Will Massachusetts Have a Fiber Optic Network?

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1 Ashfield Fiber Optic FAQ What is the proposed project? WiredWest, in collaboration with the Massachusetts Broadband Institute (MBI) and the Franklin Regional Council of Governments (FRCOG), propose to build and operate a fiber-to-the-home network. The MBI will construct the fiber optic network, connecting every premise in the participating towns. WiredWest will own and operate the network on behalf of its member towns, offering internet access and other services to all homes and businesses. If I already have DSL, why do I need fiber? You need fiber if you want high speed internet now or want to be able to increase your speed later as your needs increase. Most DSL speeds in town are less than 3 Mb/s. A small number of residents in town have 6 or 7 Mb/s service. WiredWest fiber optic speed is at least 25 Mb/s with speeds available up to 1000 Mb/s. Why can t we just make Verizon provide us all with DSL? DSL is a last-generation technology that is already inadequate, and would hobble the future economic development of our region. Verizon has expressed no interest in expanding their wired services anywhere, is discontinuing DSL in other markets, and is focused instead on wireless cellular business. My internet service is OK for me, why should I support broadband? Many residents have no effective and affordable internet option. Satellite and cellular internet service is very expensive and has major technical limitations. Without adequate internet access, your neighbors and the town as a whole suffer: home values and economic development are depressed. Educational opportunities are limited, making the town unattractive to young families and reducing our school age population. Internet access is a modern utility and lack of broadband is a serious hardship, similar to the lack of electricity or telephone of 100 years ago. Nearly all of the methods of interacting with the outside world (shopping, education, communications, entertainment, etc.) are evolving rapidly to utilize and even depend on broadband access that is already available to most people in the industrialized world. Your support for broadband supports the future vitality of the town as a whole.

2 OK, I support broadband access, but why fiber optic? If the town is investing in the construction of a municipal works project, then it is wise to spend once to build a system that has capacity for growth for decades into the future. Fiber optic has the greatest capacity of any transmission medium. It is robust and highly reliable. What's wrong with cellular or satellite internet service? First, cellular service is not accessible from most homes in Ashfield. Additional cellular towers would be required. Second, cell service is extremely expensive when used as your primary internet connection. A gigabyte (GB) of data averages between $5 and $15 depending on your cell plan. In 2014, the average internet user with a wired connection in the United States used over 51 GB per month. Third, cellular data is unreliable. Congestion on cellular networks are common resulting in dropped calls and slowed internet traffic. For satellite internet, there are two main problems: data caps and latency. Like cellular networks, the overage charges are prohibitively expensive. In addition, satellite internet is fundamentally limited by the long distance that radio transmissions must travel between earth and the orbiting satellite. This transmission lag, called latency, means that many modern uses for the internet including video conferencing, internet telephony, online games, and secure networking for telecommuting are flaky at best and often fail completely. What about the new wireless service? Hilltown Networks is currently offering 10 Mbps fixed wireless internet service to the Ashfield town center for $50 per month with no data caps. There are plans to sustainably expand the service to outlying areas as business develops. The current wireless offering is accessible by only a minority of residents, but it offers faster speeds than DSL and is the best current, interim option. It may prove to be a reasonable alternative to fiber particularly if the WiredWest campaign is unsuccessful. However, a wireless network that reaches all residents in town would require a large number of powered repeaters on existing or new tall structures to ensure sufficient connection to all households. Such networks are notoriously challenging to engineer in a geography of rolling hills and dense foliage, but it can be done. Another factor with wireless is that it operates within limited radio frequencies so congestion and interference can be a frequent problem. On the other hand, electronics are becoming available that offer sustained throughput of 100 Mbps and higher for wireless.

3 If I pay $49 now for fiber, can I change my mind? Yes. Your deposit either a check or a credit card payment will be held in escrow until service becomes available, which may not be for two years or more, and then it will be applied to your first month s bill for service, at which time you will receive a service agreement. If Ashfield fails to qualify, your deposit will be returned promptly. If you move or change your mind, you may request in writing that your deposit be refunded in full with interest. How will this project be financed? This project will be funded by the towns that are part of the WiredWest network and by a major Massachusetts state grant. The network construction cost to Ashfield is estimated at $2.3 million. Ashfield taxpayers will need to authorize borrowing for this amount at the Annual Town Meeting in May to finance the project. How is Ashfield going to raise the money to pay for this last mile? At a town meeting (annual or a special meeting in the summer), meeting participants must approve an authorization to borrow up to $2.3 million by a ⅔majority vote. In addition, a majority of voters must approve a debt exclusion on a special election ballot by September 1st. Debt payments will be paid through town revenue, most likely from property taxes. However, the Treasurer and the Select Board will choose a financially prudent borrowing schedule and payment strategy. For example, it is possible to make interest only payments in the first few years during construction or use available free cash or money from stabilization to reduce the principal. Then, once the network is up and running, revenues from subscribers can be used to help pay down the debt. What will this cost me in terms of property taxes? Assuming a 20-year bond at a 4% interest rate, the property tax rate will increase at most by approximately 80 cents per $1000 of assessed value. The average homeowner's property tax would increase by about $190 per year or about $16 per month. For most residents, a combined fiber optic internet and full-featured phone package at $75 per month represents a savings of more than $25 per month compared with their existing, inadequate service. So even with increased property tax, most residents will end up saving money. It is also possible that some or all increases in property tax will be offset by revenues from the network operations. More subscribers will result in a greater likelihood of profits that will be returned to the towns and can be used to help pay down the debt. We're using the HIGHEST tax increase possible in this estimate. The estimates used here reflect the "worst case," or "not-to-exceed" tax burden to our town. We must vote to authorize the maximum amount of the bond to build the network which is $2.3 million.

4 However, if monthly subscription revenues for the entire network are sufficient (greater than 40% subscriber rate) the cooperative will reimburse Ashfield for its bond payments. Each town must get a minimum of 40% pre-subscribers to even be a part of the network so the chances of reimbursement should be good. What is the effect of fiber optic broadband access on my property value? Some homes in Ashfield with no broadband access have simply not sold recently, suggesting that the lack of broadband significantly depresses property value. On the other hand, a recent study found that adding fiber optic service to a home increased the property value of a $300,000 home by an average of $5,250. When will the new fiber network be built? Construction will probably begin this year. The state's Massachusetts Broadband Institute (MBI) will construct the network and they will begin requesting bids for engineering services once the first set of towns agree to borrow during the annual town meeting season. Is it possible that by the time this network gets installed that there will be new technology that makes it obsolete? It is highly unlikely that a fiber optic network would be obsolete in just a few years. Fiber is the standard, high capacity transmission medium throughout the world. Its capacity has and will continue to increase through upgrades to the electronics connected at each end as faster, better technologies are developed. The theoretical limits of the medium are huge compared to its current utilization. However, it is always possible that some unforeseen alternative solution will become available. I m wary of big public projects, particularly those that are described as self-funded through revenue. What are the risks of the fiber project? The primary risk for WiredWest is the same risk that all businesses face: that revenues are less than expenses. The reason that the Fiber Town campaign has a 40% pre-subscription threshold is to ensure that revenues will exceed expenses at least at the start of the operation. If at some future time the expenses increase substantially and exceed revenue, then the board will have a couple of choices: cut expenses, increase subscribers, or raise rates. Additionally WiredWest could expand its business by offering additional services. Should broadband be left to the private sector? The private sector has left Ashfield behind because we are not sufficiently profitable. Meanwhile, internet access has become infrastructure just like roads, public water, or schools. Municipal infrastructure projects do not have to make a short-term profit for

5 private investors, but are intended, instead, for the long-term public good. Private companies should not be the sole arbiters of who gets 21st century infrastructure and when they get it. Will I save money compared to my existing internet and phone services? Most people will realize a significant savings. For example, a minimum satellite internet service is typically $50 (10/1 Mbps down/up, 10GB data cap). (Cellular internet costs are comparable to satellite.) A full-featured Freedom Essentials Verizon land line is typically $75 including $15 in fees. (Digital service through WiredWest is not expected to include the fees and recovery charges levied by Verizon.) Total cost for residents today typically starts at $125 per month. By comparison, fiber optic service ($49 for symmetric 25 Mbps, no data cap) and a full-featured digital phone ($25) together cost $74 per month representing a savings of at least $50 per month. Verizon DSL subscribers will likely find that the WiredWest internet and phone ($75) is about the same as Verizon s bundled internet and phone (typically $80 including fees). Importantly, fiber optic residents may also incur additional property tax to cover the bond payments. It is estimated that the revenues based on a 40% subscription rate will be sufficient to offset debt payments, but residents may be on the hook to pay up to the full debt payments through increased property taxes. Across the 32 towns, the average homeowner is estimated to pay an average of $8 to $12 per month in additional taxes, with a few communities paying more and a few paying less. Thus, even with additional taxes, most people will experience significant savings and those who pay slightly more will enjoy far superior service while supporting an important community asset that will add value not only to connected premises, but also to overall quality of life in that town. What are some examples of new internet uses that require broadband speeds and capacities? Cloud Back Up: With no data caps it is very easy to set up off-site backups of all of your data. Cloud backup services create encrypted copies of your files that are simpler and safer than maintaining local backup disks. Some cloud storage systems provide access so you can view and edit documents from any computer or portable device at home or away. Other systems keep a copy of all of your digital music for streaming to any device. But using these services don t work with slow speeds and low data caps. Entertainment: It is becoming apparent that the future direction for delivering most high definition TV/Video and movies is over the internet. Just in the last year, many of the

6 premium TV channels previously available only via cable or satellite have started streaming their content over the internet, effectively bypassing the middleman cable and satellite providers with their comparatively inflexible and expensive delivery packages. The next step in video technology is emerging with quad definition TV set prices dropping to that of HD prices of just a few years ago. Quad definition is also known as Ultra High Definition (UHD) and is commonly referred to as 4K for the 4000 lines of pixels as opposed to High Definition (HD) which is 1080 lines of pixels. The bandwidth requirements for streaming High Definition (HD)TV are high, so streaming quad definition (UHD) content will certainly require even greater broadband capabilities. Now picture two or three different TV sets in your house trying to stream UHD video feeds at the same time. It can t be done without high speed Internet access. Education: Remote, web based access to higher education is becoming a common offering from many colleges and universities, requiring reliable broadband capabilities. Using high speed Internet access allows small school districts like Mohawk to combine with other small school districts to offer Advanced Placement courses to their students which they might not be able to afford to do on their own. I own more than one property in town or have a duplex. Do I need to sign up each property? Yes! If you own multiple properties it's important to send in one registration for EACH rental unit. Internet is like other utilities in the way that each unit needs its own hookup. We're encouraging the property owner, instead of the renter, to send in the deposit. If you change your mind and decide not to have broadband installed, or sell your property before service arrives, you can get your deposit back. Can I keep my existing Verizon phone / DSL service? Yes. You are under no obligation to use any service provided by the town. What Parts Of This Cost Money? Building the network involves paying for many different aspects of a town-wide infrastructure project. It is similar to bringing electricity to every home. Costs include: A network design - i.e. what splitters or other equipment is needed where the fiber will run. The design is also a prerequisite for making detailed cost estimates. A project manager or project management company to coordinate and schedule the work, ensure contractors are paid, ensure work is completed on-time and correctly, and be responsible for the details of the project Police details during construction

7 "Pole applications" to Verizon and National Grid/Western Mass Electric to prepare the poles for the addition of fiber to utility poles. The application fees are applicable to preparing the utility poles to accept fiber. Labor to actually install the fiber on poles and connect homes The fiber itself and other hardware and technology components to build a fiber infrastructure. A regional solution reduces some of the costs because resources can be shared across the participating towns. Who Will Own The Resulting Infrastructure/Network? The Massachusetts Broadband Institute will be involved with the design and build of the network and manage the distribution of state grant monies to the project. After the network is completed, the MBI intends to transfer ownership to either the town or WiredWest to manage and maintain the resulting network. Wired West is a cooperative so Ashfield is one of the member/owners. Testimonial Here are some more examples of day-to-day uses of high speed Internet from a user of Comcast cable high speed (100 mbps) Internet access: Home security systems with video monitoring equipment require high speed Internet access. It is possible to see what is happening in my house in real time from anywhere in the world. I even have cameras that can be set to pan around the room and to send an to me if any motion is detected in the house while we are away. Plus, these cameras feed the videos to a storage location on the cloud so that even if the cameras and my computer is stolen, there is always a movie of the thieves in action available to me because of having high speed Internet access. Skype video conferencing is a pleasure with high speed Internet access. Communicating with (and seeing) my daughter in Australia without buffering, pixelation, stuttering or disconnects, is important to us. We feel closer even though she is 12,000 miles away. With a Slingbox 500 and high speed Internet access I can watch my home television set from anywhere in the world. That may sound frivolous but when I am in Bismarck, North Dakota and the Red Sox are playing for the divisional championship, it is nice to be able to see them on NESN. Or if the Deerfield River is flooding again and I am still in Bismarck, I can follow news of the flood on Channel 22 or Channel 40 live from anywhere with a Slingbox 500 and high speed Internet access. I have one word for all of you who are frustrated with the high cost of DirecTV and DishNetwork and that word is Roku. It has thousands of channels from which to choose - some pay channels and some free. If you pay for Netflix, Amazon Prime and Hulu Plus

8 streaming video and watch them via your Roku box, you ll have most of what is available via those satellite services plus lots more! Streaming High Definition TV eats up lots of bandwidth. Streaming Amazon Prime in HD can eat up 2 gigabytes per hour! Netflix isn t much better at 1 gigabyte per hour. And if you think that watching TV in High Definition is as good as Standard Definition, it ain t. There are other streaming devices besides Roku. There is AppleTV by Apple, Chromecast TV by Google, Fire TV by Amazon and many others but they all require high speed Internet access without data caps! More and more of our household devices are connecting to the Internet. I bet a majority of today s smart TVs, smartphones and Blu-Ray players have built in wi-fi so that they can connect to the Internet. I now have thermostats that I can set from anywhere in the world using my cellphone because they are Internet ready. I have smoke/co detectors and security cameras that not only talk to each other but communicate online as well. If the smoke detector is triggered in my kitchen, it will send an to me and at the same time activate the dropcam camera so I can actually see what is going on in my kitchen even if I am overseas. I ll be able to see it on my cellphone, a tablet or on a computer. And this is only the beginning. It is impossible to even imagine what will be available to us in the future because of high speed Internet access. Routine downloads are getting huge! I gave my kids an XBox One for Christmas. It came with two games but you had to download the games to the Xbox. Well it turned out that one game was almost 30 Gigabytes and the other was almost 50 Gigabytes. Then, a couple weeks later, the XBox needed updating before it would even work and that was another 2 Gigabytes. You can t really do those kinds of downloads on dial-up or even DSL or satellite Internet access. Update your iphone? There s another gigabyte of data. Now smart TVs and other smart appliances need updating from time to time and those downloads can be big, too. My wife and I find ourselves using Gigabytes of data per month. If there were still children living at home with us that figure would certainly be higher. We are not the Jetsons living some future life. The things I have described above are here and now. In the future we are bound to use more and more data and that will require faster and faster Internet speeds. We are only a few years into the Internet and it has already changed almost everything - telephones, televisions, medical records, , music, photography, texting, shopping, writing, etc. We need high speed Internet access to keep up with the rest of the world. Without it the world will leave us behind.