HomeMy WebLinkAboutPACKET Town Board Study Session 2015-07-28
Tuesday, July 28, 2015
TOWN BOARD 5:00 p.m. – 6:40 p.m.
STUDY SESSION Rooms 202/203
5:00 p.m. Dinner Served
5:10 p.m. Trustee & Administrator Comments & Questions.
5:20 p.m. Future Study Session Agenda Items.
(Board Discussion)
5:30 p.m. Final Draft of NeoFiber Broadband Strategy Report.
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 4:45 p.m.”
AGENDA
August 11, 2015
Session on Zoning Basics
Update on Town of Estes Park
Financial Policies
September 8, 2015
Update on the Status of the Events
Center Finances
October 19, 2015
Final Avalanche Economic
Development Strategy Report
November 10, 2015
Discussion of Noise Ordinance
Items Approved – Unscheduled:
(Items are not in order of priority)
International Property Maintenance
Code (Dangerous Buildings Code) and
Adoption of New International Building
Code Draft Reviews
Fish Hatchery Property Discussion
Local Preference Purchasing Policy
Briefing on Storm Drainage and Flood
Management Issues and Management
Options
Update on Environmental Assessment
NEPA Process Draft Concerning the
Loop
Study Session Items for Board
Consideration:
Update on Upcoming Construction
Schedules for Major Projects Through
2018
Review of Draft Recommendations for
Vacation Rentals
Future Town Board Study Session Agenda Items
July 28, 2015
Prepared for the Town of Estes Park & Estes Park EDCby NEO FiberJuly 23, 2015
FCC –Broadband is a Public UtilityEconomic Development – Competitive Broadband◦Avalanche Consulting Strategic Plan◦Business Attraction◦Business Incubator◦Wellness Center◦Learning Center◦Performing Arts Center◦Medical Center, Schools, Library, Utilities, et al.
Current Service Status from NEO Fiber SurveyBusiness Retention –2 left, 1 planning, 2 consideringRetail –Lost connection for salesLodging ‐Hotelwifitest.com Telecommuters –2 daughters left vacation earlyReal Estate ‐Location, Connection, Connection
92% support in Broadband Special Election93% interest in faster, more reliable broadband in NEO Fiber broadband survey
Abbiatti, Michael ‐ Community 'To' Moon, Michael ‐ Community 'To'Batey, David ‐ Community 'To' Neuzil, Wendy ‐ IT Rocky Mountain Nat Park 'Cc'Bugher, Tony ‐ TDS/Baja Field Marketing Manager 'Cc' Nicholas, Jon ‐ EDC 'To'Calkins, Eric ‐ RMDAS 'Cc' Patterson, Rod ‐ Baja Broadband System Tech Lead/TDS 'Cc'Elrod, Mark ‐ Community 'To' Pickering, Jim ‐ EDC 'To'Fraundorf, Alan ‐ Town of EP 'To' Repine, Mark ‐ RMDAS 'To'Gay, Ken ‐ Grand Heritage 'To' Repine, Rachelle ‐ RMDAS 'Cc'Godbey, Jerry ‐ Distinctively Colorado 'To' Riffle, Mark ‐ Estes Valley Library Technical Services Supervisor 'Cc'Gutierrez, Felix ‐ Baja Broadband / TDS 'Cc' Rosener, Greg ‐ Community 'To'Hall, Gary ‐ CIO IT Estes Park Med Center 'Cc' Rosenkrance, Sheldon ‐ Estes Park School District Superintendent 'Cc'Hiester, Art ‐ Community 'Cc' Shelley, Don ‐ Estes Valley Networks 'Cc'Krumme, Cynthia ‐ Airbits local contact 'Cc' Spray, Dan ‐ AirBits 'Cc'Kruse, Diane ‐ NEO Fiber 'Cc' Tyo, Roger ‐ TDS/Baja Field Cable Marketing Manager 'Cc'Lancaster, Frank ‐ Town of EP 'To' Ulrickson, Gordon ‐ IT YMCA of the Rockies 'Cc'Lawson, Larry ‐ EDC appointee 'To' Wagner, Tim ‐ CenturyLink Area Plant Supervisor 'Cc'Mayo, Gerald ‐ EDC/EstesPark 'To' Webb, Jim ‐ Community 'To'
Competitive broadband Internet speed and cost to business and residential customers,Funding entirely through user feesApproximate 10 ‐12 year debt retirement of $27 ‐$30 million of infrastructure buildout costsAfter retiring infrastructure buildout debt, a source of revenue to the Town similar to that since 1945 from the Power and Light DivisionPrivate‐Public Partnership opportunities for local internet service providers.
have successfully been deployed in numerous communities throughout the country. resemble what the City of Longmont is implementing, with a city‐wide phasing of both commercial and residential neighborhoods. are financially sustainable, have been successful in other locations and can be implemented in the Estes Valley. provide for possible Private‐Public Partnership roles for the current local service providers. Cash flow generated from offering broadband services for all of the various models produce Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) of $4 ‐$6 Million per year after year 3.
The community wants to see faster, more abundant broadband servicesThe actual speed tests confirm the lack of adequate broadband services throughout the communitySpeed is the most important factor to the community, followed by redundancy and then by price.Education to the community regarding what is possible, what other cities are experiencing and the opportunity to change the model of scarcity/affordability should be done to further educate the public.42% of the respondents have either one or two people working primarily from home. 53% of respondents stated that they telecommute.
Actual speed tests average is 5.42/2.78 MbpsLowest speeds 0.22/0.49 MbpsGlobal average speed is 55 MbpsSuggested speed: 1 Gbps (1,000 Mbps)Local Service Providers are not planning to build Fiber to the Home/Business
To Consider:Best in the World: $.03/MbpsGoogle Fiber, Lafayette, Chattanooga: $.07/MbpsAverage in the World: $1.39/MbpsCurrent residential price in Estes Park: •$5 ‐$12/Mbps for download speeds •$13 ‐$50/Mbps for upload speedsRecommended: Abundant Broadband that is Affordable. 1 Gbps (1,000 Mbps) for $70 ‐$95 or .07 ‐.095/Mbps
Key AssumptionsCapital CostsFeasibility ObjectivesRevenue Models:User FeesTap FeeUtility FeesResultsTime to Retire Debt
Year 1 Year 2Year 3 Year 4 Year 5Retail Model #1, $70/month residential service1,852,119$ 4,053,810$ 4,569,043$ 5,127,776$ 5,379,102$ Retail Model #2, $95/month residential service2,495,079$ 5,163,010$ 5,806,835$ 6,494,442$ 6,793,990$ Retail Model #3, Tap Fee and $70/month3,813,335$ 4,302,416$ 4,817,650$ 5,372,928$ 5,379,102$ Retail Model #4, Tap Fee and $95/month4,456,295$ 5,411,616$ 6,055,442$ 6,739,594$ 6,793,990$ Retail Model #5, Utility Fee and $70/month2,440,484$ 4,642,174$ 5,157,408$ 5,716,141$ 5,967,467$ Retail Model #6, Utility Fee and $95/month3,083,444$ 5,751,374$ 6,395,200$ 7,082,807$ 7,382,355$ EBITDARevenue Models
Revenue ModelsDebt Service Constant Percentage, Year 5Stabilized Cash FlowIRRTerminal ValueRetail Model #1, $70/month residential service286% 5,379,102$ 9% $14.9 MillionRetail Model #2, $95/month residential service361% 6,793,990$ 16% $27.7 MillionRetail Model #3, Tap Fee and $70/month286% 5,379,102$ 12% $17.6 MillionRetail Model #4, Tap Fee and $95/month361% 6,793,990$ 19% $30.4 MillionRetail Model #5, Utility Fee and $70/month317% 5,967,467$ 13% $20.8 MillionRetail Model #6, Utility Fee and $95/month393% 7,382,355$ 20% $33.6 Million
Design, Engineering, Construction: $27 – 30MOperational partnership: $500k - $1.5M ◦Billing, Customer Service, Trouble Resolution◦Truck Rolls, Service Calls, Installation and Repair◦Training and Adoption Programs
Power & Light Smart Grid OpportunityE-government: Smart Parking Meters, Parking and Traffic MitigationWirelessCellular BackhaulSmart City ApplicationsFunding: Accessible grant and loan programs
Competitive broadband Internet speed and cost to business and residential customers,Funding entirely through user feesApproximate 10 ‐12 year debt retirement of $27 ‐$30 million of infrastructure buildout costsAfter retiring infrastructure buildout debt, a source of revenue to the Town similar to that since 1945 from the Power and Light DivisionPrivate‐Public Partnership opportunities for local internet service providers.
NEO Fiber Draft Deliverable
1
Estes Park
Broadband Expansion and
Technical Assistance Strategy Report
July 22, 2015
Prepared for
Town of Estes Park
and
Estes Park EDC
By
NEO Fiber Draft Deliverable
2
Estes Park Broadband Expansion and
Technical Assistance Strategy Report
Table of Contents
1. Executive Summary ............................................................................................................................... 4
2. Introduction and Overview .................................................................................................................. 6
Abundant Broadband is a Necessity for Economic Vitality. ........................................................... 6
The Community has Overwhelmingly Supported this Need for Abundant Broadband. ........... 7
Local Service Provider Capabilities ..................................................................................................... 8
Dramatically Transform the Current Broadband Offering – Abundant Broadband that is
Affordable. .............................................................................................................................................. 9
Two of the Five Service Delivery Models are Feasible. .................................................................... 9
Possible Private-Public Partnership Roles for Current Local Service Providers......................... 10
Capital Costs Required for Implementation and Potential Phases. .............................................. 10
Financial Results, Sustainable Approach and Return on Investment. ......................................... 11
3. Survey and Speed Test Results .......................................................................................................... 12
The Community has Overwhelmingly Supported this Need for Abundant Broadband. ......... 12
Residential Survey Results ................................................................................................................. 13
Business and Anchor Institution Survey Results ............................................................................ 21
Respondent Comments. ...................................................................................................................... 26
4. Local Service Provider Capabilities ................................................................................................... 31
5. Ownership Model Recommendations .............................................................................................. 32
6. Possible Private-Public Partnership Roles for Current Local Service Providers ........................ 39
7. Laying the Groundwork, Methodology and Process ...................................................................... 40
Existing Fiber Optic Network ............................................................................................................ 40
Connecting Anchor Institutions ......................................................................................................... 42
Expansion into Neighborhoods ......................................................................................................... 44
Projected Capital Costs, FTTH/FTTB and Possible Phasing .......................................................... 46
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Using the Communications Space vs. Power Space on Utility Poles ........................................... 48
What are We Aiming For? Pricing Considerations ........................................................................ 49
Take Rate Assumptions and Product Mix ........................................................................................ 55
A Note about Phone Service and Cable TV Services. ..................................................................... 55
What about Wireless? .......................................................................................................................... 56
Defining “Feasible” .............................................................................................................................. 57
8. Service Delivery Models ..................................................................................................................... 59
Two Service Delivery Models are Feasible ....................................................................................... 59
Why are the Other Models Not Feasible? ......................................................................................... 60
9. Financial Plan and Results .................................................................................................................. 64
Financing Assumptions, Amortization Schedule ............................................................................ 64
Revenue Assumptions ......................................................................................................................... 64
Tap Fee, Utility Fees or Installation Charges ................................................................................... 65
Capital Costs ......................................................................................................................................... 66
Operating Expense Assumptions ...................................................................................................... 67
Financial Results ................................................................................................................................... 68
10. Benefits of Advanced Broadband Networks and Why This Matters, Abundant Broadband is
a Necessity for Economic Vitality .......................................................................................................... 82
Stimulate Economic Growth. .............................................................................................................. 82
Speed Matters. ...................................................................................................................................... 83
Community Outreach and Support. .................................................................................................. 86
Telecommuting Opportunities ........................................................................................................... 91
Every “Thing” will be Connected to the Internet ............................................................................ 93
Affordable Healthcare ......................................................................................................................... 93
Education and Distance Learning ...................................................................................................... 95
Public Safety: Our first responders need reliable, ubiquitous coverage ..................................... 96
Digital Inclusion and Civic Engagement .......................................................................................... 97
Civic Engagement, Transparency, Access to Government Resources. ........................................ 98
Higher Home Values ........................................................................................................................... 98
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11. In Summary ...................................................................................................................................... 100
1. Executive Summary
In this report, NEO Fiber provides detailed engineering and financial analysis of broadband
service options for the area served by Estes Park Power and Light Division. This analysis is
based on extensive, real-world experience and industry-standard assumptions.
Based on NEO Fiber’s analysis, the Town of Estes Park has an opportunity to facilitate access to
financially sustainable, state-of-the-art broadband service that would provide:
Competitive broadband internet speed and cost to business and residential customers,
Funding entirely through user fees,
Approximate 10 to 12 year debt retirement of $27 - $30 million of infrastructure buildout
costs,
Provides a source of revenue to the Town similar to that since 1945 from the Power and
Light Division,
Private-Public Partnership opportunities for local internet service providers.
NEO Fiber examined, in detail, five different models of service delivery. After extensive
evaluation, the only two financially viable models were 1) Retail Services to Businesses Alone or
2) Retail Services to Businesses and Homes. These two models were financially viable because
they provided sufficient income from user fees to retire infrastructure buildout debt.
The other three models, 3) Infrastructure Owner Only, 4) Government Services Provider, and 5)
Open Access Provider, did not produce sufficient income to retire infrastructure buildout costs.
There is strong public support for access to competitive broadband as demonstrated in the
February 2015 SB-152 special election results, and as found in the NEO Fiber broadband survey
in which 93% said they would be interested in accessing a faster, more reliable broadband
network.
Competitive broadband is essential to sustaining and developing Estes Park’s economic and
cultural vitality. This was reflected in the recent Federal Communications Commission’s (FCC)
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determination that broadband internet access is a utility, as necessary to contemporary life as
electricity, roads, and water systems.
In NEO Fiber’s broadband survey and public engagement discussions, it was clear that Estes
Park’s current levels of broadband service are considerably more expensive and slower than
what is currently available in our competitors’ areas within Colorado, nationally, and globally.
If providing competitive broadband services to Estes Park were financially attractive to the
private sector, it could be argued that it would have already happened. High initial capital
costs, higher than public sector borrowing costs, need for higher return on investment than in
the public sector, and our comparatively small customer base and consequent small revenue
stream, make private sector provision of speed and cost competitive broadband service
unlikely.
In the course of its evaluation of broadband delivery options, NEO Fiber met with all of the
local service providers. Along with the general private sector issues identified above, restricted
access to capital and return on investment concerns may limit local internet service provider
ability to furnish more competitive broadband services.
NEO Fiber Draft Deliverable
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2. Introduction and Overview
In February this year, the Town of Estes Park and the Estes Park Economic Development
Corporation (“Estes Park EDC”) engaged NEO Fiber (“NEO”) to prepare a business plan and
strategy for broadband expansion and technical assistance for the Town of Estes Park and the
surrounding region, stretching from Allenspark to Glen Haven. NEO is a broadband consulting
firm that is working with municipalities, counties and regions to improve advanced broadband
infrastructure. NEO’s mission is to assist customers in all aspects of building and owning Last
Mile Fiber to the Home (“FTTH”), Fiber to the Business (“FTTB”) and Middle Mile fiber optic
networks. A Fiber to the Home or Business network is one in which fiber optic cable is brought
all the way to the home or business location.
This broadband plan contains technology driven business strategy that leverages existing fiber
optic facilities and wireless capabilities, and is intended to attract investment, spur innovation
and diversify the region’s limited economic base. Estes Park (the “Town”), in partnership with
Platte River Power Authority (“PRPA”) has an existing fiber optic network ring that includes
the core commercial area and connects certain Town facilities and key locations. The existing
fiber optic network was underutilized and the goal of the broadband plan was t o leverage this
existing network and provide strategies to best use this existing infrastructure. The existing
fiber network has connectivity through Loveland to the national internet backbone. This
portion of the network is currently deployed using Western Area Power Administrations
(WAPA) transmission lines. In addition to the network deployed in Estes Park, PRPA owns
and services fiber optic facilities in all four communities of its shareholders (Fort Collins, Estes
Park, Loveland and Longmont.) PRPA leases a portion of the existing fiber optic network to
many telecommunication providers; CenturyLink and Level 3 are among them.
During the flood in September 2013, Century Link lost its fiber through Glen Haven resulting in
a CenturyLink outage that left much of Estes Park and other nearby communities without
telecommunications, phone, Internet and 911 services. For public safety reasons, re-establishing
redundancy and several diverse communication paths in and out of the Estes Park area were
noted as important goals of this project.
Abundant Broadband is a Necessity for Economic Vitality. The economic
health and survival of this region depends in large part on the availability and affordability of
advanced telecommunication services. Advanced broadband service is no longer a luxury. The
Internet and its use have infiltrated every area of our lives. The Internet and its associated
technologies are used for social media and staying connected, for entertainment and streaming
NEO Fiber Draft Deliverable
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videos. More importantly it is used to transfer files and download/upload information that is
critical to businesses, medical establishments, public safety, online banking, training and
distance education, smart metering, point of sale applications, and every part and parcel of our
lives. Communities that lack adequate broadband services are finding a disparity between the
“haves” and “have-nots,” and without sufficient broadband capabilities, find their people and
local businesses leaving the community. Additionally tourists and visitors to the community
may decide to visit other places where their lives and businesses can continue to be conducted
rather than a community that does not have adequate broadband services.
Avalanche Consulting’s Economic Development Strategy and Market Assessment1 addresses
the need for advanced broadband services as an opportunity for professionals to live and work
in the community. Throughout their draft report, broadband is referred to as a challenge that
needs to be tackled in order to provide the proper infrastructure for targeted industries.
Targeting professional services as a growth industry requires that people have abundant and
affordable broadband services at home, allowing the professional to telework. According to a
recent Aspen Institute Communications and Society Program publication, which is also referred
in Section 10 of this deliverable, “The Future of Work”, work is no longer confined to a specific
time and place. Open systems, open platforms, shared folders and databases, “crowdsourcing,”
and collaboration between employees, contractors, vendors and suppliers happens “in the
cloud” facilitating the ability to work anywhere there is a high-speed Internet connection, at any
time. Section 10 of this report speaks to The Benefits of Advanced Broadband Network and
Why This Matters.
The Community has Overwhelmingly Supported this Need for Abundant
Broadband. On February 3rd, 2015 a public vote to opt-out of Colorado’s Senate Bill 152 was
conducted within the Town of Estes Park. 92% of the voters in Estes Park voted to reclaim local
authority to establish a telecommunications utility. In other similar elections held in Colorado
the results have been 60-75% in favor of opting-out of the current law that restricts
municipalities from building telecommunications infrastructure. The overwhelming and
unprecedented results of this election are a clear indication that the community is interested in
making a change and speaks to the need for better broadband services.
NEO conducted community outreach meetings discussing the need and process for advanced
broadband services. The community outreach meetings were well-attended and feedback from
the community confirmed the vast need for better broadband services. NEO Fiber put together
two surveys to receive input from the community in regards to broadband needs for the Town
of Estes Park and the region. The first survey was designed and distributed to residential users
1 “Estes Valley Economic Development strategy, Market Assessment,” Avalanche Consulting, June 2, 2015
NEO Fiber Draft Deliverable
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and the second was distributed to businesses and anchor institutions within Estes Park and the
surrounding areas. 300 survey responses were received for the survey targeting the residential
users. 55 responses were received for the business and anchor institution survey. Survey results
were consistent with the election outcome.
When asked if respondents would be interested in accessing a faster, more reliable
broadband network, 93.45% said, “Yes.”
The survey provided instructions to respondents to take an actual Internet speed test. The
lowest speeds recorded were 0.22 Megabits per Second (“Mbps”) download and 0.49 Mbps
upload. The highest speeds recorded were 66 Mbps download and 5.5 Mbps upload. The
average speeds recorded were 10.75 Mbps download and 2.07 Mbps upload. Considering that
other towns, cities and communities are investing in networks that provide services that are 500
– 1000 times faster speeds than actual capacity available in Estes Park, speaks to the lack of
adequate broadband services actually available. These real-world speed test results confirm the
need for more abundant broadband.
Local Service Provider Capabilities
In addition to community outreach meetings, NEO conducted individual interviews with the
local service providers currently providing Internet services in the community. Although the
providers have invested in limited fiber optic infrastructure to key businesses and anchor
tenants within the Town, the existing provider’s networks are primarily based upon cable
modem, Digital Subscriber Line (DSL) and wireless technologies. Each of these network
technologies are shared; meaning, as more users are on the network, the capacity and
availability of bandwidth is diminished. DSL service is provided by copper telecommunication
lines and can carry high bandwidth signals only for a short distance – a few hundred yards;
after which the signal is degraded and bandwidth diminishes. While cable modems generally
provide transmission speeds of anywhere between five and 50 megabits per second on the
download (and are generally much slower when uploading), this technology is shared and
therefore, all users on the network share this bandwidth. For example, if there are 100 users
sharing 50 Mbps, each user receives 0.5 Mbps of service.
Fiber optic technology provides two-way speeds of up to 1 Gigabit per second, with 10 Gigabit
systems now coming to market. This is 1,000 times to 10,000 times faster than DSL, wireless and
cable modem networks. Additionally, the carrying capacity of fiber is unlimited. As fiber optic
technology transmit pulses of light, more bandwidth can be delivered on a fiber optic network
by adding various colors of light or additional spectrum. Fiber is unique because it can carry
high bandwidth signals over long distances without signal or bandwidth degradation and it can
provide that capacity in both directions – for both upload and downloading information.
NEO Fiber Draft Deliverable
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The current service providers do not have plans to upgrade their networks to Fiber to the Home
in Estes Park. The current local providers have access to limited capital and therefore, simply
cannot implement this technology throughout the community. As the existing networks that are
built on DSL, wireless and cable modem do not support the needs of bandwidth today, the
problem will only grow bigger as time goes on. Internet bandwidth consumption is doubling
every year. With continued explosive national growth in demand for bandwidth for the
foreseeable future, the lack of existing infrastructure to support bandwidth consumption is a
problem that is not going away.
Dramatically Transform the Current Broadband Offering – Abundant
Broadband that is Affordable. The current model for providing Internet or broadband
services is based upon a model of scarcity. In order to get Gigabit-type Internet services, as
there is not fiber available on a wide-spread basis, users must pay a lot for this service. This
model of scarcity makes abundant broadband unaffordable. Currently the businesses and
anchor institutions do not ever or rarely subscribe to Gigabit-type services as these services due
to high prices. Gigabit Internet service pricing currently is provided at approximately $3,000
per month. If the Town embarked upon building a FTTH network, targeted pricing for
businesses and anchor institutions would be $300 - $500 per month for Gigabit Internet service.
Residential pricing is targeted at $70 - $95 per month for Gigabit Internet. This would
dramatically transform the pricing and broadband offering that is currently available in Estes
Park, making high-bandwidth Internet services attainable, accessible, abundant and affordable.
Two of the Five Service Delivery Models are Feasible. NEO provided financial
models for all of the various service delivery options. These options ranged from providing
dark fiber services - which the Town is currently providing; to wholesale services - where the
Town builds the network and current local service providers provide retail Internet services on
an open network; to retail models – where the Town builds the network and provides services
directly to the end users. All of the financial models are based on detailed, realistic analysis and
extensive real-world, industry-standard assumptions.
The Town of Estes Park has higher than average capital costs due to being both located in the
mountains with rocky conditions, and in a rural has area with a relatively low customer base.
As a result, the two models that are feasible and financially sustainable are ones in which the
Town offers services directly to end users.
The Town could offer services on a wholesale basis; however, in order for this model to be
financially sustainable, the pricing to end users would need to be increased to a point where the
service is no longer affordable. Alternatively, a wholesale model would work if the service
providers took a substantially lower percentage of the revenue than what has worked
NEO Fiber Draft Deliverable
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throughout other FTTH communities that have deployed a wholesale open access network. It is
unlikely that a private company would provide retail services under such a proposal, since it
would not provide them sufficient revenue.
The two financially sustainable models produce a revenue stream for the Town that is similar to
the residual revenue stream of the Estes Park Light and Power Division. These two models – of
providing services directly to the anchor institutions and businesses - and to the business
community as well as the residents and homes of the community - have successfully been
deployed in numerous communities throughout the country. These two models resemble what
the City of Longmont is implementing, with a city-wide phasing of both commercial and
residential neighborhoods. These models are financially sustainable, have been successful in
other locations and can be implemented in the Estes Valley.
Possible Private-Public Partnership Roles for Current Local Service
Providers
Throughout the community engagement process and in conversations with the broadband
steering committee and the Town Trustees, it was expressed that the community wants to
engage with the local service providers. The two models that are financially sustainable
provide for possible Private-Public Partnership roles for the current local service providers.
Final design, engineering, project management, program management and construction of the
network would be outsourced. This opportunity represents approximately $27 - $30 Million in
potential revenue to the existing service providers. Additionally, the network operations and
management, truck rolls and repair service could be outsourced. Sales, marketing, customer
service and billing services could potentially be outsourced as well. Based upon the
assumptions used in the financial models, this represents $500k to $1.5M in annual operating
revenue potentially available to local service providers. Estes Park would be required to
competitively bid these opportunities; however, a local preference could be given to local
service providers and/or local service providers that bid jointly with national providers.
Capital Costs Required for Implementation and Potential Phases. The
projected capital costs for a Fiber to the Home (FTTH) and Fiber to the Business (FTTB) network
in the Estes Park region is estimated at $27 - $30 Million. NEO’s team was given GIS mapping
information of existing utility poles and conduit in place through Estes Park Light and Power
and used this information to conduct a preliminary design and engineering of the network
using existing utility poles when possible. NEO provided recommendations on potential
phasing of the network build out and provided financial models and their respective financial
results for building the network at once as well as building the network out in a phased
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approach in 2-5 years. Capital costs can be recovered through offering Internet services directly
to end users and all financial feasibility objectives are met.
Financial Results, Sustainable Approach and Return on Investment. NEO
ran several financial models based upon a number of revenue models – all producing favorable
and feasible results. There is no one-size fits all approach to a community broadband network
and therefore, there are a number of possibilities for pricing services. NEO has provided
financial models for the following revenue benchmarks:
Retail Model #1, $70/month residential service
Retail Model #2, $95/month residential service
Retail Model #3, Tap Fee and $70/month
Retail Model #4, Tap Fee and $95/month
Retail Model #5, Utility Fee and $70/month
Retail Model #6, Utility Fee and $95/month
All of these models have positive results. Cash flow generated from offering broadband
services for all of the various models produce Earnings before Interest, Taxes, Depreciation and
Amortization (“EBITDA”) of $4 - $6 Million per year after year 3. The purpose of showing these
various approaches is to provide options for pricing and revenue models that provide strong
financial results that are sustainable.
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3. Survey and Speed Test Results
The Community has Overwhelmingly Supported this Need for Abundant
Broadband. On February 3rd, 2015 a public vote to opt-out of Colorado’s Senate Bill 152 was
conducted within the Town of Estes Park. 92% of the voters in Estes Park voted to reclaim local
authority to establish a telecommunications utility. In other similar elections held in Colorado
the results have been 60-75% in favor of opting-out of the current law that restricts
municipalities from building telecommunications infrastructure. The overwhelming and
unprecedented results of this election are a clear indication that the community is interested in
making a change and speaks to the need for better broadband services.
NEO conducted community outreach meetings discussing the need and process for advanced
broadband services. The community outreach meetings were well-attended and feedback from
the community confirmed the vast need for better broadband services. NEO Fiber put together
two surveys to receive input from the community in regards to broadband needs for the Town
of Estes Park and the region. The first survey was designed and distributed to residential users
and the second was distributed to businesses and anchor institutions within Estes Park and the
surrounding areas. 300 survey responses were received for the survey targeting the residential
users. 55 responses were received for the business and anchor institution survey. Survey results
were consistent with the election outcome.
When asked if respondents would be interested in accessing a faster, more reliable
broadband network, 93.45% said, “Yes.”
The survey provided instructions to respondents to take an actual Internet speed test. The
lowest speeds recorded were 0.22 Mbps download and 0.49 Mbps upload. The highest speeds
recorded were 66 Mbps download and 5.5 Mbps upload. The average speeds recorded were
10.75 Mbps download and 2.07 Mbps upload. Considering that other towns, cities and
communities are investing in networks that provide services that are 500 – 1000 times faster
speeds than actual capacity available in Estes Park, speaks to the lack of adequate broadband
services actually available. These real-world speed test results confirm the need for more
abundant broadband.
Although the survey is a randomized sample; however, the results of the survey strongly
suggest the following take-aways:
The community wants to see faster, more abundant broadband services
NEO Fiber Draft Deliverable
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The actual speed tests confirm the lack of adequate broadband services throughout the
community
Speed is the most important factor to the community, followed by redundancy and then
by price.
Education to the community regarding what is possible, what other cities are
experiencing and the opportunity to change the model of scarcity/affordability should
be done to further educate the public.
42% of the respondents have either one or two people working primarily from home,
providing insight into the need to not only serve businesses within the community, but
to also address providing abundant broadband services to homes. In the application
part of the survey, 53% of respondents stated that they telecommute.
If the Town of Estes Park implements a FTTH/FTTB network that is affordable, receiving
take rates of at least 40% will be achievable which helps ensure the financial
sustainability of the project.
Here are the results of the surveys.
Residential Survey Results
Network Technology. Most of the residents have Cable, DSL or a wireless connection for
their Internet service at home. 90% of residents have DSL, Cable or a wireless connection.
Four of the respondents
responded that they
have a fiber connection
at home. This may, in
fact, be incorrect but
was not verified. Many
of the providers
advertise having fiber
and there is often the
misperception that the
providers are offering a
fiber connection at the
home. However, none
of the providers in
Estes Park are currently
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offering a fiber connection to the home in Estes Park.
Reliability. When asked about reliability of the Internet connection, in some cases (29%) the
connection drops either all the time or regularly. In most cases (77.8%) the speed or capability
of the connection varies from time to time or considerably.
Service Providers. The existing service providers are Baja Networks/TDS Telecom,
CenturyLink, Airbits, RMDAS, AT&T and Estes Valley Networks.
Current Pricing. The range of what is currently being spent for Internet services varies
greatly for residential users; between $20 – over $100 per month. In some cases the price for
service includes TV (17%) and in others cases, the price for service includes phone service (29%).
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Bundling
Services. 73%
of the
respondents
stated it was
NOT important
to bundle TV and phone service in one invoice with Internet services. Only 7% stated it was
extremely important to bundle service and 19% stated it was somewhat important.
Perception of Speed. When asked to rate the speed of the Internet, many of the
respondents stated that the Internet speed was good or acceptable. Some stated is was slow or
very slow. Some also stated the speed was excellent. Interpreting this data, it could be said that
more education should be done with the public regarding what is acceptable or good.
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Speed Test Results. The survey provided instructions to respondants to take an actual
speed test. The lowest speeds recorded were 0.22 Mbps download and 0.49 Mbps upload. The
highest speeds recorded were 66 Mbps download and 5.5 Mbps upload.
The average speeds recorded were 10.75 Mbps download and 2.07 Mbps upload.
Of those that rated their speed as “Excellent” and took the
actual speed test, here were the speed test results.
“Acceptable” speed ranges were 0.74 Mbps/0.75 Mbps and
56.88 Mbps/2.18 Mbps. Again, the results imply that more
information can be shared with the community regarding
what other communities are experiencing, or what the rest of
the world is receiving in terms of speed, bandwidth and
pricing.
Top speeds for the service providers that offer services through a wireless connection were
recorded at 12 Mbps download and 5.6 Mbps upload. Average speeds for wireless was 5.43
Mbps download and 2.78 Mbps upload.
Time of Day Use. When asked what time of day is the Internet used the most at home,
respondants answered durning the morning and during the evening.
Rating
Download
Speed
Upload
Speed
Excellent 1.56 1.68
Excellent 1.97 0.72
Excellent 3.49 3.01
Excellent 3.52 0.65
Excellent 4.5 0.5
Excellent 4.75 0.53
Excellent 5.5 1.6
Excellent 7.02 11.86
Excellent 11.32 0.73
Excellent 11.49 5.52
Excellent 18.84 0.88
Excellent 28.45 5.07
Excellent 30 10
Excellent 51.1 4.2
Excellent, Baja sells me "50"45 5.6
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Great Interest in Faster, More Reliable Network. When asked if respondents would
be interested in accessing a faster, more reliable broadband network, 93.45% said, “Yes.”
What Matters. Respondents were asked to rank what was the most important to them in
terms of their Internet service with “1” being the most important. Respondents ranked “speed”
as the most important attribute, followed by “redundancy” and then “price.”
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Devices. The survey asked which devices were used to connect to the Internet and asked to
check all the devices that apply.
30.1% of the respondents stated they used a smart TV and nearly ½ (48.16%) use Streaming TV.
Work from Home. 30.5% of the survey respondents have one person who works at home
and 11.74% of the respondents have two people who work at home.
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School-Aged Children. 89.67% of the people taking the survey do not have school-aged
children living at their home. Approximately 9% of the people taking the survey have kids at
home.
According to the 2010 Census data, 16.9% of households in Estes Park have children under the
age of 18 living in the home. This might mean that tho se households that have kids at home did
not have time to take the survey.
How is the Internet Used? The following uses of the Internet applied for survey
respondents. Browsing and online banking topped the list, and 52.86 of the survey takers stated,
“working from home and telecommuting.”
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Service Gaps. NEO’s team sorted the data of download and upload speeds by neighborhood
and found Allenspark and Glen Haven have the slowest Internet speeds. However, each
neighborhood reported spotty Internet speeds; reporting low bandwidth of 1-2 Mbps from
several respondents.
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Business and Anchor Institution Survey Results
Network Technology. Most of the businesses have Cable, DSL or a wireless connection for
their Internet service for the business
One of the respondents
responded that they
have a fiber connection
at their business. There
are more wireless
connections for
businesses than for
residential customers.
Reliability. When
asked about reliability
of the Internet
connection, 47.27%
stated the speed varies
from time to time, but
the connection never
drops. 36.36% stated
the speed varies
considerably and the connection regularly drops.
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Current Pricing. The range of what is currently being spent for Internet services varies for
business users; most are paying between $100 - $250, followed by between $50 - $100. For
those that were spending between $500 - $1,000 per month for Internet services alone, the speed
test results were 20.91 download and 3.21 upload. The business that responded that there was a
fiber connection to the business is paying between $500 - $1000 per month for Internet and the
speed test results were 44.87 download and 48.69 upload.
44.23% of the respondents stated that their pricing includes telephone service, 50% stated it j ust
included internet service.
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Perception of Speed. When asked to rate the speed of the Internet, 50% of the business
respondents stated it would be better if the Internet were faster, but the business can still do
what it needs. 25.93% stated it is not fast enough to do what the business needs.
Speed Test Results. The survey provided instructions to respondants to take an actual
speed test.
The average speeds recorded were 15.46 Mbps download and 3.45 Mbps upload.
Businesses Want Faster, More Reliable Broadband. When asked if respondents
would be interested in accessing a faster, more reliable broadband network, 94.44% said, “Yes.”
Why Haven’t you Subscribed to Faster Internet? When asked, “What are the main
reasons your business doesn't subscribe to a faster Internet service?” respondents primarily
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responded that faster Internet service is not available, followed by the monthly bill for faster
Internet service would be too expensive.
Would you Subscribe? When asked if the business would subscribe to Gigabit service if it
was available, 63.64% stated either very likely (43.64%) or most likely (20%). Another 20%
stated it would depend upon how much it costs.
Faster Internet Speed Impact. Businesses were asked if faster Internet speed was
available, how the business would be impacted. Businesses were asked to check all that
applied. Here were the results:
1 2 3
28 9 9
14 15 11
4 7 2
3 4 3
2 1 1
1 10 18
0 6 8
No interest in having faster Internet service.
The business is limited by purchasing rules.
The business would have to purchase or lease
equipment to get faster Internet service.
Answer Options
The business would be required to sign a contract to
get faster Internet service.
Faster Internet service is not available.
Other
The monthly bill for faster Internet service would be too
expensive.
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Considered Moving? When asked, “I am considering moving my business outside of the
Estes Park area because I cannot get Internet that is fast enough to support my business,” there
was one respondent that said, “Yes, I am planning to move my business,” and four that were
considering moving. The bulk of the respondents (67.92%) stated they were staying put but
wish for faster Internet.
What Matters. Respondents were asked to rank what was the most important to them in
terms of their Internet service with “1” being the most important. Similar to the residential
survey, business respondents ranked “speed” as the most important attribute, followed by
“redundancy” and then “price.”
Response
Percent
Response
Count
53.8%28
44.2%23
26.9%14
26.9%14
26.9%14
23.1%12
21.2%11
19.2%10
15.4%8
9.6%5
1.9%1
18
Conducting more business
More videoconferencing
Other (please specify)
More with maintaining a database/record keeping
Connecting with similar businesses more
Internet is fast enough. The business would not do anything different.
More email or other communications
Set up more locations
Hire more employees
More webinars or online training
Answer Options
More financial management/billing
Conducting more research
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Respondent Comments. Perhaps the comments from the survey respondents are the
most compelling. Below are comments from the community surveys. Names of providers have
been taken out.
I really like my current service and the friendly staff, but I sure wish my connection was
times faster
Our current service is awful. It is the lowest speed they offer AND the only speed
available where we live on Rams Horn Rd. They say they are NOT going to upgrade it.
Also, we can't get xxxx or xxxx there. We currently are paying for TWO DSL lines to our
home just so we can limp along. PLEASE figure out a way for us to get better service.
This really affects us. I am spending my summer at our condo in AZ instead of our
cabin in CO; one factor was awful Internet access available at our cabin. The ping is
60ms, download speed 1.3Mbps, upload speed 0.63. These are not errors. They are real
numbers!! Help!!
My current internet service has gotten continually slower since I moved into this house
two and one half years ago.
Would love to have faster cheaper service
Please get us faster internet!
Currently, the price is high and the speed/service is not good.
Need it to be fast, dependable, secure, and reasonable!
We need alternatives
I would like to have high speed Wi-Fi available at the Library and throughout
downtown. Current service at these locations is spotty and often slow. I would like more
ISP alternatives.
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we would use internet for tv/video but our service is too slow and buffers and its not
feasible to do it through the tv
Treat like a public utility. It's to provide high speed at a reasonable cost.
The internet is going to become the predominant delivery system for entertainment and
communications. We need reliable, high speed internet. It should be a public entity, like
telephone land lines and electricity, that gives us good service at a reasonable price. Not
a big telecommunications monopoly that can dictate what we get and what we pay.
I chose my provider when I moved to Estes Park because they're a local company with
decent speed, price, and excellent customer service. I have been very satisfied with their
service, although speed could be better at times. I do NOT want to have to use a non-
local company as customer service will suffer.
The speed issues we have with our provider are usually in the evening, especially on the
weekend while watching our Internet connected smart TV; that TV connecting drops
our often during those times. The TV is connected directly to a Apple Airport Express
WiFi device (as an extension from our main Airport Extreme ~ 20 ft away)
Occasionally too slow, excessive buffering. Sometimes just quit because of this.
I don't need screaming fast, but it's really slow down here in the canyon. I reset my
modem every day in hopes that will help, but it doesn't seem to.
Current service is much too slow!!!
Very slow-difficult to work at home
Service is slow and almost unreliable during peak times. Very annoying. Improvement
is needed.
Currently using xxxx; they are okay, but these are things I dislike: - The internet service
drops unexpectedly a few times a week (not good for working at home). - Sometimes
the speed seems slower than it should be. - Once a year they raise their rates and I have
to call and ask them if I can pay what a new customer would pay (which is month-to-
month and no contract, so I don't understand why they try to penalize customers who
have been loyal).
We need to do better. This Valley is falling behind those places we compete with for
tourists and jobs. If not a matter of economic survival, it is close to it. Estes Park,
because of its lack of adequate broadband, is becoming increasingly non-competitive.
Hopefully this recognition is shared by those in a position to do something about it in a
proactive way and assert the needed leadership.
We are in Little Valley and choices are limited. No one offers true broadband. I hope we
can change this relatively soon.
Current provider goes down more frequently than xxxx in Denver. Also slower.
Streaming Video will halt and buffer...
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$55/month for 15mbps seems like a lot for pretty slow speed compared to what's
available in the valley.
Speed varies from time to time; connection drops from time to time
Please, god, bring fiber fast!
I previously built and sold an ISP business (2003 - 2011). I am currently an Internet
Entrepreneur and build and run internet based companies. I work from my home in
Estes Park. When I build the ISP, we installed and managed fiber, ethernet, and
broadband wireless connections to three cities. In Estes, we need to be thinking about
getting 100Mbps fiber to homes in the near term and moving to 1Gbps+ in the future.
Obviously, we won't be able to get Fiber to every residence in the area due to terrain
constraints, but doing what we can is a good start. Beyond that, I think we need 2 - 3
total redundant feeds coming into the community. As I understand currently, there is
one main point of presence feeding the entire EP Valley. The existing DS L and Cable
serving the community is fine for the very short term, but we need to be thinking about
how we keep Estes relevant in the future. We can attract more young professionals and
startups if we have great infrastructure. Estes is a great place for entrepreneurs to live
and having great internet is part of the equation. Internet isn't going away and I'm glad
we're starting to have this conversation now. (This respondent provided contact
information and the Competitive Broadband Committee has followed up with him.)
Internet is vital to my work. Without reliable, fast internet I would be forced to relocate.
Very excited at the prospect of higher speeds and dependability.
Because we live here seasonally we would like to turn it off during the winter months.
Unfortunately we live in a part of Little Valley with no current service.
Can I get some other choice besides xxxx? Anyone at all?
As a part-year resident, it is extremely important that I have enough bandwidth to be
able to access the security cameras that I have installed in my home. They worked when
I first put in xxxxx, but now there is insufficient upload speed for me to access them
unless I am physically at the house - in which case the cameras are useless. I would
imagine others in the Estes Valley are experiencing the same issues.
Would like to see excellent wireless broadband service for visitors, tourists and others.
need local DNS servers for when we can't connect to the valley.
I work in the hospitality industry and more and more free wi fi is expected by visitors.
Most complaints that I hear are regarding spotty cell phone service. Don't hear too
many complaints about internet connectivity.
It's adequate, but not great. However if our internet service quality were to be reduced,
we have to move to an area where I could continue to work.
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Our current internet service through xxxxx is extremely unreliable. Although the
company is very honest and helpful when requested, their service is not reliable or fast
enough for a serious internet user. It is impossible for several individuals to use their
service at the same time - streaming sites such as YouTube, Vimeo, Netflix (esp. in 4K),
and Vessel are very slow to load and buffer near constantly on high -use periods of the
day. A community broadband service would offer a significant advantage over
privately held options - incredible speed, reliability, and customer support. This can be
seen in many locations where fiber, community internet was rolled out - particularly
with Google Fiber installations in Kansas City, Provo, and Austin. I am writing this as a
high school student who is soon moving to a college with fiber internet, and intend to
largely base my housing decision on where I can receive very fast internet at a
reasonable rate. If I were to move back to Estes Park, the availability of a very fast, fiber,
community broadband service would SIGNIFICANTLY impact my decision, especially
considering Estes' relative remoteness from other locations, encouraging work-from-
home professionals.
The faster, cheaper, and reliable, the better.
Very supportive of fast internet service at a reasonable price.
Really looking forward to a new ultra high speed internet service in estes park. I would
likely sign up no matter how high the monthly price was (up to $200/month at the max
maybe, but hoping it would be somewhere between $50-$100/month). Have no interest
at all in bundling services.
It's very expensive for what we get.
Since I got a smart phone, I use that almost exclusively now except for paying bills. If it
is too expensive, I will drop it as I only use it 6 or 7 times a month. Internet is so slow,
my smart phone works so much better. I need an inexpensive option.
My service is regularly far below the promised "up to" rate most of my waking hours. I
can never watch a TV show or movie without waiting for load time to catch up.
A locally-owned service is important to me.
Terrible! Even my phone calls keep getting dropped; internet is very slow and is always
dropping!
We don't work from home, but we are involved in non-profit and volunteer work that
uses the computer quite a lot
Excellent wireless broadband also needed for tourists. Best if it could extend outside of
downtown, including areas of RMNP, certainly visitor centers.
DSL is limited to 12 MB
The speed of my service is adequate for now, but in future, it will not be. More and
more is coming via internet.
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Currently do not use for movies but probably will.
xxxx guaranteed 50Mbits speed. I am getting 18 today. Sometimes, it's as slow as 3
Mbits.
xxxx has been incredibly "spotty" at best, then when I call them (very regularly) I have to
wait for a long time. They then tell me to do all the "power downs" and such, then they
just reset it from their office. Super frustrating as this happens at least twice per month.
Please Please please get better internet to Estes Park ASAP! Thanks. I feel the poor
internet in Estes is holding Estes back!
We are really to have greater bandwidth and higher speed and are willing to pay a
premium for it.
slow, slow, and slow. Very hit and miss when it comes to speed.
Upload speed is very slow!
Wireless reception in Prospect Estates is limited or poor.
Can't stream at 1.3 speed and slow response is difficult.
It is bad!!!
My internet service is terrible and xxxx says there is nothing they can do.
We are changing this month to bundle with our sat. TV provider in order to save money.
We will bundle TV, land-line, & internet. I would love to see faster, cheaper internet.
wireless inside the house disconnects frequently requiring resetting of satellite DVR to
get on-demand movies/programs
xxxx’s download speeds are fine if you pay lots of money. The upload speeds are totally
abysmal. 2 megabits just sucks.
Supposed to get 12Mb download .. got 5.33Mb during this test.
One of the reasons I moved my business to the Valley was the poor business internet
speed, reliability, and cost. I spent nearly $2000 per month for less capability than what
I now pay $300 for in Loveland.
Speeds occasionally drop below 1mb/s but regularly drop into the 3 - 6 mb/s range.
Most slowdowns occur in the evenings but then that's when we most use the service and
are most aware. The modem needs a reboot on average once per week but seems to go
through periods when a couple times a day may be needed. This of course may be the
internal network or the modem itself but I suspect the link to the provider is frequently
the problem.
We get dropped often by xxxx, and sometimes it is frustratingly sloooooooooow. I get
to
Gigabit speed is important to me.
Fast and reliable is required.
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4. Local Service Provider Capabilities
In addition to community outreach meetings, NEO conducted individual interviews with the
local service providers currently providing Internet services in the community. Although the
providers have invested in limited fiber optic infrastructure to key businesses and anchor
tenants within the Town, the existing provider’s networks are primarily based upon cable
modem, Digital Subscriber Line (DSL) and wireless technologies. Each of these network
technologies are shared; meaning, as more users are on the network, the capacity and
availability of bandwidth is diminished. DSL service is provided by copper telecommunication
lines and can carry high bandwidth signals only for a short distance – a few hundred yards;
after which the signal is degraded and bandwidth diminishes. While cable modems generally
provide transmission speeds of anywhere between five and 50 megabits per second on the
download (and are generally much slower when uploading), this technology is shared and
therefore, all users on the network share this bandwidth. For example, if there are 100 users
sharing 50 Mbps, each user receives .5 Mbps of service.
Fiber optic technology provides two-way speeds of up to 1 Gigabit per second, with 10 Gigabit
systems now coming to market. This is 1,000 times to 10,000 times faster than DSL, wireless and
cable modem networks. Additionally, the carrying capacity of fiber is unlimited. As fiber optic
technology transmit pulses of light, more bandwidth can be delivered on a fiber optic network
by adding various colors of light or additional spectrum. Fiber is unique because it can carry
high bandwidth signals over long distances without signal or bandwidth degradation and it can
provide that capacity in both directions – for both upload and downloading information.
The current service providers do not have plans to upgrade their networks to Fiber to the Home
in Estes Park. The current local providers have access to limited capital and therefore, simply
cannot implement this technology throughout the community. As the existing networks that are
built on DSL, wireless and cable modem do not support the needs of bandwidth today, the
problem will only grow bigger as time goes on. . Internet bandwidth consumption is doubling
every year. With continued explosive national growth in demand for bandwidth for the
foreseeable future, the lack of existing infrastructure to support bandwidth consumption is a
problem that is not going away.
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5. Ownership Model Recommendations
There are a number of considerations to how the network can be operated and who or what
type of entity would own the network. The primary considerations are the regulatory
environment, how the network could be financed, the weighing of control, risks and rewards
and finally, what entity is most likely to succeed in the implementation of the network and
strategy. The pros and cons of the various organizational structures and examples of various
communities that have used the different types of organizational structure were provided as a
deliverable to this project to the Town Trustees in May. NEO Fiber recommends that the Town
of Estes Park own and operate a fiber optic network as either part of the Town’s Power and
Light division or as a separate enterprise within the Town. This recommendation is given for
the following reasons:
1. There are no regulatory constraints for the Town to own and operate
telecommunications infrastructure. Further description of the regulatory environment is
provided below.
2. The existing service providers are not able to and therefore will not implement a fiber
optic network to every home and/or business. In interviews with local service
providers, availability of capital is limited and therefore the local service providers will
not be able to have access to the amount of capital needed to implement a Fiber to the
Home/Fiber to the Business network. CenturyLink does not currently have plans to
implement FTTH/FTTB in Estes Park, nor does Baja Broadband/TDS.
3. The Town of Estes Park could fund the network through revenue bonds, using revenue
generated from use of the FTTH/FTTB network and the network itself as collateral.
Funding could also be obtained through general obligation bonds. Both revenue and
general obligation bonds have relatively low interest rates, a longer term (20-30 years)
and often can be set up to include payments of interest only for the first one – three
years. Sometimes interest is tax exempt for municipal and revenue bonds. Debt
coverage is one of the biggest risks for these networks and the Town of Estes Park can
mitigate this risk as it has access to low interest and flexible, long-term payment plans.
Additionally, there are loan and grant programs that are available for municipalities and
utilities. Obtaining grant funding for implementation of the network is another possible
option that is available to the Town of Estes Park. The grant program that is available
through Colorado’s Department of Local Affairs is available for municipalities and
regional councils of government to improve telecommunications and broadband
infrastructure. It is anticipated, however, that grants would cover only a fraction of total
capital costs.
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4. The Town of Estes Park’s Power and Light Division, as a utility, has customer service,
billing and operating experience. At the Town’s option, the functions of operating a
FTTH/FTTB network can be outsourced to existing service providers, providing
opportunities for Public/Private Partnerships and leveraging the existing service
providers’ experience. Some of the operating and capital expenses of annual pole rental
fees, and expenses for submitting permits, can be lowered by having the Town of Estes
Park own and operate the network versus having the private sector do so.
5. The Town of Estes Park can put in place policies to further help in building out
telecommunications infrastructure. Policies such as Dig-Once, Joint Trench Agreements,
and a streamlined permitting process can be implemented to leverage other public
works projects that will allow the Town to further build out telecommunications
capacity.
6. The Town of Estes Park Power and Light Division is planning to implement smart-grid
technology that would be connected with a fiber backbone network. Smart-grid
technology will assist the power division in operations, maintenance and load-balancing
energy resources. Two of the highest cost locations for operations and maintenance of
the power distribution are located within Glen Haven and Allenspark. The Town of
Estes can build a fiber network connection to these locations, lowering operations and
maintenance expenses for the power division and at the same time, offer advanced
broadband services to place that have dismal service today. Additionally the Town is
looking at smart-parking and smart-parking meters that can utilize the fiber optic
network. The fiber network can serve multiple purposes – automated meter reading
and smart-grid, parking applications and providing advanced broadband and data
services to the community. Other e-government applications can also be supported on
the FTTH/FTTB network.
7. The Town of Estes Park has a vested interest in the local vitality and economic
development opportunities that need adequate telecommunications and broadband
infrastructure to be supported. The Town of Estes Park can control its own destiny in
offering robust infrastructure to support further economic development, education,
medical and e-government applications, not waiting for the private sector to solve a
problem that will only become more of an issue as bandwidth needs continue to expand.
As a refresher, further information is provided below in regards to the reasons why NEO Fiber
is making this recommendation.
Regulatory Environment. The first consideration in determining models for ownership and
operations structure is to consider the regulatory environment in Colorado and specifically,
within the Town of Estes Park and whether or not there are any limiting factors in regards to
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the Town of Estes Park building telecommunications or broadband networks, providing
services, entering into public - private partnerships and/or financing a broadband build.
By a vote of the Town’s citizens in February of this year, the Town has restored the authority it
had prior to passage in 2005 of the state statute known as Colorado’s Senate Bill 152. The
wording of the Town’s ballot issue was:
“Without increasing taxes, shall the Town of Estes Park reestablish the Town's right to provide
all services restricted since 2005 by Title 29, Article 27 of the Colorado Revised Statutes,
described as “advanced services,” “telecommunications services” and “cable television
services,” including any new and improved high bandwidth services based on future
technologies, utilizing community owned infrastructure including, but not limited to, the
existing fiber optic network, either directly or indirectly with public or private sector partners,
to potential subscribers that may include telecommunications service providers, residential or
commercial users within the Town and the service area of the Town's light and power
enterprise?”
The wording of the ballot language is quite broad, and references the authority to “provide all
services” that were previously restricted by SB 152. The ballot language also specifically
references public – private partnerships when it authorizes the Town’s involvement in
broadband “either directly or indirectly with public or private sector partners…” Therefore, the
Town has very broad authority to enter into any one of the wide variety of public – private
partnerships that exist today or may be developed in the future. Any restrictions or limitations
are based upon general authority of a statutory municipality and not as a result of state law
addressing local government involvement in broadband matters.
Financing of a broadband network, just like the financing of any other public project, is
governed by state law, and primarily by the Constitutional Amendment known as the
Taxpayer’s Bill of Rights (TABOR). Colorado Constitution, Article X, Section 20. With respect to
incurring debt, Section 20 (4)(b) of TABOR requires an election prior to “creation of any
multiple-fiscal year direct or indirect district debt or other financial obligation whatsoever
without adequate present cash reserves pledged irrevocably and held for payments in all future
fiscal years.” To the extent that the financing of a broadband network, or any components of a
network would require the issuance of debt, the Town would be required by TABOR to seek a
vote of the registered electors in the Town. To the extent that the Town owns or controls
existing network facilities that it wishes to use in a network, or has the financial resources to
pay for new facilities, it may do so without an election.
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Statutory municipalities are granted their authority in Title 31 of the Colorado Revised Statutes.
Estes Park is a statutory town. Among the powers of statutory municipalities are the power to
enter into contracts and the power to acquire, hold, lease, and dispose of both real and personal
property. C.R.S. 31-15-1(b) and (c). The Town also has the power to contract indebtedness
(subject to TABOR) by borrowing money or issuing the bonds of the municipality “for any
public purpose of the municipality, including but not limited to the following purposes: Supplying
water, gas, heating and cooling, and electricity; purchasing land; and purchasing, constructing,
extending, and improving public streets, buildings, facilities, and equipment…” C.R.S. 31-15-
302(1)(d)(I). While this section of the statute does not specify telecommunications, the authority
granted to Towns is specifically not limited to the examples stated, and the broadband facilities
the Town is considered would, according to Denver-based attorney, Ken Fellman, be deemed a
public purpose, and therefore permitted. That being said, the total amount of the Town’s
indebtedness for all authorized purposes may not exceed three percent of the actual value, as
determined by the assessor, of the taxable property in the Town. C.R.S. 31-15-302(1)(d)(II).
Financing Options. Other considerations for choosing an ownership model include the ability
to receive financing and funding to pay for the capital costs of the network construction.
Municipalities may finance these networks through obtaining revenue bonds or general
obligation bonds. This financing is typically available for low interest rates of 3-6%.
Alternatively, financing for a private sector fiber network may have interest rates of 5-15%.
Certain financing and funding programs restrict who is eligible to apply for and receive
funding. The federal grant and loan programs available for funding broadband construction
include the following:
State-Level
Grants DOLA
Rural Broadband
Experiments, Connect
America
Community Connect
Grants
Distance
Learning and
Telemedicine
Grant Program
Health
Connect, Rural
Healthcare
Program E-rate
Eligibility
Regional Council of Governments Yes -----
Local Government, Tribes Yes Yes Yes Yes --
Non-profit -Yes Yes Yes --
Corporations -Yes Yes Yes --
Cooperatives -Yes Yes Yes --
Education ---Yes -Yes
Medical Providers ---Yes Yes -
Eligible Telecommunications Carrier -Required ----
Timing Ongoing
November 7, 2014; Phase II
in 2015
Grant cycle is in early
part of year.
How much?
$100M total, grant
amounts dependent upon
technology/bandwidth
Grants available
for Equipment,
inside wiring and
"other facilities"
Federal Level
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The Colorado Department of Local Affairs (DOLA) has announced a $20 Million grant program
for regional councils of governments and municipalities. In 2015, DOLA will have three rounds
of financing applications with deadlines for grant submission being April 1st, August 1st and
December 1st. Recently, we learned that such funds are likely to be exhausted by the December
1st round of applications. Further funding will depend upon legislative action.
The Rural Broadband Experiments and Connect America programs are available to unserved
areas; the definition for eligibility is 3 Mbps combined upload and download. As the FCC in
2015 raised the definition of served to 25 Mbps download and 3 Mbps in upload speeds, there
may be funds available through the Connect America to a wider group of communities. One
caveat currently of the Connect America program is that it is available for Eligible
Telecommunication Carriers.2
The Telecommunications Infrastructure Loan Program available through the USDA “makes
long-term direct and guaranteed loans to qualified organizations for the purpose of financing
the improvement, expansion, construction, acquisition, and operation of telephone lines,
facilities, or systems to furnish and improve Telecommunications service in rural areas. The
definition for “rural area” is within the boundaries of any incorporated or unincorporated city,
village, or borough having a population less than 5,000 inhabitants.”3 As of 2014, Estes Park’s
population is 5,901 people. Estes Park would not qualify as a rural area for this program and
therefore, would not qualify for the Telecommunications Infrastructure Loan Program.
The Rural Broadband Loan Program, which is part of the Farm Bill, “is designed to provide
loans for funding, on a technology neutral basis, for the costs of construction, improvement, and
acquisition of facilities and equipment to provide broadband service to eligible rural
communities.”4 Again, the definition of rural includes communities with a population less than
5,000 inhabitants.
Other sources of funding should also be considered. These include internal loans, bonds, TIF
and revenue funds, economic development financing programs, and crowd sourcing.
2 With assistance from the Estes Park EDC Competitive Broadband Committee, the Town submitted a letter of
interest to the FCC concerning Connect America in March 2014.
3 US Department of Agriculture Rural Development, About Telecom Infrastructure Loans, available at
http://www.rurdev.usda.gov/utp_infrastructure.html
4 US Department of Agriculture Rural Development, About the Farm Bill Loan Program, available at
http://www.rurdev.usda.gov/utp_farmbill.html
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E-rate is available for schools and in the past was used to as a reimbursement or supplement for
Internet access services. The E-rate program has had a number of changes recently; one
significant change is the ability to reimburse for construction of facilities (i.e. fiber optic cable) to
serve the school.
There are grant programs that are available for Telemedicine and Distance Learning as we ll as
program targeted specifically for Rural Health.
There are a number of other financing options some of which include; New Market tax credits,
for which allocations would have to be secured; economic development retail sales tax funds,
and bond financing through a number of different structures and types of bonds.
Control, Risk and Reward, Local Vested Interest. Other considerations for selecting the most
appropriate ownership model include balancing the tension between control, risk and rewards.
Control considerations include who owns the network and makes decisions regarding how the
network is used coupled with who maintains the network and the types and levels of services
offered. Many proponents of community broadband networks are in favor of having a local
entity own the network.
Local ownership implies having a vested interest in the economic outcomes for the community.
Networks are built to spur economic development and are built to key anchor institutions that
require high availability of bandwidth.
A local entity may own the network, but the impact of the cost of building the network must be
weighed against the risks of doing so. Fiber networks are capital intensive. Consideration of
bearing the financial risk must be weighed against the rewards that the network could
potentially bring to the community. Rewards of local ownership of the network may include
more abundant broadband, higher bandwidth speeds available, and lower costs to end users.
These attributes may also entice companies, research facilities, education centers and
entrepreneurs to re-locate to the community. The network infrastructure then becomes a
catalyst for economic development. Owning the network can give the local entity more control
over the services being offered. For example, if the network owner provides services directly to
the end user using a retail model, the network owner sets pricing and service offerings.
Ability to Finance the Network. As the option to finance the capital costs of the network
through low interest-bearing revenue bonds, the risk of debt coverage is lower for the Town of
Estes Park to finance the capital costs than having another organization fund it. Municipal
securities are issued to finance public-purpose projects for infrastructure such as roads, airports,
hospitals, school, water and sewer systems and telecommunication networks. Generally,
municipal bonds fall into one of two categories – general obligation bonds or revenue bonds.
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Interest income is generally federally tax exempt; although there are several types of general
obligation and revenue bonds and it should not be assumed that all bonds are tax exempt.
General obligation bonds are backed by the full faith and credit of the governmental entity, and
taxes can be issued to pay back the loan. Revenue bonds are secured by revenues generated by
the issuer or by certain taxes such as sales, fuel or hotel occupancy taxes. As community
broadband networks are considered infrastructure that serves the public purpose,
municipalities can use bonds to finance the construction costs.
Leverage existing skills and systems in place. Estes Park’s Power and Light Division has
many desirable and already established operational skills and systems in place. These skills
and systems include an established customer call center and/or a billing system. Estes Park’s
Power and Light Division already maintains electric infrastructure and owns bucket trucks and
has outside plant engineers that maintain power lines and equipment. The skills needed t o
maintain a fiber network may be taught to existing electric department employees that are
already familiar with maintaining outside plant or some of these functions can be outsourced to
local service providers. Estes Park may own the network, but outsource portions of the
operation and maintenance of the network to another entity, creating opportunities for Public-
Private Partnerships with the local service providers.
Favorable Policies. A municipality may also have the ability to implement favorable policies
and ordinances to facilitate community broadband network construction. For example, the
Town may have a “Dig Once Policy” that requires all public works, utility and/or road
improvement projects to install additional conduit for the Town while there is an open trench.
The Town of Estes Park may also have an ordinance whereby any abandoned fiber located
within the Town’s limits reverts to the Town’s ownership after a period of time. Having these
policies in place allows the Town of Estes Park to have access to conduit and fiber that could be
used to build infrastructure. Either way, much of the capital costs of opening a trench and
installing conduit are greatly reduced by having these policies in place. It is our
recommendation that these two polices be put in place within Town of Estes Park at the earliest
opportunity, no matter what model is used.
Leveraging Utility Department Needs. Estes Park’s Power and Light Division is already
seeking ways to implement smart-grid technology to help lower operations and maintenance
costs. This technology can be implemented on the FTTH/FTTB network. Other applications
such as the Town’s smart parking meters and signage notifying the public of available parking
or road congestion can be implemented on the fiber network.
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6. Possible Private-Public Partnership Roles for Current
Local Service Providers
At the Town’s option, a Public/Private Partnership (“PPP”) model could be set up to reduce the
operational risks potentially for the Town of Estes Park, and yet provide all of the benefits that
are associated with local ownership and patient funding. A PPP is a negotiated contract
between a public and private entity to fulfill certain requirements and obligations. The Town of
Estes Park could engage in a Request for Proposal process with local and national service
providers for many of the functions associated with building out and operating the network.
The following functions are possible roles for current local service providers:
Design and engineering.
Construction of the network.
Service turn-up, installation and maintenance
Marketing and sales activities
Customer service, billing and trouble resolution
Network monitoring
Throughout the community engagement process and in conversations with the broadband
steering committee and the Town Trustees, it was expressed that the community wants to
engage with the local service providers. The two municipal enterprise business models that are
financially sustainable provide for possible Private-Public Partnerships for the current local
service providers. Final design, engineering, project management, program management and
construction of the network would be outsourced. This opportunity represents approximately
$27 - $30 Million in potential revenue to the existing service providers. Additionally, the
network operations and management, truck rolls and repair service could be outsourced. Sales,
marketing, customer service and billing services could potentially be outsourced as well. Based
upon the assumptions used in the financial models, this represents $500k to $1.5M in annual
operating revenue potentially available to local service providers selected to perform these
outsourced functions for the Town. Estes Park would be required to competitively bid these
opportunities; however, a local preference could be given to local service providers and/or local
service providers that bid jointly with national providers. Requests for proposals may be in an
open and non-discriminatory process by which one or more service providers could be selected
to enter into a PPP with the Town of Estes Park for construction, maintenance and operations of
the FTTH/FTTB network.
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7. Laying the Groundwork, Methodology and Process
This section lays the groundwork for the financial plan as it discusses the existing fiber optic
network, NEO’s methodology for the preliminary design and projected capital costs,
information regarding defining and determining what is feasible and a discussion of pricing
considerations. The discussion of pricing considerations are included in this section to help
provide information on the most connected cities of the world and their pricing for abundant
broadband as well as studies on the average pricing in the world. This information will used to
help provide a comparison to what is currently being provided in Estes Park and to give a good
foundation for providing abundant broadband at an affordable price.
Existing Fiber Optic Network
The Town of Estes Park and Platte River Power Authority (PRPA) have b uilt a 72-count fiber
optic ring that includes the core commercial area and key businesses and government offices
throughout the community. Of the 72-fibers, there are approximately 24-32 fibers that are
available for expanded use. The primary goal of this engagement is to identify ways in which
the existing network could be better utilized to enhance and expand commercial access to the
fiber optic network as a key need for both existing businesses and for attracting new businesses.
PRPA was and currently is in the process of replacing much of their backbone fiber network
within Estes Park and sent a map of the locations in which various segments of the fiber
network would be replaced to NEO. NEO’s team provided information to PRPA on locations
where there should be additional access points (enclosures/cabinets/huts) to be able to access
the fiber optic network for later buildout into other commercial and residential areas.
A map of the existing fiber optic network and areas where the network will be upgraded and/or
replaced is shown on the following page.
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In addition to the fiber network that is installed within the community, Estes Park and PRPA
also own fiber from Estes Park through Loveland to the national internet backbone. This
portion of the network is currently deployed using Western Area Power Administration’s
(WAPA) transmission lines. Additionally, PRPA owns and services fiber optic facilities in all
four communities of its shareholders (Fort Collins, Estes Park, Loveland and Longmont.) PRPA
leases a portion of the existing fiber optic network both within the community and with access
to the community (on the WAPA transmission lines) to many telecommunication providers;
CenturyLink and Level 3 are among them.
During the September 2013 floods, CenturyLink lost its fiber through Glen Haven, causing an
outage that left much of Estes Park and other nearby communities without telecommunications,
phone, Internet and 911 services. For public safety reasons, re -establishing redundancy and
several diverse communication paths in and out of the Estes Park area were noted as important
goals of this project.
PRPA has engaged an engineering firm, Black and Veatch to further research ways to obtain
fiber optic connectivity in and out of Estes Park providing redundancy and connectivity to the
“outside world.” As PRPA has engaged Black and Veatch, NEO Fiber did not duplicate these
efforts by also providing research and preliminary capital costs and engineering services for
these potential routes; however, NEO’s team can assist in negotiations with the various entities
that are planning fiber optic expansion in and out of Estes Park. The entities that are currently
planning or considering fiber optic facilities are Crown Castle, the Colorado Department of
Transportation (CDOT), EAGLE-Net Alliance, Tri-State Power and Generation, PRPA and
CenturyLink. Possible routes include Highway 36, Highway 34 and through the Adams
Tunnel.
Connecting Anchor Institutions
NEO and the Competitive Broadband Committee put together a list of community anchor
institutions made up of government offices, schools, the hospital and other key medical
establishments, key business parks and large broadband users within the community. Anchor
institutions are often the largest employers and largest telecommunication/broadband users
within the community. NEO and the Competitive Broadband Committee, working with PRPA,
identified which anchor institutions currently had fiber optic connectivity. NEO’s team
designed a fiber network that leverages Estes Park’s existing network that would serve all of the
anchor institutions that were not currently being served with fiber optic facilities.
Below is a list of the anchor institutions identified in this process:
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Fiber Now?Count Anchor Name Full Address
1 County - Larimer County Shops, 543 Elm Ave, Estes Park
Yes 2 County - Larimer County's Estes Park offices 1601 Brodie Avenue, Estes Park.
3 Fed - Bureau of Reclamation, 2015 Marys Lake Road, Estes Park
Yes 4 Fed - East Portal YMCA Tunnel Road (Adam's Tunnel Road)
Yes 5 Fed - Mary Lake SubStation
6 Fed - US Interior Department, 841 S Saint Vrain, Estes Park
Fed - Postal offices
7 Fire - Allenspark Fire Protection (Same)
8 Fire - Allenspark Station 4 7400 Colorado Highway 7 Allenspark CO 80517
Yes 9 Fire - Estes Park Fire Department 901 North Saint Vrain Avenue Estes Park CO 80517
10 Fire - Glen Haven Area Fire Station 2 142 Elk Ridge Court Estes Park CO 80515
11 Fire - Pinewood Springs Fire Protection District, 61 Kiowa Rd, Lyons, CO 80540 (36 corridor to Lyons)
12 Forest - Roosevelt National Forest Estes Park Ranger Station 161 2nd Street, Estes Park
13 Library - Estes Valley Public Library District 335 East Elkhorn Avenue Estes Park CO 80517
Yes 14 Med - Estes Park Medical Center 555 Prospect Avenue Estes Park CO 80517
Yes 15 Med - Estes Park Medical Center Ambulance 555 Prospect Avenue Estes Park CO 80517
16 Med - Salud Family Health Center-Estes Park 1950 Red Tail Hawk Drive Estes Park CO 80517
17 Med - Prospect Park Living Center 555 Prospect Avenue Estes Park CO 80517
18 Med - Harmony Foundation 1600 Fish Hatchery Rd, Estes Park, CO 80517
19 Med - Timberline Medical PC 131 Stanley Ave Ste 202 Estes Park CO
Yes 20 Police - Estes Park Police Department 170 Macgregor Avenue Estes Park CO 80517
Yes 21 Police - Estes Park Police Department Jail 170 Macgregor Avenue Estes Park CO 80517
Yes 22 Police - Estes Park Police Department PSAP 170 Mcgregor Estes Park CO 80517
Yes 23 County - Larimer County Sheriffs Office - Estes Park Substation 1601 Brodie Avenue Estes Park CO 80517
24 Rec - Aquatic Center 660 Community Drive
25 Rec - Estes Valley Recreation and Parks District 690 Big Thompson Ave, Estes Park, CO 80517
26 Rec - Youth Center 380 Community Drive, Stanley Park
27 RMNP - Rocky Mountain National Park
EAGLE-Net 28 School - Estes Park Elementary 1505 Brodie Avenue Estes Park CO 80517
EAGLE-Net 29 School - Estes Park High 1600 Manford Avenue Estes Park Co 80517
EAGLE-Net 30 School - Estes Park Middle 1500 Manford Avenue Estes Park CO 80517
EAGLE-Net 31 School - Estes Park Middle School 1500 Manford Avenue Estes Park CO 80517
32 School - Estes Park WIC Clinic 1601 Brodie Avenue Estes Park CO 80517
EAGLE-Net 33 School - Park (Estes Park) R-3 1605 Brodie Avenue Estes Park CO 80517
School - American Honda Education Corporation, Eagle Rock
34 Town - Conference Center 101 S St Vrain Ave Estes Park CO 80517
Yes, PRPA and RMDAS 35 Town - Fairgrounds 1209 Manford Ave Estes Park CO
Yes 36 Town - Fleet Maintenance 575 Elm Rd
Yes 37 Town - Housing Authority 500 Big Thompson Ave
38 Town - Museum 200 4th St, Estes Park, CO 80517
Yes 39 Town - Senior Citizens Center, 220 4th St Estes Park CO
Yes 40 Town - Water Treatment Plant at Mary's Lake
Town - Water Treatment Plant at Glacier (between YMCA and Park
Yes Town - Visitor's Center 500 Big Thompson Ave
Yes Town - 1470 AM Radio Gear Prospect Mountain
Visit Estes Park/Local Marketing District 1200 Graves Avenue
Yes 41 Town of Estes Park 170 Macgregor Avenue Estes Park CO 80517
42 Utility - Allenspark Water & Sanitation, 14861 State Hwy 7, Allenspark, 80510.
Yes 43 Utility - Estes Park Power SubStation 5
Utility - Estes Park Water Department
44 Utility - Estes Park Sanitation District, 1201 Graves Avenue, Estes Park CO 81517
Yes 45 Utility - Power and Light Service Center
Yes 46 Utility - Prospect Mountain (wireless towers)
47 Utility - Upper Thompson Sanitation District, 2196 Mall Road, Estes Park, CO 80517
State - CDOT shops on Elm
Yes, PRPA and
CenturyLink ISP - Airbits 439 West Elkhorn Ave
Yes, PRPA and
CenturyLink and Level 3 ISP - Estes Valley Networks 1180 Woodstock Drive
RMDAS Fiber Manske's Building Across the street from 1180 Woodstock Drive
RMDAS Fiber Judy Manske's complex corner of RT7, 1st street and RT36
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This by all means does not need to be a final and conclusive list of anchor institutions and some
listed occupy the same building/physical space; however, NEO based the design and capital
cost assumptions based upon this preliminary list of locations.
A GIS map of the proposed fiber network design has been provided to PRPA and to Town staff
as well as the Competitive Broadband Committee.
Expansion into Neighborhoods
In addition to a map of the existing fiber optic network, NEO obtained GIS mapping and parcel
data information on the various neighborhoods, residential and business areas within the
community by working with Larimer County’s GIS department. Additionally the Town of
Estes Park’s GIS Consultant from InVision GIS provided utility maps of Estes Park Power and
Light’s existing electric poles and conduit. InVision GIS also provided unit counts of existing
utility customers by neighborhood. NEO aligned potential phasing and capital costs with Estes
Park’s comprehensive plan which identifies various neighborhoods throughout the community.
Below is a map from Estes Park’s comprehensive plan, showing the various neighborhoods and
their boundaries.
Businesses
48 Stanley Hotel
49 Wellness Center
50 Lower and Upper Stanley Village
51 EP News 191 Woodstock Drive #2 Estes Park CO 80517
52 EP Trail Gazette 351 Maraine Ave Suite B Estes Park CO 80517
53 Nick Mollé Productions - Estes Park TV 142 E Elkhorn Ave, Estes Park, CO 80517
54 US Bank 363 East Elkhorn
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Below is mapping and utility counts by neighborhood provided by InVision GIS.
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NEO’s team identified the existing electric poles by neighborhood and provided preliminary
capital costs for building a Fiber to the Home (FTTH) and Fiber to the Business (FTTB) network
using existing electric poles when possible. From here, NEO’s team identified preliminary and
projected capital costs to serve the anchor institutions, the downtown area, Highway 34 and
Highway 36 and each potential neighborhood.
Projected Capital Costs, FTTH/FTTB and Possible Phasing
The following capital costs are projected by neighborhood for a Fiber to the Home (FTTH) and
Fiber to the Business (FTTB) network in Estes Park. These capital costs are based upon the
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assumption of deploying aerial fiber in the communications space on existing utility poles and
are based upon an initial take rate assumption of 40%.
To further break down these costs into timing of how capital is spent, there are two instances in
which capital is spent for a FTTH/FTTB project. The first instance is when the backbone or
distribution network is built, and equipment to support the network is established at a
centralized location. Total costs for the full-region distribution network are estimated at $17.2
million. The second instance is when the customer subscribes to service and the network is
extended from the backbone network to the home or to the business. Equipment is installed at
the home or business and the service is provisioned to be turned on. These two capital spends
are often referred to as “to Pass” the customer and “to Light” the customer. Here is a
breakdown of these costs:
Capital Costs Summary, at 40% Take Rate Residential Allenspark Glen Haven Businesses Total
Anchor Tenants $ 1,904,069 1,904,069$
Allenspark Connection $ 1,135,512 1,135,512$
Allenspark 1,774,960$ 1,774,960$
Beaver Point 2,163,075$ 2,163,075$
Carriage Hills 3,021,392$ 3,021,392$
Downtown 1,326,076$ 1,326,076$
Fall River 1,772,142$ 1,772,142$
Fish Creek 5,203,155$ 5,203,155$
Glen Haven Connection 684,892$ 684,892$
Glen Haven 440,121$ 440,121$
Hwy 34 and Hwy 36 1,368,557$ 1,368,557$
North End 3,953,618$ 3,953,618$
Spur 66 2,134,749$ 2,134,749$
Totals 18,248,131$ 2,910,471$ 1,125,013$ 4,598,702$ 26,882,318$
Capital Costs Summary, Outside Plant Only, to
"Pass" Customer Residential Allenspark Glen Haven Businesses Total
Anchor Tenants $ 1,003,598 1,003,598$
Allenspark Connection $ 997,602 997,602$
Allenspark 1,010,442$ 1,010,442$
Beaver Point 1,270,510$ 1,270,510$
Carriage Hills 2,084,025$ 2,084,025$
Downtown 750,281$ 750,281$
Fall River 1,048,143$ 1,048,143$
Fish Creek 3,227,696$ 3,227,696$
Glen Haven Connection 601,658$ 601,658$
Glen Haven 134,479$ 134,479$
Hwy 34 and Hwy 36 921,214$ 921,214$
North End 2,660,486$ 2,660,486$
Spur 66 1,450,367$ 1,450,367$
Totals 11,741,226$ 2,008,044$ 736,137$ 2,675,093$ 17,160,500$
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Using the Communications Space vs. Power Space on Utility Poles
When other fiber optic cables occupy the communications space, they sometimes must be
moved to allow space for the placement of a new fiber optic attachment in compliance with
National Electric Safety Codes for clearance between power and communication cables, and
between communication cables and ground levels. Make-ready tasks and expenses therefore
include moving existing utilities and installing extension arms.
When poles cannot be made ready for an additional fiber optic attachment by moving
communication cables on the existing pole and keeping all clearances from ground and power
space, it may become necessary to place a taller pole that would allow the new fiber attachment
with adequate and required clearances. In some cases, the poles are too old and worn to support
the weight of additional fiber placement. If this is the case, all utilities currently on the pole
would need to be moved from the old pole to the new pole. These tasks bump up the costs for
make ready expenses and can also delay construction of the network. This has been the case
with the City of Longmont, as they are experiencing higher make ready costs to accommodate
placement of fiber cable using their poles.
Because Estes Park Power and Light operates transmission and generation facilities, it is subject
to requirements and regulations by the North American Electric Reliability Corporation (NERC)
and the Federal Energy Regulatory Commission (FERC). One of the most important of these
requirements is that Estes Park Power and Light must maintain control of infrastructure located
in its power space on utility poles, including any maintenance activities. This means that Power
and Light could install fiber in their power space, but they would be required to do the actual
placement and the maintenance activities associated with the fiber. Their linemen would place
and maintain the fiber in the power space because they are certified to work in the power space
or certified linemen would be hired to place fiber. There are other practices in the FTTH
Capital Costs Summary, at 40% Take Rate, to
"Light" Customer Residential Allenspark Glen Haven Businesses Total
Anchor Tenants $ 900,471 900,471$
Allenspark Connection $ 137,909 137,909$
Allenspark 764,518$ 764,518$
Beaver Point 892,565$ 892,565$
Carriage Hills 937,368$ 937,368$
Downtown 575,795$ 575,795$
Fall River 723,999$ 723,999$
Fish Creek 1,975,460$ 1,975,460$
Glen Haven Connection 83,234$ 83,234$
Glen Haven 305,642$ 305,642$
Hwy 34 and Hwy 36 447,344$ 447,344$
North End 1,293,131$ 1,293,131$
Spur 66 684,383$ 684,383$
Totals 6,506,905$ 902,427$ 388,876$ 1,923,610$ 9,721,818$
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industry to place most fiber in the power space, and to place cabinets and taps in the
communications space, so they would be accessible to general contractors and other
communications providers and would not be restricted to power space certified crews or Estes
Park Power and Light linemen. This is a practice used in other FTTH deployments with power
utilities, including those in Jackson and Pulaski, Tennessee, and in Bristol, Virginia. Atlantic
Engineering Group, NEO's subcontractor for this project, was the primary FTTH design and
engineering firm for many of these projects and may be able to lend practices to be considered
to reduce capital costs associated with make ready expenses, and yet also address safety
concerns for use of the power space. If the power space is used for placement of fiber instead of
the communications space, make ready expenses could potentially be reduced by nearly $5
million, reducing the overall projected capital costs from $26.9 Million down to $22 Million.
Detailed excel spreadsheets identifying the assumptions, the percentage of aerial vs.
underground fiber, projected bills of material and labor costs were provided for projected
capital costs for use of the communications space and for use of the power space by NEO to the
Competitive Broadband Committee and to Town staff.
What are We Aiming For? Pricing Considerations
The current model for providing abundant Internet or broadband services is based upon a
model of scarcity. In other words, in order to get Gigabit-type Internet services, as there is not
fiber available on a wide-spread basis, users must pay a lot for this service. Incumbent
providers prefer to offer services through the existing infrastructure. This model of scarcity
makes abundant broadband unaffordable. Currently the businesses and anchor institutions do
not ever or rarely subscribe to Gigabit-type services. Gigabit Internet service pricing currently
is provided at approximately $3,000 per month. If the Town embarked upon building a FTTH
network, targeted pricing for businesses and anchor institutions would be $300 - $500 per
month. Residential pricing is targeted at $70 - $95 per month for Gigabit Internet. This would
dramatically transform the pricing and broadband offering that is currently available in Estes
Park, making high-bandwidth Internet services attainable, accessible, abundant and affordable.
Below is a discussion of the best pricing and abundance – or service offerings in the world as
well as a discussion of the average price per Mbps in the world.
Currently anchor institutions and service providers are paying a range of $1,000 - $1,500 per
month for 100 Mbps of service and a handful of customers are receiving Gigabit service for
$3,000 per month. Most of the attendees in the community meetings, according to the
questionnaire, are paying $50 - $100 per month for up to 6 - 15 Mbps. The goal of this project is
to transform this model of pricing dramatically. The question is, what level of service is
appropriate and at what price?
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In order to answer that question, it is helpful to understand what is being offered in other cities
across the U.S. and the world, and what price points are offered as well. According to the Open
Technology Institute’s 2014 Cost of Connectivity Report5, the top 25, best-in-class or speed
leaders around the world have the following service levels and pricing:
The U.S. cities are highlighted. The price per Mbps ranges from .32/Mbps to .07/Mbps.
Since 2012, almost every city in the ranking above has increased the top speed offering and has
dramatically lowered their pricing. For example, Lafayette, LA charged $999.95 per month for
its gigabit service in 2013 and dropped that price to $109.95 per month in 2014. In Mexico City, a
5 See http://www.newamerica.org/downloads/OTI_The_Cost_of_Connectivity_2014.pdf New America
Rank City ISP
Download
Speed
Upload
Speed Price
Price
per
Mbps
1(tie)Seoul HelloVision 1000 1000 30.30$ 0.03$
1(tie)HongKong Hong Kong Broadband Network Ltd1000 1000 37.41$ 0.04$
1(tie)Tokyo KDDI 1000 1000 39.15$ 0.04$
1(tie)Chattanooga, TN EPB 1000 1000 69.99$ 0.07$
1(tie)Kansas City, KS Google Fiber 1000 1000 70.00$ 0.07$
1(tie)Kansas City, MO Google Fiber 1000 1000 70.00$ 0.07$
1(tie)Lafayette, LA LUS 1000 1000 109.95$ 0.11$
8 Zurich Swisscom 1000 100 157.55$ 0.16$
9 Bristol, VA BVU 1000 50 319.95$ 0.32$
10 Bucharest RCS & RDS 1000 30 32.35$ 0.03$
11 Paris Free 1000 .35.28$ 0.04$
12(tie)Amsterdam XS4ALL 500 500 72.29$ 0.14$
12(tie)Copenhagen SES-NVE 500 500 129.24$ 0.26$
12(tie)Riga Baltcom 500 500 142.29$ 0.28$
12(tie)Los Angeles, CA Verizon 500 500 299.99$ 0.60$
12(tie)New York, NY Verizon 500 500 299.99$ 0.60$
12(tie)Washington, DC Verizon 500 500 299.99$ 0.60$
18 Toronto Rogers 350 350 182.25$ 0.52$
19 Prague UPC 240 20 83.63$ 0.35$
20(tie)San Francisco, CA Webpass 200 200 30.00$ 0.15$
20(tie)Mexico City Axtel 200 200 156.32$ 0.78$
22 Berlin Deutsche Telekom 200 100 57.63$ 0.29$
23 Dublin UPC 200 10 63.41$ 0.32$
24 London Virgin 150 0 55.71$ 0.37$
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200 Mbps package was available for nearly $100 less than the price offered for that speed by a
different provider in 2013.
Per the report, the average download speed of plans in this ranking increas ed from 233 Mbps in
2012 to around 500 in 2013, and almost 650 Mbps in 2014. Nearly half of all cities in this ranking
offer Gigabit speeds, and more than two-thirds of all cities offer service over 500 Mbps.
Per the rankings, Chattanooga, TN; Bristol, VA; and Lafayette, LA, now offer some of the fastest
and most affordable high-speed residential products available in the country despite the fact
that they have some of the lowest population densities among the cities that are surveyed. All
three cities offer gigabit speeds that place them on par with Hong Kong, Seoul, Tokyo, and
Zürich. All three of these examples are city- or utility-owned entities, rather than a private
sector ISP. In fact, the only other provider that offers gigabit speeds in the cities we surveyed is
Google Fiber, which sells 1 Gbps service in Kansas City, KS, and Kansas City, MO, for the same
price as EPB in Chattanooga, TN.
By contrast, Verizon’s top tier is a 500 Mbps symmetrical connection that is available to some
residents of New York, NY; Washington, DC; and Los Angeles, CA for about $300/month,
which is significantly more than the cost of a gigabit in Chattanooga, TN (around $70/month) or
Lafayette, LA (around $110/month) and comparable to the price of the gigabit package in
Bristol, VA (around $320/month) but only half the speed.
Also to note from the report, rural areas with low population density have historically struggled
to attract adequate private sector infrastructure investment, similar to what has been the case in
Estes Park. More recently, many of these local communities have taken broadband investment
into their own hands and now provide residential service through a publicly-owned network or
utility company. There are many examples of successful locally-owned networks. In general, the
research shows that these locally-owned networks tend to deliver better value to their
customers when compared on a price-per-megabit basis to competing cable and telecom
providers in their own cities.
Business customers for Google Fiber and Chattanooga do pay higher prices for Gigabit service.
Here is a summary of the services available in each of these cities:
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Another relevant data point is setting pricing for Estes Park is to understand on average, what is
being offered within the U.S. According to a broadband report by Point Topic6 which was
conducted in the first quarter of 2014, the average monthly combined stand-alone and bundled
residential broadband subscription for copper networks in North American came in at $8.54,
that for cable at $2.03 and that for fiber at $1.45. Point Topic found the global average monthly
charge for residential broadband services was $76.61. The average bandwidth provided for
residential services was 55 Mbps, meaning the global average cost per megabit was $1.39.
According to the report, The U.S. ranked 43rd of the 90 countries surveyed in Point Topic’s
market research and analysis, ranking just behind Colombia and one place ahead of Greece.
Monthly U.S. broadband subscription rates did fall below the global average of $76.61,
however. Access to actual U.S. average broadband pricing data requires a subscription to Point
Topic, but it’s estimated to be in the $60 – $65 price range.
These pricing examples can serve as a benchmark for Estes Park’s service providers as a
standard or goal for providing Gigabit service to the end-users. According to the Airbits and
Estes Valley Networks websites, the two companies offer the following service levels and
pricing to residential customers.
6 See http://www.telecompetitor.com/report-average-u-s-broadband-prices-are-below-world-
average-of-76-61/
Google Fiber Monthly
Fee
Residential Gbps service 70.00$
Residential Gbps service plus TV 120.00$
Business Gpbs service 100.00$
Chattanooga EPB Monthly
Fee
Residential Gbps service 70.00$
Residential 100 Mbps service 57.99$
Business Gpbs service 299.99$
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Both companies offer a seasonal service for $25 - $50 per month for a minimum of four months.
Neither Baja Networks/TDS nor CenturyLink advertise their pricing on their websites. It could
be assumed that pricing for Baja Network/TDS and CenturyLink are comparable to advertised
pricing for Airbits and Estes Valley Networks. This assumption is also verified by the results of
the surveys that were conducted.
The current residential price per Mbps in Estes Park is $5 - $12 for download speeds and $13 -
$50 for upload speeds. Airbits’ service offering of .35 Mbps was not used in the price per Mbps
calculation range. Again, the global average noted above is $1.39.
Recommended Pricing. Estes Park has several challenges that make the feasible financial
model difficult to achieve. First, the capital costs are higher than other cities because Estes Park
is located within a mountainous area where there is significant rock. Underground utility
construction is higher because additional costs must be considered for boring and trenching in
densely-rocky conditions.
The Town of Estes Park has a seasonal population resulting in uncertain revenue projections.
Although residents may continue to subscribe to broadband services while they are away for
security and video surveillance applications or to rent their property while gone, it is not certain
that they will continue to subscribe to service while away. Estes Park is a rural community with
low housing unit density. These factors drive the costs of providing fiber to the community to
be more expensive than metropolitan build-outs and the cost to build within the community to
be more expensive than in higher density or more populated areas.
Residential Service Price per
Month
Cost of
Download
Mbps
Cost of
Upload
Mbps
6 Mbps/3 Mbps $49 $8.17 $16.33
.35 Mbps/.35 Mbps $29 $82.86 $82.86
12 Mbps/6 Mbps $79 $6.58 $13.17
3 Mbps/1 Mbps $35 $11.67 $35.00
6 Mbps/1 Mbps $50 $8.33 $50.00
15 Mbps/3 Mbps $75 $5.00 $25.00
Airbits
Estes Valley Networks
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Therefore, the recommended pricing for services must take these conditions into consideration.
Much Better Speeds at the Same Price. One strategy for pricing is to offer 1 Gbps service -
which is 67 times faster than Airbits and Estes Valley Networks top tier offering (15 Mbps) - for
pricing that is comparable to their top tier offerings of $70 - $79 per month. This would put
Estes Park in the running for the top 24 fastest cities/towns in the world offering the most cost
effective bandwidth per Mbps. This pricing strategy was modeled and the financial model is
feasible only by offering services in a retail fashion – meaning, providing Internet services
directly to the end user. A minimum take rate percentage to achieve financial feasibility is 40%
at $70 per month. The financial results are positive – close to breakeven; however, NEO
cautions using this approach. It is better to have a financially sustainable plan than to need to
raise taxes later. There are other strategies to pursue that would strengthen the financial plan.
These include charging a tap fee or installation charge, having a minimal amount of
service/pricing a year for the seasonal population, accessing a monthly utility charge and/or
providing dark fiber services on new routes where there is excess fiber. These strategies are
discussed in detail under the Financial Plan section.
Much Better Speeds at Global Average Pricing. Another strategy for pricing is to offer 1 Gbps
service for the global average pricing per Mbps – or $139 per month. It is uncertain whether or
not services will be subscribed to at this level of pricing. If the typical customer subscribes to
Internet services currently for $50 per month for 6 Mbps download and 1 -3 Mbps upload, will
the residential customer pay $139 per month for much better services? In this case, comparing 6
Mbps to 1 Gbps, customers would receive speeds that are 167 times faster than current speeds.
This pricing strategy is feasible with minimum take rate percentages of 25%.
NEO’s Recommendation - Somewhere in Between, Less than $100/month. Perhaps another
consideration is to understand how the Internet has changed the way cable TV or entertainment
services are used. Typically, customers will pay $100 per month for cable TV and Internet
services combined. As more users are receiving cable TV programming and entertainment over
the Internet through companies such as Netflix, Hulu, Amazon, Vessel, YouTube, and Vimeo,
many cable TV customers are “pulling the plug” on their cable TV service. This may help
justify offering Gigabit service for $95 per month.
Pricing for Businesses. NEO recommends offering businesses two tiers of service levels at the
following price points:
100 Mbps $150/month
1 Gbps $400/month
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Take Rate Assumptions and Product Mix
The financial models were run based upon a take rate of 40% in the first year. The City of
Longmont is experiencing a take rate of 47% when the City runs fiber within the neighborhood.
Google Fiber will often conduct neighborhood competitions to see which neighborhood can
sign up and reach a certain take rate percentage first. Whichever neighb orhood reaches the
certain take rate first, will have fiber built to that neighborhood first. A good take rate goal for
pre-sign ups is 40%.
After the first year, the financial models were based upon additional take rate percentages of 5%
each year up to 55% (40% in the first year + 5% in the second year, 5% in the third year and an
additional 5% in the fourth year) for residential customers and additional take rate percentages
of 20% in years 2 and 3 up to 60% for businesses (40% in the first year, 20% in the second year
and 20% in the third year). The Fiber to the Home Council has conducted studies of municipal
broadband and has found the average take rate percentage for municipally-owned FTTH
network is 65% within three years of offering services. This percentage does not take into
consideration the transformation caused by offering Gigabit-type services. Take rate
percentages for fiber network with Gigabit services receive take rates of 40 -50% before
construction happens and 75% within the first three years of offering services.
Of those that took service, it was assumed that 50% of businesses would subscribe to the 100
Mbps service and 50% of the businesses would subscribe to the 1 Gbps service. For residential
service, it was assumed that all customers were offered a 1 Gbps service.
A Note about Phone Service and Cable TV Services.
Phone Service. With enhancements being made to cellular phones and the increasing mobility
needs of customers today, more customers are opting for cell phone services o ver their landline
phones. Smartphones have more advanced computing ability and connectivity than landline
phones. Smartphones are now cameras, media players, video cameras, GPS navigation units,
web browsers, and personal digital assistants.
Landline phone service is a product in decline. Only 30% of the American population have a
landline phone as of 2015. The FCC is recommending changing the Universal Service Fund,
which helped subsidize the installation of networks to build landline phones; to subsi dizing
broadband services. The Universal Service Fund would no longer subsidize landline phone
service, but would instead subsidize broadband or Internet services. Given these trends, NEO
is not recommending that Estes Park invest in infrastructure to provide phone service or VoIP
services.
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Cable TV Services. Video and cable TV usage is dramatically changing too. The top 12 cable
companies have all seen a dramatic decline in cable TV subscribers in the past twenty -four
months. Former pay-TV subscribers are opting for lower-priced Internet streaming solutions,
such as Netflix, Hulu and Amazon. The big three channels (ABC, NBC and CBS), as well as
most cable TV content is now offered online at no or very low cost depending upon the
programming. As customers are becoming more Internet-savvy, more content is now offered
online for free, and given the current context of the tough economic climate, when given a
choice, customers are discontinuing their cable TV subscriptions in favor of Internet
entertainment options.
The customer’s experience in the world of TV is well established and expectations are deep-
seated. Customers do not want to experience channel delay or service disruptions, which have
been typical in most IPTV service roll-outs. Initiating an IPTV service must meet or exceed
previous customer experience from cable or satellite companies. Market research shows that if
these experiences are not impeccable, the customer is already predisposed to changing services
should their expectations (or anybody else’s in the household, for that matter) not be met.
Offering Cable TV or IPTV services is challenging and complex. Even for existing service
providers or other utility providers that already have an operational team and systems in place,
launching IPTV service is unlike providing any other service offering in the past. The
complexity of the last-mile network infrastructure, i.e. the fiber from the curb to the premise, the
Customer Premise Equipment configurations, the difficulties in establishing programming and
distribution rights, competition among Fortune 500 companies, the complexity of the service
offerings, coupled with the customer’s established TV viewing expectations make offering IPTV
services difficult at best. It could take several years for Estes Park to overcome or build up to
the operational challenges of offering IPTV services. In several years, the number of subscribers
choosing pay-TV services will be even lower than it is today. Therefore, NEO is not
recommending that Estes Park offers Cable TV or IPTV services.
What about Wireless?
Wireless services are important to the community as well as wireless technology can serve the
mobile and portable customers and visitors to the community. Wireless services are an
important public amenity, but wireless will not replace or provide an alternative technological
solution over fiber networks. Many wireless access points and cell sites are already connected
through a fiber network; and therefore, wireless service should be considered an application on
a fiber network rather than a separate type of network.
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According to the service providers interviewed by NEO, there is currently network interference
experienced between the two or three wireless providers in Town. Wireless technology is in a
constant state of change with upgrades and new capabilities added each year. Typical wireless
networks must be upgraded every two years. The next generation of wireless technology –
Wireless Hotspot is currently being developed to allow the wireless connection to stay
connected (in other words, not drop the signal) while the user moves from one hotspot to
another (similar to cell phone technology). NEO recommends that if the Town of Estes Park
wanted to offer a wireless network to its constituents that it could certainly do so and fund the
network through excess cash flows generated from the broadband services but it should wait to
invest in the technology until the next generation of wireless hotspots is widely available and
tested. There may be another source of revenue available to the Town of Estes Park by offering
Wireless Hotspot services to visitors to the area. At the Town’s option, such services could be
offered through a public-private partnership.
Mobile backhaul is another revenue opportunity for the Town of Estes Park. Cellular data
traffic grew 300-fold from 2006 to 2013 and will grow another sixfold by 2017. The exploding
demands for mobile bandwidth are prompting wireless providers to upgrade the connections
from their cell sites to the Internet. This represents an opportunity for the Town of Estes Park to
offer dark fiber leases to mobile and cellular carriers, connecting their various cell sites
throughout the Town and to the Internet. 50% of cell sites today are now connected by fiber.
The next generation of wireless LTE Advanced will move all baseband processing to the cloud,
rather than to the cell site. This means that all cell sites will have to be connected via fiber to the
hubs where processing takes place – i.e. the Internet.
Defining “Feasible”
Before having a detailed discussion on each of the service delivery models, it is important to
note what makes a financial model feasible or perhaps what are the minimum gating scenarios
or financial results that make a project financially sustainable.
Every entity, whether it is a business, or a non-profit organization, or a government agency, will
have a different set of financial objectives for defining what is “feasible” in order to assist the
organization in making financial decisions. For example, a private sector company may need to
see an unleveraged IRR of 30% or greater in order to obtain financing to build a FTTH/FTTB
network. Being a municipality, in order to meet its goals, Estes Park may not need to see an IRR
of 30%; but rather simply a positive IRR.
NEO recommends the following financial feasibility objectives:
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1. Debt Service Constant on Outstanding Debt. The Debt Service Constant calculates the
factor that, multiplied by the original loan principal, yields the annual debt service
payment (principal plus interest) required to amortize a loan. NEO provided a Debt
Service Constant Percentage on Outstanding Debt with Net Operating Cash flows that
ask the questions, “Can Net Operating Cash flows cover the payment of principal plus
interest on the outstanding debt? And what percentage of Net Operating Cash flows
can service the debt?” When this formula is over 200 percent, there is a likely
opportunity to refinance; or use the collateral of the network and the collateral of the Net
Operating Cash flows to further expand the network. As a litmus test, it is desirable to
see if the network is “financeable” with this Debt Service Constant on Outstanding Debt
calculation of greater than 200 percent within the first 4-5 years.
2. Cumulative Cash flows of the Network over 10 years are greater than the Debt
Service. This objective provides that Estes Park will be able to cover its Debt Service by
the operating cash flows generated from the network and that after 10 years, cumulative
cashflows are greater than the debt.
3. Positive Income. Income from operations covers interest and taxes. As depreciation
and amortization are not subject to cashflow, NEO left these out of the assumptions.
This objective allows Estes Park to seek debt financing to build out a FTTH/FTTB
network; the operating income will cover interest and tax expenses.
4. Positive IRR. Estes Park may simply need to see a positive return on the investment.
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8. Service Delivery Models
The following chart summarizes the various service delivery models for FTTH/FTTB networks.
Two Service Delivery Models are Feasible
If Estes Park wants to provide pricing that is in the $70 - $95 price range for residential services
of 1 Gbps, than the retail models of providing Internet services directly to either the businesses
(model 4 above) and to the businesses and residential homes (model 5 above) are feasible.
NEO provided financial models for all of the various service delivery options. These options
ranged from providing dark fiber services - which the Town is currently providing; to
wholesale services - where the Town builds the network and current local service providers
provide Internet services; to retail models – where the Town builds the network and provides
services directly to the end users. All of the financial models are based on detailed, realistic
analysis and extensive real-world, industry-standard assumptions.
As the Town of Estes Park has higher than average capital costs due to being located in the
mountains with rocky conditions, and is rural and has a relatively low customer base, the two
models that are feasible and financially sustainable are ones in which the Town offers services
directly to end users.
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The Town could offer services on a wholesale basis; however, in order for this model to be
financially sustainable, the pricing to end users would need to be increased to a point where the
service is no longer affordable. Alternatively a wholesale model would work if the service
providers took a substantially lower percentage of the revenue than what has worked
throughout other FTTH communities that have deployed a wholesale open access network.
The two financially sustainable models produce a revenue stream for the Town that is similar to
the residual revenue stream of the Estes Park Light and Power Division. These two models –
the first model of providing services directly to the anchor institutions and businesses and the
second model to the business community as well as the residents and homes of the community
have successfully been deployed in numerous communities throughout the country. These two
models are what the City of Longmont is implementing. These models are financially
sustainable, have been successful in other locations and can be implemented in the Estes Valley.
The two models that are financially sustainable provide for possible Private -Public Partnership
roles for the current local service providers. Final design, engineering, project management,
program management and construction of the network would be outsourced. This opportunity
represents approximately $27 - $30 Million in potential revenue to the existing service
providers. Additionally, the network operations and management, truck rolls and repair
service could be outsourced. Sales, marketing, customer service and billing services could
potentially be outsourced as well. Based upon the assumptions used in the financial models,
this represents $500k to $1.5M in annual operating revenue potentially available local service
providers offering these outsourced functions for the Town. Estes Park would be required to
competitively bid these opportunities; however, a local preference could be given to local
service providers and/or local service providers that bid jointly with national providers.
Why are the Other Models Not Feasible?
Below is a description of each of the service delivery models and their financial results.
Infrastructure Provider. Currently Estes Park provides infrastructure through IRUs and dark
fiber leases to providers in the area. This is an inefficient use of the fiber because the fiber is
allocated on a 1:1 basis. This approach works when there is a large amount of fiber counts
available from the municipality to sell to the existing service providers. For example, if Town of
Estes Park built a 288-count fiber network, it could sell excess capacity to numerous service
providers in an open-access manner. This is not the case. The Town of Estes Park has 30-36
fibers available for use. There is not enough fiber to continue to offer dark fiber leases in this
manner in an efficient way.
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This approach does minimize Estes Park’s role in offering services and minimizes its capital
costs, its investment and its risks by shifting the capital costs of further expansion to the service
providers. The service providers would be required to spend the capital costs needed to
expand the network, and provide equipment to light up the network. This approach allows
service providers the greatest degree of flexibility in the broadband access network they
implement.
This approach is not currently working within the Town of Estes Park. The existing service
providers do not have access to capital that would be required to further build out to the homes
and businesses.
Government Service Provider. The municipality builds fiber to and provides services for
anchor tenants, government offices, public safety, schools, universities, and medical
establishments. In addition to providing more abundant broadband at an affordable pr ice to
these stakeholders, other services such as IT support, videoconferencing, software updates, etc.
can be provided and shared amongst governments to reduce costs and provide better e-
government applications.
After the financial model was run, it was found that providing fiber services to the Anchor
Tenants only is not feasible. The model never turns a profit and continues to lose money every
year. There are not enough customers generating sufficient revenue to cover the debt service.
Open Access Provider or Wholesale Model. An open access network is one in which the
physical access to the network is separate from the services that are offered on the network. In
its truest sense, the infrastructure owner does not supply services for the network; thes e
services are provided by the service provider. There is clear delineation of separation of
network ownership and service providers (i.e. wholesale only services). In many open access
networks, the network owner may also be the retail service provider (for example, offer retail
Internet services directly to end users) AND offer wholesale service is an open-access
environment or perhaps the municipality retains the ability to serve anchor institutions and/or
government agencies.
In order for this model to work, pricing would need to be increased dramatically – to a point
where customers may not sign up as the monthly rate would not be affordable or the service
providers would need to take a much lower percentage of the revenue. Industry averages of
revenue share provided to the infrastructure owner is in the 30-40% range. The service
providers would receive the bulk of the revenue (60-70%) as they are providing the Internet
backhaul and access, customer support, marketing and sales. The model was run at a 40%
revenue share to the Town. The following pricing would be financial feasible; however, it is
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questionable whether or not customers would subscribe to this service as it is much more
expensive than what they are receiving now.
Anchors and Businesses
Residents and Homes
Other differences in the Open Access or Wholesale Model than the Retail Model:
Internet Access and Backhaul Charges. The ISP would be responsible for providing
Internet services and would pay for backhaul and transport fees (“Internet supply”).
Cost for backhaul and transport fees for Estes Park would be $0.
Customer Care: The service providers would be responsible for Customer care; Estes
Park would have minimal customer care issues, cost per customer for Customer Care
changed from $5/customer in a Retail model to $.50/customer for the Wholesale Model.
General and Administration Costs are reduced in a Wholesale Model. This changed
from 5% of Revenue in a Retail Model to 2% of Revenue for the Wholesale Model.
Marketing and Sales. 3% of Revenue for Retail Services Model only; 0% for Wholesale
Services
In conclusion – the pricing is not affordable and the concern of meeting a 40% take rate
percentage to achieve financial feasibility may be difficult given the higher price needed to
make the model work.
Consequently, the following two models of providing retail services are feasible and the
financial results are strong.
Retail Service Provider Model, Businesses and Anchor Tenants. In this model, the
municipality builds the fiber network, installs electronics to light the network and provides
Businesses
Wholesale Revenue
to Estes Park
Retail, Pricing to
Customer
Revenue to
ISP
Shared Services: 100 Mbps Internet 75.00$ 250.00$ 175.00$
Shared Services: 1 Gbps Internet 225.00$ 750.00$ 525.00$
Residential, Build 1
Wholesale Revenue
to Estes Park
Retail, Pricing to
Customer
Revenue to
ISP
Shared Services: 100 Mbps Internet 45.00$ 150.00$ 105.00$
Shared Services: 1 Gbps Internet 67.50$ 225.00$ 157.50$
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services directly to the end users. In this model, the municipality competes directly with the
service providers offering services to the business and anchor tenants in the community.
The financial results are strong; the entity is projected to be profitable in year 1. All of the
feasibility objectives are achieved.
Retail Service Provider Model, Businesses and Residences. In this model, the municipality
provides Internet services to the businesses and residences within the community.
The financial results are strong; the entity is projected to be profitable in year 1. All of the
feasibility objectives are achieved.
A detailed financial plan is provided for the retail service models under the next section.
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9. Financial Plan and Results
Detailed financial models were run for all of the service delivery models discussed in Section 8.
These models have been provided to the Competitive Broadband Committee and to Town staff.
The financial model for providing services to all of the homes and businesses is discussed in
detail under this section. The assumptions for financing, the amortization schedule, revenue
assumptions, operational expenses and the financial results are provided herein. Additionally,
there are other options to consider which may further reduce the financial and operational risks
associated with community broadband networks.
Financing Assumptions, Amortization Schedule
The financial model assumes a low-interest revenue or general obligation bond or a low-interest
loan with an interest rate of 5% is used to finance the capital costs of the network. A 30-year
amortization schedule was used, with the assumption of paying principal and interest
payments immediately. Many of the financing mechanisms that Estes Park Power and Light is
using have the ability to pay interest only payments for one – three years. To be conservative,
the financial model assumes payment of principal and interest. As described in Section 7,
capital cost projections include building the backbone and distribution network plus providing
the drop cable, equipment and labor for an initial take rate percentage of 40%. It was assumed
that additional expansion of customers would be financed through debt rather than funded
through profits of the entity. This again, is a more conservative approach; however, there are
excess profits that are generated and therefore, expansion of the network could be funded
through operating cashflows or profit rather than additional debt.
Revenue Assumptions
Take rate assumptions for the first year were assumed to be 40%. After the first year, the
financial models were based upon additional take rate percentages of 5% each year up to 55%
(40% in the first year + 5% in the second year, 5% in the third year and an additional 5% in the
fourth year) for residential customers and additional take rate percentages of 20% in years 2 and
3 up to 60% for businesses (40% in the first year, 20% in the second year and 20% in the third
year). Of those that took service, it was assumed that 50% of businesses would subscribe to the
100 Mbps service and 50% of the businesses would subscribe to the 1 Gbps service. For
residential service, it was assumed that all customers were offered a 1 Gbps service.
Targeted pricing for businesses and anchor institutions would be $300 - $500 per month.
Residential pricing is targeted at $70 - $95 per month for Gigabit Internet. This would
dramatically transform the pricing and broadband offering that is currently available in Estes
Park, making high-bandwidth Internet services attainable, accessible, abundant and affordable.
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The model was run at a price point of $70 per month (Retail Model #1, $70/month) and at $95
per month (Retail Model #2, $95/month) for residential service. The detailed results of the
models are provided below.
Pricing for Business and Anchor Institutions were:
100 Mbps $150/month
1 Gbps $400/month
Tap Fee, Utility Fees or Installation Charges
Another way to improve the financial model may be to charge a tap fee per customer or an
installation charge. This charge could be amortized for the customer over the first year of the
contract. Tap fees are charged for other utilities such as power, water and sewer and can also be
applied to broadband services. As mentioned earlier, statistics from the FTTH Council state
that real estate developments communities that have deployed FTTH networks have insta ntly
improved home sales values. According to the FTTH Council, access to fiber adds 3.1% to the
value of a home and having a Gigabit-enabled service available increases home values by 7%
over homes that have access to 25 Mbps or less. In Estes Park, the average home price is
$560,000. A 7% homes value increase translates to $39,200. Therefore, it may be palatable to
charge a $500 tap fee given the impact a Gigabit-enabled network has on increasing the value of
the home.
The financial model of $70 per month for residential service was modified by charging a $500
tap fee (an additional $42 per month is applied for the first year of the contract). The financial
impact and results of this change are provided in Retail Model #3, Tap Fee and $70/month.
Another model was run with a tap fee and the residential pricing of $95 per month (Retail
Model #4, Tap Fee and $95/month).
Another consideration may be to charge each utility customer a $5 fee per month whether they
sign up for broadband services or not. If the Town of Estes Park Power and Light has 10,432
customers, the annual revenue generated from this would be $625,920. This dramatically offsets
operating expenses for the network. See Retail Model #5, Utility Fee and $70/month and Retail
Model #6, Utility Fee and $95/month.
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In summary, here are the various financial models that are provided herein:
Retail Model #1, $70/month residential service
Retail Model #2, $95/month residential service
Retail Model #3, Tap Fee and $70/month
Retail Model #4, Tap Fee and $95/month
Retail Model #5, Utility Fee and $70/month
Retail Model #6, Utility Fee and $95/month
Capital Costs
Again, the capital costs for building to all of the residential neighborhoods and businesses are
projected to be:
The models were run with the assumption of building out to all of the homes and businesses at
once. The model also is feasible if the build-out takes a longer time. If a one year build out
seems too aggressive, NEO recommends building to the anchor institutions first, followed by
the businesses – the downtown core and along Highway 34 and Highway 36. Then, NEO
recommends building the residential neighborhoods based upon demand for services. A
Google-like neighborhood competition with a goal of 40% to sign up prior to construction could
be implemented. After the initial take rate of 40%, it is assumed that the capital costs required
to add additional customers is $1,550 per new business and anchor institution customers and
$1,050 for residential customers. This cost include the drop cable from the backbone or
Phasing
Capital Costs Summary, at 40% Take Rate Anchors Residential
Build 1
Residential
Build 2
Residential
Build 3
Residential
Build 4 Businesses Total
Anchor Tenants 1,904,069$ 1,904,069$
Allenspark Connection 1,135,512$ 1,135,512$
Allenspark 1,774,960$ 1,774,960$
Beaver Point 2,163,075$ 2,163,075$
Carriage Hills 3,021,392$ 3,021,392$
Downtown 1,326,076$ 1,326,076$
Fall River 1,772,142$ 1,772,142$
Fish Creek 5,203,155$ 5,203,155$
Glen Haven Connection 684,892$ 684,892$
Glen Haven 440,121$ 440,121$
Hwy 34 and Hwy 36 1,368,557$ 1,368,557$
North End 3,953,618$ 3,953,618$
Spur 66 2,134,749$ 2,134,749$
Totals 1,904,069$ 2,910,471$ 1,125,013$ 12,159,764$ 6,088,367$ 2,694,634$ 26,882,318$
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distribution network, the utility box with the electronic equipment to “light” the fiber and the
labor to install the drop cable, splice the fiber and install the electronic equipment.
Fiber optic networks are typically depreciated over a 20-year flat depreciation schedule.
Equipment is usually depreciated over a 5-year depreciation schedule. These assumptions were
applied in the financial models. It was assumed that a vehicle expense of $60,000 was incurred
for every technician.
Easements may need to be perfected for commercial use for network that will be built on aerial
electric lines. A more detailed analysis of the location of electric poles and the respective parcel
information is being obtained. For purposes of the financial plan, assumptions used for capital
costs for easement perfection were $100 per pole and $200 per parcel with the assumption of 20
parcels per mile for the aerial fiber plant. The aerial fiber plant makes up 65% of the total plant
miles. Again, these assumptions are being further refined by Estes Park’s Power and Light
Division. There is precedent set in Colorado by Time Warner for payment to landowners of
$100 per pole for perfection of easements for commercial use.
Operating Expense Assumptions
Below are the operating expense assumptions:
The Town of Estes Park will need to subscribe to Internet services and mark-up these services to
the end users. Oversubscription is a common practice in the industry. It assumes that for every
1 Gbps of service received from Estes Park, 400 customers would share in that 1 Gbps pipe.
Operating Expenses and Other Assumptions Assumption Notes
Uncollectable Revenue Percentage, Bad Debt 1%of Revenue
Sales Churn, percent of Total Revenue 2%of Total Revenue
Revenue Escalation (Inflation of Revenue per
year)0%No increase in pricing
Cost of Bandwidth Assumptions Assumption Notes
Average Peak use per customer in Mbps 250 Very conservative
Oversubscription Rate 400
City of Longmont currently uses 1 for 1,000
oversubscription rate
Cost of Backhaul Initially 15,000$
Monthly Rate, starting in year 3, Assuming initial
need is 10 Gbps circuit
Cost of Additional Backhaul per Gbps 1,500$
Annual Growth/Reduction Rate of Cost/Mbps -0.10 The cost of bandwidth will continue to diminish
Annual Growth rate of Bandwidth per Customer 120%
The growth of bandwidth needs will continue to
grow
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This is a practice because not all of Estes Park’s customers will be online at the same time and
the entire Gbps of service provided will not be used at all times. The City of Longmont is
currently experiencing a 1:1000 oversubscription rate.
Financial Results
Below is a summary of the results for all six variations of the model using different revenue and
pricing assumptions. All of the results are positive; this has been provided to show various
options and approaches to revenue generation. Some of the results are more positive than
others.
Network Management Assumptions Assumption Notes
Software Maintenance 20,000$ Annual, starting in year 2
O&M Fees from IRUs -$ Annual, starting in year 3
Utilities, Power & Environmental 10,000$ Annual, starting in year 1
Pole Rent 4$
Per pole per year, Estes Park currently charges
this.
Facilities Rent 24,000$ Per year, to house electronic and optical equipment
Maintenance materials 10.00$ Per mile
Vehicle repairs/fuel 350.00$ Per Tech, per month
Network Maintenance/Service Calls/Installs
Assumptions Assumption Notes
Install/service Network Technicians Salary 40,000$
Service call or truck roll (% of customers, per
month)1.0%
Installs per day, per tech 4.00
Service calls per, per tech 4.00
Plant miles per maintenance tech 60
Plant Maintenance tech annual wages 50,000$
# of Technicians per Supervisor 8$
Technician Supervisor Salary 80,000$
% of Network Maintenance/Service Calls/Installs
Outsourced 0%
% Higher costs of Outsourcing 100%
Salaries and Staffing Assumptions Assumption Notes
Salary, Administrator 90,000$ Annual, starting in year 1
Payroll Taxes and Benefits (% of Wages)38.2%Marketing and Sales Expense, percent of Total
Revenue 3%3% of Revenue for Retail Services Model only
Customer Care 5.00$ Per Customer
General and Administrative Overhead, % of
Revenue 5%
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Here are the details financial results for each of the pricing models and their respective
assumptions.
1. Retail Model #1, $70 per month for Residential Service
Year 1 Year 2 Year 3 Year 4 Year 5
Retail Model #1, $70/month residential service 2,997,000$ 5,184,900$ 5,808,600$ 6,417,000$ 6,642,000$
Retail Model #2, $95/month residential service 3,681,000$ 6,464,900$ 7,125,400$ 7,870,900$ 8,147,200$
Retail Model #3, Tap Fee and $70/month 5,083,400$ 5,449,375$ 6,073,075$ 6,677,800$ 6,642,000$
Retail Model #4, Tap Fee and $95/month 5,767,400$ 6,629,375$ 7,389,875$ 8,131,700$ 8,147,200$
Retail Model #5, Utility Fee and $70/month 3,622,920$ 5,810,820$ 6,434,520$ 7,042,920$ 7,267,920$
Retail Model #6, Utility Fee and $95/month 4,306,920$ 6,990,820$ 7,751,320$ 8,496,820$ 8,773,120$
Annual RevenuesRevenue Models
Year 1 Year 2 Year 3 Year 4 Year 5
Retail Model #1, $70/month residential service 1,852,119$ 4,053,810$ 4,569,043$ 5,127,776$ 5,379,102$
Retail Model #2, $95/month residential service 2,495,079$ 5,163,010$ 5,806,835$ 6,494,442$ 6,793,990$
Retail Model #3, Tap Fee and $70/month 3,813,335$ 4,302,416$ 4,817,650$ 5,372,928$ 5,379,102$
Retail Model #4, Tap Fee and $95/month 4,456,295$ 5,411,616$ 6,055,442$ 6,739,594$ 6,793,990$
Retail Model #5, Utility Fee and $70/month 2,440,484$ 4,642,174$ 5,157,408$ 5,716,141$ 5,967,467$
Retail Model #6, Utility Fee and $95/month 3,083,444$ 5,751,374$ 6,395,200$ 7,082,807$ 7,382,355$
EBITDARevenue Models
Revenue Models
Debt Service
Constant
Percentage,
Year 5
Stabilized
Cash Flow IRR Terminal
Value
Retail Model #1, $70/month residential service 286%5,379,102$ 9%$14.9 Million
Retail Model #2, $95/month residential service 361%6,793,990$ 16%$27.7 Million
Retail Model #3, Tap Fee and $70/month 286%5,379,102$ 12%$17.6 Million
Retail Model #4, Tap Fee and $95/month 361%6,793,990$ 19%$30.4 Million
Retail Model #5, Utility Fee and $70/month 317%5,967,467$ 13%$20.8 Million
Retail Model #6, Utility Fee and $95/month 393%7,382,355$ 20%$33.6 Million
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EBITDA is positive; however, there is not enough cashflow from operations to cover the interest
payments on the loan.
Debt service constant on outstanding debt is over 200% within five years.
Stabilized annual cash flows or EBITDA are $5.3 Million and there is an IRR of 9%.
2. Retail Model #2, $95 per month for Residential Service:
Here are the results if pricing for residential service is increased to $95 per month for residential
service.
2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation 1,427,095$ 1,560,942$ 1,694,987$ 1,826,927$ 1,841,146$
Amortization -$ -$ -$ -$ -$
Earnings Before Interest and Taxes 425,024$ 2,492,868$ 2,874,056$ 3,300,849$ 3,537,957$
Interest Expense - New Debt 1,440,283$ 1,418,393$ 1,395,384$ 1,371,196$ 1,345,772$
Interest Expense - Existing Debt -$ -$ -$ -$ -$
Interest Expense - Other -$ -$ -$ -$ -$
Income Before Taxes (1,015,259)$ 1,074,474$ 1,478,672$ 1,929,652$ 2,192,185$
Property Tax -$ -$ -$ -$ -$
Income Taxes -$ -$ -$ -$ -$
Net Income (1,015,259)$ 1,074,474$ 1,478,672$ 1,929,652$ 2,192,185$
Forecast Project Period
1. Debt service constant on outstanding debt; target over 200% after Year 5.
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
1 2 3 4 5 6 7 8 9 10
OPERATIONS
Net Cash Flow from Operations 1,852,119$ 4,053,810$ 4,569,043$ 5,127,776$ 5,379,102$ 5,379,008$ 5,379,008$ 5,379,008$ 5,379,008$ 5,379,008$
Interest 1,440,283$ 1,418,393$ 1,395,384$ 1,371,196$ 1,345,772$ 1,319,047$ 1,290,954$ 1,261,424$ 1,230,383$ 1,197,755$
Principal Payment 393,011$ 449,746$ 472,756$ 496,943$ 522,367$ 549,093$ 577,185$ 606,715$ 637,756$ 670,385$
Additional Principal Payment -$ -$ -$ -$ -$ -$ -$ -$
Net Cash Flow 18,825$ 2,185,670$ 2,700,904$ 3,259,637$ 3,510,963$ 3,510,869$ 3,510,869$ 3,510,869$ 3,510,869$ 3,510,869$
Cumulative Cash Flow 18,825$ 2,204,495$ 4,905,399$ 8,165,036$ 11,675,998$ 15,186,867$ 18,697,736$ 22,208,605$ 25,719,474$ 29,230,343$
Debt Service Constant on Outstanding
Debt 220%244%270%286%289%292%
Debt Service
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2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Revenues
Service Revenues
Total Anchor 40,400$ 84,900$ 117,300$ 134,500$ 137,600$
Total Residential, Build 1 295,800$ 510,200$ 569,400$ 628,600$ 650,800$
Total Residential, Build 2 134,800$ 232,600$ 259,400$ 286,500$ 296,400$
Total Residential, Build 3 1,581,400$ 2,728,100$ 3,044,300$ 3,360,600$ 3,479,200$
Total Residential, Build 4 587,400$ 1,013,200$ 1,130,800$ 1,248,200$ 1,292,400$
Total Businesses 1,041,200$ 1,795,900$ 2,004,200$ 2,212,500$ 2,290,800$
Tap Fee or Installation Fee - Residential
(one time) -$ -$ -$ -$ -$
Tap Fee or Installation Fee - Business (one
time) -$ -$ -$ -$ -$
Utility Fee (monthly) $ - $ - $ - $ - $ -
Total Revenues 3,681,000$ 6,364,900$ 7,125,400$ 7,870,900$ 8,147,200$
-$ -$ -$ -$ -$
Uncollectable Revenues (36,810)$ (63,649)$ (71,254)$ (78,709)$ (81,472)$
SubTotal Revenues 3,644,190$ 6,301,251$ 7,054,146$ 7,792,191$ 8,065,728$
Revenue Inflation -$ -$ -$ -$ -$
Total Revenues 3,644,190$ 6,301,251$ 7,054,146$ 7,792,191$ 8,065,728$
Expenses
Cost of Backhaul Initially -$ 180,000$ 180,000$ 180,000$ 180,000$
Cost of Additional Backhaul per Gbps 56,333$ -$ 70,614$ 77,656$ 77,656$
Annual Growth/Reduction Rate of Cost/Mbps -$ (18,000)$ (25,061)$ (25,766)$ (25,766)$
Software Maintenance -$ 20,000$ 20,000$ 20,000$ 20,000$
Utilities, Power & Environmental 10,000$ 10,000$ 10,000$ 10,000$ 10,000$
Pole Rent 19,962$ 19,962$ 19,962$ 19,962$ 19,962$
Facilities Rent 24,000$ 24,000$ 24,000$ 24,000$ 24,000$
Maintenance materials 2,412$ 2,412$ 2,412$ 2,412$ 2,412$
Vehicle repairs/fuel 37,333$ 21,669$ 21,946$ 22,188$ 19,906$
Network Technicians, Service Calls Salaries 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
Network Technicians, Installations Salaries 173,867$ 22,040$ 22,040$ 21,733$ -$
Maintenance Technicians Salaries 201,025$ 201,025$ 201,025$ 201,025$ 201,025$
Network Technician Supervisors 88,888$ 51,592$ 52,253$ 52,829$ 47,395$
Salary, Administrator 90,000$ 90,000$ 90,000$ 90,000$ 90,000$
Payroll Taxes and Benefits 219,514$ 148,279$ 149,542$ 150,641$ 140,263$
Outsourcing Network Maintenance -$ -$ -$ -$ -$
O&M Fees from IRUs -$ -$ -$ -$ -$
Sales Churn, percent of Total Revenue 73,620$ 127,298$ 142,508$ 157,418$ 162,944$
Marketing and Sales Expense, percent of Total Revenue110,430$ 190,947$ 213,762$ 236,127$ 244,416$
Customer Care 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
0 -$ -$ -$ -$ -$
Total Expenses 1,149,111$ 1,138,241$ 1,247,311$ 1,297,749$ 1,271,738$
EBITDA 2,495,079$ 5,163,010$ 5,806,835$ 6,494,442$ 6,793,990$
Forecast Project Period
Income Statement Retail Model #2, $95/month Residential Service
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Stronger EBITDA numbers are achieved; and principal and interest payments can be made.
(Depreciation expense does not impact cash flow.)
A stronger debt coverage ratio is achieved:
Stabilized annual cash flows or EBITDA are $6.7 Million and it has an IRR of 16%.
3. Retail Model #3, Tap Fee and $70 per month Residential Service
2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation 1,427,095$ 1,560,942$ 1,694,987$ 1,826,927$ 1,841,146$
Amortization -$ -$ -$ -$ -$
Earnings Before Interest and Taxes 1,067,984$ 3,602,068$ 4,111,848$ 4,667,515$ 4,952,845$
Interest Expense - New Debt 1,440,283$ 1,418,393$ 1,395,384$ 1,371,196$ 1,345,772$
Interest Expense - Existing Debt -$ -$ -$ -$ -$
Interest Expense - Other -$ -$ -$ -$ -$
Income Before Taxes (372,299)$ 2,183,674$ 2,716,464$ 3,296,318$ 3,607,073$
Property Tax -$ -$ -$ -$ -$
Income Taxes -$ -$ -$ -$ -$
Net Income (372,299)$ 2,183,674$ 2,716,464$ 3,296,318$ 3,607,073$
Forecast Project Period
1. Debt service constant on outstanding debt; target over 200% after Year 5.
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
1 2 3 4 5 6 7 8 9 10
OPERATIONS
Net Cash Flow from Operations 2,495,079$ 5,163,010$ 5,806,835$ 6,494,442$ 6,793,990$ 6,793,614$ 6,793,614$ 6,793,614$ 6,793,614$ 6,793,614$
Interest 1,440,283$ 1,418,393$ 1,395,384$ 1,371,196$ 1,345,772$ 1,319,047$ 1,290,954$ 1,261,424$ 1,230,383$ 1,197,755$
Principal Payment 393,011$ 449,746$ 472,756$ 496,943$ 522,367$ 549,093$ 577,185$ 606,715$ 637,756$ 670,385$
Additional Principal Payment -$ -$ -$ -$ -$ -$ -$ -$
Net Cash Flow 661,785$ 3,294,870$ 3,938,696$ 4,626,303$ 4,925,851$ 4,925,475$ 4,925,475$ 4,925,475$ 4,925,475$ 4,925,475$
Cumulative Cash Flow 661,785$ 3,956,655$ 7,895,351$ 12,521,654$ 17,447,504$ 22,372,979$ 27,298,454$ 32,223,929$ 37,149,404$ 42,074,879$
Debt Service Constant on Outstanding
Debt 280%310%343%361%365%368%
Debt Service
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2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Revenues
Service Revenues
Total Anchor 40,400$ 84,900$ 117,300$ 134,500$ 137,600$
Total Residential, Build 1 218,000$ 376,000$ 419,600$ 463,200$ 479,600$
Total Residential, Build 2 99,300$ 171,400$ 191,200$ 211,000$ 218,400$
Total Residential, Build 3 1,165,300$ 2,010,100$ 2,243,100$ 2,476,200$ 2,563,600$
Total Residential, Build 4 432,800$ 746,600$ 833,200$ 919,600$ 952,000$
Total Businesses 1,041,200$ 1,795,900$ 2,004,200$ 2,212,500$ 2,290,800$
Tap Fee or Installation Fee - Residential
(one time) 262,200$ 36,450$ 36,450$ 32,775$ -$
Tap Fee or Installation Fee - Business (one
time) 1,824,200$ 228,025$ 228,025$ 228,025$ -$
Utility Fee (monthly) $ - $ - $ - $ - $ -
Total Revenues 5,083,400$ 5,449,375$ 6,073,075$ 6,677,800$ 6,642,000$
-$ -$ -$ -$ -$
Uncollectable Revenues (50,834)$ (54,494)$ (60,731)$ (66,778)$ (66,420)$
SubTotal Revenues 5,032,566$ 5,394,881$ 6,012,344$ 6,611,022$ 6,575,580$
Revenue Inflation -$ -$ -$ -$ -$
Total Revenues 5,032,566$ 5,394,881$ 6,012,344$ 6,611,022$ 6,575,580$
Expenses
Cost of Backhaul Initially -$ 180,000$ 180,000$ 180,000$ 180,000$
Cost of Additional Backhaul per Gbps 56,333$ -$ 70,614$ 77,656$ 77,656$
Annual Growth/Reduction Rate of Cost/Mbps -$ (18,000)$ (25,061)$ (25,766)$ (25,766)$
Software Maintenance -$ 20,000$ 20,000$ 20,000$ 20,000$
Utilities, Power & Environmental 10,000$ 10,000$ 10,000$ 10,000$ 10,000$
Pole Rent 19,962$ 19,962$ 19,962$ 19,962$ 19,962$
Facilities Rent 24,000$ 24,000$ 24,000$ 24,000$ 24,000$
Maintenance materials 2,412$ 2,412$ 2,412$ 2,412$ 2,412$
Vehicle repairs/fuel 37,333$ 21,669$ 21,946$ 22,188$ 19,906$
Network Technicians, Service Calls Salaries 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
Network Technicians, Installations Salaries 173,867$ 22,040$ 22,040$ 21,733$ -$
Maintenance Technicians Salaries 201,025$ 201,025$ 201,025$ 201,025$ 201,025$
Network Technician Supervisors 88,888$ 51,592$ 52,253$ 52,829$ 47,395$
Salary, Administrator 90,000$ 90,000$ 90,000$ 90,000$ 90,000$
Payroll Taxes and Benefits 219,514$ 148,279$ 149,542$ 150,641$ 140,263$
Outsourcing Network Maintenance -$ -$ -$ -$ -$
O&M Fees from IRUs -$ -$ -$ -$ -$
Sales Churn, percent of Total Revenue 101,668$ 108,988$ 121,462$ 133,556$ 132,840$
Marketing and Sales Expense, percent of Total Revenue152,502$ 163,481$ 182,192$ 200,334$ 199,260$
Customer Care 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
0 -$ -$ -$ -$ -$
Total Expenses 1,219,231$ 1,092,465$ 1,194,694$ 1,238,094$ 1,196,478$
EBITDA 3,813,335$ 4,302,416$ 4,817,650$ 5,372,928$ 5,379,102$
Forecast Project Period
Income Statement Retail Model #3, Tap Fee and $70/month
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Debt service constant is 286% in year 5. Stabilized annual cash flows or EBITDA are $5.3
Million and it has an IRR of 12%.
4. Retail Model #4, Tap Fee and $95 per month for Residential Service
Debt service constant is 361% in year 5. Below is the projected income statement for this model.
2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation 1,427,095$ 1,560,942$ 1,694,987$ 1,826,927$ 1,841,146$
Amortization -$ -$ -$ -$ -$
Earnings Before Interest and Taxes 2,386,240$ 2,741,474$ 3,122,662$ 3,546,001$ 3,537,957$
Interest Expense - New Debt 1,440,283$ 1,418,393$ 1,395,384$ 1,371,196$ 1,345,772$
Interest Expense - Existing Debt -$ -$ -$ -$ -$
Interest Expense - Other -$ -$ -$ -$ -$
Income Before Taxes 945,957$ 1,323,081$ 1,727,279$ 2,174,804$ 2,192,185$
Property Tax -$ -$ -$ -$ -$
Income Taxes -$ -$ -$ -$ -$
Net Income 945,957$ 1,323,081$ 1,727,279$ 2,174,804$ 2,192,185$
Forecast Project Period
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2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Revenues
Service Revenues
Total Anchor 40,400$ 84,900$ 117,300$ 134,500$ 137,600$
Total Residential, Build 1 295,800$ 510,200$ 569,400$ 628,600$ 650,800$
Total Residential, Build 2 134,800$ 232,600$ 259,400$ 286,500$ 296,400$
Total Residential, Build 3 1,581,400$ 2,728,100$ 3,044,300$ 3,360,600$ 3,479,200$
Total Residential, Build 4 587,400$ 1,013,200$ 1,130,800$ 1,248,200$ 1,292,400$
Total Businesses 1,041,200$ 1,795,900$ 2,004,200$ 2,212,500$ 2,290,800$
Tap Fee or Installation Fee - Residential
(one time) 262,200$ 36,450$ 36,450$ 32,775$ -$
Tap Fee or Installation Fee - Business (one
time) 1,824,200$ 228,025$ 228,025$ 228,025$ -$
Utility Fee (monthly) $ - $ - $ - $ - $ -
Total Revenues 5,767,400$ 6,629,375$ 7,389,875$ 8,131,700$ 8,147,200$
-$ -$ -$ -$ -$
Uncollectable Revenues (57,674)$ (66,294)$ (73,899)$ (81,317)$ (81,472)$
SubTotal Revenues 5,709,726$ 6,563,081$ 7,315,976$ 8,050,383$ 8,065,728$
Revenue Inflation -$ -$ -$ -$ -$
Total Revenues 5,709,726$ 6,563,081$ 7,315,976$ 8,050,383$ 8,065,728$
Expenses
Cost of Backhaul Initially -$ 180,000$ 180,000$ 180,000$ 180,000$
Cost of Additional Backhaul per Gbps 56,333$ -$ 70,614$ 77,656$ 77,656$
Annual Growth/Reduction Rate of Cost/Mbps -$ (18,000)$ (25,061)$ (25,766)$ (25,766)$
Software Maintenance -$ 20,000$ 20,000$ 20,000$ 20,000$
Utilities, Power & Environmental 10,000$ 10,000$ 10,000$ 10,000$ 10,000$
Pole Rent 19,962$ 19,962$ 19,962$ 19,962$ 19,962$
Facilities Rent 24,000$ 24,000$ 24,000$ 24,000$ 24,000$
Maintenance materials 2,412$ 2,412$ 2,412$ 2,412$ 2,412$
Vehicle repairs/fuel 37,333$ 21,669$ 21,946$ 22,188$ 19,906$
Network Technicians, Service Calls Salaries 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
Network Technicians, Installations Salaries 173,867$ 22,040$ 22,040$ 21,733$ -$
Maintenance Technicians Salaries 201,025$ 201,025$ 201,025$ 201,025$ 201,025$
Network Technician Supervisors 88,888$ 51,592$ 52,253$ 52,829$ 47,395$
Salary, Administrator 90,000$ 90,000$ 90,000$ 90,000$ 90,000$
Payroll Taxes and Benefits 219,514$ 148,279$ 149,542$ 150,641$ 140,263$
Outsourcing Network Maintenance -$ -$ -$ -$ -$
O&M Fees from IRUs -$ -$ -$ -$ -$
Sales Churn, percent of Total Revenue 115,348$ 132,588$ 147,798$ 162,634$ 162,944$
Marketing and Sales Expense, percent of Total Revenue173,022$ 198,881$ 221,696$ 243,951$ 244,416$
Customer Care 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
0 -$ -$ -$ -$ -$
Total Expenses 1,253,431$ 1,151,465$ 1,260,534$ 1,310,789$ 1,271,738$
EBITDA 4,456,295$ 5,411,616$ 6,055,442$ 6,739,594$ 6,793,990$
Forecast Project Period
Income Statement Retail Model #4, Tap Fee and $95/month
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Stabilized annual cash flows or EBITDA are $6.7 Million and it has an IRR of 19%.
5. Retail Model #5, Utility Fee, $70 per month Residential Service
2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation 1,427,095$ 1,560,942$ 1,694,987$ 1,826,927$ 1,841,146$
Amortization -$ -$ -$ -$ -$
Earnings Before Interest and Taxes 3,029,200$ 3,850,674$ 4,360,454$ 4,912,667$ 4,952,845$
Interest Expense - New Debt 1,440,283$ 1,418,393$ 1,395,384$ 1,371,196$ 1,345,772$
Interest Expense - Existing Debt -$ -$ -$ -$ -$
Interest Expense - Other -$ -$ -$ -$ -$
Income Before Taxes 1,588,917$ 2,432,281$ 2,965,071$ 3,541,470$ 3,607,073$
Property Tax -$ -$ -$ -$ -$
Income Taxes -$ -$ -$ -$ -$
Net Income 1,588,917$ 2,432,281$ 2,965,071$ 3,541,470$ 3,607,073$
Forecast Project Period
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2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Revenues
Service Revenues
Total Anchor 40,400$ 84,900$ 117,300$ 134,500$ 137,600$
Total Residential, Build 1 218,000$ 376,000$ 419,600$ 463,200$ 479,600$
Total Residential, Build 2 99,300$ 171,400$ 191,200$ 211,000$ 218,400$
Total Residential, Build 3 1,165,300$ 2,010,100$ 2,243,100$ 2,476,200$ 2,563,600$
Total Residential, Build 4 432,800$ 746,600$ 833,200$ 919,600$ 952,000$
Total Businesses 1,041,200$ 1,795,900$ 2,004,200$ 2,212,500$ 2,290,800$
Tap Fee or Installation Fee - Residential
(one time) -$ -$ -$ -$ -$
Tap Fee or Installation Fee - Business (one
time) -$ -$ -$ -$ -$
Utility Fee (monthly) $ 625,920 $ 625,920 $ 625,920 $ 625,920 $ 625,920
Total Revenues 3,622,920$ 5,810,820$ 6,434,520$ 7,042,920$ 7,267,920$
-$ -$ -$ -$ -$
Uncollectable Revenues (36,229)$ (58,108)$ (64,345)$ (70,429)$ (72,679)$
SubTotal Revenues 3,586,691$ 5,752,712$ 6,370,175$ 6,972,491$ 7,195,241$
Revenue Inflation -$ -$ -$ -$ -$
Total Revenues 3,586,691$ 5,752,712$ 6,370,175$ 6,972,491$ 7,195,241$
Expenses
Cost of Backhaul Initially -$ 180,000$ 180,000$ 180,000$ 180,000$
Cost of Additional Backhaul per Gbps 56,333$ -$ 70,614$ 77,656$ 77,656$
Annual Growth/Reduction Rate of Cost/Mbps -$ (18,000)$ (25,061)$ (25,766)$ (25,766)$
Software Maintenance -$ 20,000$ 20,000$ 20,000$ 20,000$
Utilities, Power & Environmental 10,000$ 10,000$ 10,000$ 10,000$ 10,000$
Pole Rent 19,962$ 19,962$ 19,962$ 19,962$ 19,962$
Facilities Rent 24,000$ 24,000$ 24,000$ 24,000$ 24,000$
Maintenance materials 2,412$ 2,412$ 2,412$ 2,412$ 2,412$
Vehicle repairs/fuel 37,333$ 21,669$ 21,946$ 22,188$ 19,906$
Network Technicians, Service Calls Salaries 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
Network Technicians, Installations Salaries 173,867$ 22,040$ 22,040$ 21,733$ -$
Maintenance Technicians Salaries 201,025$ 201,025$ 201,025$ 201,025$ 201,025$
Network Technician Supervisors 88,888$ 51,592$ 52,253$ 52,829$ 47,395$
Salary, Administrator 90,000$ 90,000$ 90,000$ 90,000$ 90,000$
Payroll Taxes and Benefits 219,514$ 148,279$ 149,542$ 150,641$ 140,263$
Outsourcing Network Maintenance -$ -$ -$ -$ -$
O&M Fees from IRUs -$ -$ -$ -$ -$
Sales Churn, percent of Total Revenue 72,458$ 116,216$ 128,690$ 140,858$ 145,358$
Marketing and Sales Expense, percent of Total Revenue108,688$ 174,325$ 193,036$ 211,288$ 218,038$
Customer Care 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
0 -$ -$ -$ -$ -$
Total Expenses 1,146,207$ 1,110,537$ 1,212,767$ 1,256,350$ 1,227,774$
EBITDA 2,440,484$ 4,642,174$ 5,157,408$ 5,716,141$ 5,967,467$
Forecast Project Period
Income Statement Retail Model #5, Utility Fee and $70/month
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Debt service constant is 317% in year 5. Stabilized annual cash flows or EBITDA are $5.9M and
it has an IRR of 13%.
6. Retail Model #6, Utility Fee and $95 per month for Residential Service
Debt service constant is 393% in year 5. Stabilized annual cash flows or EBITDA are $7.3M and
it has an IRR of 20%.
2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation 1,427,095$ 1,560,942$ 1,694,987$ 1,826,927$ 1,841,146$
Amortization -$ -$ -$ -$ -$
Earnings Before Interest and Taxes 1,013,389$ 3,081,232$ 3,462,421$ 3,889,214$ 4,126,321$
Interest Expense - New Debt 1,440,283$ 1,418,393$ 1,395,384$ 1,371,196$ 1,345,772$
Interest Expense - Existing Debt -$ -$ -$ -$ -$
Interest Expense - Other -$ -$ -$ -$ -$
Income Before Taxes (426,894)$ 1,662,839$ 2,067,037$ 2,518,017$ 2,780,550$
Property Tax -$ -$ -$ -$ -$
Income Taxes -$ -$ -$ -$ -$
Net Income (426,894)$ 1,662,839$ 2,067,037$ 2,518,017$ 2,780,550$
Forecast Project Period
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2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Revenues
Service Revenues
Total Anchor 40,400$ 84,900$ 117,300$ 134,500$ 137,600$
Total Residential, Build 1 295,800$ 510,200$ 569,400$ 628,600$ 650,800$
Total Residential, Build 2 134,800$ 232,600$ 259,400$ 286,500$ 296,400$
Total Residential, Build 3 1,581,400$ 2,728,100$ 3,044,300$ 3,360,600$ 3,479,200$
Total Residential, Build 4 587,400$ 1,013,200$ 1,130,800$ 1,248,200$ 1,292,400$
Total Businesses 1,041,200$ 1,795,900$ 2,004,200$ 2,212,500$ 2,290,800$
Tap Fee or Installation Fee - Residential
(one time) -$ -$ -$ -$ -$
Tap Fee or Installation Fee - Business (one
time) -$ -$ -$ -$ -$
Utility Fee (monthly) $ 625,920 $ 625,920 $ 625,920 $ 625,920 $ 625,920
Total Revenues 4,306,920$ 6,990,820$ 7,751,320$ 8,496,820$ 8,773,120$
-$ -$ -$ -$ -$
Uncollectable Revenues (43,069)$ (69,908)$ (77,513)$ (84,968)$ (87,731)$
SubTotal Revenues 4,263,851$ 6,920,912$ 7,673,807$ 8,411,852$ 8,685,389$
Revenue Inflation -$ -$ -$ -$ -$
Total Revenues 4,263,851$ 6,920,912$ 7,673,807$ 8,411,852$ 8,685,389$
Expenses
Cost of Backhaul Initially -$ 180,000$ 180,000$ 180,000$ 180,000$
Cost of Additional Backhaul per Gbps 56,333$ -$ 70,614$ 77,656$ 77,656$
Annual Growth/Reduction Rate of Cost/Mbps -$ (18,000)$ (25,061)$ (25,766)$ (25,766)$
Software Maintenance -$ 20,000$ 20,000$ 20,000$ 20,000$
Utilities, Power & Environmental 10,000$ 10,000$ 10,000$ 10,000$ 10,000$
Pole Rent 19,962$ 19,962$ 19,962$ 19,962$ 19,962$
Facilities Rent 24,000$ 24,000$ 24,000$ 24,000$ 24,000$
Maintenance materials 2,412$ 2,412$ 2,412$ 2,412$ 2,412$
Vehicle repairs/fuel 37,333$ 21,669$ 21,946$ 22,188$ 19,906$
Network Technicians, Service Calls Salaries 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
Network Technicians, Installations Salaries 173,867$ 22,040$ 22,040$ 21,733$ -$
Maintenance Technicians Salaries 201,025$ 201,025$ 201,025$ 201,025$ 201,025$
Network Technician Supervisors 88,888$ 51,592$ 52,253$ 52,829$ 47,395$
Salary, Administrator 90,000$ 90,000$ 90,000$ 90,000$ 90,000$
Payroll Taxes and Benefits 219,514$ 148,279$ 149,542$ 150,641$ 140,263$
Outsourcing Network Maintenance -$ -$ -$ -$ -$
O&M Fees from IRUs -$ -$ -$ -$ -$
Sales Churn, percent of Total Revenue 86,138$ 139,816$ 155,026$ 169,936$ 175,462$
Marketing and Sales Expense, percent of Total Revenue129,208$ 209,725$ 232,540$ 254,905$ 263,194$
Customer Care 20,864$ 23,509$ 26,154$ 28,762$ 28,762$
0 -$ -$ -$ -$ -$
Total Expenses 1,180,407$ 1,169,537$ 1,278,607$ 1,329,045$ 1,303,034$
EBITDA 3,083,444$ 5,751,374$ 6,395,200$ 7,082,807$ 7,382,355$
Forecast Project Period
Income Statement Retail Model #6, Utility Fee and $95/month
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2016 2017 2018 2019 2020
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation 1,427,095$ 1,560,942$ 1,694,987$ 1,826,927$ 1,841,146$
Amortization -$ -$ -$ -$ -$
Earnings Before Interest and Taxes 1,656,349$ 4,190,432$ 4,700,213$ 5,255,880$ 5,541,209$
Interest Expense - New Debt 1,440,283$ 1,418,393$ 1,395,384$ 1,371,196$ 1,345,772$
Interest Expense - Existing Debt -$ -$ -$ -$ -$
Interest Expense - Other -$ -$ -$ -$ -$
Income Before Taxes 216,066$ 2,772,039$ 3,304,829$ 3,884,683$ 4,195,438$
Property Tax -$ -$ -$ -$ -$
Income Taxes -$ -$ -$ -$ -$
Net Income 216,066$ 2,772,039$ 3,304,829$ 3,884,683$ 4,195,438$
Forecast Project Period
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10. Benefits of Advanced Broadband Networks and Why
This Matters, Abundant Broadband is a Necessity for
Economic Vitality
The following section is taken from a white paper written by NEO Fiber. The information is
relative to Estes Park in understanding the applications and trends in broadband services. This
section discusses the community benefits of advanced broadband networks and provides the
context of why building Gigabit-enabled networks are important.
Stimulate Economic Growth. Many municipalities across the country
are deploying next-generation, high-bandwidth telecommunications
networks as a means of stimulating economic growth and development.
Our world is changing; and it is doing so rapidly. Technology is impacting every part and
parcel of our lives -- from where and how we conduct work, to whether or not we thrive
economically and socially. It has impacted the way we live, our entertainment, our culture, the
way government services are provided and accessed, the way healthcare is being delivered, and
the way we educate our children and provide education to better improve our workforce. With
the introduction and accelerated advancement of technologies, having access to affordable,
redundant and abundant broadband is quickly becoming the most critical infrastructure of our
time, just like electricity and transportation were in the early 1900’s. Advanced broadband
infrastructure has the potential to create more jobs, increase the community’s competitive
ability globally, create new technologies, increase opportunities for the region’s companies,
enhance public safety, provide better and less expensive healthcare, and provide greater
educational opportunities throughout our community. In a recent meeting/webinar and report
produced by Brookings in May of this year, fiber was added as a critical infrastructure.7
Advanced broadband networks are creating seismic changes in local, state, national and global
societies, as well as markets, business and in institutions around the world. Access to social
media and the Internet has shifted governments, threatened national and local boundaries,
inspired revolutions, and has changed us culturally. The Internet and its associated
technologies have impacted wealth, work, education, government, health, public safety, a nd
7 Joseph Kane and Robert Puentes, "Beyond Shovel Ready: The Extent and Impact of U.S. Infrastructure
Jobs," Brookings Institution, (May, 2014) available at
http://www.brookings.edu/research/interactives/2014/infrastructure-jobs#/M10420
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education. Having equal access to advanced broadband networks bridges the digital divide
and creates better equality between the haves and the have-nots.
Like the introduction of electricity, advanced broadband networks are fundamentally changing
our world in ways that were not expected or anticipated. Much like electricity, advanced
broadband networks are the enabling technology in which all things are impacted. Electricity
was invented to turn on the lights, but empowered – literally, the transformation to an
industrial society. Advanced broadband networks are now the enabling technology to
transform us yet again, to a global technology and information society; the new Knowledge
Economy. (See Captive Audience by Susan Crawford).
Just as it was impossible to know in advance the impact that electrification would provide the
critical infrastructure to power all of our modern appliances, computers, health monitoring
systems, manufacturing facilities, computers, radio and television, and financial markets; so too,
is it impossible to predict the impact and reach of advanced broadband networks. We do not
yet know the far reaching impacts that the Internet will have on our lives and on generations to
come. However, it is certain that NOT having access to advanced broadband networks would
be equivalent to being in the dark without electricity!
The incumbent providers of phone service, Internet and cable TV services are not building best-
in-class broadband networks fast enough. The model by which these services are being
provided needs to shift dramatically to enable faster deployment of advanced services,
affordable broadband and abundant capacity to support our current and future needs for
bandwidth.
Speed Matters. Global network traffic has quadrupled from 2009 to
2014. Both commercial and residential Internet bandwidth consumption
are doubling every year.
Bandwidth refers to the capacity, or speed of the networks to carry traffic. The question is often
presented, “How fast is fast enough?” and “What should be the definition of broadband?” The
Federal Communications Commission (FCC) has proposed in the National Broadband Plan that
broadband be defined as 50 Mbps “downstream” (to the consumer) and 20 Mbps “upstream”
(from the consumer into the network) by 2015.8 Given the growth trends in bandwidth needs
8 Federal Communications Commission, Connecting America: The National Broadband Plan (Mar. 17, 2010).
Available at http://transition.fcc.gov/national-broadband-plan/national-broadband-plan.pdf
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and network traffic, this definition is conservative and barely meets the minimum needs for
bandwidth consumption today and certainly does not address the needs that are forthcoming.
In the early days of the Internet, text messaging, email and web sites were not data-rich or
bandwidth intensive and the average consumer did not need more than 7 Mbps of bandwidth.
When YouTube burst upon the scene in 2005, this dramatically changed things. One video
download was the equivalent of downloading 30,000 web pages. Since that time, videos and
picture-rich content have been downloaded and uploaded on a regular basis by the masses.
The applications we use on the Internet are becoming much more feature-rich and bandwidth
intensive and our existing networks cannot keep up with the demand for networks that support
these applications.
The Fiber to the Home Council (FTTH) stated its position clearly in a brief to the FCC. “Even
today, with most users still operating on last-generation broadband technologies, the
capabilities of advanced video, cloud-based services, and other bandwidth-intensive
applications are growing at a pace beyond what our existing networks are capable. Cisco and
other scientific companies talk about the network in terms of “terabytes” of capacity in the
network center, or “core.”9 According to the Cisco 2012 Zettabyte Report, businesses today
routinely require symmetrical gigabit service between their locations.”10
Also referenced in the Cisco 2012 Zettabyte Report, global Internet traffic grew 45 percent
during 2009 alone and has doubled every year since then. Both commercial and residential
Internet bandwidth consumption are doubling every year, as video, cloud computing,
advanced storage solutions, telemedicine, telecommuting, video conferencing, etc., are
becoming more prevalent from end users. Applications are becoming more bandwidth
intensive and as more devices – tablets, Smartphones, computers, appliances – are being used
both in the home and for business applications. Research conducted by Cisco states by 2016,
there will be nearly three Internet Protocol or IP-connected devices per person. Internet-
connected televisions, radios, set-top boxes, Blu-ray players, Netflix, cameras and picture
frames now receive or deliver movies, TV and photos through the Internet.
According to FTTH's brief to the FCC referenced above, “the average monthly traffic in 2014 on
the Internet has been equivalent to 32 million people streaming Avatar in 3D, c ontinuously for
the entire month.” In 2014, video downloads and uploads comprised 50 percent of all Internet
9 Fiber to the Home Council, “America's Petition to the Federal Communications Commission for
Rulemaking to Establish a Gigabit Communities Race-to-the-Top Program,” July 23, 2013.
10 Cisco, “The Zettabyte Era” (May 30, 2012).
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traffic. In the coming years, the sum of all forms of Internet Protocol (IP) video (Internet video,
video on demand, video files exchanged through file sharing, video-streamed gaming, and
videoconferencing) will reach 86 percent of the total Internet traffic. Applications supported by
cloud-based services through multiple devices have created the need for always-on connectivity
and advanced broadband network bandwidth.
Table 1, Applications and their Needed Bandwidth
While Internet bandwidth use is doubling, cellular networks are also
greatly overextended.
In addition to explosive growth in Internet consumption from homes and businesses, mobile
Internet use has also advanced dramatically. Smartphone applications are spurring higher
consumption of multimedia services. With tablet computers and smartphones having easy
access to games, e-books, TV programs, email, shopping, banking and social media sites,
wireless service providers have been scrambling to upgrade their networks.
The need for advanced broadband connectivity must include both a consideration for fiber,
connecting our businesses, offices and establishments, homes; as well as w ireless and cellular,
allowing for mobile and portable access as we travel, move about and commute.
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Community Outreach and Support. All-Fiber networks are
imperative, critical and necessary to stimulate economic development
and growth. Municipalities, communities and regions that want to
impact economic development must build 21st Century infrastructure.
Municipalities, communities and regions that have deployed all-fiber networks have already
seen the tremendous economic impact of building symmetrical gigabit networks. These
communities have fostered an environment of innovation, economic development and growth,
collaboration, and creative activities. According to a 2012 survey of economic development
professionals, 60 percent said that 1 Gigabit of service had a "definite impact" on new
businesses that moved to an area (see Table 2). As having access to advanced broadband
services is the number one priority for large businesses as they are looking for commercial real
estate, the communities that have built gigabit-enabled fiber networks have already benefited
economically by attracting businesses and industries to re-locate to their communities.
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Table 1 Fiber’s direct impact on attracting new businesses to a community.11
After Chattanooga deployed their Gigabit network, the city attracted numerous high-tech firms,
and entrepreneurs to relocate their company facilities, including Amazon, Alstom, and
Volkswagen amongst others. Several venture capital firms were established in Chattanooga
after their Fiber to the Home network was built because this fostered a business climate that
was perfect for innovation and creativity. When surveyed, 42 percent of economic development
professionals claimed that 1 Gigabit of service actually attracts new businesses to an area (see
Table 3). Since building its gigabit network, Chattanooga has created over 7,000 new jobs and
attracted billions of dollars in capital investment in a city once referred to as the “dirtiest city in
America.”12
11 Craig Settles, Building the Gigabit City, (e-book). Available at
http://portal.calix.com/portal/calixdocs/mktg/w/gig/Building_the_Gigabit_City.pdf
12 Chatanooga’s “GigTank” website, available at http://www.thegigcity.com/gigtank/
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Table 2 Broadband's impact on economic outcomes from the perspective of speed.13
In 2012, the Chattanooga Electric Power Board (EPB) established GigTank, an application-
incubation facility. The goal of GigTank is to build applications to utilize the capabilities of
gigabit networks. According to its website, “GigTank is a startup accelerator connected to a
living, metro-wide fiber optic network. Hosted by the Company Lab, this annual program
attracts entrepreneurs from across the globe to Chattanooga, the home of America’s first
widely-available gigabit Internet service. With Internet speeds that run 100x faster than the
national average, Chattanooga offers entrepreneurs the opportunity to innovate on the
broadband platform of the future.” This year, GigTank is focusing on three start-up tracks
accelerating seed stage startups in the additive manufacturing (3D printing), smart grid and
healthcare industries by connecting these new companies with the tools, capital and
connections to go to market.
13 Settles, Building the Gigabit City.
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Chattanooga itself has experienced great success with its smart grid system that is running on
the city’s all-fiber network. The smart-grid system promotes energy efficiency throughout the
city, remotely monitoring the system’s power consumption, load balancing and power
substations. It allows the electric system to re-route around failures and downed power lines in
storms and outages, restoring services within minutes. Prior to the smart -grid system
implementation, typical outages may have lasted four to five hours and many neighborhoods
may not have had services restored until residents notified Chatanooga’s EPB of the outage.
Today, with the new smart-grid system in place over the all-fiber network, EPB can restore
service in minutes. Savings realized by better management of the city’s power system and
improved operations has paid for the cost of deploying the Fiber to the entire community
system.14
Similar to Chattanooga’s GigTank program, entrepreneurs have developed gigabit-ready
applications through the US Ignite Partnership.15 US Ignite is a non-profit, public-private
organization that is supported by the White House Office of Science and Technology and the
National Science Foundation. US Ignite is focusing on creating applications in the following
disciplines of national priority:
Education and Workforce
Energy
Health
Public Safety
Transportation
Advanced Manufacturing
In addition to creating transformative applications, US Ignite connects people and resources,
coordinates test beds, provides efforts towards scalability and providing these applications to
the masses, informs the public and takes these applications to market. One cutting-edge
application being developed by researchers at the University of Massachusetts, and s upported
by US Ignite, is the Collaborative Adaptive Sensing of the Atmosphere (“CASA”) program.
CASA uses predictive storm-tracking technology and “data 5 to 10 times more detailed than
current radar systems” to provide citizens with advanced notificatio n of severe weather events.
These applications, as well as all of the other applications developed by US Ignite, are only
possible with having access to a minimum of 100 Mbps of bandwidth. US Ignite is participating
14 Mike Smalley, "Broadband and the Smart Grid," (2008) available at
http://www.carinatek.com/PDFs/BBP_AugSep08_SmartGrid.pdf
15 US Ignite, available at https://us-ignite.org/about/what-is-us-ignite/
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with municipalities and communities that have built out fiber networks and are offering this
type of bandwidth to their constituents.
Kansas City offers another example. When Google issued a Request for Proposal for the “Think
Big with a Gig” program to host gigabit test-beds and have Google build within their city, over
one thousand communities across the country submitted applications.16 Google selected the bi-
state Kansas City metropolitan region. Kansas City has already seen an uptake in new high-
tech start-ups due mostly to Google’s FTTH efforts. Through Homes for Hackers and the
Kansas City Startup Village, entrepreneurs have built a community of innovators enticed by the
possibilities presented by the Google Fiber network.17 A prominent venture capitalist has even
purchased a home in a Kansas City “fiberhood” to allow entrepreneurs to live for free in Kansas
City and build gigabit-ready applications. High-tech companies recognize the benefits of these
networks and are willing to relocate just to have access to them.
Since Google’s roll-out of gigabit services in Kansas City, it has made plans to build Fiber to the
Home in Austin and has recently purchased an existing system in Provo, Utah. Google last year
announced plans to build FTTH in 34 municipalities across the country upon cooperation and
attainment of a checklist put out by Google.
Other communities that have built fiber networks have shown economic growth by attracting
manufacturing, high-tech and technology companies in large part because of their investment in
all-fiber networks. These include:
Municipal FTTH
Networks
New Companies, due in part, to
All Fiber Infrastructure
Auburn, IN Cooper Tire Expansion
Bristol, TN Media General
Bristol, VA Northup Grumman
CGI
Chelan County,
WA Yahoo
Douglas County,
WA Sabey Corporation
Grant County, WA MSN (Microsoft)
16 Topeka, Kansas, even changed their name to Google in hopes of being selected as the test-bed.
17 Kansas City Startup Village, available at http://www.kcstartupvillage.org; and Homes for Hackers,
available at http://homesforhackers.com.
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Ask Jeeves
Intuit
Independence, OR Metal fabrication companies
Kutztown, PA Film production companies
LENOSIWSCO, VA Data Centers
Mason County,
WA Louisville Slugger
Sims
Technology companies
Online engineering firms
Morristown, TN Cogate Palmolive
Powell, WY
Alpine Access Virtual Call
Center
These communities understand that symmetrical gigabit networks are essential for economic
development and innovation.
Telecommuting Opportunities
The number of people working from home or telecommuting has increased enormously in the
past few years and will increase exponentially in the future. According to a study conducted by
the Global Workplace Analytics18, telework grew nearly 80% from 2005 to 2012. In 20 10, based
on its own limited survey, WorldatWork estimated that 16 million employees worked at home at
least one day a month, a number that increased almost 62% between 2005 and 2010.
Extrapolating from 2010 to 2014 would put the current number of those who telecommute at
least one day a month at approximately 25 million.
According to the study, in twenty-five percent of the nation’s 20 largest metro areas, more
people now telecommute than use public transportation as their principal means of
transportation to work. More importantly, according to Global Workplace Analytics, the
estimated based upon the current labor force composition is that 64 million U.S. employees hold
a job that is compatible with at least part-time telework (50% of the total workforce). 79% of
U.S. workers say they would like to work from home at least part of the time (WorldatWork
Telework Trendlines 2009) and 87% of federal employees say they want to work from home
(2013 Federal Viewpoint Survey).
18 Global Workplace Analytics Recent Statistics on Telecommuting available at
http://www.globalworkplaceanalytics.com/telecommuting-statistics
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There are significant economic benefits from telecommuting and working from home.
According to the Global Workplace Analytics website, “If those with compatible jobs and a
desire to work from home did so just half the time (roughly the national average for those who
do so regularly) the national savings would total over $700 Billion a year.” Other data points
from the website are:
o A typical business would save $11,000 per person per year
o The telecommuters would save between $2,000 and $7,000 a year
o The oil savings would equate to over 37% of our Persian Gulf imports
o The greenhouse gas reduction would be the equivalent of taking the entire New
York State workforce permanently off the road.
o The Congressional Budget Office’s estimate of the entire five-year cost of
implementing telework throughout government ($30 million) is less than a third
of the cost of lost productivity from a single day shut-down of federal offices in
Washington DC due to snow ($100 million).
According to the Aspen Institute’s Communications and Society Program’s recent publication,
“The Future of Work”, (2011) work is no longer confined to a specific time and place. Open
systems, open platforms, shared folders and databases, “crowdsourcing,” and collaboration
between employees, contractors, vendors and suppliers happens “in the cloud” facilitating the
ability to work anywhere there is a high-speed Internet connection, at any time.19
Providing the ability for people to work from home or from Internet meeting rooms – i.e. the
local coffee shops, libraries, community centers, co-working spaces, incubator locations or
virtual offices -- requires access to advanced broadband services. The benefits and cost savings
of telecommuting can only be realized when workers have access to abundant broadband. If
work is portable, people will choose communities that are rich in culture, art, entertainment,
recreation, educational opportunities for kids and adults and are affordable. Work is no longer
tied to place. Communities need to change to attract and maintain this new portable workforce.
19 David Bollier, “The Future of Work, What it Means for Individuals, Markets, and Governments,” Aspen
Institute’s Communications and Society Publication, (2011).
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Every “Thing” will be Connected to the Internet: Medical Devices,
Health Monitoring Systems, Our Cars, Our Clothes, Household Systems,
Appliances, Energy Controls – the “Internet of Things.”
Every good thing out there is connected to the Internet; the new “Internet of Things.” These
things include household systems that monitor security systems, locks, energy use,
temperature, and water control. It includes appliances that call automatically for maintenance;
make shopping lists, schedule events, order parts, and schedule repair -- all without the need
for human intervention or oversight.
The Internet of Things includes medical devices that monitor our health, detect and alarm us
when medical issues are present, clothes that detect glucose levels or heart conditions, and hats
that monitor our brain activity. Cars are now connected to the Internet, monitoring the car’s
status and performance, notifying drivers of traffic delays, alternative routes, hazardous
conditions and mechanical issues. Soon cars will drive themselves. Internet-connected cars will
provide anti-collision technology, automatically braking and steering clear of accidents or
potential accidents. Our coming and going, our location, customer information and
applications will all be collected, stored and monitored. Some of this sounds a bit
uncomfortable; however, the reality of all of this is here. Devices are all Internet-enabled.
Although we as individuals will need to determine how far and how much data we want to
have shared and collected, it is clear that the Internet of Things is only enabled with advanced
broadband capacity.
Affordable Healthcare: The growing Baby Boomer population and the
implementation of the Patient Protection & Affordable Care Act will
create new challenges for our healthcare system.
The baby boomers are getting older; the largest portion of our population is aging. Concerns of
increased healthcare costs with our aging society will need to be curbed by providing better,
smarter, more cost-effective healthcare. Implementation of the Patient Protection and
Affordable Care Act is placing new demands on the medical industry to become more efficient,
cost effective and nimble, demanding that physicians interact with more patients.
Telemedicine is the use of information technology including the telephone, the Internet and
personal computers, for diagnosing, treating and monitoring patients. Telemedicine is adding a
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new dimension to modern health care. These advances are not only making care more
accessible and convenient, they are lowering the costs of medical care, while not sacrificing the
quality of care, and in many studies, improving the quality of care. Physicians can consult with
more patients, and patients can meet with their physicians in a shorter time period. Less time is
spent checking the patient in and leading the patient to the exam room. In terms of economic
advantages, telemedicine can save a great deal of time for patients who otherwise would have
to leave work. Telemedicine can also eliminate many ER visits, which are often the most costly
means of providing healthcare services.
According to the Wellness Councils of America (WELCOA), as many as 70 percent of primary
care visits, and 40 percent of emergency room visits to treat acute medical conditions could
have been diagnosed and prescribed medication all over the phone.20 The methodology of
providing care has not changed; however, the medium for providing care has. The physician
can perform diagnostic testing, interview the patient, check vital signs, etc. remotely using
videoconferencing and remote monitoring equipment, and the telephone or internet; instead of
providing these services in person.
The American Telemedicine Association highlights various reports on the efficacy, cost sa vings,
improved healthcare and patient benefits of telemedicine.21 One report highlights the
experience of UPMC Health Plan, an integrated delivery and financing system headquartered in
Pittsburgh, Pennsylvania, in its efforts to support primary care pract ices as they converted to
patient-centered medical homes. From 2008 through 2010, sites participating in the UPMC pilot
achieved lower medical and pharmacy costs; more efficient service delivery, such as lower
hospital admissions and readmissions and less use of hospital emergency departments; and a
160 percent return on the plan’s investment when compared with nonparticipating sites.
Presbyterian Healthcare Services based in Albuquerque, New Mexico, adapted the Hospital at
Home® model developed by the Johns Hopkins University Schools of Medicine and Public
Health to provide acute hospital–level care within patients’ homes. In this program, patients
show comparable or better clinical outcomes compared with similar inpatients, and they show
higher satisfaction levels. Available to Medicare Advantage and Medicaid patients with
common acute care diagnoses, this program achieved savings of 19 percent over costs for
similar inpatients. These savings were predominantly derived from lower average length-of-
20 Wellness Council of America, "Collecting Data to Drive Health Efforts," available at
https://www.welcoa.org/resources/collecting-data-drive-health-efforts-classic-edition/
21 American Telemedicine Association, numerous case studies available at
http://www.americantelemed.org/about-telemedicine/telemedicine-case-studies
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stay and use of fewer lab and diagnostic tests compared with similar patients in hospital acute
care.
Additionally, patients that are participating in a home health program or telemedicine program
experience higher satisfaction as they receive more personal one-on-one care, without taking
time from work to travel to a medical clinic and wait for their appointment with the doctor. The
source of satisfaction for most patients is the ability to see a specialist trained in the area most
closely related to the patient’s condition, the feeling of getting personalized care from a
provider who has the patient’s interest in mind, and the ability to communicate with the
provider in a very personal and intimate manner over the telecommunications technologies.
With the Internet of Things for Medical Devices, it is now possible to remotely monitor a
patient’s health with the use sensors, detectors, actuators and the Internet. Medical remote
monitoring devices are connected to the Internet where a patient’s vital statistics get transmitted
via a gateway onto secure cloud-based platforms where the data is collected, stored, monitored
and analyzed. These devices can monitor and alert physicians or loved ones if a patient’s vitals
fall outside a healthy range. Scanners can monitor inventory levels for pharmaceuticals before a
medication runs out and order supplies and inventory ensuring that hospitals and clinics have
the needed supplies.
Other medical applications enabled with advanced broadband include medical training and
consultation with other physicians and providers, electronic health records, and the ability to
log-in and read patient charts, MRIs and X-rays.
Education and Distance Learning: Our workforce must continue to
evolve through workforce training and education. The manner in which
we provide education to our kids and to adults is changing, requiring us
to access information and education through distance learning and
reverse classroom experiences.
The concept of working for a single company or within a single industry for thirty years until
retirement is no longer an economic reality. Workers will change careers an average of seven
times during their lifetime. Workers cannot expect to enjoy a “steady job” with a lifelong
employer, nor expect that employer to provide the training and skills needed as the work
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changes. Workers will require on-going training, education and mentorship. Many of these
resources for further education and mentoring are now mostly available on -line and virtual.
Educational institutions, workforce training, universities, and corporations must provide
education when people can use it, rather than at a specific place and time, working around
lifestyle, schedules and work/home priorities and pressures.
Homework assignments, testing and accessing educational videos are all on-line. The
methodology by which education is happening is changing. Schools are providing the reverse
classroom, or flip education; a concept that includes providing a video of the lesson online.
Students download the lesson remotely while at home, watch the lecture, can pause, reflect,
rewind and watch again. The classroom time is then used for more in-depth study, homework,
questions and interaction between the students and teachers.
Public Safety: Our first responders need reliable, ubiquitous coverage,
higher standards than what our commercial networks currently have,
interoperability between networks and priority access to information
and databases.
Emergency response teams have unique needs and higher standards for broadband and
communications. Our first responders need networks that are reliable, always on, secure,
provide ubiquitous coverage, interoperability between network and priority access to
information and databases. Their devices need to be small, lightweight, versatile and
autonomous, wearable and portable. The devices need to be capable of sensing the
environment, of tracing and tracking resources and able to convey a wealth of information to
other responders, civil protection authorities and to crisis management centers. Sensor-nets can
provide for situational awareness for disasters, fires, emergencies, car wrecks and other events,
but these sensors require access to high bandwidth and the current wireless networks do not
currently support these applications adequately.
Police officers are ready to trade in their handheld radios for use of their iPhones, iPads, and
Android devices while on the job. Until recently, this has created a problem for law enforcement
agencies as smartphones and tablets haven’t been able to connect to conventional Land-Mobile
Radio (LMR) networks. U.S. public safety agencies will soon be able to use the FirstNet
network that provides priority access for law enforcement, first responder and public safety
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agencies. This is critical during disasters when cell phone networks can become congested, as
FirstNet is a network that will have spectrum dedicated exclusively for public safety entities.
Additionally, most devices for law enforcement include video applications – camera-equipped
police and camera-equipped cars, cameras on traffic stops and enforcement of speed sensors
and speeding tickets, and live ambulance video-links to hospitals. The existing wireless
networks cannot support the applications that are in use today. The 911 system cannot process
videos from citizens, but as we are finding during emergencies, the public is often the “eyes and
ears” during these crises as citizens are videotaping events as they happen. Having the public
be able to record events and send the information to first responders allows for better
transparency, honesty and less mistakes.
Digital Inclusion and Civic Engagement: The Great Equalizer
between the Haves and the Have-nots.....or Not?
Broadband must be ubiquitous or it will further create a digital divide between the haves and
the have-nots. When broadband is ubiquitous it can be the great equalizer between different
economic classes. In 2014, the International Economic Development Council asked economic
development professionals if broadband service could "encourage individual entrepreneurship
among under-served constituents," and 35 percent said that it is quite likely and 14 percent said
that they had seen it firsthand (see Table 4). Ubiquitous broadband access can help create social
equality. However, not having advanced broadband access available to everyone can create
further inequalities of wealth and potentially can create further gaps in education, social
institutions and government resources. Broadband must be abundant, redundant and available
to everyone.
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Table 3 Entrepreneurship among underserved constituents.22
Civic Engagement, Transparency, Access to Government Resources.
Advanced Broadband Networks can transform civic engagement, access to government
resources and transparency of government. All government documents, including GIS data,
applications, information on initiatives, information on financial contributions etc. are now
available on-line. Documents must be able to be in a standardized format, searchable and
available where data can be edited and used by other programs. Providing citizens access to
this data provides further transparency, community engagement, public input, and public
impact on government.
Higher Home Values
Finally, statistics from the FTTH Council state that real estate developments communities that
have deployed FTTH networks have instantly improved home sales values. According to the
FTTH Council, access to fiber adds 3.1% to the value of a home and having a Gigabit available
22 International Economic Development Council, "The Broadband-Driven Economy."
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increases home values by 7% over homes that have access to 25 Mbps or less. In Estes Park, the
average home price is $560,000. A 7% homes value increase translates to $39,200.
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11. In Summary
In summary, the following provides the primary conclusions of this study.
1. Abundant Broadband is a Necessity for Economic Vitality. The economic health and
survival of this region depends in large part on the availability and affordability of advanced
telecommunication services. Advanced broadband service is no longer a luxury as the Internet
and its use have infiltrated every area of our lives. The Internet and its associated technologies
are used for social media and staying connected, for entertainment and streaming videos; but
more importantly it is used to transfer files and download/upload information that is critical to
businesses, medical establishments, public safety, online banking, training and distance
education, smart metering, point of sale applications, and every part and parcel of our lives.
2. The Community has Overwhelmingly Supported this Need for Abundant Broadband. On
February 3rd, 2015 a public vote to opt-out of Colorado’s Senate Bill 152 was conducted within
the Town of Estes Park. 92% of the voters in Estes Park voted to reclaim local authority to
establish a telecommunications utility. In other similar elections held in Colorado the results
have been 60-75% in favor of opting-out of the current law that restricts municipalities from
building telecommunications infrastructure. The overwhelming and unprecedented results of
this election are a clear indication that the community is interested in making a change and
speaks to the need for better broadband services.
3. Community Outreach Meetings and Surveys Provide Further Input from the Community
in Support of this Project. The Town and NEO conducted community outreach meetings
discussing the need and process for advanced broadband services. The community outreach
meetings were well-attended and feedback from the community confirmed the vast need for
better broadband services. NEO Fiber put together two surveys to receive input from the
community in regards to broadband needs for the Town of Estes Park.
When asked if respondents would be interested in accessing a faster, more reliable
broadband network, 93.45% said, “Yes.”
The survey provided instructions to respondents to take an actual Internet speed test. The
lowest speeds recorded were 0.22 Mbps download and 0.49 Mbps upload. The highest speeds
recorded were 66 Mbps download and 5.5 Mbps upload. The average speeds recorded were
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10.75 Mbps download and 2.07 Mbps upload. Considering that other towns, cities and
communities are investing in networks that provide services that are 500 – 1000 times faster
speeds than actual capacity available in Estes Park, speaks to the lack of adequate broadband
services actually available. These real-world speed test results confirm the need for more
abundant broadband.
4. Local Providers are Not Investing in FTTH in Estes Park. Although the providers have
invested in limited fiber optic infrastructure to key businesses and anchor tenants within the
Town, the existing provider’s networks are primarily based upon cable modem, Digital
Subscriber Line (DSL) and wireless technologies.
The current service providers do not have plans to upgrade their networks to Fiber to the Home
in Estes Park. The current providers have access to limited capital and therefore, simply cannot
implement this technology throughout the community. As more applications are bandwidth
intensive, the lack of existing infrastructure that supports this type of bandwidth consumption
is a problem that is not going away. Internet bandwidth consumption is doubling every year.
As the existing networks that are built on DSL, wireless and cable modem do not support the
needs of bandwidth today, the problem will only grow bigger as time goes on.
5. Estes Park Needs Abundant Broadband that is Affordable. The current model for
providing abundant Internet or broadband services is based upon a model of scarcity. If the
Town embarked upon building a FTTH network, targeted pricing for businesses and anchor
institutions would be $300 - $500 per month for Gigabit Internet service. Residential pricing is
targeted at $70 - $95 per month for Gigabit Internet. This would dramatically transform the
pricing and broadband offering that is currently available in Estes Park, making high-
bandwidth Internet services attainable, accessible, abundant and affordable.
6. Two of the Five Service Delivery Models are Feasible. All of the financial models are based
on detailed, realistic analysis and extensive real-world, industry-standard assumptions. The
two financially sustainable models produce a revenue stream for the Town that is similar to the
residual revenue stream of the Estes Park Light and Power Division. These two models – of
providing services directly to the anchor institutions and businesses - and to the business
community as well as the residents and homes of the community - have successfully been
deployed in numerous communities throughout the country. These two models are what the
City of Longmont is implementing. These models are financially sustainable, have been
successful in other locations and can be implemented in the Estes Valley.
7. There are Possible Private-Public Partnership Roles for Current Local Service Providers.
The two models that are financially sustainable provide for possible Private -Public Partnership
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roles for the current local service providers. Final design, engineering, project management,
program management and construction of the network would be outsourced. This opportunity
represents approximately $27 - $30 Million in potential revenue to the existing service
providers. Additionally, the network operations and management, truck rolls and repair
service could be outsourced. Sales, marketing, customer service and billing services could
potentially be outsourced as well. Based upon the assumptions used in the financial models,
this represents $500k to $1.5M in annual operating revenue potentially available local service
providers offering these outsourced functions for the Town. Estes Park would be required to
competitively bid these opportunities; however, a local preference could be given to local
service providers and/or local service providers that bid jointly with national providers.