Rochester, MN (KROC AM News) - The Rochester City Council could decide this year whether to fund a market study to determine interest in a publicly-operated cable utility.

The Council was briefed Monday on an analysis of a proposal from Alcatel-Lucent  to operate a utility that could offer cable, internet and phone services.

The analysis was based on a projected 30-percent market penetration and it found the cost to build a system would be an estimated $53-million.  The sale of bonds, interest and other costs could be another $14-million.

The study shows monthly residential costs for internet-only service would range from $10 to $100, depending on broadband speed. The medium cost would be around $50 - $70.

The council was told there are several legal issues that need to be looked at, such as possible referendums. There are also risks, including possible legal action, cost-cutting by current providers and rapid technology changes.

The issue was sent to the Rochester Public Utilities board for its consideration. The board is already aware of the proposal. It is expected to let the council know by September if a market study should be conducted. If the council ultimately decides to proceed with the proposal, RPU would likely operate the new utility.  

Staff will also look at the current public utility operated by the city of Longmont, Colorado. Its internet operation was judged the fastest in the country last year. It was expected to have the gigabit service available to the entire city of 90,000 residents this year at a cost of $50 a month.

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