AFN finances turning around

The Ashland Fiber Network is finally making money.

Last fiscal year, the city of Ashland's cable television and high speed Internet service lost $880,000 on operations, Finance Director Lee Tuneberg said.

But from the start of this year's fiscal year in July through October — the latest numbers available — AFN's revenues have exceeded operating costs by $203,000, he said.

Those figures do not include payments on AFN's debt, Tuneberg noted.

Actual operating costs are about even with budgeted costs, while revenues are ahead of estimates, he said.

The Ashland City Council hired Joe Franell from the private sector early this year to head AFN, which is $15.5 million in debt. Since then, he has made numerous changes, including handing over operations of the money-losing cable television service in October to a business, Ashland Home Net, while keeping the more profitable Internet side.

The number of cable television customers is down by 361 from AFN's 3,209 customers in December 2005 to Ashland Home Net's 2,848 customers this month, Franell said.

"We had anticipated a much larger loss," said Ashland Home Net Owner and President Gary Nelson. "There's a great community spirit in the city of Ashland. There's a great spirit to support local businesses." Franell said he had expected Ashland Home Net to lose about 600 customers based on the number of customers who bought premium channels and digital services from AFN.

When the company took over cable television operations, it stopped offering AFN's fourth and most expensive television package. Ashland Home Net offers three television packages, starting from $9.99 per month.

Nelson said many of the customers who bought AFN's premium television package dropped down to Ashland Home Net's third tier of service, rather than going to a competitor.

On AFN's remaining Internet side, customer counts are up by 83 from 3,718 in December 2005 to 3,801 this month, Franell said.

Nelson, who is also a retailer of AFN's wholesale Internet service, said he believes AFN Internet customer counts would have dropped significantly if the city had simply eliminated its television service rather than letting a private company take it over.

Many customers buy both Internet and cable television services.

"If they'd shut it off completely, a good number of people would have gone to Charter (Communications) to get service," Nelson said.

He said it is still too early to tell whether Ashland Home Net will make money offering television service.

He said he is in continuing negotiations with channel providers to try and keep costs down.

Nelson said he will have to raise rates in the future, but his goal is to keep his prices below those offered by Charter.

On other fronts, AFN began offering wireless Internet service this summer after spending about $10,000.

Franell said he has 27 full-time customers for the service, which can be bought in daily, weekly or monthly blocks. Daily and weekly users have fallen off with the end of the tourist season. Numbers should pick back up in the spring, he said.

Rates are $3.95 per day, $12.95 a week or $30 per month.

Franell said AFN staff members will continue to expand the wireless network as customer numbers increase. It now covers about one-third of town.

In late 2006, AFN teamed with Rio Communications, a subsidiary of the Roseburg-based Cow Creek Indian Tribe, to begin offering telephone service over AFN's cable and fiber optic lines.

The city of Ashland will receive a share of the revenue - without having to invest in telephone equipment. The city will also receive a share of revenue from Ashland Home Net's television service.

Franell said he will ask the City Council to authorize spending about $300,000 in the next fiscal year to upgrade AFN's aging equipment. After that, the council could choose to use any excess revenues to help pay AFN's debt, he said.

Staff writer Vickie Aldous can be reached at 479-8199 or vlaldous@yahoo.com.