North Kansas City's fiber-optic network is finally coming up for air.
LiNKCity, the Northland enclave's attempt to run its own high-speed Web infrastructure, made it Missouri's fastest city until Google Fiber showed up. Since service began, in 2006, it has also been a deficit magnet. Now, though, a deal struck with Google seems to put LiNKCity within striking distance of breaking even.
North Kansas City's April 16 City Council meeting was primarily notable for the swearing-in of a new mayor and a new slate of council members, ones who had largely campaigned on a plank against the notion of selling North Kansas City Hospital. (A détente is well under way on that matter, now that the city and the hospital have entered into settlement negotiations.) But also on the agenda that day was a $3.2 million deal for Google to lease the LiNKCity system's "dark fiber."
"I don't even know what dark fiber meant," Mayor Don Stielow tells The Pitch.
It's unused fiber — and LiNKCity has it in abundance.
Google's lease doesn't make North Kansas City one of the communities sprouting up to grab Google's gigabit-fiber coattails. (Shawnee and Raytown are the latest.)
"This doesn't mean we're delivering Google Fiber service to the city of North Kansas City," Google spokeswoman Jenna Wandres says. "It just means we're using their fiber as a pass-through to get to surrounding areas."
So the coattails in this instance belong not to Google but to LiNKCity. The Web giant needs North Kansas City's unused fiber infrastructure to build out in the Northland without the annoyance of setting up new infrastructure, as it has done elsewhere in the metro.
Google's lease payments are expected to help shore up the LiNKCity bottom line, which has sagged since its inception.
North Kansas City spent $10.5 million in gaming money, the revenue that comes from Harrah's Casino, to build the network. It was supposed to be an attractive amenity to residents and a lure to outside businesses to move to North Kansas City. It was also set up as an enterprise fund, a segment of the city's budget that's supposed to operate as a business and generate its own profit.
But projections for LiNKCity's popularity proved overblown. LiNKCity had the advantage of building its network without long-term financing, but its market penetration into residences and businesses reaches about a third of the city.
Soon LiNKCity was running less like a business and more like the federal government during the last 12 years.
Former North Kansas City Mayor Gene Bruns liked the idea of building a fiber-optic network, having seen a similar advent in Provo, Utah. But iProvo's speed didn't prevent a similar ledger struggle, and other cities might look to both Provo and North Kansas City as cautionary tales. (Google also bailed out iProvo recently with the announcement that it would take over that infrastructure and sell its Fiber service there.)
In 2009 and 2010, LiNKCity lost a total of $1 million. The city went to the gaming fund, North Kansas City's version of a mint, to cover the shortfalls.
This didn't help Missouri State Auditor Tom Schweich's opinion of the enterprise. In a 2011 audit, he pointed out that residents already had ways to connect to the Internet, and he said the city should think about whether it ought to continue on the LiNKCity path.
The same year, North Kansas City also contracted a consultant to look at the operation. That report reached similar conclusions about the network's financial viability. The consultant recommended raising prices, digging deeper into the market with the service and putting current users on more expensive plans — oh, and that the city try to sell its dark fiber.
LiNKCity director Byron McDaniel has told city officials that the Google deal — which is good for 20 years — finally puts the network on better footing.
"He reported with this — it all of a sudden becomes maybe not profitable, but it's at least breaking even," Stielow says. "We might even be able to turn a profit on the thing."