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LakesNet helps city help itself

DETROIT LAKES - Detroit Lakes is unique in the way that area residents can receive Internet service.

Incumbent providers such as Arvig (cable modem) and Qwest (DSL) have been providing broadband for several years now.

What makes Detroit Lakes different is that the city owns its own telecommunications network and offers Internet connections to the public under the LakesNet banner.

But city Public Utilities Superintendent Curt Punt said that his department isn't out to compete with the big players. Serving customers through dial-up or wireless in most cases, LakesNet isn't offering blazing speeds that the city can use to lure new customers. Instead, it's offering a low-cost option for people who still use dial-up or don't want to mess with the cable or telephone companies.

"I do feel that we fill voids in our community that are good to fill," he said.

And the city is providing Internet to homes without impacting existing infrastructure in a major way.

LakesNet has 32 wireless towers operating from locations across the city. Most transmitters are based on the water tower, with 14 transmitters beaming signals.

The standpipe on the south side of Detroit Lake that acts as a water tower has eight antennas as well.

The other transmitters are scattered throughout various locations, including a new location at Soo Pass.

Punt said that the services the city provides aren't geared for residents. At least that's not the primary reason.

Sewer lift stations can be controlled remotely and a wireless network allows that to take place relatively cheaply compared to a direct phone line or fiber connection.

By connecting homes and businesses to the wireless network, LakesNet offsets the costs of providing for the city's own needs.

In the future, those needs could include wireless meter reading.

Right now, there are 418 dial-up customers left and 292 wireless customers. LakesNet also provides high-capacity fiber connections to businesses if needed.

An additional service is with dark fiber, where the city lays down the line to connect a customer to whatever location they want it to go.

"It helps lower our costs of what we need to do," Punt said.

LakesNet is turning a profit for the city, albeit a declining one. Annual profit in 2003 was close to $85,000, but has decreased to just under $25,000 in 2006.

On paper, LakesNet posted a loss last year by going approximately $50,000 in the red.

That deficit is based largely on the city taking a loss on equipment depreciation. Before accounting for depreciation, LakesNet made about $95,000 in 2007.

Another factor affecting LakesNet's bottom line is that revenues have dropped from $473,690 in 2003 to $394,193 in 2007.

The decline in revenue won't convince Punt to focus more on LakesNet than supporting city services.

He said that in the past, LakesNet would try harder to gain customers than it does now. That strategy is in the past.

"For a short time we became more serious about selling wireless Internet," Punt said.

The cost and manpower needed for that shift proved to be too much for the city to handle.

"It got to the point where we realized we're not going to put transmitters to lure new customers," Punt said. "If we need it for our own needs, that's a different story."

Punt hoped that before the city built its own network, private industry could have stepped in and worked out a partnership.

"I hoped that private industry would want to run the Internet with the infrastructure that we put in," Punt said. "Those things didn't work out."

So the city had to do it on its own.

There aren't any plans to expand the city's network to include fiber optics to the home. Some cities, including Brainerd, have fiber networks extending right to the doorstep; it wasn't the right fit for Detroit Lakes.

The city will provide fiber to a business if it works out for all parties, said Punt.

"They have to sign a long-term contract or pay," Punt said.

As for complaints from the incumbent providers, Punt hasn't heard of any.

"I don't think they look of us as competition," he said.

Arvig, though, said they oppose LakeNet's efforts.

"We don't feel it's right for government to get involved when the private sector is clearly providing service," said David Pratt, director of video operations for Arvig.

On the other hand, Punt said that without LakesNet, the city wouldn't have the high-speed connections it needs.

At the time LakesNet was conceived, U.S. West (Qwest's predecessor) didn't exist and cable modem service wasn't even on the horizon.

"We provided technology sooner than we would have otherwise," Punt said.

Arvig's contention is that LakesNet doesn't have to follow the same hoops as the private sector, especially on tax and right-of-way issues.

"There's not necessarily a level playing field," Pratt said.