephone equipment. The city will receive $7 a month per residential telephone line, $6 for the first two lines a business buys, and $2.50 for each additional business line, Franell said.

"This is a safe way to do it because the risk is minimized and the capital investment is minimized," he said. "This is the most conservative way to go."

AFN is now following a model where most of it's services are provided by businesses that pay fees to use AFN infrastructure. That more closely replicates the traditional, and accepted, role of government to provide infrastructure for businesses and residents, rather than competing with business and incurring risk.

Since its start in the late 1990s, AFN has wholesaled high-speed Internet service to businesses and nonprofits that retail service to customers. In October, AFN handed over the operations of its money-losing cable television service to Ashland Home Net, which leases the television infrastructure from the city and pays a share of revenues.

The one service AFN sells directly to customers is wireless Internet service.

The city is building the wireless system, which it started this summer, as it adds customers. About 30 percent of Ashland homes can get wireless service now. The system should be complete in about one year, Franell said.

AFN's operations are similar to a concept discussed by the AFN Options Committee in 2005.

The committee recommended that year that the City Council sell the financially struggling service or spin it off as a nonprofit. Committee members were intrigued by an "open carrier" model — under which businesses would pay fees to use AFN infrastructure to provide services. But they said they hadn't had time to fully explore the concept.

AFN Options Committee member Paul Collins said the new telephone service could mean better service for customers and seems financially prudent.

Franell said he will need to spend about $500,000 in the next fiscal year to upgrade AFN's aging infrastructure. After that, the Ashland City Council can use revenue from various services provided over the system to help pay AFN's $15.5 million debt or for other council priorities, he said.

The council cut the city budget in other areas and raised property taxes to make AFN debt payments this year. Councilors have not decided on a long-term strategy to pay AFN's debt.

Services, costs vary

Rio Communications will have full emergency 911 service over AFN's cable and fiber optic lines, Franell said.

The telephone service will not travel over the Internet, meaning customers will not experience gaps in conversations that can result when Internet traffic is heavy, he said.

Customers of Vonage, an Internet-based telephone service, may not have full 911 service, according to Vonage's Web site.

Vonage customers should register their addresses and phone numbers so that a 911 operator will be able to send help if a caller is unable to talk or the call is disconnected. Some Vonage customers have no 911 service. Their 911 calls are sent to Vonage's national emergency center, the company's Web site states.

Vonage is offering a deal of unlimited local and long distance calls for $19.99 per month for six months, and $24.99 thereafter. The price does not include fees and taxes. Customers must pay for an Internet connection to receive service.

Qwest, which provides traditional phone service in Ashland among other offerings, charges $12.80 per month for its most basic level of residential service.

Fees and taxes add about $12.20 to that amount, bringing the monthly charge to approximately $25 per month, said Bob Gravely, spokesperson for Qwest in Oregon.

Qwest long distance costs $4.99 per month plus 5 cents per minute. Unlimited long distance costs $15 with Qwest local service, he said.

Gravely said the addition of telephone service over AFN infrastructure adds to the competitive environment.

"We are accustomed to competition from any number of providers, including Rio," he said. "Competition is good for the customer. We're confident that the bundle of services we offer is competitive and we'll do fine."

More than half of Qwest customers bundle their telephone service with some other communications or entertainment product, Gravely said.

Franell taking lead

The decision to partner with Rio Communications to provide telephone service came without a city council vote, Franell said. But he said he did discuss the issue with council members.

The council does not have to approve revenue-only contracts where no money is spent. The contract with Rio Communications also is not an exclusive contract, which would have required a competitive bidding process, he said.

City Councilor Russ Silbiger said the arrangement with the business makes financial sense.

"It's another way to add service without adding costs. We're essentially renting them a line. They're paying us per customer and we don't have to incur any costs," Silbiger said. "It's great. It seems like a no-lose situation for us." Silbiger said the council gave Franell latitude to make certain decisions regarding AFN.

"I'm very happy not to micro-manage Joe's operation," Silbiger said. "He's got to work within his budget. I think the council gave him a green light to do these things. The point of hiring a professional is not to have to sit there and double-think every decision."

The city hired Franell early this year from Knology, a broadband telecommunications carrier offering telephone, cable television and Internet services in the southeast United States.

For more information about the telephone service, call 552-2222.

Staff writer Vickie Aldous can be reached at 479-8199 or vlaldous@yahoo.com.