Off-Shore Island Broadband Study Summary and Key Points. Maine Island Broadband Conference November 19, 2015
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1 Off-Shore Island Broadband Study Summary and Key Points Maine Island Broadband Conference November 19, 2015
2 Tilson Background Network Deployment Tilson designs, permits and maintains networks for carriers, utilities and governments E.g. wireless small cells, utility smart grid, fiber networks Consulting Broadband, government/institutional, Construction IT Broadband Consulting Informed by network deployment Focus Maine and New England Islesboro example 2
3 Today s Agenda Study background Community goals Current offerings (vs. goals, broadband definition) Technology overview Cost savings opportunities Business models Attitudes about change and funding Next steps Economic benefits (time permitting) Questions 3
4 Study Background Assumption: Broadband is an important tool in addressing social, economic, educational, government and health issues Objective: Provide information that will enable informed decisions in community planning 4
5 Islands Included Islesford Great Cranberry Sutton Island Frenchboro Swans island Isle Au Haut Matinicus Monhegan Vinalhaven North Haven Chebeague Island Long Island Peaks Cliff 5
6 Study Components Community meeting * Asset/service inventory Randomized survey of property owners * Network design and cost estimates * Valuation of economic benefits Summary of community broadband projects Overview of potential operating models 6
7 Community Goals 7
8 Predominantly Shared Goals Sustaining year round community Young families Telecommuting Maintain geographic isolation/provide access to services Government Telemedicine Business support/economic development Minimize trips to mainland Relief from summer network congestion Service parity 8
9 Importance of Service Parity 9
10 Service Parity By Island 10
11 Current Service Offerings and Uptake 11
12 Current Retail Service Providers A mix of providers across islands 12
13 Current Retail Service Providers Peaks and Cliff 13
14 Reported Satisfaction by Provider 14
15 Maine School and Library Network Most island schools and libraries have, or are getting, 100 Mbps symmetrical service Chebeague, Frenchboro, Matinicus, Isle Au Haut in process of upgrades Cliff, Islesford will be only exceptions after
16 Broadband Definition vs Current Service Customer Type FCC (25/3 Mbps) Connect ME (10/10 Mbps) Schools and Libraries Y - mostly* Y TWC customers Y N FairPoint DSL customers TDS DSL customers N N Chebeague.net DSL N N Redzone and GWI legacy wireless Other (cell phone) N N N N N N * After 2016, excludes Cliff and Islesford 16
17 Current Service Ability to Meet Broadband Goals (generalized) Young families Telecommuting Government services Business support Economic development Minimize trips to mainland No summer congestion Service parity Yes Sometimes No 17
18 Subscription Trends by Resident Type 18
19 Technology Overview 19
20 Island Network Components Local Access Network Legacy Wireless (unlicensed) DSL Wireless LTE Hybrid Fiber/Coax Fiber Mainland Connection Microwave backhaul Sub-sea cable Middle Mile Fiber Internet Backbone 20
21 Middle Mile Network Example Maine Fiber Company s Three Ring Binder 21 Source: Maine Fiber Company website
22 Digital Subscriber Line (DSL) FairPoint, TDS offerings on the islands Speed a function of loop length (distance from node), condition of copper plant, gauge of wire Fairly easy to achieve maximum speeds of 15/1 Mbps Does no yield uniform coverage/service parity Higher speeds (e.g. 25/2) require shorter loop lengths Relatively small leaps in delivered speeds Viable option for improving service; not practically viable for getting to Broadband defined speeds 22
23 DSL Solution Components Upgrade existing DSLAMs to higher speeds (e.g. 3/1-15/1) Add more DSLAMs Fiber to the node Upgrade or add mainland backhaul Subsea cable Microwave 23
24 Example of one DSL Node 24
25 + DSL Nodes 25
26 DSL Improvement Considerations FairPoint and TDS likely only operators Frees towns of heavy involvement Limits control Cost varies widely, but less than $100,000 per new node on mainland May trigger backhaul upgrade ILEC solution may be less economical than CLEC backhaul 26
27 Hybrid Fiber Coax (Time Warner) 100% coverage on Peaks Partial coverage on North Haven (fiber) Partial coverage on Vinalhaven (hybrid network) Cost and terms of expansion not known Customer satisfaction, speed offerings and subsea fiber capacity 27
28 Wireless LTE Licensed spectrum (not your neighbor s RedZone) Used by mobile carriers Signal susceptible to obstruction Currently requires towers or tall buildings Rapid technological advances 28
29 Sample Redzone Propagation: Topography Matters 29 Source: Redzone Wireless
30 Wireless LTE Considerations Today s technology requires several 150 towers for all but the smallest islands Costs about $325,000 for 150 tower + cell site Coverage variations similar to cell phone Technology changing rapidly + s/- s Software upgrades New vendors Small cells on horizon Optimized for mobile users Current tower build requirement, coupled with rapid technology advances, introduce medium-term uncertainty 30
31 Support for New Tower Despite general support for new tower, minority opposition could be effective 31
32 Redzone Model: Monhegan Until small cell technology is available, only the smallest islands have projected full coverage with one tower Legend Wireless LTE Design Indoor Router Coverage Outdoor Antenna Coverage Tower Location 32
33 Small Cell Example 33
34 Fiber to the Premise (FTTP) Fastest; Most upgradeable; Most reliable; Most amenable to various business models; But... Most LEGEND expensive to build Feeder Cable 144 Ct. Distribution Cable 72 Ct. Distribution Cable 48 Ct. Average cost to build a function of density Distribution Cable 24 Ct. Town Border 34
35 FTTP Per Premise $ by Island Excludes: microwave backhaul, electronics, network head end 35
36 Cost per Premise In/Exclusions Inclusions: fiber to the curb, drops Exclusions: electronics, head end and microwave backhaul Head End 36
37 Cost Savings Opportunities 37
38 Phasing Phasing possible at little extra final cost Design Phase 1 for end-state: Fiber counts; head end; contiguous service areas Minimize distance to backhaul Phase 1 will have a much higher cost per premise Phasing can be a difficult political conversation 38
39 Regional Opportunities For practical purposes, applies to municipal networks Two buckets: Capital Expense Operating Expense Cap Ex Little cost savings, other than pooling purchasing power, in building physical network Savings potential in building a mesh network 39
40 Mesh Microwave Backhaul Network Redundant paths to mainland Electronics send data down working paths Higher capital expense than non-redundant Cost savings and resiliency benefit to regional design 40
41 Operational Expense Cost Savings Opportunities Fixed OpEx (pole attachment, administration, bucket truck, network head end, mainland backhaul) Variable Op Ex (billing, customer service, bandwidth) 41
42 Utility-Owned Networks Possibly largest cost savings opportunity Shared OpEx Customer service Billing Bucket truck Possibly lower pole attachment fees Backhaul (CapEx and OpEx) 42
43 Business Models 43
44 Technology/Business Model Technology Total Est. Capex Likely Partner Add DSL nodes Node expense + backhaul/rewiring/fiber Fairpoint or TDS Business Model Options Privately owned and operated Expand hybrid fiber/coax network unknown Time Warner Cable Privately owned and operated Wireless LTE $125k or $325k/tower RedZone Privately owned and operated Fiber to the Premise $2k-$5k/prem Many Many 44
45 Business Model Options ISLAND Utility Owned and Operated Network Utility Owned and Privately Operated Privately Owned and Privately Operated (Incumbent or New Network) Municipally Owned and Privately Operated Municipally Owned/Mun icipally Operated Cranberry Isles Monhegan Frenchboro Chebeague Long Island Isle au Haut Swan s Matinicus Vinalhaven North Haven 45
46 Business Model Decisions: Fiber Biggest drivers of average cost per user density, subscription rates The more users, the lower the cost opting in; seasonal rates High adoption rates required for: keeping price down keeping subsidies to a minimum Considerations for adoption rates opt-in network utility model garbage collection seasonal offering 46
47 Attitudes About Change and Funding 47
48 Pooled Responses: Attitudes about Change and Funding 48
49 Next Steps 49
50 Suggested Next Steps Convene broadband working group Broad representation Meet with providers What are they willing to do without/with minimal subsidy Determine best path forward Timing, technology, business model, regional cooperation If a fiber network Extensive business model analysis (funding, price, adoption, service offerings, etc) Engineer a network, select operating partners (if applicable) RFP Vote Implement 50
51 Engage Tilson First Community Referendum Timeline for Municipal Fiber Solution Feasibility Study Survey Design Report Partner Selection RFP Prep Response Period Negotiations Community Roll Out Structuring and Financing Marketing and Negotiations 0 Months 3 Months 6 Months 9 Months 13 Months 15 Months 18 Months
52 First Community Referendum Second Referendum Go Live Engineering Survey Engineer Report RFP Site Acquisition Attachment Agreement License Ride out and Estimate Implementation Mobilize Make Ready Construction Testing 21 Months 24 Months 27 Months 30 Months 33 Months 36 Months 39 Months
53 The Path Forward Optimum solution is a function of: Community goals; Current service; Abilities and constraints; View of the future. 53
54 Economic and Social Benefits of High Speed Internet Presented by Susan Inches Tilson Technology Management
55 The Big Picture: Hard to assign cause and effect Hard to assign specific benefits to Maine communities Fast changing landscape Many studies show improved economies following internet upgrades
56 Measurable Impacts Impacts of Broadband Technology Opportunity Program (BTOP) Grants: Increased economic output Improved productivity of the workforce (business and government) Increased access to inputs and markets Increased employment Improved job search results Reduced prices of internet service to community anchor institutions Increased availability of internet to seniors, rural areas and low income populations Improved levels of educational attainment
57 Measurable Impacts Improved academic performance Expansion of course offerings Improved digital literacy Improved political and civic engagement Increase in volunteerism Improved patient care Improved efficiency and productivity of healthcare providers Improved access to government services and information Source: ASR Analytics, Sept. 2014
58 Real Estate Values: Broadband access... adds $11,815 value to a $439,000 home (2014 U of Wisconsin) A fiber connection.... adds $5,437 to the price of a $175,000 home (2015 U Colorado and Carnegie Mellon) Source: "How Fast Internet Affects Home Prices," The Wall Street Journal (June 30, 2015)
59 Real Estate Values: Broadband access adds 2% to the price of a condo: $4487 on a $200,000 condo Broadband access adds 15% to apartment rental: $152 on $1000/mo. Rent Many homebuyers and businesses will not consider locating where there is no high speed internet. Source: RVA Market Research and Consulting,
60 Broadband and Economic Indicators Recent studies regarding the economic impact of broadband investment have suggested a connection between increased broadband availability and economic performance Bhattacharjee (2015) finds that each 1 Mbps increase in speed creates the following results up to 60 Mbps. 1 Factor Unemployment Rate Drops by.08% Bachelor Degree Rate Increases by.42% Median Household Income Increases by $570 Average Home Value Increases by $3,200 Result 1 Bhattacharjee, Sudip, Presentation: The Economic Impact of Gig Networks, Yale School of Management. May 4,
61 Case Studies: Cedar Falls IA: Twenty years ago, [Cedar Falls] had 27 businesses and $5 million in taxable valuation; today after building a fiber network, there are 160 businesses and $270 million in valuation. Chattanooga, TN: With its fiber-to-the-home network offering gigabit speeds throughout the city, Chattanooga has attracted several major companies, including Volkswagen, which has already spent more than $1 billion building factories in the area and created 12,000 new jobs, as well as attracting Homeserve USA and Amazon.
62 Case Studies: Danville, VA: Used its fiber network to revitalize its economy, once the worst in the state with 19% unemployment, and made the city a site of robust economic development, attracting Microsoft, IKEA and other new, high-tech businesses. Powell, Wyo: In anticipation of a fiber-to-the-home system in rural Powell, a South Korean venture capital firm agreed to pay up to $5.5 million to engage 150 certified teachers, working from their homes, to teach English to students in South Korea using high-speed video. The FTTH system has been so successful that the city was able to buy out its investors 18 years ahead of schedule. - Broadband Communities Magazine, Nov-Dec
63 Internet Growth
64 The Next Industrial Revolution? 1800 s Access to new forms of power (steam engines) Access to new forms of transportation (canals, then trains) 1900 s Access to new forms of power (electricity) Access to new forms of transportation (cars, trucks and planes) 2000 s Access to new forms of power (renewable energy) Access to digital communications and virtual travel
65 Imagine. Getting a doctor s checkup from the comfort of your living room Attending a parent-teacher conference without having to take the ferry Playing tag with your grandchildren across the country on the internet Playing music, learning a new craft or even fixing the plumbing with a live instructor on-line
66 Seizing Opportunities for Your Community The Question Is: Will you bring improved broadband to your community and set it on a path for enhanced interaction, productivity and growth? 66
67 Questions? 67
68 Contacts Tilson Technology Management 245 Commercial Street Portland, ME Liza Quinn Sue Inches
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