Public, private internet options in competition in Hillsboro
More and more high-speed internet options are moving into the Hillsboro area, with both public and private services.
The city government is building out a publicly funded internet service, HiLight — a relative rarity among U.S. municipalities.
Meanwhile, last month, private company Ziply Fiber announced that it's expanding its service capacities for local property owners.
Whether Hillsboro's city-run service can compete with private-sector offerings from regional companies like Ziply, and mega-corporations like Xfinity Comcast, remains to be seen.
Ziply announced in January the rollout of 2- and 5-gigabyte service options for roughly 170,000 customers in the Pacific Northwest — many of those in the Hillsboro area. By the end of June, the company says it plans to have these services available to all its customers.
"We've only been around for little over 18 months now, but we have thousands of cyber addresses in the broader Hillsboro area," said company spokesperson Ryan Luckin.
The company is a regional internet service provider, operating in Washington, Oregon, Idaho and Montana.
Hillsboro's HiLight service first rolled out in late 2020, making the publicly funded internet provider available to about 800 residents and businesses in the Shute Park neighborhood. Service is now expanding to South Hillsboro, and the city government announced plans last year to have it available to half of the city's residents by 2025.
HiLight also offers multi-gig options, with the capability of providing speeds of up to 10 gigabytes, city officials say.
All 44 facilities that make up the Hillsboro School District are on the city's distribution network and "backbone," the term for the infrastructure that provides the service and which was built in partnership with the school district.
Hillsboro has spent about $17 million in total to get the program started, all thanks to Oregon's Gain Share program, to build the HiLight network's backbone and fiber huts, which act as switchboards for the distribution network.
In total, the project is estimated to cost the city more than $100 million to roll out citywide. About half of that cost will be paid from Gain Share, with another $3 million chipped in by the federal American Rescue Plan Act.
Gain Share was created by the Oregon Legislature in 2007 to fund strategic investments throughout the Beaver State by passing half of the income tax collected on newly created jobs to local jurisdictions.
However, if the state's Gain Share program isn't renewed by the Legislature beforehand, it would expire in 2025. If that funding dries up, the city would be left to find a way to pay for the last half of the HiLight infrastructure and rollout.
"Beyond this initial funding, the city will continue to explore additional funding sources, including additional Gain Share funds; federal infrastructure funding opportunities; potential interfund borrowing; bonds or other loans; and other state and federal broadband grant opportunities," said HiLight general manager Brad Nosler via email.
Both HiLight and Ziply have targeted their rollouts to those with unreliable internet access or, in the case of some rural areas where Ziply is concerned, no internet whatsoever.
"If you look at all the markets where we're looking to be developing fiber … it's primarily rural neighborhoods that have never had high-speed, reliable internet," said Luckin. "Other companies say that it's too expensive to invest in the infrastructure in these markets."
Hillsboro officials, on the other hand, have the goal of rolling out HiLight for low-income households with limited options and less money to afford high-speed internet. The Shute Park neighborhood where the service started was specifically selected to address low internet access in that part of town, and HiLight has reduced rates for low-income families through its Bridge program.
Both Ziply and Hillsboro say that the pandemic has put the need for reliable, high-speed internet into fuller focus for businesses and residents alike.
"The pandemic has really put a lot of this in stark contrast," said Luckin. "We're asking parents to work from home, (and) kids are studying from home. So, if you don't have reliable internet, that's not really possible."
On the business side, Luckin said the company has heard from numerous businesses about their need for multi-gigabyte internet services, which provide faster download and upload speeds.
"There will be a lot of companies that are growing now, and they will need more than a gig," he said. "Video editors are sharing massive video files … they are saying they need 5 gigabytes, (and) with cloud computing and with Pacific Northwest being a home for tech, we think it makes sense to build up that 5-gigabyte option. It may be what we all need for decades to come."
As for how HiLight will attract enough customers to sustain the city's operation of the service, officials point to the locally based operations and the pricing that they can offer, which is lower than what non-promotional pricing is offered by private sector competitors.
Nosler says that HiLight's 1-gig option, the most popular, is 32% cheaper than Ziply's comparable service and 50% cheaper than Comcast's.
HiLight touts a $10 monthly option for low-income and qualifying households.
City officials also say that one appeal of HiLight is that customers don't have to worry about expiring promotional pricing or price reduction programs offered through other government entities.
Ziply representatives point out that the private sector also has options through federal Affordable Connectivity Program subsidies to offer this kind of low pricing.
However, Nosler contends that whereas other low-income options are offered through federal reimbursement programs, HiLight's reduced packages are "built into the service."
"For the speed and price, there is no comparison to what Bridge delivers for qualifying residents," Nosler said.
Hillsboro officials say they're committed to offering HiLight pricing at the lowest possible rates, rather than as a for-profit service. They say this means annual increases won't be normal.
However, the cost to run the utility will likely go up in the future, which may lead to price increases.
"While it is anticipated that HiLight's current rates will not change annually, it is also anticipated that operational costs will increase in the future, and periodic price adjustments may be necessary," Nosler said. "HiLight's entire financial position will be tracked on an ongoing basis. While rate increases will not be an annual regularity like with some other service providers, they may be included as part of a broader financial assessment."
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