The Santa Clarita City Council approved a potential 50-year, nonexclusive deal with Aspire Broadband expected to bring fiber-optic internet speeds to the Santa Clarita Valley over the next three years.
The city is granting access to an unused portion of its dark-fiber strands so the internet service provider can build, own and sell connection speeds to city residents.
The contract calls for 20 years with three additional options for 10 years, with the city’s revenue in the deal coming from 10% of Aspire’s gross revenues for all services provided within city limits, with two minimum thresholds for the first 20 years.
During his presentation explaining the need and benefit to the council prior to its approval, Benny Ives, information services manager for the city, said only 10% of households in Santa Clarita have access to the service, which is about 10 times faster than traditional “high-speed internet.”
The city has installed more than 100 miles of fiber-optic infrastructure over the past 20 years to connect its traffic signals, parks and city facilities, according to the staff report.
The service options presented by the city in last week’s council meeting mentioned 500 megabytes per second going up to 5 gigabytes per second. As a reference point, a one-hour high-definition video file is approximately 1.2 to 1.4 gigabytes in size. The initial pricing indicated its initial service level would cost about $60 monthly for a one-year introductory price, with discounts available for seniors and low-income households.
The city is to receive a guarantee of $2.75 million over the initial 10-year period and $5 million over the subsequent 10-year period, for a total of $7.75 million in the general fund, according to city officials. The deal also calls for Aspire to provide a “cash sponsorship” of $50,000 per year beginning in the second year of the contract, for its duration. Ives said the estimated ceiling for the city’s revenue was approximately $30 million.
A request for proposals in 2020 for a public-private partnership stalled during COVID-19, according to Ives’ presentation, which also mentioned a speed-test site, speedup.santaclarita.gov to further solicit resident feedback. Ives also said that, in the city’s conversations with other municipalities, there has not been much difference in the marketplace since the city asked for bids in 2020.
Ives called the staff plan “a direct result of the council listening to the city and responding,” mentioning a 2018 survey that reported 31% calling it a high priority and 29% saying it was a “medium” priority.
That led to a survey of more than 200 businesses that indicated they were unhappy with the current commercial broadband offerings. The new service would provide a significant boost for streaming speeds, which accounts for approximately half of all internet use, Ives added.
City officials said Monday that Aspire approached the city, and the city did not put out the project for additional proposals because it’s a nonexclusive deal. A similar concern about the noncompetitive process was raised by the Moorpark City Council; however, that city also approved a similar service agreement on a 4-1 vote in April.
Ives indicated that there are businesses with franchise rights in the area that could add the service, such as AT&T and Verizon, “but they haven’t done it.”
“Founded in 2019 as Aspire Communications, we began as a design-build firm specializing in citywide network deployments,” according to the Simi Valley-based internet service provider’s website, which also touts the company as the fastest fiber-optic provider in Ventura County.
“Unlike traditional copper cables, fiber-optic technology transmits data using light, allowing for ultra-fast speeds, greater bandwidth and unmatched reliability,” according to Aspire’s website. Ives compared the potential speed difference to drivers sharing a crowded highway under traditional internet to each motorist having their own roadway with unlimited access.
The city and Aspire have mapped the city into 10 areas, with four segments expected to take a total of three years in order for the provider to create a citywide network that has the potential of reaching approximately 80,000 households, Ives said. A map also discussed the order in which the different parts of the city would be upgraded.
A leader in the city’s business-development efforts hailed the deal approved at last week’s City Council meeting as “fundamental to the city’s economic vitality.”
“The city’s leadership in expanding fiber infrastructure not only meets the needs of our residents, it directly enhances our region’s competitiveness for business investment and job creation,” said Ondré Seltzer, CEO for the SCV Economic Development Corp., a city-county-business partnership that promotes local job growth.
He also called the deal “a meaningful improvement in network resiliency and choice.”
