HomeMy WebLinkAboutPACKET Town Board Study Session 2016-06-28
Tuesday, June 28, 2016
TOWN BOARD 4:45 p.m. – 6:30 p.m.
STUDY SESSION Board Room
4:45 p.m. Dinner Served.
5:00 p.m. Vacation Home Task Force Update.
(Larimer County Director Gilbert)
5:20 p.m. Broadband Take Rate Study.
(Dr. Mosteller)
6:15 p.m. Trustee & Administrator Comments & Questions.
6:25 p.m. Future Study Session Agenda Items.
(Board Discussion)
6:40 p.m. Adjourn for Town Board Meeting.
Informal discussion among Trustees concerning agenda items or other Town matters may occur before this
meeting at approximately 4:30 p.m.
AGENDA
VRTF Task StatusAs Of 22 June 2016Maximum occupancyProcess for establishing occupancy count (2 per bedroom + 2 additional occupants)Minimum age limit for counting an individual as a occupantShould the same Land Use standards apply to both types of vacation rentals (8 & below and 9 & above) (Addition requirements are being recommended)Behavior of renter vs owners (who gets cited for violations)Parking limitations (onsite/offsite) (Need to revisit, due to additional information)Traffic limits (Use existing requirements)Speed limits in area (Use existing requirements)28 June 2016
Renter notification requirements (Trespassing, trash, hazards, etc.)Noise (limitations on outdoor noise)Number of Vacation Rentals in a neighborhood (No number to be established)Local contact requirements for manager/ownerRecommendation on finesReview of Assessor’s records vs Building Department records (Ie: number of bedrooms) (Already underway)Proof of insuranceInspections by local government (All normal Land Use, Building, Health, Fire, etc. to be utilized)Liability: Rental agreements to protect liability of neighborsVRTF Task StatusAs Of 22 June 201628 June 2016
Grandfathering of Vacation Rentals that have 9 or more occupants•Grandfather existing 9/above VRs utilizing a date to be established by the Trustees & BOCC•Within 30 days of the final adoption of 9/above VR regulations, all potential grandfathered 9/above VRs are to submit for license/permit.•Grandfather status is only for the location and use as a 9/above VR. Parking, Building, Health, Fire, etc. are not Grandfathered.Locational requirements (setbacks, distance between Vacation Rentals, zoning districts, etc.)•Allowed in the same zoning districts as the 8/below are allowed•Minimum of 1 acre lot•Minimum of 25’ setbacks all a yards or the zoning district setbacks, whichever is greaterNeighborhood Character (Boards need to decide during approval process)VRTF Task StatusAs Of 22 June 201628 June 2016
The Town of Estes Park Internet Survey Report
Prepared by
Jill Mosteller, Ph.D.
February 29, 2016
1
Contents
Executive Summary ....................................................................................................................................... 3
Overview ................................................................................................................................................... 3
Purpose ..................................................................................................................................................... 3
Approach ................................................................................................................................................... 3
Key Highlights and Findings ...................................................................................................................... 3
Survey Results ........................................................................................................................................... 4
Residential ................................................................................................................................................. 4
Profile of Residential Respondents ....................................................................................................... 4
Demographics ....................................................................................................................................... 4
Current Internet Subscription Profile - Residents ................................................................................. 7
Competitive Landscape ......................................................................................................................... 7
Conjoint Analysis ....................................................................................................................................... 8
Conjoint Utilities All Residential Participants ........................................................................................... 9
Attribute Importance – Residential ........................................................................................................ 10
Take Rates - Residential .......................................................................................................................... 11
Business Survey Results .......................................................................................................................... 11
Profile of Business Participants ........................................................................................................... 11
Competitive Landscape - Business Internet Services .......................................................................... 13
Conjoint Utilities Business Participants – Commercial Locations ....................................................... 15
Take Rates by Business Type ................................................................................................................... 17
Attribute Importance – Businesses ..................................................................................................... 18
Conjoint Utilities – Businesses that operate from a residential location ........................................... 18
Conjoint Utilities Business Participants – Residential Location .......................................................... 19
Attribute Importance – Businesses operating from residential locations .......................................... 20
Take Rate – Businesses operating from a Residential Location .............................................................. 21
Concluding Remarks................................................................................................................................ 22
2
Executive Summary
Overview
The Town of Estes Park officials wanted to determine the ‘take rate’ by resident and business
community members of internet service offers that varied by speed and price. Those served by Estes
Park Light and Power were invited to participate. Previous research and other evidence suggest the
community would welcome the public utility offering such a service (e.g. 92% voting to opt-out of
Colorado’s Senate Bill 152 in 2015), with the expectation that faster service than what is currently
available would be offered at every location served by Estes Park Light and Power. Current internet
services offered are slow compared to other nearby and nationwide communities (e.g. Neo Fiber
Report). Also, commercial providers in the area may not find it financially viable to embark on a fiber to
every home (FTTH) or every business (FTTB) endeavor, given the capital investments and the financial
returns that may be required.
One consideration for pursuing such an endeavor is understanding the types of internet service offers
that may be attractive to the residential and business communities.
Purpose
This study’s purpose was to examine residents and businesses value perceptions of internet service
offers that varied, in part, based upon speed and monthly service price. This market research project
employs conjoint analysis, an approach that offers insight into the design and pricing of products and
services.
Approach
Two surveys comprised data collection efforts; one for residential and the second for business internet
users. Estes Park Light and Power residential customers were randomly called and asked to participate.
Upon providing an email address, participants were sent a unique survey link. The business survey was
distributed two ways. First, all businesses registered and licensed in the community were sent a link
using the email address provided on file. Second, local associations and professional organizations
distributed a generic survey link through member listservs or other email member distribution lists.
The internet surveys were distributed during December 2015. Surveys closed the first week of January
2016. To maximize participation, reminder and thank you notes were sent within two weeks of the
surveys’ initial distribution to individual email addresses recruited or provided.
Key Highlights and Findings
• Two hundred and forty-five residents (n=245) and/or secondary homeowners in the Estes Park
area initiated with 214 completing the survey. Primary residents comprised 58% of participants.
A majority (84%) of residential/homeowner participants report subscribing to internet service in
this area. Given this sample size, based on a 95% confidence interval, the maximum margin of
error (MOE) on a take rate is +/- 3.5%.
3
• Two hundred and sixty-six people (n=266) participated on behalf of businesses, with a significant
majority identifying as being the owner/proprietor or manager of the enterprise. A variety of
businesses, in terms of employee size, annual revenue, and industry types, participated.
• For both resident and business participants, the Town of Estes Park scored the most favorably in
terms of current/potential internet service providers evaluated.
• Results suggest that creating two tiers of offers (i.e. each with a different internet speed and
price point) for both residents and businesses would enhance the perceived value of internet
service offers within the community.
• For business participants, the take rate of commercial offers varied according to firm type and
revenues. Price, then speed were most important, based on the ranges of each provided.
• For residential participants, internet speed is most important, followed by price, then provider.
• One-time installation fees may provide positive value, depending upon the terms and/or
services provided.
• Many participants reported internet service being bundled with other services (i.e. phone, TV).
This may present unique challenges and opportunities related to subscribers converting to a
public utility internet service.
Survey Results
Residential
Profile of Residential Respondents
Over 400 email invitations were sent, with 370 being valid addresses (9% bounce rate). Data comprises
58% responding and completing the survey. While the response rate is high, compared to online
surveys in general, the number of offers to evaluate (28) may have contributed to the 13% attrition rate
of those who started and actually completed the survey (Dillman 2007).
Two hundred and forty-five people initiated the residential survey, with 58% (n=142) reporting that the
Estes Valley area (including Estes Park, Glen Haven, Allenspark and surrounding areas) is their primary
residence. Most (95%) primary residents and the majority of the secondary residents (almost 70%) that
participated, subscribe to home internet service in this area.
Demographics
Sixty-six percent (66%) of primary residents reporting living in a two-person household. These results
align with an average of 1.97 persons living in each household, according to the U.S. census for the Town
of Estes Park (http://quickfacts.census.gov). Primary residents (87%) predominately owned their
homes. Respondents from across all five zip codes were represented; 75% reported living in the 80517
area, followed by 80510 at 12%. Distribution by geographical area was dispersed across all areas as
illustrated in the next table.
Dillman, Don A. (2007), Mail and Internet Surveys; The Tailored Design Method, 2nd edition, John Wiley &
Sons, Inc.
4
Participants Residential Location
For primary resident participants, the largest group reported being between 50 to 64 years of age.
According to the most recent U.S. Census report for the town, 25% of the population is 65 years of age
or older. While participants 65 or older are overrepresented (+15%) in this residential sample,
participants align with census figures showing 59% of the population being 18 to 64. Older participants
5
(50+) skewed towards owning secondary residences in the area. Overall, men represented 59% of this
sample.
Primary Resident Age Distribution
For primary residents, the largest percentage (34%) reported income between $50,000 and $74,999 per
year. The median (i.e. 50% make less, 50% make more) household (HH) income for primary residents is
$56,203 per year (U.S. Census). Primary resident participant HH income aligns with the general
population in this area.
For secondary residents, the majority (60%) reported earning $100,000 a year or more.
Overall, the resident/homeowner sample aligns with HH size and income for primary residents, with
demographics being underrepresented by younger consumers and females. The degree to which
younger consumers or females in a HH influence or determine choice of home internet service providers
in this area is not known.
Primary versus Secondary Residence – Household Income
6
Current Internet Subscription Profile - Residents
Eighty-four percent (84%) of resident participants reported subscribing to home internet service in this
area. According to a 2015 Pew Research Report (www.pewinternet.org) 67% of households nationwide
report subscribing to home broadband internet service. A Pew 2013 report indicated that 20% of
households subscribe to neither broadband nor use a smartphone. Given the topic of this research,
participation from those who are more than likely to subscribe to internet service is evident.
For primary residents, internet service was typically bundled (59%) compared to secondary residents
(48%).
Primary versus Secondary Place of Residence –Ala carte or bundled internet service
Competitive Landscape
Two internet service providers serve most residential participants. ISP2 and ISP4 were the two dominant
internet service providers reported, with 48% and 28% of primary residents subscribing to their services
respectively. For secondary residents, 34.72% reported using ISP2 and 29.17% subscribing to ISP4.
Current Internet Service Providers reported by Residential Participants
In terms of characterizing their current internet service, overall both types of residents described it
similarly; leaning toward being expensive, providing slightly less than moderate speed, and leaning
toward being somewhat reliable. One broad interpretation could be that for what they pay and the
speed they get, it’s of low to moderate value. It should be noted the scores for speed reflect a wide
distribution of responses, which may be attributed to variety of factors like resident location, service
provider, and internet service type (e.g. cable, satellite, etc.).
7
Characteristics of Current Residential Internet Service
Conjoint Analysis
Conjoint analysis is a research method that presents ‘offers’ to consumers and asks them to rate, rank or
choose from the offers. Offers are comprised of different levels of attributes (i.e. 3Mbps/1Mbps, 1
Gigabit/1Gigabit - internet download and upload speeds) deemed to be influential in consumers
decision-making. Offers are presented in a way that collectively tests different levels against one
another. An orthogonal plan of offers allows one to compute a ‘utility’ score for each attribute and level
(i.e. price=attribute, levels=$35, $50, $75) based on participants responses to each offer. Stated
differently, the utility score represents a form of value (positive or negative) in relation to other levels
tested within that attribute. The range of utility scores within each attribute can then be used to
determine relative attribute importance of all attributes tested for that sample of respondents.
For the residential and business surveys, offers were developed, in part, based upon a review of
competitive offers in the area. Note – not every provider and every plan can be included due to the
sheer number of offers one would have to evaluate. Offers reflected ranges of prices and speeds that
were commonly offered in November 2015, in addition to potential future offers and provider (i.e. Town
of Estes Park) being considered.
For the business and resident surveys, participants were asked to rate 28 different internet service
offers. Attributes for both surveys included internet service provider (ISP), download and upload
speeds, and price per month for internet service. Installation fees were evaluated for residential
participants. Three offers were holdout offers, meaning that the utility values derived from evaluating
the previous 25 could be used to test the validity by determining the ability to predict the last three
scores. To validate the scoring process, participants were then asked to choose between two offers,
with several pairs being shown. These attributes were used based upon key attributes promoted widely
by several internet service providers in the area, thus reflect realistic information consumers and
businesses would be exposed to in the marketplace.
While the mean scores for each of the offers can be informative (e.g. offer #3 = 5.4 average score across
all respondents), the power of conjoint is in its ability to determine utilities (i.e. perception of value at
each attribute level) and attribute importance. From this data, the value of the service provider, as well
as what people may be willing to pay for faster internet speed can be determined. First the utility
information will be presented, followed by attribute importance for resident and business customers
respectively. Interpretation of the data will be presented, followed by how the results inform
willingness to pay for internet service at different levels of service offers.
Question 1 2 3 4 5 Mean
Monthly Cost:
Inexpensive:Expensive 4.43% 8.37% 35.47% 31.53% 20.20% 3.55
Internet Speed:
Slow:Fast 16.75% 15.76% 35.47% 23.65% 8.37% 2.91
Internet Connection:
Unreliable:Reliable 7.92% 11.39% 24.75% 29.70% 26.24% 3.55
8
Conjoint Utilities All Residential Participants
Residential Conjoint Result Summary
Results suggest that the Town of Estes provides favorable value compared to the other current service
providers. Internet speeds at or above 50Mbps/15Mbps with monthly prices below $70 provide
positive value. An installation fee may also be provide positive value, depending upon the services it
may include.
Residential Conjoint Data Details
Participants rated the offers on a 0 to 10 point scale. The utility scores presented represent all
residential participants (N=214) who completed the survey. The constant represents the baseline from
which all offers begin. The far left hand column represents the attributes, the column next to it
represents the levels of each attribute presented. Utility scores should only be compared within each
attribute, not across attributes. So for service providers, the data shows that the most utility (i.e. value)
is provided from the Town of Estes (0.856) and the least utility is from ISP1 (-0.732). While ISP2 is
positive (0.145), the Town of Estes is perceived more favorably.
As one may expect, faster internet speeds would create more value than lower internet speeds. One
Gigabit speed for downloads and uploads yield 1.969 in utility versus (-1.582) for 3Mbps/1Mbps. For
this sample, low speeds detract from the overall perceived value of the offer.
For monthly price, a reverse trend occurs. Low prices (e.g. $35/month) create positive utility (1.246)
and the higher price points create negative utility. Stated differently, a price of $95/month would reduce
the overall evaluation score by 1.123 units. Price can diminish utility when it is perceived to be
Residential - ALL N=214
Utilities
Utility Est.Std. Error
ISP ISP1 -0.732 0.157
ISP2 0.145 0.157
ISP3 -0.061 0.157
ISP4 -0.209 0.157
Town of Estes 0.856 0.157
Speed 3 Mbps / 1 Mbps -1.582 0.12
12 Mbps / 6 Mbps -0.693 0.148
50 Mbps / 15 Mbps 0.306 0.148
1 Gbps / 1 Gbps 1.969 0.148
Price $35/Mo 1.246 0.12
$50/Mo 0.443 0.148
$70/Mo -0.566 0.148
$95/Mo -1.123 0.148
Install $0 -0.261 0.109
$49 -0.106 0.109
$79 0.367 0.13
(Constant)3.204 0.089
9
something (extra) the customer has to give up in order to receive the benefits of the product or service
offer.
This same logic in relation to installation fees could be expected to follow suit, however, in this study,
this is not the case for the $79 installation fee. One speculation is that people may have assumed that it
would include setting up the service (versus self-installation once the service is connected/activated).
Another interpretation may be that once installed, reactivation or re-installation fees would not be
incurred if the service needed to be suspended or disconnected. Note – the scope of this study did not
validate either of these speculations, however, if true, it shows where value for the customer can be
created by identifying what services customers want included in the installation fee.
Adding the utility scores for each level of attribute that comprises the offer, one can compute the value
of one offer, as well as compare competing offers. For example, an offer of 1 Gigabit internet service
offered by the Town of Estes at $70 per month with a $79 installation charge would yield the following
utility score:
3.204 (constant) + 1.969(speed) + 0.856 (Town of Estes) + (-0.566) ($70) + 0.367 ($79 install) = 5.83
The highest score possible is 10. The assumption is that the offer with the higher utility score will be
associated with a greater likelihood to sign-up for the service, assuming one is aware of it and it is
available in one’s area, and a competing offer with higher utility is not being offered.
For a competitive comparison, if a prevalent competitive offer is ISP2 offering 50Mbps/15Mpbs speed
for $70 a month (unbundled) and the Town of Estes is offering 1 Gigabit at $95/month with the same
installation fees ($79) then the utility comparison would be the following:
ISP2 3.204 (constant) + 0.145 (ISP) + 0.306 (speed) -0.566 (price) + 0.376 (installation) = 3.465
Town of Estes 3.204 (constant) + 0.856 (ISP) + 1.969 (speed) -1.123 (price) + 0.376 (installation) = 5.282
The utility score for each level of each attribute is entered to determine the ‘value’ of the offer. In this
comparison, the Town of Estes offer would be perceived more favorably due to a higher utility score
(+1.817).
Attribute Importance – Residential
The importance values compare attributes relative to one another. For residents overall, speed is the
most important, followed by price and provider. Stated differently, speed accounts for approximately
36% of decision, with price and provider respectively following in influence.
Residents
10
Take Rates - Residential
Participants were shown pairs of offers and asked to select the one they preferred. Each paired choice
offers insight. The numbers reflect percentages of offers chosen between each pair. For Pair One, low
price and slow speed are countered with a higher price and fast speed. Pair Two raises the price for
both offers and increases the lower speed offer by 4x. A 15% shift in preference to the lower price and
lower speed is observed. For Pair Three the price and speed differences are closer to each other, with
preference for paying $20 more per month when speed increases 4x at these price points. The last pair
tests what could be a likely competitive situation if the Town of Estes (D) offers Gigabit service and a top
competitor (B) offers faster residential service than what is currently available.
Overall results suggest that two offers may maximize the residents’ value of subscribing to internet
service offered by the Town of Estes Park. A significant percentage of respondents favor a low price
point with faster speed than what is currently available, and another group may favor One Gigabit
service and may be willing to pay for it ($70 to $95/month), depending upon the offer’s incremental cost
compared to other competitive offers
Business Survey Results
Profile of Business Participants
Two hundred and sixty-six participants, 160 operating from a commercial location, (106 from residential)
took the survey. A significant majority identified as being an owner/proprietor of the commercial (69%)
and residential (97%) locations, with 22.5% report being a manager of a commercial location. These
results suggest that decision-makers and/or key influencers for internet service participated.
A variety of businesses are represented with lodging and professional services industries being
predominant. Other business types included managing long term rental properties, working from home
self-employed or for an employer), providing or performing various activities or services, nonprofit, and
related work.es, nonprofit, and related work.
Pair One Pair Two Pair Three Pair Four
A, $35/Month, 3
Mbps/1 Mbps,
$49 Installation
B, $70/Month,
1 Gbps/1
Gbps, $79
Installation
C, $50/Month, 12
Mbps/4 Mbps,
$79 Installation
D, $95/Month,
1 Gbps/1 Gpbs,
$49
Installation
D,
$70/Month,
50 Mbps/16
Mbps, $49
Installation
A,
$50/Month,
12 Mbps/ 4
Mpbs, $79
Installation
D, $95/Month,
1 Gbps/1
Gbps, $0
Installation
B, $70/Month,
50 Mbps/ 16
Mpbs, $49
Installation
47.14 52.86 62.62 37.38 60.56 39.44 49.76 50.24
11
Participant Business Type by Location Type
Participants from commercial business locations represented various organizational sizes (i.e. number of
employees). Results suggest that business participants reflected a variety of industries, organizational
sizes, and revenue streams.
A majority of commercial businesses report earning $100,000 per year or more, whereas a majority of
residential location businesses report earning less than $100,000 a year. One residential business
segment to note are those who report earning $100,000 to $249,000 (20%) per year.
Number of Employees Residential location Commercial location
1-5 93.33% 46.54%
6-10 3.81% 24.53%
11-50 2.86% 24.53%
51 or more 0.00% 4.40%
Business Type Residential location Commercial location
Retail (Clothing, Art, Gifts,
Jewelry, Music, Housewares) 4.72% 17.72%
Professional Services
(Healthcare/Medical,
Counseling, Financial, Real
Estate, Property
Management, Cleaning, Pet
Care, Beauty,
Advertising/Marketing,
Computer, Personal Care,
Exercise/Fitness, etc.)
32.08% 25.95%
Other (please describe) 19.81% 15.19%
Lodging (Hotel, Motel,
Vacation Rental Properties) 37.74% 29.75%
Food & Beverage Retail
(Restaurants, Coffee/Tea
Shops, Bars, Convenience
Stores, Groceries, Liquor
Stores, etc.)
0.00% 9.49%
Construction (Building,
Plumbing, Roofing, Electrical,
Framing, Paving, etc.)
5.66% 1.27%
Automotive (Dealerships,
Repairs, Maintenance, Parts,
Gas Station)
0.00% 0.63%
12
Estimated Annual Revenues Comparison by Business Location Type
Competitive Landscape - Business Internet Services
Approximately 96% of business survey participants reported subscribing to internet service. A majority
of businesses report subscribing to bundled services that include internet.
For current internet service, 49% of residential location type of businesses describe the service as
leaning toward being expensive and moderately slow, but moderately reliable. For commercial location
businesses, the perception of speed was slightly more positive (M=2.99 vs 2.66) than residential
locations. The standard deviation score illustrates the degree of variability – the higher the number, the
higher the dispersion of scores from the mean.
Internet Service – Bundled? Residential location Commercial location
No 41.00% 47.10%
Yes, it's bundled with
telephone service 17.00% 36.13%
Yes, it's bundled with
television service 25.00% 9.03%
Yes, it's bundled with
telephone and television
service
17.00% 7.74%
13
Next, like residents, business participants were asked to rate 28 offers. From these, utility scores for
each level of attribute were determined. Results are presented in the next table.
Residential location
Question 1 2 3 4 5
Monthly Cost: Inexpensive:Expensive 3.00% 7.00% 41.00% 32.00% 17.00%
Internet Speed: Slow:Fast 17.35% 25.51% 33.67% 20.41% 3.06%
Internet Connection: Unreliable:Reliable 9.09% 17.17% 20.20% 27.27% 26.26%
Commercial location
Question 1 2 3 4 5
Monthly Cost: Inexpensive:Expensive 4.05% 8.78% 43.92% 25.00% 18.24%
Internet Speed: Slow:Fast 10.32% 26.45% 31.61% 17.42% 14.19%
Internet Connection: Unreliable:Reliable 7.79% 21.43% 24.68% 23.38% 22.73%
Residential location
Statistic Monthly Cost:
Inexpensive:Expensive
Internet Speed:
Slow:Fast
Internet Connection:
Unreliable:Reliable
Mean 3.53 2.66 3.44
Standard
Deviation 0.96 1.08 1.30
Commercial location
Statistic Monthly Cost:
Inexpensive:Expensive
Internet Speed:
Slow:Fast
Internet Connection:
Unreliable:Reliable
Mean 3.45 2.99 3.32
Standard
Deviation 1.02 1.20 1.26
14
Conjoint Utilities Business Participants – Commercial Locations
Business Conjoint Result Summary
The business survey followed a similar format as the residential survey, however, the offers reflected
publicized commercial offers. For ISP’s, the Town of Estes Park produced the highest utility score (0.89).
For commercial businesses, speed matters. The utility score for 1 Gigabit of speed is 2.21. Download
speeds of 100Mbps or less yielded negative utility scores. Prices per month of $400 or higher yielded
negative utility value, and prices of $100 or less per month yielded positive value.
Business Conjoint Data Details
As illustrated in the graphs that follow, a steep increase in speed utility occurs between 250/125 Mbps
and 1 Gigabit speeds (+2.064). For price, steep declines in utility occur between $50 to $100/month (-
1.576) and between $150 and $400/month (-1.519). These shifts point to different offers, where value
may be maximized using different price points with different speeds. Examining the differences between
price and utility values, for example, (everything else being held constant) at $50 per month for 25
Mbps/10 Mbps would yield a net positive utility value of 1.107. On Gigabit service at $150 per month
would yield a net positive utility value of 2.16.
Utility Est.Std. Error
ISP ISP1 -0.55 0.378
ISP2 0.003 0.378
ISP3 -0.441 0.378
The Town of Estes Park 0.89 0.378
ISP4 0.099 0.378
Speed 25Mbps/10Mbps -1.232 0.378
50Mbps/20Mbps -0.774 0.378
100Mbps/50Mbps -0.35 0.378
250Mbps/125Mbps 0.146 0.378
1 Gbps/ 1 Gbps 2.21 0.378
Price $50/mo.2.339 0.378
$100/mo.0.763 0.378
$150/mo.0.056 0.378
$400/mo.-1.463 0.378
$800/mo.-1.694 0.378
(Constant)2.336 0.189
15
The approach of comparing different offers in the commercial business context is the same as discussed
in the residential example. Comparing an offer from ISP2 that offers 250Mbps/125Mbps for $400 per
month and an offer from the Town of Estes Park for 1 Gbps/1 Gbps for $800 per month, we compute
the following:
ISP2 2.336 (constant) + 0.003(ISP2) + 0.146(speed) – 1.463(price) = 1.022
Town of Estes 2.336 (constant) + 0.890 (ToE) + 2.210(speed) – 1.694(price) = 3.742
Generally speaking, the second offer would be more attractive than the first for commercial business
enterprises. However, both scores are low since it is based on a 10 point scale. So the overall desirability
of the offer by the business community may be low. Businesses, however, may vary in the perceived
value of offers, as illustrated next.
16
Take Rates by Business Type
The numbers reflect the percentage that each offer was chosen between each pair of offers. For
example, under Pair One, 86% of lodging businesses chose the ISP2 offer that offered 1 Gigabit internet
speed for $150 per month over an ISP1 offer of 25Mbps download internet speed for $50 per month.
For food & beverage retail, however, 70% chose the less expensive, lower speed offer.
The bottom row shows the overall take rate among businesses between each pair of offers. For pair
one, 60% prefer 1 Gigabit of service for $150 per month compared to a slower, more economical plan.
In short, for $100 more, at a price point of $150, 60% prefer the 40x increase in speed.
For the second pair, however, when the price escalates to $400 per month, preference shifts back to a
lower speed at a lower price point (76%) – but it is not as low or slow as the first low speed/low price
option. This illustrates that preference may vary at different price and speed thresholds and relative
differences between offers.
For the third pair, the price and speed differences are smaller than the first two pairs. A slight majority
favor paying $50 more per month in exchange for at least twice the speed, with the speed starting at
100Mbps.
While the overall margin of error for the total take rates is +/- 5% (Overall Take Rate Table), for
subsamples (e.g. business type), it would be much larger due to the small numbers represented in each,
so it is not advised to generalize these take rates to all other businesses within each sector. The variance
in take rates is shown to illustrate that different types of businesses may value different types of offers.
ISP1, $50/Month,
25 Mbps/10 Mbps
ISP2, $150/Month, 1
Gbps/1 Gbps
ISP3, $100/Month, 50
Mbps/ 20 Mbps
Town of Estes Park,
$400/Month, 1
Gbps/1 Gbps
Town of Estes Park,
$150/Month, 250
Mbps/100 Mbps
ISP4, $100/Month,
100 Mbps/ 50
Mbps
Lodging (Hotel, Motel, Vacation Rental
Properties)13.33 86.67 58.06 41.94 71.88 28.13
Retail (Clothing, Art, Gifts, Jewelry,
Music, Housewares)52.17 47.83 95.45 4.55 36.36 63.64
Food & Beverage Retail (Restaurants,
Coffee/Tea Shops, Bars, Convenience
Stores, Groceries, Liquor Stores, etc.)
70 30 100 0 20 80
Professional Services
(Healthcare/Medical, Counseling,
Financial, Real Estate, Property
Management, Cleaning, Pet Care,
Beauty, Advertising/Marketing,
Computer, Personal Care,
Exercise/Fitness, etc.)
48.15 51.85 88.46 11.54 50 50
Construction (Building, Plumbing,
Roofing, Electrical, Framing, Paving, etc.)100 0 100 0 0 100
Automotive (Dealerships, Repairs,
Maintenance, Parts, Gas Station)100 0 100 0 0 100
Other (please describe)27.78 72.22 52.94 47.06 76.47 23.53
Total Take Rate %'s between paired
offers 39.09 60.91 76.85 23.15 54.13 45.87
Business Type Take Rates Among Paired
Offers (%'s)
PAIR ONE PAIR TWO PAIR THREE
17
Overall Take Rate by Businesses of Three Paired Offers*
. *(MOE +/- 5% -95% confidence interval)
The Business Overall Take Rate Table illustrates price and speed tradeoffs, reflected in the take rates.
To maximize business internet subscriptions, offering different pricing plans with different speeds (e.g.
$150 for 250/150 speeds, $400 for 1 Gigabit) may be effective in attracting in meeting the internet
needs of different types of businesses.
The lodging industry, for example, may have a greater need to provide robust internet service as part of
its core service offering and embed the cost in the rates it charges for lodging. A retail store may not
need to provide free WiFi in order to attract shoppers, but may need a reliable connection for sales
transactions conducted using the internet. Thus both businesses need internet service but for different
purposes, thus underlying different demands for speed and price.
Attribute Importance – Businesses
For businesses, the overall attribute importance scores reflect a slightly greater importance on price
rather than speed. This may be in part attributed to the fact that the price points tested are also
significantly higher than those tested for residential locations. In addition, data suggest that different
business segments, determined by annual revenues and type of business, may exist that may reflect
differences in importance among these attributes. The firm that provides the service also yields some
influence (23%). It is not uncommon for ISP’s to have account representatives designated to support
specific firms that provide significant revenue streams and where responsiveness to internet service
issues may be critical.
Businesses operating from commercial location
Conjoint Utilities – Businesses that operate from a residential location
Businesses that operate from a residential location (versus a commercial location) were shown
residential offers. These offers were the same as those shown in the residential survey. The Town of
Estes yielded the highest utility score among providers (1.101), slightly higher than residential
participants (0.856). One Gigabit speed also yielded a higher utility score (2.283) than residential
participants (1.969). Price delivered negative utility at price points above $50. Installation charges
provided some positive utility. The previous comments made about this in the residential results may
be applicable here as well.
ISP1, $50/Month,
25 Mbps/10 Mbps
ISP2, $150/Month, 1
Gbps/1 Gbps
ISP3, $100/Month, 50
Mbps/ 20 Mbps
Town of Estes Park,
$400/Month, 1
Gbps/1 Gbps
Town of Estes Park,
$150/Month, 250
Mbps/100 Mbps
ISP4, 100/Month,
100 Mbps/ 50
Mbps
Total Take Rate %'s between
paired offers 39.09 60.91 76.85 23.15 54.13 45.87
Business Type Take Rates
Among Paired Offers (%'s)
PAIR ONE PAIR TWO PAIR THREE
18
Conjoint Utilities Business Participants – Residential Location
For business users operating from a residential location, an offer by the Town of Estes for 1 Gigabit
internet service at $70/month with an installation fee of $79 would yield a utility score of:
3.425 (constant) + 2.283 (speed) – 0.609(price) + 0.27(installation) = 5.369
Given the utility gain between 50Mbps and 1 Gig (2.261) versus the utility loss from price between $70
and $95 (-0.411), suggests the gains from improved speed offset the decreased utility from an increase
in price between these two levels.
Business - Residential Location
Utilities
Utility Est.Std. Error
ISP ISP1 -0.406 0.168
ISP2 -0.256 0.168
ISP3 -0.096 0.168
ISP4 -0.343 0.168
Town of Estes 1.101 0.168
Speed 3 Mbps / 1 Mbps -1.862 0.129
12 Mbps / 6 Mbps -0.641 0.159
50 Mbps / 15 Mbps 0.22 0.159
1 Gbps / 1 Gbps 2.283 0.159
Price $35/Mo 0.992 0.129
$50/Mo 0.637 0.159
$70/Mo -0.609 0.159
$95/Mo -1.02 0.159
Install $0 -0.275 0.117
$49 0.005 0.117
$79 0.27 0.14
(Constant)3.425 0.096
19
The biggest drop in utility is between $50 and $70/month (-1.246). The slopes on either end are not as
steep. This may represent an inflection point where two plans with the two different speeds may be
viable (e.g. $50/month for 50MB and $95/month for 1 Gigabit).
Attribute Importance – Businesses operating from residential locations
In terms of importance, speed is the most important (41), followed by provider and price. People who
operate a business from a residential location are slightly less price sensitive (23) than residential
consumers (25). While this may seem counterintuitive compared to the commercial business sample,
also note the price points presented to the residential location business sample were significantly lower
(Max price point=$150 versus $800) than the commercial location business sample.
20
Businesses operating from a residential location
Comparing the relative importance of attributes across residential location types of users (business use
versus residential use), speed is most important for business and residential users at a residential
location (41% and 36% respectively).
The internet service provider accounts for approximately 25% of the evaluation of the offer. For
businesses operating from a residential location, price is slightly less important (23%) compared to other
residential users (26%).
Next, the take rate of four pairs of residential offers are evaluated. Note the take rates for businesses
operating from a residential location are noted at the bottom with dark green highlighting the overall
preferred offer for each pair. For comparison, resident take rates are provided, since they were shown
the same pairs of offers.
Take Rate – Businesses operating from a Residential Location
For the first pair – testing the two extremes in terms of speed, with a $35 difference in price and $30
difference in installation, overall 24% more prefer for faster internet speed at a higher price. The overall
take rate is 62% for the Gigabit service at $70 per month (compared to 53% from the residential survey).
The second pair improves the lower end speed but increases both price points. At $95 per month for 1
Gbps internet service offered by the Town of Estes Park, the take rate approaches 59% (vs 37% R) when
the competing offer is $50 a month for 12Mbps/4Mbps speed with a $79 installation fee offered by
ISP3s.
When the price is $70 for 50 Mbps download speed by the Town of Estes (ToEP) and the competing
offer is $20 less for 38 Mbps decrease in download, but offered by ISP1, the take rate increases to 70%
for the ToEP.
The fourth offer reflects a closer price comparison with the ToEP offer 1 Gbps at $95/month against a
ISP2 offer of 50 Mbps/10 Mbps for $70/month and $49 for installation. This results in a slightly stronger
preference (56%) for faster speed (20x) for $20 more per month.
Pair One Pair Two Pair Three Pair Four
Offers
A, $35/Month, 3
Mbps/1 Mbps,
$49 Installation
B, $70/Month,
1 Gbps/1
Gbps, $79
Installation
C, $50/Month, 12
Mbps/4 Mbps,
$79 Installation
D, $95/Month,
1 Gbps/1 Gpbs,
$49
Installation
D,
$70/Month,
50 Mbps/16
Mbps, $49
Installation
A,
$50/Month,
12 Mbps/ 4
Mpbs, $79
Installation
D, $95/Month,
1 Gbps/1
Gbps, $0
Installation
B, $70/Month,
50 Mbps/ 16
Mpbs, $49
Installation
Res Take Rate 47.14 52.86 62.62 37.38 60.56 39.44 49.76 50.24
Biz Res Take Rate 37.84 62.16 41.1 58.9 70.67 29.33 56.58 43.42
21
Compared to residents, businesses that operate from residential locations appear to value speed more
and are willing to pay more for it. This is evidenced in the higher take rates for higher speed and priced
offers. These findings reinforce the viability of offering two internet service plans. Those that use the
service to support professional endeavors may value faster internet speeds and demonstrate a
preference in their willingness to pay for it than those residents who subscribe for personal purposes.
Sixty-six (66%) of residents reported ‘working from home’. These business residential location take
rates, integrated with previous residential data, suggest that offering a higher priced, higher speed
residential offer may be attractive these types of users.
Concluding Remarks
Participants, both residential and business, favorably perceive the Town of Estes Park Utility offering
internet service.
In order to maximize the residential subscriber base, examining the financial viability of offering two
plans may be worthwhile. For residents an improved internet speed from what is currently available,
priced up to $50 per month may yield positive value. A second plan that offers One Gigabit service at a
higher, yet competitive price point, may be attractive to a different segment of residents.
Installation fees should be seriously considered and packaged in a way that facilitates positive value to
the subscriber.
For businesses, results suggest offering two plans may be viable as well. Based on the price points and
speeds tested, one offer should target a lower price point with a lower speed, yet sufficient enough to
be of value (e.g. $100 for 100 -Mbps). Firms vary by size, revenue streams, and type – therefore
different plans designed to meet different needs may help to maximize the overall take rate.
Results from this research suggest offering different offers for residential and business users. Besides
the inherent value of an offer, the price and speed of the offers should also be based, in part, on other
competitive offers available in the marketplace.
22
The Town of Estes ParkBroadband Take Rate StudyJill Mosteller, Ph.D.6/28/2016
Take Rate Study Agenda•Response rates•Residential Survey Results•Business Survey Results•Competitive Landscape•Insights into Future Potential Offers
Participant Response Rates•Participant Profiles•Residents– 402 agreed, 370 valid email addresses valid, 245 started, 214 completed (58% response & completion rate).•Primary & Secondary resident mix (58% P/42% S).•Overall 84% subscribe to internet service. •MOE on take rate for residents is +/‐3.5%•Businesses– 266 participants•Variety of business types, sizes, and revenue streams.
Residential Survey Results Participants’ Residential LocationsAll areas represented.
Estes Park Resident Quick FactsPopulation – 6165Housing Units – 4107People 65 or older – 25%People 18‐64 – 58%HH Size –1.93Gender – 53% FemaleHomeownership – 70.9%Median HH Income ‐$59,826Source http://quickfacts.census.govGenderMenWomenKey Takeaways: Different areas represented, 18‐64 residents match census, men (+12%) M 59% W 41%Participant Profiles
Estes Park Resident Quick FactsPopulation – 6165Housing Units – 4107People 65 or older – 25%People 18‐64 – 58%HH Size –1.93Gender – 53% FemaleHomeownership – 70.9% Median HH Income ‐$59,826http://quickfacts.census.govHH Size Mean=2.07Key Takeaway: HH Size in sample closely reflects actual household composition, as well as median HH income for primary residents. Homeowners (+22%).
Current Residential Internet ServiceBundled vs. Unbundled Key Takeaway: 55% of residential survey participants currently bundle their internet service
Residential Attribute ImportanceImage courtesy of Komondo.comISP –Internet Service ProviderKey Takeaway: Speed accounts for 36% of rating of offer, followed by price (26%).
Conjoint Utilities (‘value’ for each attribute level)Residential ParticipantsAn offer’s value is the sum of it’s partsHigher utility score = higher perceived valueKey Takeaways: 1. Positive value is created when Town of Estes is the ISP (Provider).2. Internet speeds at or above 50 Mbps/15 Mbps for download and upload speeds provide positive value3. Price points below $70/month provide start to provide positive value.4. Installation fees may provide positive value depending upon what’s included. Residential ‐ ALL N=214UtilitiesUtility Est. Std. ErrorISP ISP1‐0.732 0.157ISP2 0.145 0.157ISP3‐0.061 0.157ISP4‐0.209 0.157Town of Estes 0.856 0.157Speed 3 Mbps / 1 Mbps‐1.582 0.1212 Mbps / 6 Mbps‐0.693 0.14850 Mbps / 15 Mbps 0.306 0.1481 Gbps / 1 Gbps 1.969 0.148Price $35/Mo 1.246 0.12$50/Mo 0.443 0.148$70/Mo‐0.566 0.148$95/Mo‐1.123 0.148Install $0‐0.261 0.109$49‐0.106 0.109$79 0.367 0.13(Constant) 3.204 0.089
Speed and Price Utilities ‐ResidentsKey takeaways: Positive value emerges with speeds at 50 Mbps/15 Mbps and above and at prices below $70/month.
Residential Take Rates –Res vs Biz ResKey Takeaway:Residents who operate or perform professional services from their home prefer higher speeds and are less price sensitive than residents in general*.*66% of residential participants report working from home.ResBiz ResPair One Pair Two Pair Three Pair FourA, $35/Month, 3 Mbps/1 Mbps, $49 InstallationB, $70/Month, 1 Gbps/1 Gbps, $79 InstallationC, $50/Month, 12 Mbps/4 Mbps, $79 InstallationD, $95/Month, 1 Gbps/1 Gpbs, $49 InstallationD, $70/Month, 50 Mbps/16 Mbps, $49 InstallationA, $50/Month, 12 Mbps/ 4 Mpbs, $79 InstallationD, $95/Month, 1 Gbps/1 Gbps, $0 InstallationB, $70/Month, 50 Mbps/ 16 Mpbs, $49 Installation47.14 52.86 62.62 37.38 60.56 39.44 49.76 50.2437.84 62.16 41.1 58.9 70.67 29.33 56.58 43.42Residential Take Rates –Res vs Biz ResD = Town of Estes Park
A, $35/Month, 3 Mbps/1 Mbps, $49 InstallationB, $70/Month, 1 Gbps/1 Gbps, $79 InstallationC, $50/Month, 12 Mbps/4 Mbps, $79 InstallationD, $95/Month, 1 Gbps/1 Gpbs, $49 InstallationD, $70/Month, 50 Mbps/16 Mbps, $49 InstallationA, $50/Month, 12 Mbps/ 4 Mpbs, $79 InstallationD, $95/Month, 1 Gbps/1 Gbps, $0 InstallationB, $70/Month, 50 Mbps/ 16 Mpbs, $49 Installation5468 73 47 76 48 65 5944% 56% 61% 39% 61% 39% 52% 48%45 43 56 3053 36 404751% 49%65% 35% 60% 40% 46% 54%99 111 129 77 129 84105 10647% 53% 63% 37% 61% 39% 50% 50%Secondary ‐ Primary TR Diff7%‐7%4%‐4%‐2%2%‐6%6%Biz Residential 38% 62% 41% 59% 71% 29% 57% 43%Biz Residential ‐ Overall Take Rates‐9% 9%‐22% 22% 10%‐10% 7%‐7%Primary ResidenceSecondary ResidenceOverall Residence Total Take RatesResidential Take Rates Primary vs Secondary Biz Residential vs Residential
Business Survey Results
Business Attribute ImportanceImage courtesy of alleywatch.comKey Takeaway: Price accounts for 42% of the rating of offers, followed by speed (35%).
Conjoint Utilities (‘value’ for each attribute level)Business ParticipantsAn offer’s value is the sum of it’s partsHigher utilities = higher perceived valueKey Takeaways: 1. Positive value is created when Town of Estes is the ISP (Provider).2. Internet speeds at or above 250 Mbps/125 Mbps for download and upload speeds provide positive value3. Price points below $150/month provide positive value.Business ‐ Commercial LocationUtilitiesUtility Est.Std. ErrorISP ISP1‐0.55 0.378ISP2 0.003 0.378ISP3‐0.441 0.378The Town of Estes Park 0.89 0.378ISP4 0.099 0.378Speed 25Mbps/10Mbps‐1.232 0.37850Mbps/20Mbps‐0.774 0.378100Mbps/50Mbps‐0.35 0.378250Mbps/125Mbps 0.146 0.3781 Gbps/ 1 Gbps 2.21 0.378Price $50/mo. 2.339 0.378$100/mo. 0.763 0.378$150/mo. 0.056 0.378$400/mo.‐1.463 0.378$800/mo.‐1.694 0.378(Constant) 2.336 0.189
Speed and Price Utilities ‐BusinessesKey takeaways: Positive value emerges with speeds at 250 Mbps/125 Mbps and above and at prices below $150/month.
Business Take RatesKey Takeaway:Businesses prefer faster speeds within certain price ranges ($100 to $150 per month) with price sensitivity varying by business type. ISP1, $50/Month, 25 Mbps/10 MbpsISP2, $150/Month, 1 Gbps/1 GbpsISP3, $100/Month, 50 Mbps/ 20 MbpsTown of Estes Park, $400/Month, 1 Gbps/1 GbpsTown of Estes Park, $150/Month, 250 Mbps/100 MbpsISP4, 100/Month, 100 Mbps/ 50 MbpsTotal Take Rate %'s between paired offers39.09 60.91 76.85 23.15 54.13 45.87Business Type Take Rates Among Paired Offers (%'s)PAIR ONE PAIR TWO PAIR THREE
Business Take Rates –may vary by typeISP1, $50/Month, 25 Mbps/10 MbpsISP2, $150/Month, 1 Gbps/1 GbpsISP3, $100/Month, 50 Mbps/ 20 MbpsTown of Estes Park, $400/Month, 1 Gbps/1 GbpsTown of Estes Park, $150/Month, 250 Mbps/100 MbpsISP4, $100/Month, 100 Mbps/ 50 MbpsLodging (Hotel, Motel, Vacation Rental Properties)13.33 86.67 58.06 41.94 71.88 28.13Retail (Clothing, Art, Gifts, Jewelry, Music, Housewares)52.17 47.83 95.45 4.55 36.36 63.64Food & Beverage Retail (Restaurants, Coffee/Tea Shops, Bars, Convenience Stores, Groceries, Liquor Stores, etc.)70 30 100 0 20 80Professional Services (Healthcare/Medical, Counseling, Financial, Real Estate, Property Management, Cleaning, Pet Care, Beauty, Advertising/Marketing, Computer, Personal Care, Exercise/Fitness, etc.)48.15 51.85 88.46 11.54 50 50Construction (Building, Plumbing, Roofing, Electrical, Framing, Paving, etc.)100 0 100 0 0 100Automotive (Dealerships, Repairs, Maintenance, Parts, Gas Station)100 0 100 0 0 100Other (please describe)27.78 72.22 52.94 47.06 76.47 23.53Total Take Rate %'s between paired offers39.09 60.91 76.85 23.15 54.13 45.87Business Type Take Rates Among Paired Offers (%'s)PAIR ONE PAIR TWO PAIR THREE
Business Related Internet ServiceBundled vs. UnbundledKey Takeaway: A majority of businesses that operate from residential or commercial locations have internet service bundled with other services.
Competitive ProvidersCentury Link and TDS Cable are the dominant providers for this sample.
Residential Competitive Offers in Nearby AreasBundles with phone and TV with contractsEstes Park Denver Metro Area
Residential Longmont Offers
Competitive Responses in anticipation of future offers
Insights into Potential Future Offers•Residential•Offer One ‐$50 price point with faster speeds than what is available•Offer Two –a higher price point with 1 Gig speed that is competitive with other offers•Installation fees that offer value to the HH •Business •Offer One ‐$100 to $150 price points with faster speeds than is what is currently available•Offer Two –a higher price point with 1 Gig speed that is competitive with other offers
Questions?
Financials from NEO Fiber (Now NEO Connect):Stabilized revenues of $4.5 Million annually, starting in year 3EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) or Net Profit of $3.4 Million annuallyDebt Service Constant Ratio of over 215% within four years (a positive indicator of financial feasibility). We like to see this over 200% within 5 years.With a conservative interest rate of 5%, in addition to projected principal payments annually of $500,000; an additional $500,000 ‐$750,000 in debt can be paid down annually starting in year 3.10 year Cumulative Net Cashflows from Operations (Net Profit for 10 years) of $32.24 Million.Business offer$150/month 1 GB$0 Installation50% take rate2 years to achieve itResidential Offer$70/month 1 GB$79 Installation44% take rate2 years to achieve it
July 12, 2016
Fish Hatchery Property Discussion
Update on Environmental Assessment
NEPA process – Loop.
July 26, 2016
Update on SCFD
August 9, 2016
Update on Housing Needs and
Response – Impact Fees & Other
Funding Options to Support Housing
Goals
August 23, 2016
Discussion of Regional Hydrology
Study and Implications
August 30, 2016
Tentative Town/County meeting on
Vacation Rentals 9 & More
September 13, 2016
Development of Annexation
Philosophy and Policy
Items Approved – Unscheduled:
(Items are not in order of priority)
Review Revised Sign Code Draft
Downtown Neighborhood Plan Update
Briefing and Discussion of US 34
Rebuild Project with CDOT
Discuss the Role of Town Government
in Economic Development as it
Relates to the Estes Valley EDC and
Other Organizations
Briefing on Storm Drainage and Flood
Management Issues and Management
Options. Discussion of Storm Water
Utility.
How to Handle Off Cycle Requests for
Funding for Outside Organizations
Follow Up on Broadband Issues
Study Session Items for Board
Consideration:
Future Town Board Study Session Agenda Items
June 28, 2016