Staff Report. Valerie Barone, City Manager. Considering adoption of the Broadband Master Plan and providing implementation direction to staff

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1 6.c Staff Report Date: April 24, 2018 To: From: Prepared by: Reviewed by: Subject: City Council Valerie Barone, City Manager Jeff Lewis, Information Technology Director (925) Kathleen Salguero Trepa, Assistant City Manager Considering adoption of the Broadband Master Plan and providing implementation direction to staff CEQA: Statutorily Exempt pursuant to California Environmental Quality Act (CEQA) Guidelines Section Feasibility and Planning Studies. Report in Brief Cities in California and throughout the nation are developing broadband infrastructure to improve City services and enhance economic development opportunities. The City, through the Information Technology Department, engaged Magellan to assist with a broadband master planning effort. Magellan is currently assisting 15 other cities in California with this same task. Concord s draft Broadband Master Plan includes a proposed broadband infrastructure network and discusses various business models used by local government to manage the network. The plan recommends a City-owned model that upgrades the City s current antiquated traffic system network and replaces leased lines that connect City facilities with City-owned fiber. The proposed new fiber network would reduce annual operating costs but more importantly improve connectivity to support City technology applications. This investment is already necessary in order to upgrade the City s traffic signal network to accommodate more advanced traffic management technology. Page 1 of 150

2 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 In addition, the Plan also evaluates other opportunities to leverage the broadband network to support economic development efforts and potentially generate revenue through a public private partnership with an Internet Service Provider (ISP). Additional information is included in the report below and will be provided during the presentation. Recommended Action Adopt the proposed Broadband Master Plan and approve the proposed 2-step implementation strategy: (1) Continue coordinating projects with open trenches to install fiber infrastructure, and (2) Develop and bring forward to Council for adoption a Dig Once Policy. Background Broadband networks provide high speed, wide bandwidth transmission of multiple types of information including data, voice, video and Internet traffic and access. Broadband networks can use a variety of technologies, including coaxial cable, twisted pair copper cable, wireless technology or optical fiber. The method of connecting these networks can greatly affect their speed and performance; optical fiber based broadband networks offer the fastest performance, greatest data capacity and lowest latency (lag time). While broadband networks can be used for many purposes, they are best known for improving the speed and quality of internet access. In order to promote broadband access throughout a community, municipalities have been investing in publically owned fiber-optic cable infrastructure. Typically, this effort includes connecting City-owned assets, such as street lights and traffic signals, to support 5G wireless connectivity. 5G wireless networks utilize broadband infrastructure, and will be the key to extending Smart City technologies, which rely on increasingly more data for rapid program feedback. 5G wireless communication speeds are estimated to be 1,000 times faster than the existing 4G technologies used by new smartphones and mobile devices today. Municipalities that own their fiber networks have the ability to leverage those resources to improve City services, such as: Public safety: by allowing for the use of cameras and wireless technologies in the field; Traffic management: by providing for a stable and reliable network to support adaptive traffic technology that customizes traffic signal operations to traffic demand; Infrastructure for the Internet of Things (IoT): by allowing connected access to sensors that can assist with parking, garbage disposal, street lighting and other municipal services. Page 2 of 150

3 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 Currently, the City leases fiber from an Internet Service Provider (ISP), Wave, at a cost of approximately $100,000 annually. The fiber connects City facilities, including City Hall, the Police Station, Senior Center, Centre Concord, Willow Pass Community Center, Todos Santos Plaza, and the Pavilion. Were the City to use leased fiber to add additional connections, for example to connect traffic signals, it would cost $400 per month per connection, or $4,800 annually per connection. The City s traffic signal system is comprised of 156 signalized intersections, which are primarily connected by copper wire that is antiquated and failing. The traffic signal technology cannot be upgraded without the installation of fiber, not to mention the implementation of more advanced software and hardware technologies that assist with managing traffic circulation. Leasing fiber to connect these signals would cost almost $750,000 annually. Recognizing this issue, staff completed a Traffic Signal Master Plan in 2015, which outlined a fiber connected traffic signal system and served as the starting point for the broadband master plan. The Traffic Signal Master Plan also supported grant applications, allowing Concord to receive a $3.2 million grant from the Contra Costa Transit Authority to upgrade signal technology in the downtown corridor (Attachment 2). This project includes 4.5 miles of new conduit and fiber to support the advanced technology. As a result, staff has already begun installing new conduit and fiber as feasible, incrementally installing segments of a broadband network. The proposed Broadband Master Plan takes a broad look at how that network could be built out to maximize access for not only government use, but private as well in order to support economic development and generate revenue. Implementing a broadband network to leverage Smart City technology applications was recently identified by the City Council as a Tier 1 priority during the goal setting workshop of March 24, Analysis The strategic plan explored the current state of broadband in Concord and the City s internal needs, as well as the needs of its businesses and anchor institutions, those agencies or businesses with large data communication needs. The plan outlines some of the major benefits of having a fast and affordable broadband infrastructure, including: Municipal and Smart City Services A robust fiber-optic network is critical to providing Smart City services and efficiencies, such as public Wi-Fi, intelligent transportation systems, autonomous and connected vehicle operations on City streets, real-time parking availability on streets and in garages, and smart trash cans that notify staff when service is needed, to name just a few opportunities. Public Safety Fiber-optic infrastructure is critical for the deployment of security cameras, emergency communications and other public safety related Page 3 of 150

4 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 technologies. Economic Development Broadband can be used to support existing businesses and attract new businesses that rely on ultra-fast internet access, such as high tech companies, studios, online retailers, banking institutions, research and development organizations, medical institutions and more. Improved Internet Service Municipal broadband infrastructure can also be utilized to provide internet service to the business community and anchor institutions, which can also serve as a catalyst to increase competition between existing ISPs, improving services and reducing costs throughout the City. Healthcare Because of the capability and capacity provided by such high speed networks, they can also support emerging virtual healthcare and telehealth services, by interconnecting hospitals, doctors' offices, clinics, labs and imaging centers for Concord residents. Network Management Options There are several general business models to implement and manage a broadband network. The most basic model is to implement a City-owned and managed fiber network to serve just City facilities, including signalized intersections. This model requires a capital investment, minimal operations and maintenance costs associated with repairing conduit or fiber as necessary and no revenue generation. The total estimated cost to build the complete network in three phases over approximately ten years, if implemented as three distinct projects, is $22.6 million, using a unit cost of $135/linear foot. This unit pricing includes both new conduit and fiber, and is likely on the higher side for conservative estimating. This price tag also does not include accessing grants which are available for advanced traffic management technologies (as noted above) and to reduce the digital divide by extending broadband into underserved communities. Nor does it factor in taking advantage of significantly lower construction costs by sharing trenches with other utility work or coordinating with Capital Improvement Plan (CIP) projects. As an example, the incremental replacement of 8.7 miles of traffic signal conduit has already been completed by coordinating the broadband work with other trench and traffic projects. More than half of this traffic signal conduit already contains fiber. The cost to pull fiber in the remaining new conduit is approximately $330,000. The value of this recently completed work is approximately $6.2 million, using the $135 linear foot pricing, but was installed at a cost of $2.6 million. Adding in the cost to install fiber in the empty conduit ($330,000) to equalize the cost comparison, the strategy of coordinating trench work with other projects has resulted in savings of approximately $3.3 million. The take away is that sharing construction costs with other open trench Page 4 of 150

5 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 projects will result in tremendous savings over time. The unknown is how long it will take to install the conduit and fiber using a joint project / shared trench strategy. While 8.7 miles of new conduit has already been installed (and almost 5 miles of new fiber), another 53 miles of conduit and 57 miles of fiber remains to complete the network, as proposed below. Magellan also reviewed opportunities to leverage the City-owned network for retail purposes in order to support economic development efforts and generate revenue. To offer and support retail services, there are two basic models: The City becomes a direct service provider, which would require developing the staffing and utility billing infrastructure to market, install and support a retail service, or The City partners with a third party Internet Service Provider (ISP) that manages the retail service on behalf of the City, with a revenue sharing agreement between the City and ISP. Given budgetary constraints, neither Magellan nor staff is recommending that the City Council consider directly managing retail services. Developing the staffing to market, install, service and invoice for retail internet service is beyond what the City can manage at this point, and that option was not further evaluated. Magellan did evaluate opportunities to offer retail services to customers through a revenue sharing agreement with a third party ISP to manage the service. However, staff is not recommending that option at this time, as discussed later in the report. Network Plan The Master Plan includes three phases to prioritize network build out. These three phases are the same whether the network is exclusively utilized for municipal services or if retail services are ultimately offered. The three phases are rendered below. Please note that the unit price of $135 / linear foot for both conduit and fiber is used to estimate construction costs for consistency, assuming the network was constructed as its own project; in other words, no coordination with other projects to share construction costs and open trenches. The costs noted below are the estimated maximum costs associated with building out the network in a phased, ten year timeframe. Page 5 of 150

6 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 Phase 1 Core Infrastructure Build This phase includes extending the network to pick up major city facilities and intersections and allows for the leased fiber to be replaced with City fiber, reducing annual lease costs by $100,000. Approximately $6.1 million of this phase has already been constructed (using the $135 / LF unit pricing) as staff coordinated conduit plus some fiber installation with CIP projects along the proposed route. The estimated Page 6 of 150

7 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 remaining construction costs total $9.5 million. If this phase were constructed as a single project, Magellan anticipates a three four year build to complete this phase. Phase 2 Traffic System Infrastructure Completion Phase 2 extends the fiber infrastructure to complete an upgrade of the City s traffic system. Approximately $500,000 of fiber conduit has already been installed, leaving an Page 7 of 150

8 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 estimated construction cost is $5.5 million. If this phase were constructed as a single project, Magellan anticipates a three year build to complete this phase. Phase 3 - Network Redundancy Phase 3 completes multiple loops for redundancy and reliability. This phase improves reliability for government use, and would be essential if the goal becomes to offer access to customers as a commercial ISP. This phase is estimated to cost $7.6 million for the network (approximately $20,000 has already been constructed). If the third Page 8 of 150

9 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 phase were constructed as a single project, Magellan anticipates a three year build to complete this phase. Phase 4 School Connections The Master Plan also includes information related to connecting schools. Expanding the route to incorporate service to schools would cost an additional $14.3 million dollars. MDUSD schools are already connected to high speed internet through leased lines at reasonable pricing. Staff does not recommend proceeding with this phase; therefore, the $14.3 million cost has not been incorporated into the overall financials presented in this staff report. This staff report and the Magellan report have been shared with MDUSD. The total estimated cost to build the proposed system (Phases I, II and III) over an estimated 9 years is approximately $22.6 million, factoring the random segments already installed, as summarized below. Page 9 of 150

10 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 Business Models Estimated Construction Costs ($ = millions) Phase I Phase II Phase III Estimated Total Proposed City Only Network $ $ 6.00 $ 7.59 $ Already Constructed $ (6.08) $ (0.47) $ (0.02) $ (6.57) Estimated Remaining Cost $ 9.54 $ 5.53 $ 7.57 $ Proposed Network Implementation Staff and Magellan recommend that the three phased system be built incrementally through a variety of strategies. First, by taking advantage of capital improvement projects that include trenching, City conduit and/or fiber can be installed at the same time, dramatically reducing project costs. This strategy has already been used to install segments of the network as the Information Technology Department and Engineering Division coordinate projects for this very purpose. Staff is also developing a Dig Once program for Council consideration that expands upon this joint project concept. With a Dig Once program, utility companies and other entities that trench in the public right of way would be required to install City conduit and/or fiber on a reimbursement basis, as determined by City staff based on usefulness of the location and availability of funds for reimbursements. Other agencies have developed and implemented Dig Once programs to reduce project costs and leverage open trench opportunities. Program requirements are codified through an ordinance with the reimbursement rates adopted by the City Council as part of the Master Fee Schedule. Staff also anticipates taking advantage of grants to upgrade and extend technology as a way to extend broadband network infrastructure. Grants are available for traffic and transportation improvements, reducing the digital divide by extending network access into underserved communities and for other public benefit programs. As noted previously, the City received a $3.2 million grant to upgrade traffic signal technology in the downtown corridor, which includes upgrading signal connections with new Cityowned fiber. Staff has also been working with potential partners who may be interested in assisting with Plan implementation by either sharing infrastructure, building infrastructure together to reduce costs or identifying private sector partners interested in leasing fiber assets from the City s system to generate revenue. The estimated $22.6 million cost to construct a broadband network can be accomplished incrementally at a reduced overall price by leveraging the opportunities noted above. However, the timeline to do so will vary greatly depending on joint trenching opportunities and funding. Staff would continue to identify joint projects to expand the network, and request funding as necessary to complete segments. Page 10 of 150

11 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 Financing Options If the Council were interested in expediting the construction, the City could engage in a series of borrowings to raise the required funds over the 10 year projected build out period. Each borrowing would be timed to coincide with the phased build-out. The debt would be guaranteed by the General Fund and debt service paid from a combination of non-general Fund and General Fund dollars. The costs below assume each phase is constructed as distinct projects at $135 / linear foot and financed over 30 years as a tax exempt financing. While the expedited, financed project might result in higher actual costs than building the network incrementally through joint projects and trench sharing, the benefit would be installing the system in a coordinated, expedited manner within a set ten year timeframe. Phase 1 borrowing would be approximately $9.5 million at an assumed interest rate of 4.04% based on recent similar borrowings by other cities. Maximum annual debt service would be $565,000. Phase 2 borrowing would be approximately $5.5 million with maximum annual debt service of $343,000 and an assumed interest rate of 4.3%. Phase 3 borrowing would be approximately $7.6 million at an assumed interest rate of 4.55% with maximum annual debt service of $485,000. If the entire remaining $22.6 million in projects costs were financed, the total maximum annual debt service would be approximately $1.4 million by year 9. Each phase is estimated to take roughly three years to complete so the financings would be spread over a nine year period (one borrowing every three years). Should Council desire to consider debt financing for this project, staff would refine the assumptions, prepare a timeline for implementation, and bring an analysis of pros and cons forward to Council for consideration at a future date. Retail Services Option As noted earlier, Magellan also evaluated the potential of offering retail services to businesses along the proposed broadband network to better understand the financial costs and potential revenue generated from such a service. Retail services would require Phase III for redundancy and financed phased construction in order to attract a third party ISP to manage the business service through a revenue sharing agreement with the City. Retail services would also require additional equipment, totaling $8.8 million over the three phases to connect businesses to the network. Based on community surveys and discussion with potential institutional users as well as other government entities, Magellan estimated that approximately 35% of the businesses along the City s network route would take advantage of the City s broadband service, based on a competitive pricing model if the City invested in installing Page 11 of 150

12 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 the business connections and headend equipment necessary to offer retail services. These business connections and the associated equipment would cost another $8.8 million dollars to the overall network costs, or a total of $31.4 million in total remaining construction costs for the entire system. This cost is based on unit pricing of $135 / LF for conduit and fiber, assuming an expedited phased build as noted below. Business Models Estimated Construction Costs ($ = millions) Phase I Phase II Phase III Estimated Total Proposed City Only Network $ $ 6.00 $ 7.59 $ Already Constructed $ (6.08) $ (0.47) $ (0.02) $ (6.57) Estimated Remaining Cost $ 9.54 $ 5.53 $ 7.57 $ Optional Head End / Retail Equip. $ 1.09 $ - $ - $ 1.09 Optional Business Connections $ 4.90 $ 1.80 $ 1.00 $ 7.70 Estimated Retail Costs $ 5.99 $ 1.80 $ 1.00 $ 8.79 Total Estimated Cost by Phase $ $ 7.33 $ 8.57 $ However, in exchange for the additional construction costs, Magellan estimates a revenue sharing agreement with an ISP to provide retail services could generate approximately $20-30 million for the City over twenty years as the system is built out and business accounts come online. This projected revenue assumes a business take of 30-35%, meaning that percentage of businesses (approximately 3,200 at 35%) within 500 feet of the City s network become retail customers. To better understand potential risk associated with the business take, staff asked Magellan to estimate revenue at lower business take rates. If 20% of the business along the network become customers, the potential revenue drops to approximately $135,000 per year at network build out. As noted, offering business services would require the system to be constructed over the phased ten year period in order to attract an ISP partner and add $8.8 million to the construction costs, which would also affect the financing. Staff prepared an initial assessment of potential financing options for the phased construction of the retail services component, assuming it would be constructed concurrently with the phasing plan noted above. Additional research is needed to determine whether the City would be able to finance the retail portion ($8.8 million) as a tax exempt financing or if the retail component would require a taxable debt issue. As a result, a range of costs is provided for each phase below with the lower cost being associated with a tax exempt financing and the higher assumes a taxable debt issue. The debt would be guaranteed by the General Fund. The costs below assume each Page 12 of 150

13 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 phase is constructed as distinct projects at $135/linear foot and financed over 30 years. The funding sources to pay for these costs would likely be a combination of revenues from the retail model along with a commitment from the General Fund for any funding shortfall. The added cost to the Phase 1 borrowing would be approximately $6.0 million at an assumed interest rate of 4.04% to 4.71%. Maximum annual debt service would be $355,000 to $387,000. Phase 2 borrowing would be approximately $1.8 million with maximum annual debt service of $112,000 to $123,000 and an assumed interest rate of 4.3% to 5.0%. Phase 3 borrowing would be approximately $1.0 million at an assumed interest rate of 4.55% to 5.22% with maximum annual debt service of $64,000 to $71,000. If the entire $8.8 million in retail services project costs were financed, the total maximum annual debt service would be approximately $531,000 to $581,000 by year 9. When combined with the annual repayments for the City Only Network financings discussed earlier in this report, the maximum annual debt service for the entire network would be approximately $1.9-$2.0 million. Because of the financial risk associated with providing retail services, and the financial burden to the General Fund given already constrained budget forecasts, staff is not prepared to recommend retail services at this time. Rather, staff strongly suggests that the City proceed with installation of the proposed network for its exclusive use and then reassess retail opportunities as major portions of the system are built out. However, if Council directs staff to further evaluate this option, staff recommends bringing information back in approximately one year to allow for the adoption of the proposed Dig Once policy and to assess the rate of construction using shared construction / open trenching opportunities. Implementation of fiscal stability strategies would also be in process, allowing for a better financial understanding of impacts to the General Fund. Summary and Next Steps To leverage financial opportunities and reduce impacts to City streets, a Dig Once Ordinance is being developed for Council review. This ordinance would enable the City to participate in planned excavation projects in the public right-of-way to install Cityowned conduit for broadband services on a reimbursement basis. Taking advantage of trench access reduces costs and avoids digging in the same roadway multiple times, which helps extend the overall useful life of the City s streets. Staff recommends that the City Council adopt the Broadband Master Plan proposed network, and build a City-owned network over-time in order to 1) update the City s traffic Page 13 of 150

14 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 system, 2) provide opportunities for improved public safety services, 3) develop a foundation for the Internet of Things, and 4) reduce ongoing operational cost of leasing broadband services. As a City-owned network is implemented and additional opportunities evolve, staff will continue to assess extending high speed, low cost Internet services to local businesses and anchor institutions while simultaneously providing revenue opportunities for the City. Financial Impact City Only Network The remaining cost to implement a broadband solution to connect city facilities and traffic signals is approximately $22.6 million. This cost could be financed over time to expedite build out of the system or could be built incrementally as opportunities arise through partnerships with other providers, a Dig Once policy and/or coordination with the City s capital program. Under the incremental build out approach, staff would continue to identify joint projects to expand the network, and request funding as necessary to complete segments. If financed with tax exempt financing over 30 years, the related maximum annual debt service would increase from $565,000 to $1.4 million annually as the phases are implemented. Retail Services If the City were to offer retail services through a partnership with an Internet Service Provider (ISP), the revenue generated could cover the costs of construction and provide a positive revenue stream to the City of approximately $1 million annually by 2023, assuming all assumptions are met at a 35% business take rate. This model would require an additional City investment of $8.8 million over the three phases. The maximum annual debt service costs, should the business connections and related equipment be financed, would increase over time from $355,000-$387,000 to $531,000- $581,000, depending on the financing vehicle, as the phases are constructed. The funding sources to pay for these costs would likely be a combination of revenues from the retail model along with a commitment from the General Fund for any funding shortfall. The combined total maximum annual debt service would be approximately $1.9-$2.0 million should both models be financed over 30 years. Should Council desire to pursue one or both financing options, staff would refine the assumptions,prepare a financing plan and provide an analysis of pros and cons for Council consideration at a later date. Page 14 of 150

15 City Council Agenda Report Agenda Item No. 6.c April 24, 2018 Environmental Determination CEQA: Statutorily Exempt pursuant to California Environmental Quality Act (CEQA) Guidelines Section Feasibility and Planning Studies. Public Contact The City Council Agenda was posted. Attachments 1. Broadband Master Plan 2. CCTA Grant Area Map Page 15 of 150

16 ` Attachment 1 Page 16 of 150 i

17 ` BROADBAND MASTER PLAN CITY OF CONCORD, CA FEBRUARY 2018 ACKNOWLEDGEMENTS The City of Concord would like to acknowledge the contributions of multiple individuals and organizations who have provided valuable insights and information that have contributed to the development of this City s Broadband Master Plan. These contributors include, but are not limited to: Municipal and Community Anchors City of Concord City of Concord Information Technology Department Concord Chamber of Commerce BART Caltrans Central Contra Costa Sanitary District Concord Library Contra Costa County Library Contra Costa County Department of Health Contra Costa County Water District Contra Costa Fire Department Contra Costa Public Works Mount Diablo Unified School District Business Community FivePoint Concord Naval Weapons Station Hilton Hotels OpenHart.com Regency Centers Tart Collections Transwestern All participants in the City s Broadband Business Survey and Business and Anchor Institution Focus Group Sessions Retail Provider Community Comcast, Wave (formerly Astound), Sonic, AT&T, and Paxio ii Page 17 of 150

18 ` MAGELLAN ADVISORS DISCLAIMERS Magellan Advisors Legal Disclaimer This report (including any enclosures and attachments) has been prepared for the exclusive use and benefit of the Client and solely for the purpose for which it is provided. Unless Magellan Advisors provides express prior written consent, no part of this report should be reproduced, distributed or communicated to any third party. Magellan Advisors does not accept any liability if this Report is used for an alternative purpose from which it is intended, nor to any third party in respect of this report. These materials have been prepared for informational purposes only and concern hypothetical and/or historical situations. The information is not intended as and should not be construed to provide any legal advice as Magellan Advisors does not provide legal services. Magellan Advisors and its directors, employees, contractors or associates shall not be liable for any direct or indirect consequential loss suffered by any person or organization as a result of using or relying on any statement in or omission from this Report (including any enclosures and attachments). Magellan Advisors Disclaimer on Financial Information, Assumptions, Forecasts and Risks Magellan Advisors financial models, estimates, forecasts and related financial and business risk analyses have been prepared for use solely by Magellan s Client in understanding the financial aspects of proposed broadband and telecommunications projects. Magellan accepts no responsibility or liability towards any third party in respect of this information or related content in this Report. This information is subjective in many respects, and, thus, susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. The financial information contained in this Report contains a significant number of subjective forecast assumptions including, but not limited to, subscriber take rates, rate structures, fixed and variable costs, costs of capital and related assumptions. Any deviation from the subjective forecast assumptions is likely to lead to results that are significantly different than those projected in the Report. Additionally, other events that are not explicitly allowed for in the Report and financial analysis may lead to significantly different returns or values. Neither the financial information contained herein nor its outputs necessarily represent the opinion of value or future investment returns that are achievable. The financial information prepared by Magellan Advisors in this Report is provided for the sole purpose of indicative results based on a given set of assumptions. Neither Magellan Advisors itself, nor its directors, employees, contractors or associates shall be liable for any direct or indirect consequential loss suffered by any person or organization as a result of using or 3 Page 18 of 150

19 ` relying on any statement in or omission from this financial information or any information provided in connection herewith. 4 Page 19 of 150

20 ` TABLE OF CONTENTS 1 Executive Summary The City of Concord Broadband Vision Broadband Planning Guiding Principles Broadband Implementation Alternatives & Strategy Summary of Business Models & Costs Funding Summary Building out the City s Core Network Upgrade Transportation NeTWork Systems Provide Network Redundancy Provide Network Services to the Schools Build On Demand and Incrementally Recommendations Roadmap & Action Plan Conclusions City of Concord Economy & Demographics Population Economy & Businesses Education Conclusions State of Broadband Overview of Broadband Technology Dial-Up Access Digital Subscriber Line (DSL) Digital Carrier Systems Cable Modem Fiber-Optics Wireless Satellite Modern 21 st Century Networks City of Concord Broadband Market Supply Analysis Wireless Providers Mobile Broadband Availability Business Retail Services Wholesale and Back-Haul/Long-Haul Services Smart City Array of Things Argonne National Laboratory, the City of Chicago, the University of Chicago and AT&T National League of Cities Smart Cities Report Smart Cities Readiness Guide Smart Streetlights Smart City in Concord Wi-Fi Background Page 20 of 150

21 ` 5.2 LinkNYC Wi-Fi in Concord Wi-Fi Recommendations City of Concord Needs Assessment City of Concord Needs Assessment City Departments Summary of Strategic Broadband Needs Business Community Broadband Assessment Community Anchors Institutions and Government Partnerships Concord Naval Weapons Station Reuse Project Broadband Planning Business Models City of Concord Future Fiber Network Concord City Fiber Network Design Capitalizing on Concords Existing Network Opportunistic Builds Funding Concord s Network Funding Summary Financial Model Financial Model Conclusions Ten-Year Broadband Implementation Strategy Overview Recommendations Roadmap and Action Plan Implementation of the Broadband Infrastructure Program Concord Implementation Plan Next Steps...93 Appendix A. Smart Street Light Options Phillips 97 Valmont...98 Silver Spring Networks...98 Ameresco...98 GE Current...99 Metro Smart...99 Lumca 100 Lumizone Appendix B. Municipal Wireless Implementation Strategies California Cities Wireless Implementations Additional Cities Wireless Implementations Comparative Wireless Strategies Summary Appendix C. City of Concord Needs Assessment Detailed Key Findings Appendix D. Cost Assumptions Appendix E. Municipal Broadband Business Models Municipal business models Policy participation only infrastructure provider government services provider open-access provider Page 21 of 150

22 ` retail service provider business only retail service provider business & residential public private partnership LIST OF FIGURES Figure 1. Proposed Citywide Network Design.. 12 Figure 2. Financial Analysis for Phase 1- City Core Network...16 Figure 3. Cumulative Financial Analysis for Phase 1 2 Core Network and Transportation System...17 Figure 4. Financial Analysis for Phase 1 3 Core Network, Transportation System and Network Redundancy...17 Figure 5. Financial Analysis for Phase 1 4 Core Network, Transportation System, and Schools...18 Figure 6. Population Distribution by Age Range...21 Figure 7. City of Concord, California Economic Indicators...22 Figure 8. Median Earnings by Level of Education...23 Figure 9: How fiber-optic networks connect our communities...24 Figure 10: Physical bandwidth capacity comparisons...28 Figure 11. Wireless Providers in the City of Concord...32 Figure 12: Sample Business Retail Pricing Models...34 Figure 13. Existing Cameras in New and Old City Facilities...46 Figure 14. Data Collection and Outreach Process...48 Figure 15: City of Concord Needs Assessment...50 Figure 16. Phase 1 Core Network Build and Smart City Opportunities...59 Figure 17. Phase 2 Traffic System Infrastructure and Smart City Opportunities...60 Figure 18. Future Phases Smart City Opportunities...60 Figure 19. Type of Internet Service Subscriptions in the Concord Business Community...61 Figure 20. The Internet s Degree of Importance to the Business Community: Functionality, Availability, and Response Times (Q7) Page 22 of 150

23 ` Figure 21. Likelihood of Moving Business if unable to find Internet Services that Meet Needs (Q13)...62 Figure 22. Degree of Business Disruption from Internet Services: Speed, Connectivity and Reliability (Q9)...63 Figure 23. Level of Satisfaction with Current Internet Services (Q15)...64 Figure 24. Ways that the Internet is Insufficient for Business Needs...64 Figure 25. Degree of Importance for Business to have more than one Choice of Service Provider...65 Figure 26. Likelihood of Subscribing to City-Offered Internet Services...66 Figure 27. City of Concord Proposed Fiber Network and Buffer Zones...73 Figure 28. Phase 1 Core Infrastructure Build...74 Figure 29. Phase 2 Traffic System Infrastructure...74 Figure 30. Phase 3 Network Redundancy...74 Figure 31. Phase 4 City Schools Laterals (Optional)...74 Figure 32: Sanitation District Sewer Project...76 Figure 33. City of Concord Ten-Year Broadband Implementation Strategy...80 Figure 34: Comparison of City Wireless Implementation Strategies Figure 35: Inputs to Selecting the Right Broadband Business Model Figure 36: Comparison of Municipal Broadband Business Models Page 23 of 150

24 ` 1 EXECUTIVE SUMMARY The City of Concord, California is located in Northern California s Contra Costa County. The City s General Plan for 2030, specifies goals and principles for the City s long-term development. 1 In addition to a comprehensive General Plan, the City of Concord realizes the importance of broadband and fiber infrastructure to serve the City, business community, residents, and community anchor organizations (such as schools, hospitals and utilities). Broadband infrastructure promotes Smart City 2 initiatives, economic growth and development that drive innovation, provides access to education, and encourages well-being while supporting healthcare providers and public safety communication systems. Through the use of public policy, public agency collaboration, infrastructure improvements, and public-private partnerships, the City envisions the development of a gigabit broadband connectivity. The City of Concord is among progressive communities throughout the United States that realizes an investment in fiber-optic infrastructure is an investment in the community. It also realizes that large-scale investments are required to create redundant and reliable networks that serve the community and the region. With strategic goals for long-term economic development, the City s role in encouraging broadband investments will help bridge the digital divide and be instrumental in developing infrastructure to support economic growth and Smart City initiatives. Improving broadband coverage within cities results from strategically coordinated efforts among multiple organizations to improve, facilitate and/or provide the infrastructure necessary for economic development and Smart City services throughout the community. This is a continuous effort and should be woven into the fabric of all community development strategies, budgets and programs. There are many considerations for a city in planning for its broadband future. Aside from network design, business model options, and cultural shifts, one of the biggest issues is related to financing and funding such large infrastructure projects. There are no shortages of possible uses of limited public funds from providing services to the homeless to fixing pot holes and increasing support for public safety. How then does a city justify the potential expenditures of this new utility broadband. Why not just let the private sector design and build? Why does the city have to get involved at all when it will cost so much money to construct when there are so many other potential priorities for these limited funds? Broadband is becoming an essential utility just like water, sewer and power. Imagine your city without any broadband and all the disadvantages it would impose in today s competitive 21 st century world. Cities are responsible for all their citizens, not just those that can afford services. For-profit motives do not always translate well when maintaining services for the entire population. Cities are increasingly recognizing that for-profit 1 See 2 Smart City refers to the secure use of communication and information technology to manage City assets, and enable connection of growing array of smart devices in the Internet of Things. 9 Page 24 of 150

25 ` companies do not always build/provide the services that everyone can utilize because they are motivated by profit. Many have done a great job in providing services to certain select areas, but at the same time neglecting much of the population. Progressive cities are looking to take-the-bull-by-the-horns and help prepare themselves for the broadband future on behalf of their citizens. Cities and municipalities have several options to help promote broadband in their communities. These approaches span anywhere from policy only implementations that encourage broadband, but leave it to the carriers to provide services, to some cities financing, building and managing a broadband network that is then made available to everyone. Most cities however are adopting a middle approach, and this is what Magellan Advisors is recommending for the City of Concord. 1.1 THE CITY OF CONCORD BROADBAND VISION As the City of Concord looks to the future, it acknowledges the importance of access to affordable, adequate broadband to the greater community. The City recognizes that broadband is often viewed as a utility that is as important as sewer, water and electricity. Just as cities plan, build and maintain sewer, water and waste management operations (and sometimes gas and electricity), progressive cities look at broadband telecommunications as another valuable utility that requires the same attention to careful planning as other utilities. Historically, most municipalities have relied on for-profit telecom and cable companies to plan, build and offer broadband services in their communities. This reliance makes many communities dependent on the for-profit entities for availability of broadband services, which in turn has often resulted in expensive and/or inadequate services offered using outdated infrastructure, and an unknown timeframe for upgrade and service improvement. This strategy also precludes cities from affordably using broadband for economic development and smart cities because the asset is owned and managed by telecommunications companies. Modern cities are recognizing the need to develop their own Master Broadband Plans which address the concerns of their city, anchor institutions, businesses and residential communities. City staff, the local business community, community anchor institutions, and the broadband provider community provided key input for the development of this Master Broadband Plan. The experience and best-known methods of other pioneers have been incorporated into this Master Plan, and include: Managing the public right-of way; Using advanced networks to deliver government services; Leveraging public works projects to support the cost-effective installation of telecommunications infrastructure; Facilitating competition to encourage universal access and address digital divide; and Establishing incremental plans for the growth and evolution of telecommunications services in Concord. 10 Page 25 of 150

26 ` 1.2 BROADBAND PLANNING GUIDING PRINCIPLES Cities implementing a strategy for the deployment of broadband should consider a few simple guidelines that cannot be overstated if the plan is to be successful. These guiding principles include: Long-term Perspective. The City shall have a long-term view for the deployment of their broadband network. It often takes many years to see the vision deployed. A year scope is not unusual for these projects. Leadership Commitment. The City Council and City Mayor approval are necessary to champion the plan. To deploy day-to-day strategies, a Broadband Committee will ensure successful implementation. Under the leadership of the Broadband Committee and the City s management team, the successful ability to mitigate challenges and risks over time will help ensure the successful deployment of broadband throughout the City. Shared and Collaborative Vision. The City shall have an engaged group of interested shareholders that support and share the vision of the project both in terms of political influence as well as with financial means. The plan will require perseverance and foresight. Key stakeholders to engage should include: departments within the City, local businesses, anchor institutions, hospitals and healthcare providers, current telecommunications providers, schools and libraries, EMS organizations and colleges and universities. Utility-oriented Cultural Shift. The City shall develop a new cultural shift within all divisions of the City and throughout the community that demonstrates broadband is another important utility, just like sewer, water and electricity, and that as such, broadband and the deployment of broadband should be visible in all aspects of budgeting, planning and construction processes, not just an afterthought. Incremental Approach. The network shall be built in an incremental, but not ad hoc fashion; identifying opportunities to build in conjunction with other capital projects such as road construction, connecting traffic signals or when replacing water mains. This is a practice that has been successfully implemented by cities throughout the country, however to do so each opportunity must be evaluated on a case-by-case basis. The City s Fiber Master Plan provides a network design that allows the City to capitalize on these opportunities when they arise. Current examples include the City s trenching project currently taking place in the downtown, obtaining use of fiber from BART in exchange for assisting them with their platform camera needs, and implementing a phased approach for a broadband network for anchor institutions and businesses while upgrading the City s traffic signal system. Premier Business Location. The City s 2017 Mission Statement includes establishing Concord as a premier business location. With 30% of survey respondents stating they would definitely relocate their business if they unable to 11 Page 26 of 150

27 ` find internet services that meet their business needs, a fiber infrastructure is a vital asset needed to achieve this vision. 1.3 BROADBAND IMPLEMENTATION ALTERNATIVES & STRATEGY This Master Broadband Plan provides an incremental approach for the City, focusing on meeting the needs of the City, other municipal partners, and the greater business community. This document outlines an overall strategy for the implementation of broadband throughout the City, potential business models for deployment, and overall costs for development. Figure 1. Proposed Citywide Network Design As in any capital-intensive project, there are advantages and risks that vary depending on the broadband deployment scenario chosen. The City of Concord Broadband Master Plan analyzes these scenarios and provides a strategy for deploying broadband throughout the City over a ten-year period. Each implementation phase offers opportunities for the City to connect government facilities and assets, such as traffic signals, cameras, and wireless antennas. Connected devices establish the means to measure, monitor and improve traffic, the resident and visitor experience, and public safety. Additionally, the design includes the ability to offer competitive internet services to the business community within the buffer zones of the network design. As a result, the City of Concord s network becomes a network able to provide broadband speeds to the business community. 3 A redundant network architecture that will service as the backbone for the core of the City, main traffic routes, and commercial zones is illustrated in Figure 1. The network will also be the backbone and gateway for provisioning broadband for municipal, commercial, anchor institution and residential services for the repurposing of the Naval Weapons Station. 3 During community outreach sessions, residents and community members also expressed a need to ensure residential access to high-speed internet. A fiber-to-the-home (FTTH) analysis that explores residential access is not included in the scope of this study, but should be considered to ensure the economic development, workforce development and bridging the digital divide within the City. 12 Page 27 of 150

28 ` The proposed implementation strategy includes three primary phases with an optional fourth phase: 1. Conduct Core Network Buildout; 2. Enhance Traffic System Infrastructure; 3. Construct Network Redundancy; and 4. Connect Schools (optional). An implementation timeline with associated costs is illustrated in Figure 2 below. Figure 2. City of Concord 10-Year Broadband Implementation Strategy 1.4 SUMMARY OF BUSINESS MODELS & COSTS Magellan recommends a phased approached to building a network. The City should capitalize on the need to upgrade/modernize the City s traffic signal system and using this as a vehicle to simultaneously build the foundation for a modern fiber optic network that can ultimately be used by the City for broadband purposes. Any available grant funds available have not been captured in the financial analysis. This analysis assumes the City would supply all the build funds directly from City funding sources. If the City were to use only their own funds to build the entire network, the City could spend up to $52M over a 13 Page 28 of 150

29 ` 10 year period to construct the network. Capitalizing on other grant funds, dig once and joint trench opportunities will be a smart practice that allows the City to reduce the overall resource outlay. The City has two primary options for a network model: (1) providing services for the City only; and (2) extending services to the City s business community, municipal organizations, and anchor institutions (e.g., schools, libraries, colleges). The two options could include the provision of dark fiber, lit fiber, and transport services for a variety of smart city applications. The City will need to look at the feasibility of each option available to them. Each option has its pros and cons and risks associated with it, and it will be up to the City to balance their risk tolerance and financial situation with the network models. The primary assumptions used to estimate the four phases include: Revenue, Take Rates & Price Assumptions City facilities 100% Model Commercial Businesses 35% with a 3-year ramp per phase Includes commercial businesses that are within 500 of core network assets $720 per month for 1Gbps/1Gbps transport services $360 per month for 100Mbps/100Mbps transport service Vertical Assets Leases 5% of all available poles with a 5- year ramp per phase at a rate of $400 per month with backhaul, $180 per month for lease only Anchor Institutions 30% take rate and $1,500 per month for Internet Access Schools 100% of all schools with a 3-year ramp and $1,500 per month for 1Gbps/1Gbps Internet access 14 Page 29 of 150

30 ` Provision of Wholesale Services: The City would provide wholesale services to ISPs with 100 Mb and 1 Gb transport levels. Wholesale services would be provided to an ISP who would in turn provide the end user with broadband. The pricing recommendations are reflective of the wholesale model where the ISP would capture a roughly 30% mark-up to the end user. The ISP would be responsible for all on-site/premise electronics and equipment. The City would be responsible for the installation of the lateral. Take Rate: 35% of businesses within 500-feet of the City s fiber-optic network infrastructure, or 4.5% of the City s total business community, would switch to services. Wholesale Commercial Business Services Rates: o $720 per month for 1 Gb Transport o $360 per month for 100 Mb Transport Anchor Institutions: 30% of the community anchors would participate if offered during Phase 4 of the implementation. Vertical Asset Lease Rates: 5% take rate at $400 per month average Borrowing: Models are based on borrowing funds to build out the network. However, the City of Concord should also look for opportunities to offset borrowing costs through Dig Once Policy, grant funding and like-kind exchanges with interested parties. To help build and fund the ongoing operations of the network, the City needs to generate reoccurring revenue through the lease of services on its network to others. Magellan Advisors recommends offering wholesale broadband services to businesses and anchor institutions that are within five hundred feet of the core network. This leasing of services, at competitive rates, will help provide ongoing capital to help maintain and operate the network overtime. The City will provide services to existing ISP s at a wholesale rate, that in turn will provide broadband to the business community. We do not anticipate this network to reach all businesses within the City of Concord, typically those that are within 500 feet of the core network due to the construction costs of the lateral connection to the business. Expanding the network to those outside of the 500-foot buffer can be considered on a case-by-case basis but this is beyond the scope of this report. The model also assumes the leasing of vertical assets to wireless carriers on an annual basis. Some carriers will need only to lease vertical assets, while others will also ask for fiber backhaul services from those towers, which this network is designed to provide. 15 Page 30 of 150

31 ` FUNDING SUMMARY Funding for these broadband networks can come from many sources. These sources include: o Dig Once Opportunities o Opportunistic Options o Grants such as traffic signaling funding o Like/kind exchanges with other carriers or providers (BART, CalTrans, fiber and wireless carriers seeking small cell street light pole attachments) o Existing funds including Plan of Record (POR) allowances Ongoing maintenance funds will be offset by offering wholesale broadband access/services to businesses and anchor institutions. None of these funding sources has been reflected in the financial model BUILDING OUT THE CITY S CORE NETWORK Figure 1. Financial Analysis for Phase 1- City Core Network 16 Page 31 of 150

32 ` UPGRADE TRANSPORTATION NETWORK SYSTEMS Figure 2. Cumulative Financial Analysis for Phase 1 2 Core Network and Transportation System PROVIDE NETWORK REDUNDANCY Figure 3. Financial Analysis for Phase 1 3 Core Network, Transportation System and Network Redundancy 17 Page 32 of 150

33 ` PROVIDE NETWORK SERVICES TO THE SCHOOLS Figure 4. Financial Analysis for Phase 1 4 Core Network, Transportation System, and Schools BUILD ON DEMAND AND INCREMENTALLY Magellan Advisors will present a financial model that demonstrates a potential cost model for building and maintaining a broadband network. It should be noted that this model should be viewed as only one option available to the city and assumes more of a total finance scenario rather than incorporating cost savings from opportunistic builds or grant funding options. The City of Concord should assume that much of this network will be paid for by grant funds, or that the cost of building the network can be greatly reduced by joint trenching, use of existing assets or opportunistic builds as they present themselves. 1.5 RECOMMENDATIONS Recommendation #1: Develop Fiber-Friendly Public Policies Recommendation #2: Data Center and Network Interconnects Recommendation #3: Work with Community Anchor Institutions Recommendation #4: Identify Additional Community Uses Recommendation #5: Formalize a Broadband Initiative Program (BIP), sometimes referred to as Business Plan to Make Use of Broadband Assets Recommendation #6: Release RFPs for Construction and Operations Recommendation #7: Formalize Requirements and Design for Naval Weapons Station 1.6 ROADMAP & ACTION PLAN Implementation of the Broadband Infrastructure Program through completion of the following tasks: 18 Page 33 of 150

34 ` Task 1. Document and maintain an inventory of available assets Task 2. Implement a fiber management system Task 3. Develop and standardize agreements for fiber and conduit leasing Task 4. Develop pricing policies for fiber and conduit leasing Task 5. Publish rates and terms Task 6. Create a city enterprise fund to maintain proper budgets, cost accounting, and track revenues generated by the program Task 7. Develop an RFP and competitively bid for a design/build contractor for outsideplant (OSP) O&M Task 8. Decide on management structure Task 9. Develop an RFP for contractual services or a public-private partnership for marketing and managing the network and services Task 10. Expand fiber segments in business districts and corridors Task 11. Deploy and implement Smart City equipment and services that can be supported by each phase of network expansion The recommended steps to implementing the Broadband Master Plan within the City are provided below. 1. Review and Adopt the Broadband Master Plan 2. Finalize Strategy, Budgets and Timelines 3. Inventory Existing Assets 4. Design Engineering the Outside Plant 5. Develop and Issue an RFP for Construction and Project Management 6. Engineer Operational Support Systems 7. Develop and Issue an RFP for O&M Contract 1.7 CONCLUSIONS There are many options available for the City and its stakeholders and partners to achieve their goals of providing robust broadband throughout the City. These options are discussed in Section 7. Business Models, and include risks associated with each model. The City s risk tolerance, in terms of financial obligations and disruptions to current operating paradigms, will need to be considered in determining the City s role in advancing broadband services to the Concord community. In general, in order to mitigate the aforementioned risks, it is recommended that the City of Concord take an incremental and collaborative approach to the implementation and upgrade of broadband infrastructure throughout the City. An incremental deployment of broadband within the region will be supported through consistent wireless and dig once policies and engineering standards that emphasize economic development, bridging the digital divide and enhancing public safety. Collaboration with CalTrans, BART, the Sanitation and Water Districts, Fire Districts, the business community and broadband wire 19 Page 34 of 150

35 ` and wireless providers will provide the most economical means for the deployment of broadband throughout the City. Capitalizing on available funding for traffic systems will help minimize financial risks with the potential to expedite implementation. At a minimum, the City s priorities will need to emphasize the City s core network, while replacing legacy copper and deteriorating conduit throughout the City in accordance with the Kimley-Horn Fiber-Optic Communications System Final Report dated May This Master Plan assumes that 35% of the businesses that reside within 500-feet of the City s proposed fiber network would be a future customer of City-provided fiber services. This represents approximately 4.5% of the City s total business community. While assuming more risk, using this revenue will augment other incremental approaches provided in this Master Plan and accelerate economic development and implementation of Smart City programs and services. 2 CITY OF CONCORD ECONOMY & DEMOGRAPHICS The City of Concord, California (the City ) is located in Northern California s Contra Costa County. East of the San Francisco Bay, Concord is a growing community with thriving downtown Plaza Todos Santos. The City s proximity to the Suisun Bay and Point Edith Wildlife Area (in the North), and hiking trails of Mount Diablo (to the South) and the Black Diamond Mines Regional Preserve (to the West) makes the City attractive to outdoor enthusiasts. 2.1 POPULATION The City is approximately 30 square miles with the largest population in Contra Costa County. The 2016 census data estimates a growing population of 128,726, and ranks it as the 8 th largest city in the San Francisco Bay area. The average age in the City is 37.9 years old 4. 4 American FactFinder 2015, (Accessed August 14, 2017) 20 Page 35 of 150

36 ` Figure 5. Population Distribution by Age Range CITY OF CONCORD, CA POPULATION DISTRIBUTION BY AGE Under 20 Years 20 to to to 64 Over 65 13% 24% 20% 21% 22% Source: 2015 American FactFinder Census Data 21 Page 36 of 150

37 ` 2.2 ECONOMY & BUSINESSES Year-over-year the City has improved its economic indicators with a decline in unemployment and poverty and increasing median household incomes. Figure 6. City of Concord, California Economic Indicators Another important economic indicator is the Gini Index, which measures the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution. 5 An index of 0 indicates perfect equality, whereas an index of 1 indicates complete inequality. In the City of Concord, the Gini is around 0.414, which is lower than the state of California (0.488), and as a city, Concord ranks in the among the top 11% within in the state. While disparities in income exist in all cities and countries, this metric provides a means to understand how programs and wealth is distributed among residents. This is an important indicator to assess access to information, education and healthcare within the city. For broadband, closing the digital divide is important in urban communities where there is a discrepancy in coverage for residents. The small business community within the City consists of approximately 5,000 registered businesses (2,338 retail and 2,595 commercial). The City s small business community participated in a survey and open house. The survey key is presented in Appendix C: City of Concord Needs Assessment Detailed Key and the results of these findings are presented in Appendix D. 5 Index Mundi. Gini Index (World Bank estimate) Country Ranking Page 37 of 150

38 ` 2.3 EDUCATION Since 2005, education levels within the City have increased. Eighty-seven percent of the population graduated from high school or higher compared to the Contra Costa County average of 88.9% and Walnut Creek, to the West, of 97.3% and Antioch City to the East is slightly lower at 86.9%. Overall, median earning levels by education for the City remain slightly below the County and State levels, but higher than the United States. 6 Figure 7. Median Earnings by Level of Education CITY, COUNTY, STATE AND COUNTRY MEDIAN EARNINGS BY LEVEL OF EDUCATION Antioch City Concord City Walnut Creek Contra Costa County California United States Graduate or professional degree $72,982 Bachelor's degree $56,933 Some college or associate's degree $41,063 High school graduate (includes equivalency) $29,624 Less than high school graduate $21,082 Total: $40,689 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100, CONCLUSIONS The City of Concord is growing in economic strength, academic achievement, and improving income disparity year-over-year. Additionally, as educational forums are provided online for K-12, colleges, and businesses, the ability for households to have access to the internet will grow in need. More information regarding Concord households experiences and responses to questions in the Business Broadband Survey are provided in Section 5. 6 American FactFinder, U.S American Community Survey 5-Year Estimates 23 Page 38 of 150

39 3 STATE OF BROADBAND 3.1 OVERVIEW OF BROADBAND TECHNOLOGY Broadband refers to high-speed internet services, which provide online content websites, television shows, videoconferencing, cloud services, or voice conversations to be accessed and shared via computers, smartphones, and other devices. The Federal Communications Commission defines broadband to be at least 25 Mbps downstream to the device, and 3 Mbps upstream, 7 though demands are increasing. There are multiple broadband delivery systems, though mainly cable, DSL, fiber, and wireless that connect devices to the internet. Fiber is considered the gold standard for supporting broadband, essential for fast, reliable connections. Fiber-optic cables or just fiber is a strand of glass the diameter of a human hair that carries waves of light. Using photons across glass, as opposed to traditional electrons across copper wire, fiber has the capacity to carry nearly unlimited amounts of data across long distances, literally at the speed of light. The term, broadband refers to the high-speed service, which enables devices to access online services. Broadband is generally divided into business and consumer services, and those services have multiple tiers of performance and cost. Broadband is just one of many services, which include other types of telecommunications services. The variety of services and technologies are increasing exemplified by the explosion in smartphone apps 8 but the networks themselves are converging, so that anything can potentially connect with anything else. Figure 8: How fiber-optic networks connect our communities 7 See 8 App is a shortened form of application and refers to software packages that give devices certain functions. Page 39 of

40 Broadband is deployed throughout communities as wired cables or wireless technologies that carry digital signals to and from users. The content comes into the local community from around the world via global, national and regional networks. The local infrastructure is built, connected and operated by internet and telecommunications companies that own the physical wires to each household. This started with telephone companies, which deployed twisted-pair copper telephone lines. The second wire came from television companies in the form of coaxial cable. Later satellite and wireless phone companies provided video and voice, with more flexibility to mobile and remote devices using radio waves. Beginning in the mid-1990s these companies repurposed their infrastructures to connect to the internet and carry digital content. Infrastructure that is aging and built on the older technologies described above result in slower, less reliable access to content. Due to capacity limits of this infrastructure, companies can t reliably provide high speeds, and often limit the amount of data consumers can use. Fiber provides the robust infrastructure that connect telephone, cable and internet infrastructure between communities and around the world. It was originally used by telecommunications for their core infrastructure, to connect their major switching centers, and was only available to their biggest corporate and institutional customers. Today, fiber-optic networks serve homes and businesses throughout the world providing telephone and television as well as internet access services. The next section describes internet access technologies in more detail DIAL-UP ACCESS Though not defined as a broadband technology due to speed and bandwidth 9 limitations, dial-up access still exists. Dial-up internet access uses the public switched telephone network (PSTN) to establish an analog connection from a computer to an internet service provider (ISP). The computer connects via a modem by dialing a telephone number on a conventional telephone line and translating digital data into an analog signal DIGITAL SUBSCRIBER LINE (DSL) DSL is a wireline technology uses high frequencies, which are not used by analog voice calls, to transmit digital data over traditional copper telephone lines faster than modems. DSL-based broadband provides transmission speeds ranging from several thousand bits per second (Kbps) to millions of bits per second (Mbps), generally ranging from 1.5 Kbps to 10 Mbps. DSL operates over the phone line in parallel with voice traffic so calls are not affected which plugs directly into a computer or router at the customer s site. The other end of the phone line connects to a DSL line card in the telephone company s central office or remote cabinet. Each user s data is multiplexed with their neighbors over high-capacity fiber, transported to internet interconnection points, then routed over internet backbones to their online destinations. 9 Bandwidth is technically the range of electromagnetic frequencies that a piece of broadband infrastructure accommodates. In general use, bandwidth relates to how much information capacity is available for connections on a portion of a network. Page 40 of

41 There are different types of DSL: Asymmetrical Digital Subscriber Line (ADSL/ADSL2/ADSL2+) provides faster speed in the downstream direction than the upstream direction. This is fine for most customers who receive a lot of data but do not send much. Symmetrical Digital Subscriber Line (SDSL) SDSL has the same speeds as ADSL and is used typically by businesses that generate online content or for services such as video conferencing, which need significant bandwidth both to and from the internet. Very-high-bit-rate Digital Subscriber Line (VDSL) is a new generation of technology that provides up to 52/16 Mbps. It is more sensitive to line quality and requires a more expensive line card. The availability and speed of DSL service depends on the distance from the customer to the closest telephone facility known as a central office. Telephone lines were optimized for voice communications and conditioned to eliminate high frequency noise. Consequently, some telephone lines cannot handle DSL, and others must be modified to support the service. Multiple DSL lines can be bonded to provide higher speeds, but the cost multiplies, too DIGITAL CARRIER SYSTEMS Most commonly known as T-1s, this is the digital telephone standard in the US and has been the mainstay of corporate telecom for years. This service uses a four-wire interface to deliver 1.5 Mbps, which can be subdivided into 24 channels when bonded together. While not falling within today's federal definition of broadband, this is the way many companies get internet access and connect their various facilities. T-1s are almost universally available from local service providers, although they may charge for mileage and other things that make the service rather expensive. The digital services hierarchy extends to multi-megabit services, and fits with the even higher bandwidth optical carrier services CABLE MODEM Cable operators provide broadband to subscribers using the same coaxial cable that has historically delivered content to televisions through a cable modem across the same tree and branch network used to distribute channelized broadcast television. Technically termed DOCSIS (Data Over Cable Service Interface Specification), cable broadband literally allocates channels for carrying data to and from customers instead of television. Most cable modems are external devices that have two connections: one to the cable wall outlet via coaxial cable that goes out to the internet, the other to a computer or router via Ethernet cable. Page 41 of

42 On the cable network, where the coaxial physically ends, a DOCSIS interface strips out the data and routes them all to their destinations via fiber optic cable. DOCSIS uses a multiple access approach to network in which every user s data is intermingled with others on the wire from the house to the router. Transmission speeds vary depending on the type of cable modem, cable network, and traffic load. In response to growing consumer demand for bandwidth, DSL and cable network operators upgrade outdated or underperforming equipment following their revenue models and capital budget limitations to attempt to make the infrastructure faster and more reliable. However, several fundamental issues exist that pose long-term challenges to meeting the growing bandwidth demand through copper infrastructure: Broadband signals degrade significantly over copper as distances increase. Broadband signals over copper are susceptible to electrical interference and signal degradation, particularly as they age. The amount of bandwidth available on portions of broadband networks is often shared among multiple users, which can result in an uneven distribution of speed to users, and slower speeds to all as facilities become congested FIBER-OPTICS Fiber-optic network technology converts electrical signals carrying data into light and sends the light through transparent glass fibers about the diameter of a human hair. Fiber transmits data at speeds far exceeding copper, typically by hundreds of megabits per second. With fiber-optic broadband networks, speeds in the billions of bits per second range are possible. The fiber-optic network today operates at nearly 300 Terabits per second, which is so fast that a single fiber could carry all the traffic on the internet. More commonly, fiber-optic networks provide between 100 Mbps and 10 Gbps to users. Fiber-optic networks can be designed to be highly reliable as well as fast. Fiber-optics are used extensively by major corporations and institutions and are beginning to be at the core of every telecom company s network. There are numerous standards for fiber optic networks. The two most common for broadband applications are Active Ethernet (AE) and Gigabit Passive Optical Network (GPON). The actual speeds the customer experiences will vary depending on a variety of factors, such as how the network is structured, the hardware attached to the fiber-optics, and how the service provider configures the service. The same fiber that provides broadband internet can also simultaneously deliver voice (VoIP) and video services, including video on demand. Fiber operates synchronously, meaning the service is just as fast to download as to upload, which is increasingly important for households and businesses. Dark fiber is a fiber-optic strand with no hardware attached to generate laser light signals across the fibers. From the business perspective, dark fibers are facilities real estate that are leased to customers. As with any real estate, the value of dark fiber depends on location, location, location: its end points and route. Dark fiber customers are large Page 42 of

43 enterprises, including internet service providers, that need to interconnect local area networks or last mile access network infrastructure. The fiber must be "lit" to carry data between network nodes and provide network services. That equipment must be powered and connected to other network infrastructure, and must be housed in a building or cabinet. And, of course, all this infrastructure must be secured and maintained. Dark fiber lessors and lessees need to be thorough, clear, and in agreement about who is responsible for each portion of the infrastructure. Fiber to the Node (FTTN) brings high-capacity fiber-optic cables to communities and then connects to existing DSL and coaxial equipment. This is not an all fiber approach. Rather than bringing fiber-optic cables to every home or business, the fiber is connected to the existing copper network to increase its capacity. The copper-based last mile network that connects homes and businesses to the local nodes is still a bottleneck and results in subscribers not accessing the true speeds of fiber-optic connections. Fiber to the Premise (FTTP) provides internet access by running fiber-optic cable directly from an internet Service Provider (ISP) to a customer s home or business. This approach is all fiber all the way to the customer. Fiber facilitates much faster speeds than copper wire, generally needs to be serviced less, and is "future proof" because technology can increase the bandwidth of fiber-optic cables. AE and GPON are both FTTP technologies. Figure 9 illustrates the relative difference between common internet connection methods, comparing access technologies from basic dial-up service through DSL, cable, and fiber. Whereas traditional broadband technologies have an upper limit of 300 Mbps, nextgeneration broadband that utilizes fiber-optic connections surpasses these limitations and can provide data throughputs of 1 Gbps and greater. Figure 9: Physical bandwidth capacity comparisons Dial-Up 56Kbps Legacy Technology Shared Technology ADSL 10Mbps First Generation of DSL Shared Technology ADSL2 24Mbps Second Generation DSL Shared Technology Cable 150Mbps Data Over Cable (DOCSIS 3.0) Shared Technology Next Generation Fiber 1Gbps Passive Optical, Active Ethernet Shared and Dedicated Technology Dial-Up ADSL ADSL2 Cable Fiber Page 43 of

44 3.1.6 WIRELESS Wireless broadband can operate as mobile, hotspot, or fixed. Wireless can also be used as backhaul to connect remote locations or sparsely populated areas, where DSL or cable service would not be economically feasible, via long-range directional antenna. Fixed wireless services allow consumers to access the internet from a fixed point while stationary, and often require an external antenna with direct line-of-sight between the wireless transmitter and receiver. Speeds are generally comparable to DSL and cable modem. These services have been offered using both licensed spectrum and unlicensed devices. Hotspot wireless uses the Wi-Fi standard to provide connectivity for digital devices in an area via physical access points and a router, which interconnects wireless devices to the internet. Hotspots typically operate at 54 Mbps, but the actual bandwidth depends on the quality of the wireless signal and speed of backhaul to the internet. Wi-Fi is a multiple access technology, so bandwidth is shared with other users. While users can move around in the hotspot, they can t drive away: Wi-Fi does not provide a mobile connection. Wi-Fi is fast and robust, if limited in distance and susceptible to interference because it operates in open, unlicensed spectrum. Wi-Fi hotspots are common at hotels, restaurants, and public buildings for public access. It is used in many homes and businesses for private access. Many WISPs use Wi-Fi, and it is increasingly available from traditional telecoms (AT&T and Comcast have many branded hotspots). Wi-Fi complements cellular data via mobile wireless (users often use it to avoid cellular data caps and slow speeds), and is used in conjunction with wired broadband services most hotspots connect to the internet via broadband. Wireless cellular data services, which borders on broadband speeds, are widely available from mobile phone companies. Typically referred to as either 3G or 4G (G for generation ), mobile connections operate within cells that hand off signals from antenna to antenna as the device moves. 4G can move data at 12/5 Mbps, but speeds in the Kbps range are more common. Cellular data connections are most commonly used with smartphones, or with computers via cellular network interface card. Many smartphones can act as Wi-Fi hotspots or tether to computers via Bluetooth. The next generation of wireless networks, 5G, are being designed and developed, with forecasted commercial availability in 2020 and an increased maturity of the network in approximately G networks operate multiple frequencies (i.e., 5-GHz, 60-GHz, GHz) and will utilize millimeter wavelengths. 5G networks will operate on the IEEE ac, ad, and af standards 11, also known as Gigabit Wi-Fi 12 and are expected to provide download/upload speeds up to 1 Gbps, which depends on the number of connections. 13 The networks are designed to provide increased efficiencies while decreasing latency, and are designed for improving the performance of connected devices, or the Internet of Things (IoT). In particular, network architectures with an 10 Kinney, Sean. Qualcomm SVP: New spectrum crucial to 5G success, RCR Wireless News, July 24, accessed December 5, accessed December 5, ac (Gigabit Wi-Fi) Rouse, Margaret. 5G. WhatIs, March accessed December 5, Page 44 of

45 emphasis on massive multiple input multiple output technologies (MIMO) and device-todevice (D2D) communications. For example, autonomous vehicles, healthcare technologies (such as blood glucose monitoring), ultra-high-definition video, virtual reality with many more network designs architectures and other applications. With 5G networks being heterogeneous, it must include marcocells, microcells, small cells and relays. is strong, the need for densely populated SATELLITE Satellite internet uses licensed radio spectrum to send data from and to anywhere on Earth. The signals go on a 46,000-mile roundtrip from earth-bound devices through the atmosphere via the satellite and back to earth to another computing device. These radio signals have limited capacity and thus the connections tend to be slow. Because of the distance the signal must travel, satellite transmissions are susceptible to weather. Satellite should be considered a last resort for all but the most rural and remote areas. Areas with a high adoption of satellite generally indicates a need for better service. Today, the federal government finds that no satellite broadband service meets the 25/3 Mbps threshold of broadband MODERN 21 ST CENTURY NETWORKS Modern 21 st century networks are comprised of a combination of technologies, not just one. Fiber is used in nearly all modern networks as it carries the most data and bandwidth when compared to other access technologies. Fiber is used not only for last mile access, but also as a middle-mile technology that carries data from cell towers, Wi- Fi hotspots, and other networks. Fiber is the backbone of the internet. Wireless also plays a role in a modern network. Wireless access takes many forms including cellular, fixed wireless, Wi-Fi, Bluetooth, Zigbee, ZWave, and many others. Wireless offers a mobile or untethered experience that fiber cannot. However, the tradeoff is less bandwidth when compared to fiber, but still may be appropriate for the desired mobile applications. Wireless networks will nearly always need fiber for backhaul. So, having a robust fiber network is the anchor to any modern broadband network design. The combination of these network access technologies is what provides the foundation for the Internet-of- Things (IoT) that is discussed over, especially in respect to Smart City applications and technology. Page 45 of

46 3.2 CITY OF CONCORD BROADBAND MARKET SUPPLY ANALYSIS The market analysis of the supply side of broadband includes information about the providers that serve the homes and businesses of the service area. It focuses on residential and business broadband, high-speed internet access services. The analysis also considers telephone and television services that are often bundled with broadband as provided by telephone companies, cable TV companies, and new entrant telecommunications providers (those companies that entered subject to de jure elimination of monopoly telecommunications markets in 1996). Since that time, the State of California moved to statewide video franchises issued by the California Public Utilities Commission (CPUC), from the prior regime of CATV franchises issued by cities and counties. 14 The holder of a statewide video franchise may provide video, voice and broadband services to all residents of the state. The CPUC estimated that by 2021 virtually all local video franchises will have been converted to state-issued video franchises. 15 In February of 2017, SB 649 was presented to the State Legislature and passed the State Senate and Assembly in September The bill would have significantly reduced local authority over small cell pole attachments in the public right-of-way, including aesthetics, safety and revenue. The bill was not signed by the Governor, but new legislation is being written by the wireless industry for consideration in It is important for the City to continue its opposition to this legislation so that it will maintain its rights of authority for placement of telecommunications equipment in the public right-of-way and receive fair compensation for use of street light poles for small cell deployments. The City service area has several telecommunications companies providing a range of services in different market segments. These segments are residential, business and commercial, and enterprise services. Some providers do not serve all segments or customer classes. Concord is broadly served by an incumbent landline telephone company that provides broadband services AT&T, Comcast, and an incumbent cable TV company that provides broadband services Wave (formerly known as Astound). Service areas of remaining service providers are more limited. However, newer companies (e.g., Wave, Sonic, Zayo, Paxio) within the region are creating opportunities for collaboration and public-private partnerships. In January 2018, Verizon began making statements that they would be blanketing Concord with 5G utilizing small cell technology. It is still unclear whether Verizon will be installing small cells on city-owned poles or their own poles within the public rights-ofway. While it is still too soon to determine the outcomes of these developments, the City of Concord should stay engaged in the conversation with Verizon. 14 The Digital Infrastructure and Video Competition Act of Id., page 14. Page 46 of

47 3.2.1 WIRELESS PROVIDERS MOBILE BROADBAND AVAILABILITY There are five mobile internet and mobile broadband providers in Concord that provide 100% availability throughout the City. While availability is high, additional variables related to service reliability are reviewed in later sections of this report. The table below provides a summary of the providers, the available coverage, speeds and pricing. Figure 10. Wireless Providers in the City of Concord Provider & Description Fastest Speeds Price Data AT&T Wireless provides nationwide wireless service to consumer, wholesale and business subscribers located throughout the United States and in U.S. territories, serving 136 million wireless subscribers in the U.S. This network connects millions of devices including smartphones, connected cars and asset management devices, to name a few Mbps $50 5GB MetroPCS is a prepaid wireless service that is part of T-Mobile..768 Mbps $40 5GB Sprint provides nationwide wireless service to approximately 54 million customers. Sprint provides a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses, government subscribers, and resellers. 17 T-Mobile is a national provider of wireless voice, messaging, and data services with a network capable of reaching over 308 million Americans. T-Mobile currently serves approximately 70 million customers. 18 Verizon Wireless has 146 million subscribers and is the largest wireless telecommunications provider in the United States. Verizon s LTE in Rural America Program covers 2.7 potential users in 169 rural counties, with 21 rural wireless carriers participating. 6 Mbps $50 6GB 10 Mbps $55 10GB 10 Mbps $60 12GB page Page 47 of

48 3.2.2 BUSINESS RETAIL SERVICES There are more broadband service level options for businesses, with higher speeds and service level agreements with term contracts. In the City of Concord, costs are generally slightly higher. Concord s small demographic region and limited market may be a reason for the cost differential. While fiber manufacturing industry indices have trended downward since , making materials costs more affordable, labor costs continue to contribute to high costs for new fiber construction. The business retail providers in the region are AT&T, Wave, Comcast Business, and Windstream. 20 Each one provides business level services along with residential services (except for Comcast Business). Provider AT&T (DSL) 100% 100.0% 100.0% 90.3% AT&T (Gigabit Fiber) 0.0% 0.0% 0.5% 0.0% Wave 96.6% 91.1% 91.7% 88.7% Windstream 3.0% 0.0% 0.0% 5.6% Comcast Business 97.9% 99.2% 83.0% 100.0% AT&T DSL, Comcast Business, and Wave services are widely available to businesses. Windstream s presence is very limited, and AT&T Fiber s presence is even more limited to very limited areas in one of Concord s four zip codes. Indicative service pricing for these business retail providers in Concord is $50 per month for AT&T 50 Mbps DSL; $49.95 per month for Wave 15 Mbps service; and $69.95 per month for Comcast Business 25 Mbps service. 21 The following table provides sample pricing for these business retail providers in the region and are current reference points should the City decide to offer similar services to the community in the future Broadbandnow.com results for zip codes 94518, 94519, 94520, and broadbandnow.com for zip codes 94518, 94519, and Page 48 of

49 Figure 11: Sample Business Retail Pricing Models Provider Download Speed Price Notation AT&T 50 Mbps DSL $50/month Up to 75 Mbps CBC* Basis Comcast 25 Mbps Cable $69.95/month Up to 250 Mbps CBC* Basis Wave 15 Mbps Cable $49.95/month** $59.95/month Wave 55 Mbps Cable $69.95/month** $89.95/month Wave 110 Mbps Cable $99.95/month** $179.95/month Wave 250 Mbps Cable $124.95/month** $199.95/month Wave 1 Gbps Cable $249.95/month** *Case by case basis **Wave pricing is based on promotion ending 2/28/18 $369.95/month 2-year agreement 2-year agreement 2-year agreement 2-year agreement 2-year agreement The survey of broadband providers for Concord businesses does not show a robust or encouraging presence of fiber-based high-speed broadband services. One provider AT&T offers fiber-based gigabit service in a very small part of one of Concord s four zip codes. Wave Communications does have a fiber network and coax cable network with fiber as arterial feeders and copper coax. The other providers are offering DSL or cable modem-based services. This lack of high speed fiber optic-based internet access suggests there may be a role for the City of Concord in providing infrastructure to support such offerings. Page 49 of

50 3.2.3 WHOLESALE AND BACK-HAUL/LONG-HAUL SERVICES Level 3 Communications ( is a global communications provider headquartered in Broomfield, CO that provides communications services to enterprise, government and carrier customers in over 60 countries. CenturyLink recently announced its intention to purchase Level 3. Level 3's Enterprise Solutions provides voice and video, data and security, and managed network services. A map of Level 3 s network is online at Mobilitie is a large nationwide provider of shared wireless infrastructure including fiber-optic transport facilities to connect wireless towers and antennas to the landline network. Mobilitie s complete wireless infrastructure solutions include funding, designing, building, operating and maintaining neutral host outdoor and indoor DAS networks, small cells, Wi-Fi networks and communication towers. 22 Zayo ( owns and operates a 112,600-mile network in North America with connectivity to thousands of data centers, carrier exchange points, wireless towers, media centers, entertainment venues, financial exchanges and cloud providers. Zayo offerings encompass a range of managed bandwidth, dark and lit fiber solutions, including wavelength, Ethernet, IP and video transport. Zayo's network map is at 4 SMART CITY Cities are on the cusp of rapid change precipitated by technology technology is being integrated into municipal operations for a variety of functions and applications. A Smart City is one which has developed technological infrastructure that enables it to collect, aggregate, and analyze real-time data and has made a concerted effort to use that data to improve the lives of its residents. 23 Advancing technologies place cities at the center of innovation: autonomous vehicles revising the concept of traffic and traffic signals; Wi- Fi transforming the way information is used and accessed; facial recognition technology changing building security methods; shared vehicles allowing a move away from parking costs and land use; integration of renewable energy sources and smart metering technology for water, electric and gas; smart street lighting poles providing a vertical asset for wireless data via 4G/5G and Wi-Fi, applications enabled via wireless data, smart lighting and embedded sensors enabling numerous applications including faster responses for public safety; and integration of systems with customer feedback loops to enhance and improve customer service for residents and visitors. Smart Cities are enabled generally by the Internet of Things. The Internet of Things is being driven by the increased sophistication and reduced costs associated with fiber, Trends in Smart City Development: Case Studies and Recommendations, National League of Cities, NLC Smart City Report ) Page 50 of

51 wireless, Bluetooth and sensor technologies, coupled with the advent of cloud computing, which places storage and computing power in the cloud. All devices around us are undergoing technological re-imagination to incorporate technology to make them smart. Increasingly simpler and cheaper devices can be employed by cities to connect municipal assets and functions to generate more and more data enabling more efficient and effective management of services and programs. Smart City also refers to the secure use of communication and information technology to manage City assets. However, Smart City initiatives require high bandwidth network connectivity for transmission of large and growing amounts of data. Where does a city obtain this fiberoptic cable-based high bandwidth connectivity? Area service providers will sell high bandwidth (broadband) to cities as a service on their own infrastructure, but this is priced as a retail service from relatively few providers and is unaffordable to cities in both the short and long run. The alternative is to use and expand city assets in public rights-ofway, on a planned and strategic basis, to provide Smart City connectivity. Municipal broadband networks provide affordable means for implementing smart city initiatives for health, education, public safety, mobility, livability and economic growth. Therefore, as communities invest in fiber infrastructure, they are constructing foundational communications networking useful to support a multitude of technology-based initiatives that require connectivity. By building out fiber networking, cities become Smart City ready but ultimately Smart City depends on installing applications using the fiber network. It is important to note that Smart Cities are not exclusively technological in nature. Organizational and human factors must be provided for to foster the necessary collaborations and investment in human capital. Ultimately Smart Cities initiatives are layered, involving network facilities infrastructure, with connected devices (cameras, sensors, Wi-Fi, etc.), and the data from these devices which allows capabilities to be embedded in daily practices based on collaboration among organizations and departments. This Plan is intended to guide the City in leveraging the assets it has in and above the ground, in part to identify where the City can locate, use and construct assets for Smart City applications. In particular, the City s pole assets can be leveraged as part of the transition or evolution from 4G to 5G. Page 51 of

52 4.1 ARRAY OF THINGS ARGONNE NATIONAL LABORATORY, THE CITY OF CHICAGO, THE UNIVERSITY OF CHICAGO AND AT&T An advanced Smart City application was recently started by a partnership of Argonne National Laboratory, the City of Chicago, and the University of Chicago last year and began an urban sensing project called the Array of Things. 24 AT&T is the communications partner for the project and is contributing wireless network connectivity. The project places nodes containing sensors throughout the city, which collect data on urban environment, infrastructure and activity. Up to 500 nodes are planned for installation on city streets by The nodes will collect data to be made available on an open basis to researchers, city planners, and others, allowing for the study of critical challenges including urban flooding, traffic safety, air quality, and climate change. The ultimate goal is to provide real-time data to help engineers, scientists, policymakers and residents work together to make Chicago and other cities healthier, more livable and more efficient. 25 The nodes are experimental and vary in cost depending on their scientific capabilities. 26 Fifty nodes were installed last year on traffic light poles in The Loop, Pilsen, Logan Square and along Lake Michigan. These nodes will contain sensors for measuring air and surface temperature, barometric pressure, light, vibration, carbon monoxide, nitrogen dioxide, sulfur dioxide, ozone and ambient sound intensity. Two cameras will collect data on vehicle and foot traffic, standing water, sky color and cloud cover. The node locations and data collected were determined based on research and community input. Additional nodes are planned in cities across the U.S., as well as in other countries. 27 Pilsen nodes will track air quality in an effort to relate it to asthma and other diseases; Nodes in The Loop are for study of pedestrian and vehicle flow, and traffic safety; Nodes along Lake Michigan and in other areas will allow for measurements of urban weather and climate change; and Nodes will support City of Chicago efforts to use predictive analytics and datadriven policy The Array of Things is funded by a grant from the National Science Foundation ($3.1 million) as well as investment by Argonne National Laboratories and the Chicago Innovation Exchange. There are also partnerships with scientists at many other academic institutions Id. 27 New York City, Seattle, Portland, Atlanta, Mexico City, Newcastle (UK), Glasgow (UK), and Amsterdam. Page 52 of

53 4.2 NATIONAL LEAGUE OF CITIES SMART CITIES REPORT There is a vast and growing body of studies, information, products and implementations on the Smart City. The National League of Cities (NLC) has produced a report on trends in Smart City development. 28 Smart City applications require three things working together for effectiveness: computing and telecommunications infrastructure to collect data, software applications and tools to analyze and interpret the data, and a collaborative environment in the organizations that innovate, create and use Smart City applications. The Report contains many examples of interconnection of devices in a Smart City, while noting that a reliable internet ecosystem is the glue that holds the internet of things together 29 : Transportation Congestion Sensors Water and Wastewater monitoring Parking apps and kiosks to coordinate with smart meters Bridge inspection systems Self-driving cars, shuttling people in and out of the city or making deliveries Waste management sensors Lighting Fire detection Energy monitoring Solar panels Smart logistics/freight Vehicle fleet communications Drones for public safety and infrastructure Monitoring cameras Body cameras Wearable detection The Report also contains case studies for Chicago, Philadelphia, Charlotte NC, San Francisco and New Delhi India, along with comparisons and recommendations. Chicago has created an administrative structure including its Department of Innovation and Technology which provides for an open data platform and mandated cross-functional collaboration. This structure positioned Chicago to partner with Argonne National Laboratory on the Array of Things (above). 28 Trends in Smart City Development ; National League of Cities, January 5, Id. Page 53 of

54 Philadelphia created an Office of Innovation and Technology to support movement toward smart city concepts, including programs and measures designed to lower the crime rate. Charlotte, NC established a public-private partnership (PPP) to help the city support its accelerating population growth, including an initiative to reduce wasted energy consumption. San Francisco has focused on environmental and transportation improvement measures, including programs designed to reduce traffic congestion and improve reliability of municipal transportation services. The National League of Cities Smart City recommendations are: 1. Cities should consider the outcomes they want to achieve. Data collection is not an end in itself. Initiatives need to be clearly defined. Consider what the need is, not just what other cities are doing. 2. Cities should look for ways to partner with universities, non-profits and the private sector. Cities can even partner with other cities. There are many benefits to partnering and collaboration, including access to experience, shared risks of development, and providing project continuity. Downsides to collaboration also need to be considered in structuring any partnership. 3. Cities should continue to look for Smart City best practices. Technologies are new and at present there is significant variability and a lack of agreed standards. The National Institute of Standards and Technology is working on this matter. 4.3 SMART CITIES READINESS GUIDE The Smart Cities Council publishes a Smart Cities Readiness Guide. 30 The guide has detailed information on smart city drivers and barriers, benefits, beyond silos, and city responsibilities. City responsibilities and opportunities are outlined as follows: Built Environment: Leading and planning for smart buildings powered by ICT 31, using sensors, meters, systems and software to monitor and control a wide range of building functions including lighting, energy, water, HVAC, communications, video monitoring, intrusion detection, elevator monitoring, and fire safety. Digital City Services: Switching to digital delivery of city services to increase citizen engagement, increase employee productivity, increase competitiveness, increase citizen satisfaction, and reduce cost. Services are delivered via the web, Information and Communications Technologies Page 54 of

55 smartphones and kiosks, which can require implementation of new technologies, and attitudes or approaches. Energy: Smart energy is a priority for Smart Cities, which start with smart energy systems. Health and Human Services: Smart Cities ride the transformation wave provided by advances in ICT to transform the delivery of essential health and education services since an educated and healthy city is a wealthy and successful city. Ideas to Action: A roadmap linked to a City s vision document and comprehensive plan is necessary to turn ideas to action, and make technology serve the City s larger goals. The path to a smart city is not quick, and targets are needed for clear goals to motivate citizens and permit any required course corrections. Mobility and Logistics: Population growth and wasteful congestion make this a critical area for the Smart City. Traffic congestion is wasteful and costly to the economy both directly and indirectly. There are a variety of action steps and targets that can provide for safer, more efficient transportation, including accommodating electric and autonomous vehicles and smart parking among others. Public Safety: Public safety relies on a lengthy list of infrastructure, agencies and people to keep the public safe. ICT in the smart city fosters quicker and smarter responses without wasteful duplicated effort to save lives, property and resources. Smart Payments and Finance: Digitalizing both disbursements and collections generates significant savings and increases operational efficiency. Smart People: A new city hall mindset that is more open, transparent and inclusive to build two-way communications and create stronger initiatives. Telecommunications: An adequate telecommunications infrastructure is vital for business and community development and underlies the Smart City. Waste Management: Population growth and accelerating consumption have created a rising tide of waste, outpacing the rate of urbanization. Smart cities can collect and process waste more efficiently and recover materials which have value, with a beneficial impact on public health, the environment and sustainability/zero waste, and cost control. Water and Wastewater: Like energy, water is critical to everyday life. There is also an energy water nexus, where it takes water to produce electricity, and electricity to pump water. The Smart City provides intelligence for both energy and Page 55 of

56 water systems and provides the platform for economical and sustainable production of both energy and water. 4.4 SMART STREETLIGHTS Smart City initiatives allow for municipalities to take light poles in the rights-of-way and utilize them for many different functionalities from light monitoring and management to deployment of sensor technologies that can monitor environmental factors that many have never thought possible, including crime activity, trends in traffic congestion, pollution, among other factors. But community standards regarding aesthetics, design and style solutions require that high functionality be coupled with pleasing design characteristics. Current trends in smart street lighting range from cost saving LED lighting to powerful engineered solutions including sensor placement, distributed antenna systems (DAS) and Wi-Fi deployment, and municipal communications functionality (i.e. security cameras, traffic monitoring). Municipalities vary in their implementation of these devices and technologies, however, determining an appropriate street pole can assist a city or town in scaling technology for the future, enabling additional technologies to be added as they come to market. Crucially, evolution to 5G mobile phone technology depends on closely spaced antennas for which street lights and other poles, and traffic signal standards can be very useful. Mobile service providers often prefer exclusive rights to poles, and the evolution to 5G will likely be no different. Service providers likely will state that they cannot co-locate with their competition on the pole structures, therefore they are moving quickly to gain rights to this real estate before cities can organize and prepare for the 5G deployment coming within a few short years. By planning strategically and installing smart street lighting with 4G wireless and possible 5G capabilities, a city or town could potentially future proof for these developments and ensure that additional structures do not enter their rights-of-way and add blight or clutter to the city. One of the of the most underutilized assets in municipalities and utility companies is the electric light pole. Their sheer numbers and locations deployed throughout municipalities makes them well suited for the delivery of 4G and 5G mobile services. Street light poles can be retrofitted with smart LED-based lighting, which leads to energy saving within a city and also can be leased out to service providers for deployment of their DAS/small cell technology. Furthermore, addition of Intelligent Traffic Systems improve traffic efficiency and facilitate safer, coordinated, and more intelligent decisions around traffic management. Smart Pole uses and applications include: LED lighting and lighting applications: Studies show a municipality could save 50-60% in energy costs based on the type or brand of lighting. LED lighting saves in energy costs and the lights burn three to four times longer than the traditional Page 56 of

57 bulb, saving not only energy but materials as well. Numerous products on the market also allow for lighting applications, which provide for monitoring and management of lighting throughout the area. Reduction in maintenance costs are also a benefit as software systems are connected to the lights alerting public works employees of bulb outages, breaks, or issues. Additionally, various products allow for lighting to be set on timers to dim during low traffic periods, shut off during daylight hours, or be connected to sensors to brighten when pedestrians or cars pass the pole. Solar Panels: Solar panels are now being deployed onto street lights, enabling cities to realize a net zero energy cost in relation to the energy consumed by the lamps. However, the majority of the products currently on the market require another head on the lamp with the solar equipment built into it. New technology is coming onto the market evolving and allowing for smaller, more efficient use of the light pole for solar powered energy. In these newer designs, the solar panels are on the physical poles. Sensors: Sensors are an area of many current and potential applications. The light pole is ideal for accommodating sensors, as the poles already have electricity, and provide sensors a great view of the landscape. Additionally, light poles are great for transmitting wireless signals due to their height. Sensors are used to monitor air quality, weather conditions, and motion. Law enforcement can use sensors for parking enforcement, contacting emergency services in the event of an accident, and security cameras. Motion sensors could be configured to dynamically light up a section of road when vehicular or pedestrian movement is detected and switch off or reduce the illumination in the absence of any movement, aiding in public safety. Additionally, the sensors and networks can be sensitive to sunrise and sunset for LED operating hours, or the dimming of the lighting can be set to a schedule to accommodate city or town needs. Besides the cost savings, there are many other benefits from smart lights. The system can be used to control stop lights from a central location. One example of a public safety application enabled is for a fire truck to remotely activate the system to have street lights flash red ahead of the truck s route. Drivers are thus warned that an emergency vehicle is approaching and it reduces travel times for the emergency vehicle. Wi-Fi: Smart cities connect everything buildings, lights, meters, and streets to the internet through the power of Wi-Fi. Connectivity provided through the emerging Wi-Fi frequencies below 1 ghz is being developed to extend the range and reach of signals through more materials and is particularly well-suited for applications with low data payloads like sensors. This is ideal for smart devices that don t require a constant speed connection and are located in harder to reach places. Page 57 of

58 Wireless Services/4G/5G: Currently, 4G transfer speeds top out at about one gigabit per second in perfect conditions. However, we rarely experience 4G s maximum download speed since the signal can be disrupted by buildings, microwaves, Wi-Fi signals, trees etc. 5G on the other hand, will have much higher speeds (up to 10 gigabits per second), capacity, and significantly lower latency. It will also support the thousands of internet-connected devices being introduced into our lives. The high reliability and low latency of 5G creates opportunities for city management, and public safety to control critical services and infrastructure. Cities can now connect to millions of networked devices, making real-time, intelligent, and autonomous decisions. This real-time data will reduce maintenance and create greater operational efficiency. 5G will bring broadband and media everywhere allowing users and devices to communicate in crowded or remote areas with lightning fast broadband speeds. See Appendix A for Smart Street Light Options. 4.5 SMART CITY IN CONCORD The City envisions the development of a Gigabit and Smart City that will drive innovation in the years to come. Broadband and Wi-Fi capacity can be used to transform and improve the Concord community via Smart City applications in the areas of Smart Grid, Public Wi-Fi, Electric vehicle charging stations, traffic detection and forecasting, sanitation/wastewater data, and transportation including intelligent parking and traffic signal prioritization, and Smart Transit routes with Contra Costa Transit Authority. The City s current and future goals of building a smart city include traffic signaling, Wi-Fi, HD public safety cameras, intelligent transportation, community business solutions, Page 58 of

59 connected city services, public safety services and others. Future solutions could include smart parking sensors, real-time parking signs and directional signage through intelligent signage, smart parking meters, camera surveillance and the installation of smart poles that allow future use by wireless carriers, cameras, smart signs, sensors, etc. A real-time parking system pushes space availability for on-street meters, structures and lots to the public via apps on IOS and Droid mobile devices. Pay-on-Foot devices allow the public to pay-by space using a credit card in lots without controlled entrance and exit lanes. These smart parking technologies reduce the time it takes to find a space and in turn, reduce traffic congestion and lower the carbon footprint from vehicles looking for a place to park. Also, traffic signal controllers can provide for traffic signal synchronization and remote access for staff to perform ad hoc traffic signal timing changes based on realtime conditions, emergencies and events. Special event activities have traffic and traffic control requirements that can potentially be aided using Smart City applications, including greater use of fiber network capacity instead of radio, traffic operations, event related detours, and installation of temporary cameras. The fiber also would provide backhaul capacity for an enormous amount of HD digital video from cameras for managing traffic and public safety. The City of Concord has also noted the potential of tying in street lighting, and the potential for smart poles. Street lights are viewed by many as ideal places for sensors for Smart City and other applications. Smart pole features can include: weather and air quality monitoring (including rain intensity and lightning activity, wind and barometric measures, etc.); digital signage for directions, alerts and announcements; electric vehicle charging; car and pedestrian counting; cameras, Wi-Fi, and controls for light levels/lighting capabilities in addition to wireless communications antennas. 5 WI-FI 5.1 BACKGROUND Wi-Fi is a technology that uses radio spectrum for wireless local area networking among devices based on the IEEE standards. Wi-Fi most commonly uses the 2.4 and 5 gigahertz (ghz) radio bands. However, connectivity provided through the emerging Wi-Fi frequencies below 1 ghz is being developed to extend the range and reach of signals through more materials. Devices that can use Wi-Fi technology include personal computers, smartphones, digital cameras, tablet computers, utility meters, public safety, equipment, security cameras, printers as well as various sensors. Wi-Fi compatible devices can connect to the internet via a Wireless Local Area Network (WLAN) network and a wireless access point. Such an access point (or hotspot) typically has a range of about 66 feet indoors and a greater range outdoors. Hotspot coverage can be as small as a single room with walls that block radio waves, or as large as an area covered by using multiple overlapping access points. Opportunities exist for the municipal deployment of Wi-Fi/wireless broadband networks strategically within the City of Concord. Deployment of additional Wi-Fi Access Points can Page 59 of

60 be supported by the phased deployment of fiber-optic cable recommended in this Master Plan. The cost of wireless network equipment has dropped significantly while the performance has improved dramatically. Determining where and how to build, deploy, and operate a fixed wireless broadband network is significantly less expensive and easier to manage than it was just a few years ago and for a substantially better-performing network. Experience and technology/vendor improvements have smoothed out or otherwise addressed what were larger problem areas in early implementations, including practices to deal with frequency interference, balancing CPE 32 deployment on the network, and software systems development to support network and operations administration. 5.2 LINKNYC LinkNYC is an infrastructure program in New York City which is using old phone booth locations to create 7,500 Links which provide a Emergency Call button, superfast gigabit free public Wi-Fi, phone calls and charging stations. 33 The Link kiosks also provide a tablet for access to city services, maps and directions, and two large high definition screens for public service announcements. Based on experience and feedback, the browser function has been removed from the tablet. The project is funded by advertisers and partners based on a franchise agreement with the city to ensure the Links are well maintained, and so there will be no cost to use the Links. The advertising is digital outof-home to reach people that are on the go outside on city streets. Expected benefits are to address availability gaps and the digital divide, as well as to create jobs. In addition, the Link system provides substantial funds to New York City (estimated at half a billion dollars). The Links have two security cameras for which the footage is stored for seven days. The Links will be installed over the next few years in all five of New York s boroughs. This citywide retrofit is intended to set the stage for a new brand of future smart city that will be powered by a universally accessible Wi-Fi network. Appendix B provides further detailed information on wireless strategies recently implemented by cities across the U.S. which the City of Concord may consider as it decides what strategy to pursue for its own Wi-Fi network expansion. 5.3 WI-FI IN CONCORD Wi-Fi in the City of Concord has evolved over time. MetroFi of Mountainview, CA constructed a pilot network in Todos Santos Plaza in The MetroFi network reached coverage of two-thirds of the City s area 34, and was ultimately intended to cover the entire city. The business model was to provide advertising-supported unencrypted Wi-Fi service for free, or an ad-free encrypted version for $19.95 per month. 35 While the launch of service was apparently well received, the MetroFi networks were shut down in mid MetroFi ultimately abandoned the installed equipment in Concord. 32 Customer Premise Equipment Concord City News, Spring Id. Page 60 of

61 Figure 12. Existing Cameras in New and Old City Facilities Magellan Advisors has gathered a lot of information through discussions with City staff and management regarding the history of Wi-Fi in Concord, current wireless applications and usage, and planning considerations to meet public needs. The City s fiber assets can support significant Wi-Fi implementation for its needs, particularly in conjunction with Smart City deployment. The City has numerous community and sports centers, parks, city buildings, plazas and garages where there is public demand for Wi-Fi as well as City operational uses for Wi-Fi. In addition, Wi-Fi and network enhancements to support mobile wireless 4G/5G data can be deployed in the Monument Boulevard District to address Digital Divide concerns as well as provide for Smart City and other city functions and operations. Other locations for improved Wi-Fi services include Community Centers, Todos Santos Park, Concord Pavillion and Diablo Creek Golf Course. Finally, although the reuse of the Naval Weapons Station is some years down the road, Wi-Fi and Smart City applications will be part of the infrastructure plan for that area as well. 5.4 WI-FI RECOMMENDATIONS The City desires to provision Wi-Fi broadband connectivity for the general public and businesses to promote economic development, increased access to broadband, and digital inclusion for all members of the community. The City also desires to improve wireless broadband connectivity to support public safety, Smart City initiatives, and delivery of municipal services by field-based staff using a wide variety of mobile government applications over tablets, laptops, and smartphones. The City of Concord Page 61 of

62 can clearly install Wi-Fi capability to achieve these objectives in different areas of the City including downtown it is well poised to do so with the capabilities of its fiber networking and emerging Smart Light Pole technology. However, the existing Wi-Fi installations may not provide much platform leverage, and Wi-Fi networking likely will need to be enhanced/built from the ground up. Fortunately, Concord does have significant fiber networking assets which can be utilized. Options for consideration to achieve the City s objectives are: 1. Utilize the existing Wi-Fi system and upgrade/expand as necessary to provide an open Wi-Fi for the downtown area, and other areas as determined. 2. As a standalone option (or in addition) use City electric poles and the new smart street lighting system to launch a pilot Wi-Fi network and then adopt a phased approach based on experience to turn up public Wi-Fi in the downtown and other areas. 3. In any case, Wi-Fi deployment can be considered for special event corridors and in City parks, in the City s commercial districts, and ultimately at some point evolving to ubiquitous Wi-Fi throughout the City. Page 62 of

63 6 CITY OF CONCORD NEEDS ASSESSMENT 6.1 CITY OF CONCORD NEEDS ASSESSMENT The City of Concord and the City s partner organizations encourage and express the need for a collaborative approach. A collaborative approach ensures that the greater community s needs and interests are met while leveraging resources and opportunities. As a result, collaborative efforts provide a means for the City to maintain a high level of fiscal responsibility. The City s Information Technology Department also communicates regularly with the local provider community to understand the market trends for the region. The needs assessment for the City of Concord, California includes the results from interviews with City departments conducted on February 13, 2017 and February 14, 2017; a Broadband Business Survey distributed in March of 2017, which resulted in 356 responses from the City s business community; and feedback provided during three (3) Broadband Open House sessions hosted by the City s Economic Development and Information Technology Departments on May 24, 2017, facilitated by Magellan Advisors. The results of the data collected through this process are provided in the following sections and comprise the City of Concord s Broadband Needs Assessment. Figure 13. Data Collection and Outreach Process FEBRUARY 2017 City Department Interviews MARCH-MAY 2017 Stakeholder Outreach and Broadband Survey MAY 2017 Outreach Broadband Open House JUNE - SEPTEMBER 2017 Fiber Infrastructure Needs Assesment Page 63 of

64 6.1.1 CITY DEPARTMENTS SUMMARY OF STRATEGIC BROADBAND NEEDS The City s Information Technology provides valuable services and infrastructure to support the diverse needs and growing technological needs within the community. Interviews with City departments outline the role of Information Technology in the delivery of City services, broadband infrastructure, and the growing interconnected Smart City needs within the City of Concord. Broadband telecommunications include fiber infrastructure as well as wireless technologies, such as public Wi-Fi provided by the City. A detailed summary of the interviews is provided in Figure 16, organized into the following sections: An overview and description of departments interviewed. A summary of key findings. A status of the current environment. The Status column demonstrates the degree of opportunity from significant to moderate to limited, as it pertains to broadband and/or smart city development. A description of future opportunities and needs. Page 64 of

65 Status Legend: Significant Opportunity Moderate Opportunity Limited Opportunity Figure 14: City of Concord Needs Assessment Overview and Department Description Key Findings Status Opportunities & Needs Overview City of Concord: There are 15 facilities within the City of Concord. Department of Parks & Recreation: There are approximately ten facilities that are managed by the City s Department of Parks and Recreation which include: three community centers (Willow Pass, Center Concord, and Concord Senior Center); an aquatics center; the Diablo Creek 18-hole Golf Course; and the Concord Pavilion, a 12,500-seat outdoor concert venue that is operated by a third party. The Parks and Recreation Department also manages Additional Wi-Fi is needed at all the City facilities Cellular and Wi-Fi Municipal Wi-Fi was installed and managed by the City IT, but more Wi-Fi is needed at the City s recreational centers o o Community Centers Todos Santos Park AT&T, Sprint and T-Mobile have macro sites on towers at the Concord Pavilion Conduit is available and runs past Willow Pass Park Wireless Assessment: Determine current Wi-Fi capacity at City facilities and conduct a City facilities Wi-Fi assessment. The assessment should include areas of limited access; the number of APs (by type; by facility) that will expand wireless access and configuration settings to integrate with existing WLANs; review security requirements/settings to ensure indoor wireless networks are designed, implemented and monitored in accordance with the City s mobile device and security policies. Wireless Demand Forecast: Conduct a Wi-Fi demand forecast for City parks and recreational facilities, determine Wi-Fi upgrade opportunities to enable highbandwidth utilization. Continue to Implement and Monitor Wireless throughout the City s Parks & Recreational Facilities: o City Parks and Recreation s Public Wi-Fi Launch Pages: Improve Page 65 of 150

66 Overview and Department Description Key Findings Status Opportunities & Needs the leasing of City facilities for non-profit programs. The department will be increasing its utilization of social media and the City s Public Information Officer. Camp Concord is a 29-acre, technology-free and serene recreational area located in Tahoe that operates a summer family and youth resident camp from May through October. Concord Pavilion is owned by the City and operated by Live Nation Diablo Creek Golf Course is owned by the City and managed by a third-party Vertical Assets The City owns streetlight poles within City-owned parking lots and City parks Video Cameras Cambridge Park in downtown Concord will be implementing video cameras and public Wi-Fi with 2.4 and 5.8 MHz combinations Software and Applications Recreation registration and facilities permitting software o o marketing of City Parks and Recreation programs through the development of launch pages that provide program offerings, direct marketing, and newsletters. Conduct Vertical Asset Inventory: Determine the total number of streetlight poles owned by the City and incorporate into the City GIS layers. Develop Wi-Fi Leasing Strategy for Concord Pavilion o ActiveNet Implementation New in-house timecard software Diablo Golf Course recently selected new POS 36 and tee time registration system Community Relations: The Community Relations Department manages events throughout the City, including: Farmers Market Special events for Economic Development (approximately 100,000 attendees) 4 th of July Parade (approximately 5,000 attendees) o From Todos Santos Square to Mt. San Diablo High School Expand Wi-Fi services throughout public areas: Expand fiber services along the parade route, at the farmers market, and at special events. 36 Point of Sale system Page 66 of

67 Overview and Department Description Key Findings Status Opportunities & Needs Economic Development and Affordable Housing: The City of Concord does not have a Section 8 Rental Certificate 37 program. The HUD Section 8 Rental Certificate program is operated by Contra Costa County and there are approximately 300 within the City of Concord. There are 1,200 affordable housing units that are undergoing redevelopment. The multi-family properties are managed by Compliance Services and single-family properties are managed by Hello Housing. Approximately 70% of new business within the City come through brokers, while 30% are small business development. The Economic Development Department meets with the City s Chamber of Commerce and also sits on the Tourism and Business Improvement District Board. The City maintains relationships with major property owners to understand economic development needs within the community. Engineering: Affordable Housing Broadband Multi-family and single-family affordable housing within the City are served by Comcast and Wave. Currently, the City does not have existing policies that promote a universal access program to address the digital divide. Economic Development Economic development uses the Concordfirst.com website to inform and attract new businesses. Currently attracting Life Science-oriented businesses and major banking institutions. Software and Applications CodeStar is used for commercial property development Forensic Lead is used for follow-up. Promote Broadband- Friendly Policies: Facilitate the expansion of broadband services throughout the City using business-friendly and builder-friendly telecommunications policies and standards, including recently approved Wireless Ordinance and soon to be approved Dig Once initiatives, that meet the gigabit needs of the business community and local residents. Year-over-year, there have been an increasing number of requests to lease wireless communication facilities, such as streetlight poles and traffic signals. The City s Engineering Staff are not paid through the City s General Fund. Departments are charged on a project basis for engineering staff, which is Coordinate and collaborate with partners: such as, with City departments and other municipal organizations. Continue to proactively include the information technology as the resident technology 37 The United States Department of Housing and Urban Development (HUD) is a Cabinet department in the Executive branch of the United States federal government. Within cities a local public housing authority (PHA) administers the Section 8 Rental Certificate program, which increases the number of affordable housing choices from very-low income. For more information visit (Accessed 9/20/17). Page 67 of

68 Overview and Department Description Key Findings Status Opportunities & Needs The City has reviewed and updated its wireless ordinance. approximately 30% of a project s budget. The City conducts quarterly meetings with the utilities. experts for telecommunications infrastructure. This will be increasingly important as the City develops the Naval Weapons Station. Publish Wireless Lease Agreements for Small Cell Deployments: Determine lease agreement terms for wireless provider expansion within the City and communicate City s standards to the wireless provider community. Finance: Similar to other cities, Concord utilizes a 2-year, biennial budget cycle that staggers the operating and capital process. Capital funds operate on a 10-year cycle. GIS: The City operation is currently at an $8M budget deficit and growing year-over-year. The citizens approved a temporary $12M sales tax increase with approximately $7-$8M going to operating expenses and $4-$5M distributed to the capital budget. The City required budget for road repairs is approximately $12M (down from $22.5M), and approximately $2M per year is allocated for improvements. The Pavement Condition Index (PCI) is 59, a fair rating. The City does not currently charge a business license tax, and there is no Utility Use Tax, but is considering going to the public for various tax approvals. Sales tax was passed through 2025 and the City hired a consultant to look at cannabis revenue streams as well. Exploring opportunities to outsource Police Dispatch, but also need to consider union negotiations. Explore revenue-sharing opportunities through public-private partnerships: Conduct preliminary discussions with potential strategic partnership for revenue-sharing opportunities through the implementation of fiber and broadband infrastructures. Page 68 of

69 Overview and Department Description Key Findings Status Opportunities & Needs GIS data and mapping are becoming increasingly more strategic. Information Technology: The Information Technology Department manages and supports City Departments technology needs. More than 100 applications are used for throughout the City. Through public-private partnerships the department is able to assist in the evolution of the City s telecommunications infrastructure. City Contract Data Center, INET & Fiber The City is in year 3 of a 5- year contract with Wave (formerly Astound) with one optional 5-year extension. The contract includes the provision of: o o o Data Center Co- Location Space Internet Access I-NET Current City facilities have 4 pair of fiber at each site, 2 of which are lit. Disaster Recovery Rocklin connection over 1Gb transport Legal: The City, Legal Counsel, and Information Technology reviewed and updated the City s wireless ordinance. Naval Weapons Station Reuse Project: The Naval Weapons Station is currently being used for autonomous vehicle testing. The Reuse project spans the 5,000 acres of the Naval Weapons Station and the City plans to include 6M square feet of commercial development; 13,000 residential units; and 2,500 acres of open space. The property is currently held by the Navy, with the first parcels expected to be transferred in 2018 with Lennar commencing the Traffic Signal Modernization System Lennar plans include a traffic signal system dedicated to the City. Develop a Reuse Project Conduit Plan: Begin discussion for the long-term development of broadband that includes the implementation of City-owned conduit through the reuse project. Urban Development Opportunity for High-Speed Broadband Availability: The City s Reuse Project of the Naval Weapons Station provides a significant longterm opportunity for the City of Concord to set broadband Page 69 of

70 Overview and Department Description infrastructure build-out in Key Findings Status Opportunities & Needs standards. Standards should include next generation wireless technologies and fiber infrastructure that support traffic signal synchronization and modernization, education, healthcare, public safety, and more. Explore new smart transit routes with Contra Costa Transit Authority (CCTA) Establish standards for Fiber-to-the-Home: A forward-looking approach to the housing developments will provide residents with a utility that enables advance home automation and multiple devices. Planning: The City s Planning Department, legal counsel, information technology, Public Information Office developed the City s Wireless Ordinance for microcell lease agreements. As of February 2017, the City received approximately 10 different permit applications for microcell sites from Extenet Systems, Mobilitie and AT&T. Formalize wireless policies that include permit fees, vertical asset lease rates, and contract terms for a basis of negotiations with the microcell vendors. Police: The East Bay Regional Communications System (EBRCS) is the primary public safety communications system for the City of Concord, which is part of a multi-county. The City of Concord Police Department provides dispatching services for Concord and the neighboring City of Clayton. National Incident Management System The National Incident Management System (NIMS), is used by the Emergency Operations Center, with encrypted radios. Integration between Police, Emergency Operations and the City s Fire District are necessary. Public Safety Video Cameras Currently there are no vehicle cameras or body cameras used by the City Police. Cameras existing within the SallyPort 38 and interrogation Increase inter-city connectivity: Increase connectivity between the City of Concord and City of Clayton Police departments. Develop a Regional Public Safety IT Strategic Plan: Assess the needs for integration between City of Concord Police and Contra Costa County Fire Department. Upgrade video camera system to a digital highbandwidth infrastructure. 38 A SallyPort is the entrance area in a police station or jail, where prisoners are brought in to the facility. Page 70 of

71 Overview and Department Description Key Findings Status Opportunities & Needs rooms are using an analog system. Public Safety Video Data Access and Retention Policies City Council supports video cameras in the public right-ofway. Data access and retention policies were developed and passed by City Council. Page 71 of

72 Overview and Department Description Key Findings Status Opportunities & Needs Public Infrastructure: Works The Public Works Department works closely with Contra Costa County s Metropolitan Transit Commission to manage and maintain public assets. There are approximately 310 miles of pavement within the City of Concord. Transportation: The Transportation Division is part of the City s Community Development Department. There is a total of approximately 156 traffic signals in Concord, yet the City does not currently have point-to-point wireless for outlying signals. Public Works manages traffic signal system maintenance. The City is working with CalTrans on freeway improvements. Asset Management itrack is used to manage street signs and various street assets, which are barcoded and managed in the field using ipads. The FacilityDude is used for sewer and facilities maintenance, and Street Save is the pavement management system used by MTC. Anticipate incorporating photo data. Street Light Poles The City owns 8,200 street light poles. Sewers The City maintains the sewer infrastructure, but not water, which is managed by the Contra Costa Water District. There exists an ongoing capital improvement program (CIP) for the maintenance and replacement of approximate 240 miles of sewer, replacing less than one mile per year. Automated Traffic Management System (ATMS) Recently upgraded from StreetWise to TrafficWare, using 2070 controllers. 3-4 cameras are being purchased by the City and traffic signal technicians are installing the cameras. $3M fiber inner-connect project is being funded through Measures J and C. Pedestrian Bicycle and Safe Rout Transit Plan Explore opportunities to use abandoned water mains to run fiber-optic cables. Locate funds for improving traffic signal system per Kimley Horn report recommendations Align traffic signal improvement grants and modernization with all broadband activities including fiber and wireless Establish partnership with Information Technology Department to repair, expand and improve traffic signal infrastructure and for Page 72 of

73 Overview and Department Description Key Findings Status Opportunities & Needs Adopted by City Council in broadband system operations and maintenance Page 73 of

74 The City of Concord utilizes several technologies that provide Smart City benefits. Further improving the City s fiber and broadband wireless infrastructure provides qualitative benefits that will incrementally improve the overall economic and social well-being of the community. Additional fiber infrastructure routes will be able to support a number of Smart City applications such as: broadband infrastructure to bridge the digital divide; advanced transportation management systems (ATMS) for daily and special event traffic, with an opportunity for digital wayfinding/directional signage; digital parking availability; public Wi- Fi; CCTV; 5G wireless; EV charging stations; and smart lighting. The following figures illustrate the Smart City opportunities, based on proximity to the network, by implementation phase: Figure 15. Phase 1 Core Network Build and Smart City Opportunities Page 74 of

75 Figure 16. Phase 2 Traffic System Infrastructure and Smart City Opportunities Figure 17. Future Phases Smart City Opportunities Page 75 of

76 6.1.2 BUSINESS COMMUNITY BROADBAND ASSESSMENT The City of Concord s business community understands the importance of broadband availability and access to build, operate and develop their businesses. In February and March of 2017, 357 members of the City business community completed a Broadband survey, representing a cross-section of industries and mostly small businesses with less than 10 employees. The survey was designed to understand the current broadband environment, existing business needs, and future opportunities. Responses are summarized in this section, which provide insight into opportunities for a fiber infrastructure to better serve the City s business community Broadband Survey Summary of Key Findings Internet services among the business community vary from Digital Subscriber Lines (DSL) to Fiber-Optic and Satellite services. The distribution of Internet Services among the small business community are illustrated in Figure 18 below. Figure 18. Type of Internet Service Subscriptions in the Concord Business Community Page 76 of

77 The business community overwhelming sees the internet as critical to their organization. This sentiment is strong enough that over 30% would definitely relocate their business if they were unable to find internet services to meet their business needs. This sentiment is important for city leadership, economic development directors and utilities to understand for the future fiscal stability and growth of a community. Figure 19 and Figure 20 illustrate the survey findings. Figure 19. The Internet s Degree of Importance to the Business Community: Functionality, Availability, and Response Times (Q7) Figure 20. Likelihood of Moving Business if unable to find Internet Services that Meet Needs (Q13) Page 77 of

78 Internet service reliability is an important variable for the small business community. Lack of reliability can impact a business to varying degrees. In the City, 34.48% of the businesses had moderate disruptions per month, 6.32% had severe disruptions and 5.17% had total disruption (see Figure 21). While disruption of services is relatively low, it can have consequences for small business owners. Figure 21. Degree of Business Disruption from Internet Services: Speed, Connectivity and Reliability (Q9) When asked about level of satisfaction, respondents are moderately satisfied with the price (over 60%), reliability, speed and customer service (see Figure 22). Page 78 of

79 Figure 22. Level of Satisfaction with Current Internet Services (Q15) In addition to level of importance, the majority (nearly 60%) of businesses found internet services meeting the needs of their business, while 24% of respondents did not, and over 16% are unsure. Of dissatisfied respondents, speed and price were most deficient in meeting the business needs, followed by reliability. Figure 23. Ways that the Internet is Insufficient for Business Needs Nearly 60% of the survey respondents provided feedback on the importance of choice for internet services providers (see Figure 24). As the City facilitates broadband access throughout the City, the City should explore long-term opportunities to provide services to the greater Concord community. Should the City decide to pursue a city-owned Page 79 of

80 infrastructure business model and provide wholesale and retail services to the greater community, the survey results indicate a degree of potential to capture a percentage of the local broadband marketplace. Additional analysis and scoping of service offerings would need to take place in order to determine the community s likelihood of switching. A question in the survey asked respondents this situational question: If the City of Concord were to offer Internet access, how likely would you be to subscribe if comparable services were offered at a similar price as other local Internet providers?. There was a significant positive response of 194 respondents as illustrated in Figure 25, with an aggregate response of Maybe to Definitely at 89.69%. Figure 24. Degree of Importance for Business to have more than one Choice of Service Provider Page 80 of

81 Figure 25. Likelihood of Subscribing to City-Offered Internet Services The conditions under which a business would switch vary. Five quotes with varied perspectives are provided below, representing some of the diverse perspectives within the community. Please invest in this. This is the future. Thank you. City of Concord Broadband Survey Respondent, 5/23/17 1 I recommend all new constructions should have fiber optics for internet, eventually cable and internet companies will have fiber optics soon to the house and businesses. City of Concord Broadband Survey Respondent, 5/24/17 I m not sure why the City would become involved with internet providers. Seems like there are other areas of concern for Concord City managers and employees. Also, seems like we would be opening up our streets again which would be a further annoyance. City of Concord Broadband Survey Respondent, 6/7/17 Universal access! This is NOT just about business access, but access for all families and residents. City of Concord Broadband Survey Respondent, 6/24/ Page 81 of

82 Business have a lot of options for Internet access. However, our customers may not. It is also critical to our business growth to have families/consumers/residential customers have access to fast, reliable, affordable Internet access. Especially residential customers age 25 and under and 60 and over. City of Concord Broadband Survey Respondent, 5/24/17 5 Complete responses to the survey, are provided in Appendix D COMMUNITY ANCHORS INSTITUTIONS AND GOVERNMENT PARTNERSHIPS The City of Concord continues to review opportunities to collaborate with government partners and community anchor institutions. Through the coordination of transportation projects that impact the public right-of-way, the City, CalTrans and BART Concord may leverage dig once opportunities for the implementation of conduit, fiber infrastructure and cameras. More effective public policy standards set requirements for the incorporation of broadband infrastructure into an organization s capital projects. As capital improvement projects arise for the City, County, and regional transportation systems, opportunities for the implementation of conduit and fiber should be reviewed. To date, Public Safety has expressed a need for cameras on two BART platforms. With approximately 30 schools and libraries in the City of Concord, the Mt. Diablo Unified School District and City libraries utilized e-rate to secure a $48,000/year contract with AT&T for internet services. While there is no immediate need for the schools to change providers for internet service, monitoring network utilization and the growth of online learning platforms for students should be reviewed on a recurring basis throughout the life of this project, and specifically within six months of contract renewals. The health care industry within the City has also been considered. The John Muir Health Medical Center remains the primary health facility within the region, providing 245 hospital beds within the City. Current needs of the medical industry are indicated to be met through existing contracts CONCORD NAVAL WEAPONS STATION REUSE PROJECT BROADBAND PLANNING The Concord Naval Weapons Station (CNWS) located within the city limits of Concord, is closed and is slated to be turned over by the federal government to the City of Concord for redevelopment by the city. Current planning is taking place that outlines, defines and addresses proposals for use of the 2,300 acre property. The Area Plan currently calls for multiple uses for the property Page 82 of

83 including green space, first responder training sites, new parks as well as commercial, retail, transportation, schools, homes and supporting facilities. The Area Plan calls for the new community to be built in phases over a several-year period Broadband Considerations As the City develops its broadband infrastructure and implementation of this broadband plan, it should take a proactive planning approach during the development of the CNWS reuse project. The City should establish clear policies to be used during planning and build process including technical standards and guidelines, Dig Once Policies and Wireless Ordinances. The City should be the key provider of broadband facilities to all planned and future planned facilities providing conduit and fiber assets for: Residential Fiber-to-the-Home (FTTH) All commercial and retail businesses All vertical city assets including light poles and traffic signals All anchor institutions including schools, parks, BART/transportation facilities or other government agencies The CNWS redevelopment will be a natural extension of the existing City broadband network. The City should be the provider of broadband for all of the new greenspace development by capitalizing on all of their network infrastructure as outlined in the Strategic Broadband Plan. An executive staff member should be provided by the City as a broadband liaison for all CNWS redevelopment planning. This report does not provide any financial pro forma assumptions for the CNWS redevelopment project but recommends that the City commit the City s broadband assets to the development of the area. Page 83 of

84 7 BUSINESS MODELS In determining whether and how to provide community fiber network services, the City needs to consider the different business models that municipalities and regions use to provide broadband access capabilities. The factors which define what business model fits well within the current environment, organizational and operational capabilities of the City include competitive and market factors as well as financial and risk factors that determine what risks, rewards, and funding commitments an organization is willing to accept for a broadband initiative. The commonly implemented business models fall on a continuum that ranges from low risk, low investment options to higher risk, high investment options. As a local government evaluates the various business model options along the continuum, it will encounter greater degrees of risk and reward; risk, in terms of financial, operational, and regulatory risk; reward, in terms of community benefits, revenue generation, and overall potential for profit. In addition, moving up the continuum also implies greater local government participation in the delivery of broadband services. These business models fall into three general types 39 : Hybrid Model Public-Private Partnership The City owns the network but outsources operation and maintenance to a service provider in return for a revenue share or other value. Privately-Owned Managed Services Model The fiber network is owned and operated by a service provider, but the City is an anchor tenant for the network. City-Owned Model The fiber network is owned and operated by the City. Also, there are variations on the City-owned, or Public model around the extent of the operation, as follows: Infrastructure Provider: Municipalities lease and/or sell physical infrastructure, such as conduit, dark fiber, poles, tower space, and property to broadband service providers that need access within the community. These providers are often challenged with the capital costs required to construct this infrastructure, particularly in high-cost urbanized environments. The utility infrastructure provides a cost-effective alternative to providers constructing the infrastructure themselves. In these cases, municipalities generally use a utility model or enterprise fund model to develop programs to manage these infrastructure systems and offer them to broadband service providers using standardized rate structures. Government Services Provider: Municipalities that become a government service provider will utilize a fiber-optic network to interconnect multiple public organizations with fiber-optic or wireless connectivity. These organizations are generally limited to the community anchors that fall within their jurisdiction, including local governments, school districts, higher educational organizations, public safety organizations, utilities, and occasionally healthcare providers. The 39 Further information and examples of successful municipal broadband implementations is provided in Appendix F: Municipal Broadband Business Models. Page 84 of

85 majority of these anchors require connectivity and often, the municipal network provides higher capacity at lower costs than these organizations are able to obtain commercially. Municipal and utility networks across the country have been built to interconnect cities, counties, school districts, and utilities to one another at lower costs and with long-term growth capabilities that support these organizations future needs and protect them from rising costs. In these cases, government service providers may be cities, counties, or consortia that build and maintain the network. The providers utilize inter-local agreements between public agencies to establish connectivity, rates, and the terms and conditions of service. Open Access Provider: Municipalities that adopt open-access generally own a substantial fiber-optic network in their communities. Open-access allows these municipalities to light the fiber and equip the network with the electronics necessary to establish a transport service or circuit to service providers interconnecting with the local network. Service providers are connected from a common interconnection point with the open-access network and have access to all customers connected to that network. Open-access refers to a network that is available for any qualified service providers to utilize in order to connect their customers. It allows municipalities to provide an aggregation of local customers on a single network that are able to compete for and provide services. The concept of open-access is designed to enable competition among service providers across an open network that is owned by the municipality. The municipality retains neutrality and non-discriminatory practices with the providers who operate on the network. The municipality establishes a standard rate structure and terms of service for use by all participating service providers. Retail Provider: This involves provision of business and residential services at retail rates to customers. Page 85 of

86 PUBLIC/PRIVATE PARTNERSHIP PRIVATE OWNERSHIP/ MANAGEMENT, CITY AS ANCHOR TENANT CITY-OWNED/ PUBLIC OWNERSHIP & MANAGEMENT Fiber Network Ownership City Private Owner City Construction Costs City/Private Partner Private Owner City Wireless Equipment Ownership System Operations & Maintenance City/Private Partner Private Owner City City/Private Partner Private Owner City Customer Service City/Private Partner Shared City Technology Replacement Cost City/Private Partner Private Owner City Marketing City/Private Partner Private Owner & City City Digital Inclusion Initiatives Shared City City Risk/reward profiles may be illustrated as follows: PUBLIC/PRIVATE PARTNERSHIP PRIVATE OWNERSHIP/ MANAGEMENT, CITY AS ANCHOR TENANT CITY-OWNED / PUBLIC OWNERSHIP & MANAGEMENT Public Financial Risk Moderate, depending on structure Minimal to none Higher Private Financial Risk Moderate, depending on structure Moderated by Anchor Tenancy None City Revenue Sources Fiber Network & Revenue Sharing Fees from Provider, funding for initiatives Wholesale & Retail ISP Services Private Revenue Sources Wholesale & Retail ISP Services Wholesale & Retail ISP Services None Page 86 of

87 Factors that should guide the City of Concord in selecting and managing the best business model for its own successful network deployment include: Consider successful implementations, and draw applicable lessons; Consider unique needs and challenges of the community, and address them in planning; Drive to clarity of purpose among stakeholders regarding the purpose and goals for the network; Assess the marketplace for current providers and services; Use existing City infrastructure wherever possible in network design and planning; Start small before rolling out a network covering broader geography; Build opportunistically; Identify backhaul options, and ensure adequate capacity; Plan to leverage the network for additional uses once initial deployment objectives have been satisfied; Maintain a long-term view of investing in and operating the network; Ensure clear financial expectations and sound financial projections; and, Open collaboration with partners, and maintain the relationship Page 87 of

88 8 CITY OF CONCORD FUTURE FIBER NETWORK This section explores the design of the City s fiber network, an implementation strategy, an analysis of the potential business model with which the City can implement the network, and the associated costs of each alternative. 8.1 CONCORD CITY FIBER NETWORK DESIGN Developing a city network through a four-phased implementation strategy allows the City to prioritize broadband needs, take advantage of quick wins, address immediate opportunities, leverage costs savings, provide for reinvestment opportunities, and to build a high-speed network that achieves the goals of the City and the greater community needs. Figure 26 below illustrates the completion of a four-phased approach. The buffer zone illustrates the potential of extending fiber to the business community within the areas of the network. Laterals to businesses within the buffer zones are estimated based on take rate assumptions and the costs associated with extending fiber transport services to the Concord business community. Figure 26. City of Concord Proposed Fiber Network and Buffer Zones This network design is based on a four-phased implementation strategy that includes: Phase 1. Conduct Core Network Buildout Phase 2. Enhance Traffic System Infrastructure Phase 3. Construct Network Redundancy Phase 4. Connect City Schools (Optional) These phases are illustrated in Figure 27 through Figure 30 below. Costs and Page 88 of

89 related assumptions are detailed in Appendix E. The Estimated Cost Range for Phases 1-3 illustrate the overall costs without (low) and with (high) costs to buildout laterals to the business community. Figure 27. Phase 1 Core Infrastructure Build Figure 28. Phase 2 Traffic System Infrastructure Estimated Cost Range: $$16M-$21M 2254 Total Businesses 2303 Vertical Assets (Over 3 years, Year 1-3) Estimated Cost Range: $$7.5-$8.6M 2814 Total Businesses 3582 Vertical Assets (Over 3 years, Year 4-6) Figure 29. Phase 3 Network Redundancy Figure 30. Phase 4 City Schools Laterals (Optional) Estimated Cost Range: $7.6M $8.9M 3214 Total Businesses 4238 Vertical Assets (Over 3 years, Year 7-9) Estimated Cost Range: $14.7M (Over 3 years, Year 8-10) CAPITALIZING ON CONCORDS EXISTING NETWORK To help reduce the cost of building the network, the City should work to capitalize on the use of existing infrastructure including traffic signal conduit, abandoned water mains or any overhead assets they may own. Phase 1 of the model is broken down into 4 parts: Upgrade/build network using existing traffic signaling conduit; Page 89 of

90 Establish an internet connection to a Point-of-Presence in Oakland using BART facilities; Connect all city facilities and buildings to the core network; and, Offer services through ISP s that in turn provide end user services to retail and commercial businesses within 500 feet of the core network. The design considerations of Phase 1 of the network were developed to take advantage of existing assets. These assets are primarily from existing traffic signaling conduit that the city recognizes will need to be upgraded soon. The City commissioned a study, provided by Kimley Horn, to assess the state of the City s traffic signaling systems. It was determined that the system is still based predominantly on copper-based wiring and older technology. The conduit was also assessed and roughly 50% of the conduit is in disrepair and in need of replacement. There are traffic signaling funds available from various state agencies that can be capitalized on to help fund the traffic signaling upgrades. The City, whether it decides to build the broadband network or not, will need to upgrade its traffic system in the very near future given its current state. It would be wise for the City to capitalize on these funds to help develop a joint use network that provides a backbone for both the traffic signals and for broadband for Smart City and economic development. These funds can be used to upgrade the conduit and to replace old copper wires with fiber-optic cables. This conduit and excess fiber can be used as part of the broadband network backbone. The savings from the use of these funds is NOT reflected in the financial models provided and will only result in an improved financial forecast. The City should also look for opportunistic joint trench options through creation of a dig once policy to help offset the cost of building the network. When the City plans new construction as part of its normal operations, it should always consider placing conduit/fiber when appropriate. Likewise, when other outside agencies plan their construction activities within the City, the City should work to get assets placed. This should become common practice within the City. For instance, as shown in Figure 31 below, the City is saving money through joint trenching on the sewer project and should continue to do the same with others. Page 90 of

91 Figure 31: Sanitation District Sewer Project OPPORTUNISTIC BUILDS Opportunistic builds can be a great savings facilitator for the City. However, opportunistic does not mean ad hoc. The City will need to have a detailed network plan/design that demonstrates the long-term view of the desired network. Potential opportunities will only be considered when they fall on the proposed network routes. No one needs to build or install fiber that does not connect to anywhere. Opportunistic builds also require some capital to take advantage of them. This is often overlooked by many cities in their broadband plans. A fund should be created and maintained with funds ready to capitalize on opportunistic builds. A balance of $250,000 in a capital project account is recommended for a city the size and scope of Concord. If these funds are not available at the time of joint trench opportunities, a loan from other public works projects in the public right-of-way should be used and paid back at the next capital improvement project budgeting cycle. Page 91 of

92 8.2 FUNDING CONCORD S NETWORK Magellan Advisors has provided a series of network diagrams demonstrating potential network build phases that are designed to over time, become the fiber core of the city s network. From this core, all other access technologies can be added or incorporated including Wi-Fi, cellular access and Smart City applications of the future. We have proposed a four-phase build process, but each phase can also be broken down into smaller phases or can be built as opportunities present themselves even when out of the logical sequential phase model. We call this opportunistic network building. All cities incorporate opportunistic building options into the broadband network, but the city does need to be prepared, both financially and internally, to respond when these opportunities present themselves. Funding of a network is generally bucketed into two parts, initial construction, and then ongoing maintenance. Many cities realize revenue in the form of broadband services offered to end users (business or residential, retail or wholesale) and from savings by not having to lease commercial services for their work internal needs. This revenue varies from city to city and from network to network. Magellan Advisors will present a financial model that demonstrates a potential cost model for building and maintaining a broadband network. It should be noted that this model should be viewed as only one option available to the city and assumes more of a total finance scenario rather than incorporating cost savings from opportunistic builds or grant funding options. The City of Concord should assume that much of this network will be paid for by grant funds, or that the cost of building the network can be greatly reduced by joint trenching, use of existing assets or opportunistic builds as they present themselves. When reviewing the financials, one should not conclude Magellan Advisors is recommending issuing a bond or securing all loans to build this network. Similar networks have been built and subsidized/financed through alternative means through incremental and on-demand strategies. However, careful planning and vision is still required to facilitate an appropriate network over time FUNDING SUMMARY Funding for broadband networks can come from many sources. These sources include: o Dig Once Opportunities o Opportunistic Options o Grants such as traffic signaling funding, E-Rate for schools and libraries o Like/kind exchanges with other carriers or providers (BART, CalTrans, fiber and wireless carriers) o Existing funds including Plan of Record (POR) allowances Page 92 of

93 Ongoing maintenance funds will be offset by offering wholesale broadband access/services to businesses and anchor institutions. These funding sources have not been reflected in the financial model FINANCIAL MODEL The included financial model (found in Appendix E) makes certain assumptions about network costs, network maintenance costs, revenue and funding sources. This model uses conservative estimates for end user take rate and revenue opportunities and was built to reflect the worst case scenario for network costs and associated funding requirements. This model does not take into consideration any of the potential funding/grant sources available to many cities to help augment the cost of the network, nor does it include any potential network lease savings by using the City s own network assets instead of leasing services from outside providers. It should also be noted that many of the benefits of having a broadband network that the city owns and operates are difficult to capture in monetary terms, such as having broadband available for the disadvantaged population, Smart City initiatives, aging in place, or increased security and services from the EMS groups. It also does not consider any of the monetary economic development advantages that come from having a robust broadband network. Magellan Advisors does not recommend rushing out and issuing a bond or financing the project in total, however, as the model indicates, such a paradigm would be financially viable assuming all the assumptions are met. The model proposes a four-phase network, with some phases having multiple parts. In general, each phase calls for building a core network, then providing businesses within 500 feet of the core with revenue generating services that help offset the cost and maintenance of the network. Five hundred feet was chosen as an average distance that is within the generally accepted cost to have an acceptable return-on-investment. Any further than 500 feet and the cost to construct the drop from the core to the business goes up and makes it more difficult to get an ROI. However, the City should take each request on a case-by-case basis as each drop cost may differ slightly depending on where and to how many potential subscribers are being connected. Overall, the model only assumes 4.5% of all businesses in Concord will subscribe to the City s broadband service. (This is a take rate of 35% of those within the 500-foot buffer zone).in this scenario, the City would be responsible for providing the fiber lateral to the building for businesses, and then and ISP would be responsible for providing all the premise equipment to the end user. The model assumes Phase 1 will be the foundation for the other phases and each phase builds upon the previous phase. Modeling for each phase demonstrates that each phase can become financially viable. For instance, if the City were only to build Phase 1 and none of the other phases, Phase 1 would still be financially viable by itself. If the City were to only build Phases 1 and 2 and not 3 or 4, it would also be financially viable. Page 93 of

94 Phase 4 is an optional phase as it is exclusively designed to connect all the schools within the city. This design introduces drops or laterals from the core network to the schools. Based on recent interviews, the schools have indicated they have adequate broadband today at reasonable cost and do not see a need to make any changes. Their broadband is subsidized by federal funds and they have an existing contract today with an existing provider. However, Phase 4 is planned for eight to ten years from network inception, so the school s needs could be different by then, and we have taken the time to estimate the cost to provide the schools with service in the future FINANCIAL MODEL CONCLUSIONS The included pro formas (found in Appendix E) demonstrate that even with these conservative assumptions, the City could be cash flow positive in a few years if it elects to provide businesses with broadband services while enjoying the off-balance sheet benefits of a city owned network, which are more difficult to quantify. Phased builds allow the City to test assumptions against actual network performance Each phase can be profitable Model does not consider any savings from opportunistic builds Model is only one potential model for the City Model does not show any cost savings the City would have by not leasing from existing carriers (which is minimal today given the i-net arrangement with Wave Communications for broadband connections to City facilities) Revenue will be from businesses within 500 feet of the fiber run and from leasing of vertical assets and fiber to wireless providers No Smart City costs were included in the model Phase 3 provides for network redundancy The City of Concord can build and maintain a profitable broadband network throughout the city through careful planning and execution. The City will have to assess its own risk tolerance and tactical abilities to make this network successful. Magellan Advisors has provided guidance on possible options. 8.3 TEN-YEAR BROADBAND IMPLEMENTATION STRATEGY OVERVIEW The implementation of the City s fiber network should be progressive in nature and with the intent of building a redundant, business-class network offering gigabit fiber services throughout the City. Each phase expands the availability of municipal services throughout the City, with the potential to ultimately extend fiber to the Concord business community. A time line for the implementation of each phase is provided in the figure below. The costs incurred by the City and potential revenue generated vary depending on the business model that will be implemented. Page 94 of

95 Figure 32. City of Concord Ten-Year Broadband Implementation Strategy There are various business models that can be used to implement the fiber network. An analysis of the various business models based on the overall implementation strategy are provided in the following section RECOMMENDATIONS The City has many opportunities available to expand its network and can capitalize on low cost/no cost options that are typically available for most municipalities at least those that maintain other utilities, rights-of-ways, and capital improvement programs. In other cases, the City will have to design and construct in new areas of the City where these opportunities are not present. It should be noted that these recommendations, roadmap and action plan should be viewed as only one option available to the city and assumes more of a total finance scenario rather than incorporating cost savings from opportunistic builds or grant funding options. The City of Concord should continue to look for ways to build on demand and incrementally, meeting demands as they arise, and using a crawl, walk, run approach. Page 95 of

96 Recommendation #1: Develop Fiber-Friendly Public Policies Magellan believes that Concord s most immediate strategy to encourage next-generation broadband infrastructure growth is to formalize broadband-friendly public policies. In meetings with the City of Concord departments, it was discovered that many progressive considerations are already in place, and informal policies were being formalized that are What are Broadband-Friendly Public Policies? Broadband-friendly public policies are tools that Concord is formalizing that will encourage broadband infrastructure growth. These include many items that are already informally performed by the City now, such as practices that reduce the duplication of effort and minimize the cost associated with installing utility and broadband infrastructure within its jurisdiction. Below is a list of ways that the City can encourage broadband development through the adoption or continuation of broadband-friendly polices: Evaluate fees levied on broadband providers for constructing broadband infrastructure to ensure they do not discourage broadband investment. Develop methods to streamline the broadband permitting processes within public rights-of way to ensure broadband providers do not face unnecessary obstacles to building infrastructure. Develop a process so that municipal Planning, Engineering, and Public Works Departments coordinate with each other to identify projects that could install infrastructure at reduced costs. Identify opportunities to install broadband infrastructure in conjunction with public and private construction projects. Maintain broadband infrastructure specifications in a city-owned GIS-based fiber management system, requiring updates as built, and implement processes for accurate documentation. Adopt policies that incorporate broadband as a public utility and create a policy framework to promote its deployment in public and private projects as appropriate. Draft policies to Concord s specific needs and adopt them into local policy, codes, and standards (including dig-once, joint trenching, engineering standards, etc.). Incorporate broadband concepts into Concord s Capital Improvement Plans (CIP), as appropriate, and make a commitment to fund broadband infrastructure. The City should adopt a dig once ordinance and effectively manage its new wireless communications ordinance for placement and method of 5G small-cell deployments. The City should adopt in-kind negotiation strategies when licensing small cell pole attachment agreements. Page 96 of

97 What are Broadband-Friendly Public Policies? (con t) Comprehensive Broadband Standards and Joint Trenching Policies that incorporate broadband infrastructure requirements into Concord s land development statutes or General Plan will allow and encourage broadband construction in conjunction with other capital projects. For example, installation of fiber-optic conduit during all projects involving roads, sidewalks, trails, or lighting projects where the ground is to be opened for other purposes would be less costly than installing conduit through standalone broadband projects. Since the majority of costs to build broadband infrastructure is incurred through trenching, boring, and restoration, this strategy can alleviate significant costs by opening the ground once instead of multiple times. In many states and municipalities, this formalized policy is referred to as a Dig Once policy. generally accepted as best practice. The City of Concord needs to ensure that it employs conditions for development that include telecommunications assets as a part of the necessary development infrastructure. In support of this strategy, Concord should continue to implement broadband-friendly public policy tools. These policy tools influence how broadband services develop throughout the City and show the community and prospective newcomers that Concord is serious about promoting broadband growth and accessibility. In addition, it will allow the City to expand its underground conduit and fiber system with savings over more traditional fiber construction methods, allowing the City to take a master planning approach versus deploying in an ad-hoc, unplanned way. Recommendation #2: Data Center and Network Interconnects The City should establish a new data center facility or room in its existing facility specifically for use by the fiber-optic network and should deploy fiber patch panels and lit transport equipment. This facility would act as Concord s Point of Presence, or PoP, and would include direct fiber interconnects with service and content providers. The City s success as a wholesale provider of fiber and lit transport services will be dictated by the level of connectedness of the City data center and fiber network. Connections into major data center facilities in Oakland, San Francisco or Sacramento, will provide numerous points of interconnect to hundreds of potential providers and content partners. A second local data center should be considered when funding permits. Recommendation #3: Work with Community Anchors Institutions The City has a future, potential opportunity to become a local transport provider to Concord s community anchors institutions (CAIs). From a K-12 education perspective alone, there are many schools and supporting facilities located throughout the City. Each of these ISDs contract for point-to-point connectivity solutions through third-party companies AT&T today. For the schools, these third-party contracts represent a neverending operating expense, and a movement of local tax dollars out of the community. The Page 97 of

98 schools in Concord today indicated they are fairly satisfied with the broadband services they have today. However, as demand changes, they will be constantly looking for new and faster services, at better price points. The City of Concord should be re-evaluating the ongoing needs of the schools and be prepared to provide them. Phase 4 of this plan demonstrates the capital costs associated with connecting each school facility. Many municipalities are finding ways to partner with their community anchors, working in a collaborative effort to maximize taxpayer dollars, and prioritizing local investment into local community owned infrastructure. These networks are allowing community anchors, which again, are funded primarily through tax dollars, the ability to offset and manage long-term operating costs. Community anchors, such as schools, libraries, and county or city facilities, all have a common need and contract for the exact same types of telecom services. Services that can be provided over a common telecommunications platform. Point-to-point connectivity (i.e., connecting a school to an administrative facility) is the most common service required at the local government level and is a relatively simple service to provide, in either a dark fiber configuration or using lit network services. An optional Phase 4 illustrated in Figure 30 shows potential laterals to the schools, and the CAI sites in proximity to fiber. The City of Concord should also begin to identify public and private partnerships, outside grant opportunities, and/or revenue sources from working with their community partners. Broadband infrastructure grants come in many forms, regardless, having other anchor partners can open new windows to help fund the project. In anticipation of future opportunities, the City or partner provider should register with the USAC E-Rate program, applying for a Service Provider Identification Number (SPIN) to become a certified provider of telecommunications services for the schools and community anchors. This process is administrative in nature, but a requirement to bid on and win competitive solicitations for telecommunications services. All ISPs must go to bid for new transport and Internet services at regular intervals dictated by the horizon of the contract they re going to award. Three to five-year contracts are fairly common. Recommendation #4: Identify Additional Community Uses As each phase of the network plan is built and the City s network is operational, the City will be able to implement many additional community uses. Deployment of Wi-Fi along business corridors could be enabled through network transport services being provisioned within the City s rights-of-way. The ability for the City of Concord to drop a network connection where needed, will empower numerous community-based initiatives. Wi-Fi Access Traffic Management and Digital Signage Closed-Circuit TV Cameras Municipal Utility Initiatives Digital Divide and Digital Inclusion Other Smart City Initiatives Page 98 of

99 Recommendation #5: Formalize a BIP to Make Use of Broadband Assets The City of Concord should begin to formalize a Broadband Infrastructure Program (BIP), focused on continuing to meet the needs and demands of the City operation, while bringing value to the greater community, and monetizing any assets that are available. Cities across the United States, and in California specifically, are developing these types of infrastructure programs to drive new revenues to the city and to support the long-term sustainability of their communities. These revenues are being generated off conduit and dark fiber assets, lit network services, and through the lease of vertical assets such as street lights and towers. In many cases, municipal broadband networks provide residential FTTH or business fiber-optic telecommunications services both in retail and wholesale offerings. There are several tasks required in order for Concord to formalize this program, they include: Document and maintain an inventory of available assets; Implement a fiber management system; Develop and standardize agreements for fiber and conduit leasing; Develop pricing policies for fiber and conduit leasing; Publish rates and terms; Create a City enterprise fund to maintain proper budgets, cost accounting, and to track revenues of the program; and, Create a capital fund to cover costs of building infrastructure. The City should plan to incrementally grow its program as outlined in this analysis, layering additional services onto the network as the City moves through the various phases of the plan. This series of progression will allow Concord to take measured steps to deploying broadband throughout the community, enabling the City to incrementally expand its network as opportunities and community needs present themselves. This will also allow the City to support business and community anchor needs immediately through the fiber-optic network outlined in this Plan, while targeting other areas, such as the developments being planned at the Naval Weapons Station. Recommendation #6: Release RFP for the Solicitation for Partners The City of Concord must identify how it will utilize the fiber-optic network to bring nextgeneration broadband services to the greater community. The City will also have to select the most appropriate business model that aligns with the vision of the community and its leadership, and one that fits organizationally into the City s municipal operation. While many communities strive to be a fully functioning provider of retail services, it comes with significant challenges. The most common approach is for the City to contract many of its municipal operations to other organizations and should be considered when selecting a business model as it is likely this endeavor would follow suit. The City would be best served in partnering with a private service provider to deliver services to business customers. Under this type of partnership, otherwise known as a Public-Private Page 99 of

100 Partnership (PPP), Concord would own, oversee and pay for the construction of the physical broadband infrastructure, while the private provider delivers retail service offerings such as TV, Voice, and Internet. This arrangement would provide the greatest positive impact to the City, while leaving substantial fiber capacity that could be leveraged to support the municipal operations of Concord well into the future. This additional capacity will help future proof Concord, allowing the City to take advantage of future technologies that require robust connectivity, at little incremental cost. Recommendation #7: Formalize Requirements and Design for Naval Weapons Station The Concord Naval Weapons Station located within the city limits of Concord, is closed and is slated to be turned over by the federal government to the City of Concord for redevelopment by the City. Current planning is taking place that outlines, defines and addresses proposals for use of the 2,300 acre property. The Area Plan currently calls for multiple uses for the property including green space, first responder training sites, new parks as well as commercial, retail, transportation, schools, homes and supporting facilities. The Area Plan calls for the new community to be built in phases over a several year period. Broadband Considerations As the City develops its broadband infrastructure and broadband plan, it should take a proactive planning approach during the development of the CNWS reuse project. The City should establish clear policies to be used during planning and build process including technical standards and guidelines, Dig Once Policies and Wireless Ordinances. The City should be the key provider of broadband facilities to all planned and future planned facilities providing conduit and fiber assets for: Residential Fiber-to-the-Home (FTTH) All commercial and retail businesses All vertical city assets including light poles and traffic signals All anchor institutions including schools, parks, BART/transportation facilities or other government agencies The City should be the provider of broadband for all of the new greenspace development by capitalizing on all of their network infrastructure as outlined in the Strategic Broadband Plan. The CNWS redevelopment will be a natural extension and existing City broadband network. Page 100 of

101 The City should provide an executive staff member as a broadband liaison for all CNWS redevelopment planning. This report does not provide any financial pro forma assumptions for the CNWS redevelopment project but recommends that the City commit the City s broadband assets to the development of the area ROADMAP AND ACTION PLAN The City of Concord has deemed fiber-optic infrastructure to be critical infrastructure for the community. Through development of this Plan, we have evaluated a number of options and opportunities for the City to expand its fiber-optic footprint. In the previous section, there are specific recommendations the City should consider for building its fiber infrastructure. From the recommendations, this Plan s Roadmap and Action Plan provides a step-by-step process the City could adopt to implement its Fiber Enterprise. Through analysis of these opportunities, Magellan in cooperation with the City of Concord have developed a recommended roadmap that the City can consider as they continue making key investments in broadband infrastructure. The broadband roadmap that has been developed and outlines a step-by-step approach to building Concord s fiber services out to organizations throughout the City. This roadmap will focus on leveraging some of the existing assets and will build a plan to enable Concord to expand its operations to connect more organizations, which may include businesses, community anchors, broadband providers, and other public organizations. The City must also evaluate the opportunities to leverage the light poles it owns. These poles will likely provide a great opportunity for increased wireless carrier expansion, and the City must determine how to participate in this planning, and provide the necessary infrastructure to support deployment, likely creating a significant revenue stream. The City should look for every option available to drive down the costs of constructing this network. As it has in the past, the City must use smart public policy to deploy network infrastructure where possible. Alignment with the City s capital project plans will also provide additional relief to the overall project cost. Through expansion of the City s fiber network, the City will make available all additional excess capacity to the market. It will accomplish this through the development of a Broadband Infrastructure Program, focused on commercial utilization of the City s fiber assets. Page 101 of

102 8.3.3 IMPLEMENTATION OF THE BROADBAND INFRASTRUCTURE PROGRAM The City of Concord should first focus its efforts on the development of the City s Broadband Infrastructure Program. This program will officially kick off the City s formal entrance into the broadband market. A formal Broadband Infrastructure Program is intended to formalize the program through development of a new Enterprise Fund, new brand and marketing campaign, as well as the incorporation of new policies and procedures to support the operation. Broadband Infrastructure Programs are structured as multi-phased programs, where additional services and infrastructure can be added to the program as new opportunities are presented. This provides a crawl, walk, run approach to implementing broadband, where each additional Phase of the Program becomes more complex, connects more of the community, and provides added value over previous phases. The City should begin developing this program immediately. The Broadband Infrastructure Program (BIP) phasing is explained further below: Phase 1 Develop, Brand, and Market a Broadband Infrastructure Program. Concord will need to formalize the BIP, as previously outlined, and will need to brand and market the program and services. Concord should adopt a Digital City concept, driving home the City s position in ensuring high-speed connectivity for all. The City should take on the following tasks: Task 1. Document and maintain an inventory of available assets Concord will need to maintain an inventory of all available assets that could be included in the program. The City will need to identify the fiber capacity that will be required internally to support the City s operation and ultimately the capacity that will be made available for potential third-party use. The capacity for available third-party use will be deemed excess capacity and can be made available for lease. The City currently maintains a reasonable amount of conduit, albeit in subpar condition, but this could form as the basis for this inventory, and it is already in the City's GIS system. Over time, the City will continue to add to the assets inventory as it continues to invest and build additional infrastructure. DAS/small cell carriers are beginning to lease vertical ROW assets from communities to provide more cellular coverage. Task 2. Implement a fiber management system As Concord considers utilizing its broadband infrastructure to enhance municipal operations and for potential commercial broadband purposes, the importance of documentation and record keeping for the network becomes more critical. Concord will need to maintain accurate documentation of its existing network and document new network construction as it occurs throughout the City. The system should document how Page 102 of

103 new network facilities are integrated into the program. Magellan recommends the City establish a fiber management system to accurately document, track, and report on the fiber designated for broadband applications. Several vendors offer fiber management systems particularly well suited for municipal fiber networks. Costs for these software packages will depend on the features Concord requires and the professional services the City selects for implementation and integration. It should be noted that Concord should begin this process as early as possible to minimize the amount of data that needs to be migrated to the system. As the City builds more infrastructure, the costs to migrate existing infrastructure into the system can drive the overall implementation costs higher. Task 3. Develop and standardize agreements for fiber and conduit leasing Concord will have to develop fiber leasing policies to formalize the commercial use of its dark fiber and conduit. This includes standard agreements for dark fiber and conduit leasing for the City s existing infrastructure. Concord should develop the core agreements necessary to formalize its broadband infrastructure program, including: 1. Develop a standard Master Services Agreement for leasing infrastructure to private organizations, including an industry standard service level agreement and acceptable use policy; 2. Develop a standard inter-local agreement for leasing infrastructure to public organizations, including an industry standard service level agreement and acceptable use policy. Task 4. Develop pricing policies for fiber and conduit leasing Concord needs a standard rate schedule for leasing its dark fiber and conduit to ensure the City is providing these services at competitive/non-discriminatory rates and covering all of its costs. The rate schedule should provide normalized rates across its program to ensure pricing consistency to the market. Concord should assign costs proportionally to the allocation of its network that is used for commercial broadband purposes. Rates should be designed based on a cost plus model to account for network costs plus a margin that Concord seeks to gain for leasing these services. The City should also maintain flexibility in its rate schedule to offer promotions and incentives in conjunction with economic development programs in Concord. Page 103 of

104 Key pricing tasks include: 1. Document Concord s cost structure for fiber and conduit leasing, accounting for its one-time and ongoing costs; 2. Build a cost plus rate schedule using a per foot/per strand model for dark fiber and conduit leasing or a cost for point-to-point fiber segments anywhere on the network; 3. Develop leasing terms for 1, 3, 5 and 10 years with discounts applied to longer lease terms; and, 4. If rates will be formally adopted by the City Council, build in provisions to adjust rates in special cases to accommodate the competitive marketplace. Task 5. Publish rates and terms The City should have its standardized rates available to the market in Concord, focused on broadband providers, businesses, and public organizations. The rate schedule should contain the relevant rates for fiber strand leasing, one-time charges, monthly charges, and terms. Concord should also set a disclaimer on its rate schedule that any special construction of new fiber beyond its existing network will be subject to individual case basis, otherwise known as ICB pricing. Key sub-tasks include: 1. Establish and approve the standardized rate schedule; 2. Approve terms and conditions for leasing dark fiber and conduit; and, 3. Consider what information to publish, where, and to whom. Task 6. Create a city enterprise fund to maintain proper budgets, cost accounting, and track revenues generated by the program Concord will be best served developing its broadband infrastructure program as a City enterprise fund. An enterprise fund would allow the City to accurately track all capital and operating expenses and revenues from the program, while keeping strict separation between general fund accounts and the broadband program. The City should determine if internal departments should be charged for services to pay for the necessary infrastructure required to provide connectivity. In addition, as more infrastructure is deployed, like wireless, departments and devices that access the network Page 104 of

105 should contribute to the operation as many of these initiatives will depend highly on this program. Concord will have many opportunities to include conduit and fiber into capital projects taking place across the City. The departments managing these projects are not prepared or adequately funded to include additional infrastructure that may be above and beyond the basic project requirements. The City should develop a capital fund to accrue money to pay for these additional add ins whenever a project lends itself to including conduit and fiber infrastructure in the Plan. The City should work to identify potential funding options for buildout of the network. Concord would likely not qualify for state or federal programs, due to its demographics, income levels, and urban nature, however there may be pockets that are in fact eligible. There are many programs for which the City could qualify if it focused its efforts on serving public housing or other community-based programs and facilities. In addition, as a municipality, the City has the ability to use special districts to finance infrastructure programs and projects. Task 7. Develop an RFP for a design/build contractor for outside-plant (OSP) O&M The City will require an Operations and Maintenance (O&M) contract to install and manage the fiber, conduit, and other outside plant components. This contract would be a unit cost contract for material and labor, allowing the City to incrementally build infrastructure as needed, while providing a contract that will maintain the vital infrastructure during emergency outages. The City will have to respond to outages and fiber cuts as quickly as possible, as most services the City will provide will have stringent industry accepted service level agreements tied to them. Task 8. Decide on management structure The City will need to make a decision regarding the appropriate management and governance structure for the program. Internal resources could manage the network assets, contracts, and service levels, or the City could contract with a firm to manage and operate the program. While managing dark fiber or conduit leases may be a simple task, other options of this Plan will quickly increase the complexity of the overall program. A network operator would manage day-to-day operations and hold responsibility for growing the enterprise and managing all facets of the business on behalf of the City, working to leverage the infrastructure wherever possible. Many firms and operators exist that would be interested in managing this program for a fee or revenue share. Page 105 of

106 Task 9. Expand fiber segments in business districts and corridors The City would expand fiber segments when the need arises, or more specifically when requested. The City will have to identify when and where it expands the fiber service, and under which business case metrics. The City should be well poised to take a longer-term approach on developing business cases, as its requirements for return are much different than private providers. Lit Transport, IP, and Data Center Services should be included once the City has developed the Broadband Infrastructure Program and begun to realize the demand for services in the community. Then the City should consider adding additional services to the program. Lit transport services can be provided through different platforms including wave division multiplexing (DWDM, CWDM), or Carrier Ethernet services. In addition, these services can be delivered in varying architectures such as point-to-point (PTP), and point-tomultipoint (PTMP). The City would utilize the newly constructed data center to house any network components and supporting systems, and to terminate potential customers who may require access to this type of data center facility. These types of services would be provided by the ISP. This could be considered a form of open-access network offering, where the City would own and operate the physical fiber-optic network and transport services through which retail service providers deliver services to end users. Instead of providing dark fiber, an open-access network provides wholesale transport connections or bandwidth to service providers and/or end users. Retail service providers purchase services from the provider to reach end users using fiber-optic lit connections. This model alleviates the open-access provider from managing any end user services or customers. It allows retail providers to use the open-access network to reach more customers without the need to build costly fiber infrastructure to subscribers; the open-access provider is responsible for this function. Cities find the open-access business model compelling because it allows them to focus on the operating infrastructure, a low level of active electronics, and attracting multiple service providers to their networks, which helps stimulate competition and keeps prices low for subscribers. In an open-access network, the City of Concord would not provide any retail services directly but would provide a new wholesale fiber solution to service providers that would utilize the network to serve businesses, community anchors, and potentially residents within Concord. In doing so, the City could potentially provide a new source of broadband access to service providers while maintaining neutrality and nondiscrimination, alleviating competitive risks with Concord s existing service providers. In an open-access network, the City s customers are service providers rather than retail customers, allowing the City to maintain transparency and avoid any direct customer service issues with customers using the network. The City should identify prime target commercial buildings that could be connected to the fiber network. Commercial buildings with a direct fiber connection to a major data center facility could be quite attractive for companies looking to locate within the City of Concord. Page 106 of

107 These buildings would be considered on-net, meaning they are serviced by City fiber and have a connection to a major computing center or an internet point-of-presence (POP). While taking on this form of endeavor may seem daunting, it is being done daily by municipalities and new competitive service providers. These additional services could have a major impact to the community, while building next-generation foundational community owned infrastructure. In addition, this platform would be utilized to connect City facilities and sites, utility components, sensor networks, 5G and small cell deployments, while functioning as the infrastructure of Concord s digital eco-system powering the City s smart city initiatives. The City would contract for capacity or bandwidth from a provider that could interconnect the Concord network to a regional data center or colocation facility. Many providers in Concord have dark fiber and provide dark or lit transport services. The City's network would have the ability to provide access to businesses located within the fiber network's footprint. While the City wouldn t service these businesses directly, there may be opportunities to align with a retail business provider to deliver the required services. Concord should identify multi-unit commercial buildings to connect to the network, as these buildings will normally include many potential users, but will require a single premise drop. These opportunities should reduce the overall cost to connect business users, lowering the average capital cost of each connection. Under a wholesale lit transport business model, Concord would identify the potential market for both business and community anchor connections, as well as connections and pole attachments for the light poles. Through buffer analysis, Concord can target businesses and light poles at specific distance from the fiber-optic network this becomes the potential market for the City. Concord would likely not be able to make the business case to run a fiber lateral one mile to a business however, 500ft could be a manageable build. In some cases, the City may ask potential users to contribute capital toward the fiber buildout. In Santa Monica, the City required capital contribution for business transport connections, which served as a way to reduce the overall capital burden on the City. While this practice is advisable, Concord will encounter local businesses that simply cannot afford this. Capital contributions can become an obstacle to gaining market share, however, the City has the ability to set these policies as it develops its rate schedule in the future. Concord should develop an appropriate rate structure for both best-effort and dedicated transport connections. The best-effort services will be geared toward the SMB (Small Medium Business) market, while dedicated offerings will be targeted toward providers, enterprise customers (Large Business), and community anchor institutions. The City s fiber network as proposed will pass thousands of businesses across the City. These routes have been specifically routed to pass through major business corridors to maximize the number of businesses that can make use of these assets for the purpose of potential future connectivity the location of existing City assets also impacted the Page 107 of

108 route development. Although direct last-mile retail services are not a part of the recommended roadmap, potential wholesale capacity can be made available for any retail provider that would like to access a potential customer. In addition, businesses can contract for transport connectivity to any On-Net data center facility. These routes will advance the City s economic development initiatives by providing a high-speed carrier neutral fiber backbone to area businesses CONCORD IMPLEMENTATION PLAN NEXT STEPS The recommended steps to implementing the Broadband Master Plan within the City are provided below. 1. Review and Adopt the Broadband Master Plan 2. Finalize Strategy, Budgets and Timelines 3. Inventory Existing Assets 4. Design Engineering the Outside Plant 5. Develop and Issue an RFP for Construction and Project Management 6. Engineer Operational Support Systems 7. Develop and Issue an RFP for O&M Contract Leaders of the City of Concord recognize fiber-optic infrastructure as an important part of the community. They understand that in today s world, connectivity affects every aspect of and part of a community whether in municipal operations, education, healthcare, or public safety. Today, this infrastructure also plays a crucial role in economic development and will be pivotal in the future as an enabler of long-term sustainability. The model presented in this Plan provides the City with a plan to build a modern 21 st century fiber-optic network, and a framework to begin utilizing these assets for the benefit of the greater community, providing new dark fiber and perhaps lit services to community anchors, businesses, and partnering providers. As the City continues to make progress in bringing this project to fruition, there are a number of key tasks to consider that will validate the project s cost structures and will assist the City in planning for how these assets will be constructed and utilized. The City should take the following next steps outlined below Review and Adopt the City of Concord s Broadband Master Plan City Management and elected leaders should have the opportunity to review, comment, and provide direction on this Broadband Master Plan. The roadmap outlined in this document requires funding and resources and should be vetted in this manner. Construction and ownership of broadband infrastructure at this proposed scale will include a major expansion of the existing conduit and fiber as outlined herein. The City should designate this broadband effort as a City program, and it should be funded and structured just like any other City enterprise. Page 108 of

109 Finalize Staging, Budgets, Timelines, and Develop Implementation Plan City leadership will have to determine when funding can be committed to begin construction of the network as outlined in this Plan. Before actual timelines are identified, City leadership must provide details as to how and when this program will be incorporated into the City s overall plan and budget. Review funding requirements Develop budget and funding requests for project funding Develop implementation plan with project timelines, including all procurement timelines and tasks Inventory Existing Broadband Assets The City s audit of existing traffic conduit has now been completed. There are some existing conduits that are suitable for new fiber, while other conduit is in disrepair, too small or needs some other forms of retrofitting as noted in the Kimley Horn Report. These assets should be viewed as City communications assets and utilized where possible Design Engineering of Outside Plant Once existing assets have been identified and inventoried, the City should move forward with design/engineering of the existing assets, traffic conduits, and Phase I deployment, including all backbone routes and facilities. During the design/engineering process, actual routes will be solidified, engineers estimates will be developed, and project costs can be refined. Conceptual route design as conducted in this Plan are meant to provide capital cost ranges or estimates based on potential routes. An actual design will provide a construction ready design document with supporting levels of detail to move the project directly into Year 1 construction. With these new estimates, the City will be able to update the financial model that has been developed through this Plan, and continually refine the strategic goals and direction of the project. A full design engineering package of the proposed outside plant will allow the City to prepare to release an RFP for construction of the initial network routes. A design engineering timeline for the initial project should be completed within a three to four-month time period. The City s Broadband Master Plan (this document) and its accompanying financials should be updated and revised regularly as major project events take place allowing the City to continue to capture true costs. Page 109 of

110 Issue RFP and Select Construction Firm to Begin Construction Upon completion of OSP design-engineering, the City would issue an RFP for the multi-year construction schedule of the proposed network infrastructure. The RFP would include all specifications and requirements of the OSP design-engineering deliverable; maps including all fiber routes and other network facilities; compliance and bonding requirements of the selected contractor; previous experience and references for similar OSP construction projects; and detailed requirements on the OSP documentation and modeling in the City s GIS or selected fiber management system. The RFP should be released per California Procurement guidelines, with a 30-day response window to allow for scheduled site visits and thorough responses. A respondent should be selected based on predetermined weighting criteria, and a contract negotiated to follow the City s 10-year construction schedule. A project manager should be assigned to oversee the project and report status updates to the City. The project manager would be responsible for coordinating with the selected contractor on the project schedule, lateral facility managers for building access, and with relevant City departments for traffic control and right-of-way access Establish Operating Support Systems The City should consider investing in a telecom-centric facility management system that provides documentation, inventory, work orders, and other relevant information about the network s physical plant assets. These assets include outside plant, equipment, contracts, and other relevant assets. This system will provide documentation, inventory, tracking, processes, and management of network assets throughout the system. The system is particularly important in management of the outside plant fiber-optic network to ensure the City has valid documentation and control of as-built documents, assignments, splice plans, work orders, changes, and other information pertaining to the outside plant network. Availability of this information is crucial for both managing the existing network and future system expansion. These systems are also important for tracking and depreciating assets with a long economic life, such as conduit, fiber, towers, and facilities. The cost for such a system has been included in the proposed capital budget Establish Fiber Outside Plant (OSP) O&M Contract The City Concord would issue an RFP for a multi-year O&M (Operations & Maintenance) contract, for a construction firm that would provide emergency restoration of the fiber infrastructure and would be available to expand the network as needed. Through this contract, all incremental construction, splicing, and other tasks would be performed ensuring the fiber and supporting passive components are functioning at optimal levels at all times. Any CAI or wholesale carrier will Page 110 of

111 require the City to offer industry standard Service Level Agreements (SLA) on the fiber infrastructure and transport network ensuring their ability to guarantee its services to its downstream retail customers. The City s contractor would have the necessary expertise and equipment available to maintain the City s fiber-optic infrastructure. The contractor would be required to respond to emergency fiber cuts and service outages within an agreed upon service level (i.e., response within one hour, onsite within three hours). Once carrier Ethernet electronics are incorporated, given the redundant nature of the design, fiber cuts along core routes and between potential network nodes will recover immediately using ring protection services. However, fiber cuts in the route or laterals to customers are subject to extended periods of outages affecting service, unless additional redundancy is built to specific customers who may be requesting this service. It will be important for the partner to be local to the region and with adequate staff and equipment to deploy at any time. The OSP contractor would likely be responsible for all aspects of OSP operations and maintenance. The responsibility would include adds, moves, and changes associated with the network as well as standard fiber maintenance. These tasks could include: Adding or changing fiber routes and patching requirements Extending service drops to customers Extending backbone and lateral segments, as required Relocating fiber routes due to roadway construction activity Tree trimming, as necessary Maintaining accurate documentation on network and all modifications (adds/changes) Maintaining splicing diagrams Emergency repair services (24x7x365) Design-engineering, as necessary Fiber locating Page 111 of

112 APPENDICES APPENDIX A. SMART STREET LIGHT OPTIONS The smart pole industry continues to grow and evolve and the innovations aren t slowing anytime soon. It will be important for cities and municipalities to choose a light pole partner that is prepared for the evolution of the market, with products that are easily scalable for future needs. A selection of products currently on the market are summarized below. PHILLIPS Phillips, a multi-national, conglomerate organization, is the largest, most well-known organization implementing smart street lighting across the globe. Phillips touts the only wrap and go solution for smart street lighting delivering all equipment and technology bound within the confines of the shaft of the pole. At the time of this report, Phillips offers the only completely self-contained solution, with the equipment and technology being housed within the pole. Other structures typically utilize a can antennae on the top of their pole structures. Phillips offers one variation of their light pole, with alterations possible on the external, bottom base of the pole. Fluting of the light poles are also possible as a customization option. The solution would be through a public-private-partnership, where the municipality would receive the poles for free and Phillips would receive a share of revenue generated from the potential leasing of access by wireless carriers. Figure 1: Phillips Sample Pole For more information please visit: Page 112 of

113 VALMONT Magellan Advisors was referred to Valmont Structures by Silver Spring and Ameresco, manufacturers of remote monitoring equipment and LED lighting organizations. Valmont has had great success in the street light pole market, although they have recently entered the DAS/small cell market within the past two years. All equipment, technology, and radios would need to be purchased from other organizations, such as Silver Spring, Ameresco and/or GE Current. Figure 2: Valmont Sample Pole Valmont is able to produce a highly customizable street light pole and the sales team stated that the municipality would coordinate with their engineers regarding whether the radio equipment would be enclosed within the light pole, engineered with a vault in the ground, box at the base, or separate pole external to the street light pole. The sales team stated that the engineers could be consulted with regarding development of a light pole that would enclose the equipment and be larger in size to enable the pole to withstand hurricane force winds. For more information please visit: SILVER SPRING NETWORKS Silver Springs is an international organization providing smart city technologies to cities and municipalities throughout the world, with customers such as Miami, Copenhagen, Paris, and Glasgow. While each city has different needs, Silver Spring works with municipalities to implement platforms that suit the clients needs. The company presents an app store on the website providing applications from smart grid management, lighting maintenance, and environmental sensor technology. Silver Spring Networks provides the technology, not the pole. Therefore, the municipality would need to seek out a pole manufacturer such as Valmont or HAPCO to engineer the light poles. For more information please visit: AMERESCO Ameresco is leading the green energy movement by providing energy saving LED lighting along with solar powered lighting to cities, municipalities, and organizations internationally. Some of the Ameresco local government clients include: Lowell, MA; San Antonio, TX; Englewood, CA; and Emmock, AK. Organizations can save 50-60% on energy consumption and expenses through implementation of LED lighting and even more when solar technologies are used. Ameresco could be considered a partner for LED Page 113 of

114 and solar lighting in the event that the municipality would decide to purchase technology, poles, and luminaires separately. Upon Magellan making contact with the Ameresco sales team, the manager referred Magellan to Valmont for pole structures capable of supporting DAS/small cell technology. For more information please visit: GE CURRENT GE Current provides smart city technology applied to smart light poles. Typically, the organization partners with Valmont or HAPCO for the physical light pole. The trademarked technologies GE Current utilizes include: Evolve LEDs delivering 50-65% energy savings for municipalities. LightGrid providing remotely controlled lighting, by letting city staff control metering, maintenance, and light output. Evolve IQ LEDs built-in data-collecting sensors that can access real-time reactive and predictive information. Typically, the intelligent nodes are attached to the door in the case of standard roadway LED cobra head type fixtures. Depending on the fixture style, GE Current could explore options of inserting the intelligence into the fixture slip fitter, base of the fixture that mounts to the pole, or via an external node which would be external to both the pole or fixture. At this time, GE Current does not offer DAS or 5G compatibility, but the organization is researching these capabilities. For more information please visit: METRO SMART Metro-Smart International is an organization located in Dubai, United Arab Emirates. They participate in conferences such as the Middle East Smart Lighting and Energy Summits, forging the way for energy saving street lighting as well as smart city initiatives. Metro- Smart partners with Sapa Pole Products, located in the Netherlands for environmentally sustainable poles constructed from aluminum. Metro-Smart is truly international, with projects in Australia, the United States, the Middle East, China, Singapore, and Europe. Through communications with the company s group chairman, Magellan has learned that Metro-Smart can provide the following capabilities LED dimming, control, and maintenance; security cameras; Wi-Fi deployment with the potential for 5G; sensor technologies; and solar capabilities. However, the chairman would need more information from the client to provide significantly more information. Their engineers created generic Page 114 of

115 renderings for review, although through further discussion with the client, other models could be developed. Magellan has included the renderings and an image of another lighting project for additional depictions. Figure 3: Metro-Smart Engineered Rendering Figure 4: Metro-Smart Sample Pole For more information, and a gallery of photos, please visit: LUMCA Lumca is a light pole manufacturer based in Quebec, Canada. Within the past two years they have made significant advances in developing smart street lighting poles for cities and organizations across the world. Lumca incorporates the various technologies within a can antennae attached to the top of the pole. 95% of the light poles sold by Lumca are LED based. Although LED lighting typically comes in a white hue, the company could offer hue options to suit the city or town needs. For instance, the LED utilized could be in the amber hue or the LED could possibly be half amber and half white to enable the municipality in selecting which hue to use during various seasons. Also important to the municipality would be the suitability of the pole for nautical conditions. Lumca is conscious of nautical environments and has placed poles in Vancouver and other seaside areas in Canada. They use a plethora coat, which is a high-quality, non-toxic coating which endures a 5,000-hour salt spray test and is treated with a special primer to enable the pole to withstand extreme weather conditions, including hurricanes. The company is focused on manufacturing and producing the highest quality pole possible and does not produce the technology housed inside the remote node. Partnerships have been formed through which the company works to incorporate the monitoring and Wi-Fi mesh technologies, sensors, security cameras, and hotspots. Lumca desires to get the full operating parameters of what their clients functionality requires, however, some of the partners they have worked with in the past include: DASBOX for environmental sensors, Imposa for variable messaging board, Digital Watchdog for digital cameras, Wicastr for Wi-Fi, Leviton for electronic vehicle charging stations, and ROAM for lighting control systems. The design of the structural pole in part will determine how and where the various technologies and nodes will be placed. The Lumca engineers would work with the client to assist in developing the product in a Page 115 of

116 manner that would suit the client s needs, along with establishing the appropriate functionality requirements. Lumca offers multiple designs for their smart poles, providing options for the municipality. Part of the design of the smart poles includes four bands on the outside of the shaft of the pole. This eliminates the need for banding items onto the pole (i.e. signage, wreaths) that could potentially damage the pole. These bands also allow for the pole to be upgraded in the future. The organization realizes that this is a quickly changing market and they are attempting to create a product that is scalable into the future. The manufacturer also offers various add-ons to their poles such as: USB charging stations, electric vehicle charging stations, banners, and more are expected to come to the market. Figure 5: Lumca Sample Poles For more information please visit: LUMIZONE Lumizone is a smart street pole manufacturer that integrates technologies from premier manufacturers from all over the world. The CEO of Lumizone founded Valmont and successfully ran one of the largest street pole manufacturers for approximately 20 years prior to retirement. She came out of retirement to open Lumizone and work with talented Page 116 of

117 engineers and designers to become an innovator in the smart city movement. While the street poles are their main focus of their business, Lumizone encompasses the technology side of the organization. The Lumizone product is made from steel or aluminum poles and their engineers believe there is no limit as to what they can design. The engineers can work hand in hand with the client to deliver a pole that suits their aesthetic and functionality requirements. The poles are integrated with various modules that can be customized, changed, and added to over time. Members of the organization state that their organization partners with other companies for technology, in order to integrate the best features on the market onto their product high-definition cameras, thermal cameras and face recognition; LED luminaries with photo cells and dimming capabilities; 2 way communication; card readers; Wi-Fi; motion sensors; public announcements; LCD touchscreen; radio-frequency identification (RFI) for entrance into a neighborhood; and electric vehicle charging stations. Solar panels are also available on the poles in different forms. Some clients need the poles to be completely off the grid, or solar can be added to simply further decrease energy costs. The poles are extremely scalable and flexible, according to the members of their team. Adding to and updating the modules is seamless, as technology changes and evolves. The city or municipality could potentially contact Lumizone and have the poles updated with new technology or add more modules to their systems. Clients can choose varying numbers of modules, or they can start with a certain number and add to their poles over time. Lumizone engineers would work with the client to determine the maximum number of modules available per pole based on the voltage of each module. Page 117 of

118 Some clients might require a pole made of aluminum or steel to stand up to extreme climate and the possibility of hurricane force winds. The engineers would work with the client to ensure that the correct metal is used to ensure that the pole would not rust or fail during a storm. The company has installed poles in areas of Canada that require strong structures to withstand extreme weather conditions and winds up to 200 mph. The client would have a choice of polished or brushed aluminum. Lumizone has worked with communities in Florida and understand the climate and region. In one such project, they placed their product in a gated community with card readers for entry and Wi-Fi enabled life-saving buttons for the older population. These buttons were placed on key rings or necklaces and were enabled through the 100% wireless coverage of the community. If pushed, the notification would immediately go to a response team with the location of the device. These devices are assisting the older population in aging in place through use of a functional Wi-Fi network. The Lumizone product would be tailored to the specific needs of the client. The company also has branch offices moving to Nevada and Minnesota which would save the municipality in freight costs, as the main office is located in British Columbia, Canada. Figure 6: Lumizone Sample Poles For more information please visit: Page 118 of

119 APPENDIX B. MUNICIPAL WIRELESS IMPLEMENTATION STRATEGIES CALIFORNIA CITIES WIRELESS IMPLEMENTATIONS 40 Richmond, California Population (2014 Estimate): 108,565 Area: sq mi Population Density: 2,000/sq mi The city joined a Community Partnership, roof2roof, to support antenna-based Internet access to the community. The venture is supported by Internet Archive, a non-profit entity with the main objective to address the digital divide. Internet Archive installed a 70-foot antenna on its building, which provides internet access to anyone with line-of-sight and who purchases a directional antenna. In addition, there are two repeating locations as well as booster antennas. City-owned fiber provides the backhaul. In addition, the city provides access to other infrastructure as well as city staff. Other non-profit partners support the project with custom software and provide refurbished computers to lowincome families. Access is relatively high-speed (16 Mbps). San Francisco, California Population (2016 Estimate): 870,887 Area: sq mi Population Density: 18,581/sq mi San Francisco s #SFWi-Fi was developed in stages, beginning with an abandoned EarthLink deployment. The focus then turned to deployments for low income communities, which created a strong but bare bones network. The city is working to upgrade the network through its current public Wi-Fi initiative that expands service along Market Street, in public parks, and in other areas throughout the city and county. The network uses city-owned fiber, traffic cabinets, and traffic poles to mount wireless access points. The city received significant contributions from Google, Cisco, and donated connections to the internet. Speeds average 10 Mbps down and 5 Mbps up. The network is managed by the city and county s Department of Technology. A total of $1.4 million was invested to serve public areas, and operating expenses are approximately $120,000 funded from the city budget. San Jose, California Population (2014): 1,026,908 Area: sq mi Population Density: 5,700/sq mi The City of San Jose deployed Wickedly Fast Wi-Fi in the downtown area as a free service. The network has been expanded on a targeted basis to the airport and convention center, as well as the new MLS stadium. The city manages and operates the network and has two partners cooperating for the deployment and operational support. A total amount of $94,000 was spent for deployment, and operating expenses are minimal. The city benefits from faster connections and improved parking due to faster transactions. Much of the network usage is from streaming online content. The network is intended to be supplemental or niche in nature, as there are numerous providers in the area including good coverage from wireless providers. 40 Insert source document. Page 119 of

120 Santa Clara, California Population (2014): 116,468 Area: sq mi Population Density: 6,300/sq mi The network originated in a desire of the city s municipal electric utility to support Advanced Metering Infrastructure (AMI). Santa Clara Free Wi-Fi is a joint venture between the city and the city-owned utility. While the AMI implementation totaled $11 million, the Wi-Fi implementation cost $2 million, which included $800,000 in fiber-optic extension with operating costs of approximately $200,000. The utility s fiber network provides the backhaul for approximately 600 access points placed on city light poles and facilities. The network is divided between utility/city use, and public use. Customer speeds are capped at 3 Mbps. Santa Monica, California Population (2010): 89,736 Area: sq mi Population Density: 11,000/sq mi The City Wi-Fi network was preceded by the implementation of the city-owned fiber network for business connections. Earnings from the fiber network provided funding for implementation of the wireless network. The fiber network is also used for backhauling data. The network currently consists of over 550 access points and is deployed to cover transit and commercial corridors as well as other popular areas including the beach, boardwalk, business improvement districts and parks. Most access points are linked directly to the fiber network which provides higher quality of service, and speeds of up to 8 Mbps symmetrical. The city s initial goals have been achieved in that there have been benefits for business districts, public safety, and city needs and functions. The network supports development and deployment of mobile apps which provide information relevant to citizens and visitors such as real-time parking availability, and a sense of place with a different internet launch page depending on where the person is on the network. Capital cost for network implementation was approximately $500,000, and annual operating costs are approximately $100,000. Page 120 of

121 ADDITIONAL CITIES WIRELESS IMPLEMENTATIONS Boston, Massachusetts Population (2016 Estimate): 673,184 Area: sq mi Population Density: 14,024/sq mi The Wicked Free Wi-Fi network implementation followed several years of discussion and planning to address the digital divide. Partial funding for the network came from a grant from the Department of Housing and Urban Development (HUD) in 2011, for redevelopment. The project began in 2014 with installation of 70 access points in a lowincome neighborhood. The network relies upon the city s existing fiber network ( BoNet ) for backhaul. Public Wi-Fi has also been installed in many of Boston s downtown locations and business districts for economic development purposes. The city carefully plans access point locations to be able to rely upon the city s fiber network in an economical fashion. The Wicked Free Wi-Fi network can be expanded as the city s fiber network expands to obtain economical backhaul capability. Beyond that, the network also uses and leverages other existing city infrastructure to the extent possible. The network cost approximately $6 million to install, $300,000 of which was provided by the HUD grant. Annual operating costs are approximately $100,000. Near term plans include expansion to approximately 300 access points in total. It is an outdoor network, with bandwidth limitations, supporting speeds up to 1 Mbps. The network is managed and operated by the City s Department of Innovation and Technology, who contracts out some functions to private companies. The Wi-Fi service has been presented as an asis service, in part to avoid creating user demands on administrative capacity. Corpus Christi, Texas Population (2016 Estimate): 305,215 Area: sq mi Population Density: 610/sq mi The origin of the city-funded project was to enable Automated Meter Reading (AMR), in 2002, for the city s gas and water meters. The network spans the city through 1,700 access points, supporting speeds of up to 54 Mbps, although typical usage is 3 Mbps symmetrical. Costs at the time were $7.1 million, and specification and deployment of the system was supported with outside resources. City infrastructure (e.g., traffic signal poles) and 200-mile city fiber network is used to support the outdoor network. Annual maintenance costs are approximately $500,000, under management of the City s CIO. The network was purchased by EarthLink in 2007 for subscription-based use, but abandoned by EarthLink and reclaimed by the city the following year. The system has provided the expected efficiencies of AMR, including safety, convenience, precision, cost economies, and the ability to monitor and manage resource usage. Following implementation of AMR, it became clear that bandwidth was also available for public Wi-Fi use, which was enabled in Beyond use by the public, this has fostered efficiencies and collaborations among government departments and city workers. Page 121 of

122 Minneapolis, Minnesota Population (2016 Estimate): 382,578 Area: 58.4 sq mi Population Density: 7,485/sq mi The city met with key stakeholders in the early days of wireless to explore options for the city. It was concluded that the best approach was through a Public-Private Partnership, using an RFP process for selection. The network was fully complete by Requirements and objectives included that the entire city must be covered, pricing must be reasonable to assist in addressing the digital divide, and city uses must be supported, such as enabling remote data collection by field staff, and more. In addition, the operator provides ongoing funding for efforts to increase digital literacy. Support for public safety applications is also viewed as crucial. The operator pays the city a fee for use of city assets including light poles and traffic signal standards. The city pays $1.25 million per year for use of the network as an anchor tenant. Network speeds range from 1 6 Mbps, and higher speeds (25 40 Mbps) are being tested in pilot projects, which would also require higher subscription prices. There are approximately 120 free public Wi-Fi areas in parks and business districts. Three thousand wireless devices support the network across the City of Minneapolis. Network costs are estimated at $20 million. Oklahoma City, Oklahoma Population (2015 Estimate): 638,367 Area: sq mi Population Density: 930/sq mi The city-wide network was developed for public safety purposes, funded by a new sales tax. The network was expanded to support connectivity to city facilities, and for city field staff. Oklahoma City encompasses a very large geographic area. The initial cost of the network was $5.2 million, and annual operating costs are $245,000 from the city s budget, as managed by the city s IT Department. Some consideration has been given to enabling public access, but so far that has not happened. The network supports average speeds of 4 Mbps and consists of approximately 1,500 nodes. The network has improved city services and enhanced efficiencies. The network incorporates extensive security, given the public safety use of the network. Ponca City, Oklahoma Population (2010): 25,389 Area: 19.3 sq mi Population Density: 1,382/sq mi Originally installed and tested for field communications among city personnel, the network was later opened for public access. The network uses city-owned fiber. City funds provided the initial $3.2 million to build the network, and subscription revenues for business fiber connections and residential modems support annual operating costs. The Page 122 of

123 network currently consists of approximately 500 nodes. User speeds are 3 12 Mbps, with potential for up to 25 Mbps. The network is viewed as successful since it provides efficiencies for city operations and services and provides economical access to the public thereby expanding internet utilization. The network also supports educational technology. Public use has exceeded expectations from the beginning. Port Angeles, Washington Population (2015): 19,448 Area: sq mi Population Density: 1,779/sq mi The primary purposes of the network are to support public safety, including security cameras, and to provide public access in a city with a high percentage of the population below the poverty line. Original capital investment was $3.7 million, current operating expenses are approximately $90,000, and the network is now managed and operated by an ISP with a revenue share to the city. Speeds range up to 6 Mbps down and 1.2 Mbps up. While the public subscription is lower than anticipated, the network provides the anticipated public safety benefits for the city. COMPARATIVE WIRELESS STRATEGIES SUMMARY Each network was implemented for specific original purposes, supported by a specific business model. The table below provides a comparison of the purpose, business model, funding mechanisms, and resultant network speeds of the cities wireless implementations. Figure 33: Comparison of City Wireless Implementation Strategies Purpose Business Model Funding Speed City Address Digital Divide & Public Access Support City Functions Public ** Public-Private Public Partnership City Budget Grant or Partnership Subscriber Fees Relatively Low Higher Boston, MA $$ + Corpus Christi, TX * Minneapolis, MN * Page 123 of

124 Purpose Business Model Funding Speed City Address Digital Divide & Public Access Support City Functions Public ** Public-Private Public Partnership City Budget Grant or Partnership Subscriber Fees Relatively Low Higher Oklahoma City, OK * $$ Ponca City, OK * Port Angeles, WA * $$ Richmond, CA $$ + San Francisco, CA San Jose, CA Santa Clara, CA Santa Monica, CA * Network Purposes: Corpus Christi, Texas (AMR); Minneapolis, Minnesota (Anchor Tenant, City field staff); Oklahoma City, Oklahoma (Public Safety); Ponca City, Oklahoma (City Departments); Port Angeles, Washington (Public Safety) ** Run by city department. $$ Boston, Massachusetts HUD; Oklahoma City, OK fiber capacity for business, in-home residential modems; Port Angeles, Washington ARRA; Richmond, CA Partner + Boston, Massachusetts 1Mbps; Richmond, CA 16Mbps Regardless of the scale and scope of the wireless broadband network deployment chosen by the City of Concord, there are successful best practice implementations to guide the City for its own successful network deployment. As the City moves forward with its wireless deployment strategy it is important to: Examine successful implementations and draw applicable lessons; Consider unique needs and challenges of the community and address them in planning; Strive for clarity of purpose among stakeholders regarding the purpose and goals for the network; Assess the marketplace for current providers and services; Use existing City infrastructure wherever possible in network design and planning; Start small before rolling out a network covering broader geography; Build opportunistically; Identify backhaul options and ensure adequate capacity; Plan to leverage the network for additional uses once initial deployment objectives have been satisfied; Page 124 of

125 Maintain a long-term view of investing in and operating the network; Ensure clear financial expectations and sound financial projections; and, Promote open collaboration with partners and maintain the relationships. Page 125 of

126 APPENDIX C. CITY OF CONCORD NEEDS ASSESSMENT SURVEY City of Concord Business Broadband Survey Survey Start 8.4 THANK YOU FOR TAKING THE TIME TO SHARE YOUR EXPERIENCES REGARDING INTERNET AVAILABILITY AND QUALITY OF SERVICE FOR YOUR BUSINESS. Please take this survey from a computer located in your business that uses your business Internet service. The majority of questions are multiple choice or have yes-no responses. Depending on your answers, this brief survey should take 5-10 minutes to complete. Page 126 of

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129 * * 10. Is your current Internet provider fulfilling all of your business needs? Page 129 of

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134 APPENDIX D. COST ASSUMPTIONS The following financial models are based on conservative estimates to reflect a worst case scenario in which user take rates and revenue opportunities are low. It also does not consider potential grant and assistance programs that may supplement the cost of the project nor lease savings made possible by using City assets instead of leasing from outside providers. The model assumes that Phase 1 will be the foundation for the project, with each subsequent phase expanding upon the initial model. The City may choose to complete only Phase 1, or may add as many of the additional phases as it sees fit; each successive part of the project is optional, and all are financially viable. In particular, Phase 4, which connects schools to the city s network, is planned for 8 to 10 years after the project kickoff date, as schools currently have a contract for broadband that is subsidized by federal funding. Should the needs of the schools change within this time period, Phase 4 will exist as an option for the schools to be connected. The primary assumptions used to estimate the four phases include: 100% City Facility Take Rate 35% Commercial Business Take Rate for businesses within 500 of core network assets with 3-year ramp per phase o 4.5% of all Concord businesses o $720 per month for 1Gbps/1Gbps transport services o $360 per month for 100Mbps/100Mbps transport services All rates are wholesale to an ISP; the ISP would charge full retail prices for services 5% Vertical Assets Leases with 5-year ramp per phase o $400 per month with backhaul, or $180 per month for lease only 30% Anchor Institution Take Rate at $1500 per month Internet access Other off-balance sheet benefits to consider: Phased builds allow the City to test assumptions against actual network performance Each phase can be profitable Model does not consider any savings from opportunistic builds Model is only one potential model for the City Model does not show any cost savings the City would have by not leasing from existing carriers (which is minimal today given the i-net arrangement with Wave Communications for broadband connections to City facilities) Revenue will be from businesses within 500 feet of the fiber run and from leasing of vertical assets and fiber to wireless providers No Smart City costs were included in the model Phase 3 provides for network redundancy Page 134 of

135 The following chart reflects the number of facilities accounted for in each phase: Connection Type Route Phase 1 Route Phase 2 Phase 3 Route Phase 4 Total Subs Commercial/Retail Businesses 500 ft. Buffer* Additional per phase Vertical Assets 500 ft. Buffer* Additional per phase City Facilities** Schools** *Includes overlap at route intersections **Phase is based on closest route to City Facility and School City Lateral Name Route Phase Lateral Distance (ft.) Willow Pass Center Civic Center Senior Center Corporation Yard Pump Station Center Concord Lime Ridge Community Building Concord Pavilion Police Headquarters City Parking Garage Salvio St City Parking Garage Salvio St Keller House Valley Field Office Clayton Rd Clayton City Hall Downtown Field Office (DFO) Salvio St Total Number of City Facilities and Footages Page 135 of

136 Lateral School Lateral Name Route Phase Distance (ft.) Sun Terrace Glenbrook Holbrook Monte Gardens Shadelands Sunrise Wren Avenue El Monte Meadow Homes Cambridge Woodside Carondelet De La Salle Pine Hollow Clayton Valley Nueva Vista Highlands Olympic St. Agnes School King's Valley Christian School The Concordia School Wood Rose Preparatory School Diablo Valley School Sunrise (Special Education) Diablo View Middle School Kinder Care Kinder Care Mount Diablo Elementary School Children's Center Clayton Valley Mt. Diablo Adelante Concord Summit Westwood El Dorado Mountain View Ayers Silverwood Loma Vista Adult Center Crossroads Oak Grove Ygnacio Valley Page 136 of

137 Lateral School Lateral Name Route Phase Distance (ft.) Queen of All Saints Elementary School Calvary Christian School Tabernacle Christian, Inc Ygnacio Valley Christian School Spectrum Center, Inc. - Valley Campus Seneca Center Ygnacio Valley Concord Christian Schools St. Francis of Assisi School Wood Rose Academy Diablo Day Community Total Number of Schools and Footages Page 137 of

138 10 Year Pro Forma Phase 1 Phase 1-2 Phase 1-3 Phase 1-4 Uptake (Sched: 100%) 0% 0% 0% 100% (Sched: $1500); (Bus: $720); (Anch: $400) Service Revenues (Bus: 35%) 35% 35% 35% 35% (Anc: 10%) 10% 10% 10% 10% Year # Anchors - Schools $ 552,960 $ 777,600 $ 864,000 $ 864,000 Business $ 3,764,707 $ 5,191,776 $ 5,660,237 $ 5,660,237 Poles Attachments $ 122,400 $ 172,800 $ 187,200 $ 187,200 Subtotal: Service Revenues $ 4,440,067 $ 6,142,176 $ 6,711,437 $ 6,711,437 Installation Revenues Schools $0.00 $0.00 $0.00 $56, Business $0.00 $0.00 $0.00 $0.00 Anchor &Pole Attachment $5, $0.00 $10, $10, Subtotal: Installation Revenues $5, $0.00 $10, $66, Equipment Rental Revenues Schools $0.00 $0.00 $0.00 $0.00 Business $0.00 $0.00 $0.00 $0.00 Anchor & Pole Attachment $0.00 $0.00 $0.00 $0.00 Subtotal: Equipment Rental Revenues $0.00 $0.00 $0.00 $0.00 TOTAL REVENUES $ 4,445,167 $ 6,142,176 $ 6,721,637 $ 6,777,737 Cost of Services Direct Staffing $ - $ - $ - Data Center Rack and Power (UM) $ 10,900 $ 10,900 $ 10,900 $ 10,900 Broadband Transport & Internet C $ - $ - $ - Dark Fiber Leasing $ - $ - $ - $ - Vehicle Maintenance $ - $ - $ - $ - Facilities Maintenance, Power, En $ 21,874 $ 21,874 $ 21,874 $ 21,874 Miscellaneous $ 116,613 $ 160,937 $ 175,423 $ 180,553 Network & Headend Maintenance $ 21,657 $ 21,657 $ 21,657 $ 21,657 Pole attachments $ - $ - $ - Software Maintenance $ 5,618 $ 5,618 $ 5,618 $ 5,618 Utilities $ 10,225 $ 10,225 $ 10,225 $ 10,225 Network Operations Outsource Co $ - $ - $ - Subtotal: Cost of Services $ 186,887 $ 231,211 $ 245,697 $ 250,827 GROSS PROFIT $ 4,258,280 $ 5,910,595 $ 6,475,940 $ 6,526,910 Sales, General, and Administrative Expenses Administrative Staffing $ 176,144 $ 176,144 $ 176,144 $ 176,144 Professional & Legal Fees $ 23,902 $ 23,902 $ 23,902 $ 23,902 Sales Commissions & Marketing Ex $ - $ - Reporting & Compliance $ 23,433 $ 23,433 $ 23,433 $ 23,433 Travel & Entertainment Expense $ 11,951 $ 11,951 $ 11,951 $ 11,951 Office Expense $ 11,951 $ 11,951 $ 11,951 $ 11,951 General Overhead $ 23,902 $ 23,902 $ 23,902 $ 23,902 Cost Allocation for City Services $ - $ - Bad Debt Expense $ - $ - $ - $ - s, General & Administrative Expenses $ 271,283 $ 271,283 $ 271,283 $ 271,283 EBITDA $ 3,986,997 $ 5,639,682 $ 6,204,657 $ 6,255,627 Page 138 of

139 Depreciation & Amortization Depreciation $ 958,026 $ 1,306,522 $ 1,534,226 $ 1,726,870 Amortization $ - $ - $ - $ - Subtotal: Depreciation & Amortization $ 958,026 $ 1,306,522 $ 1,534,226 $ 1,726,870 EBIT $ 3,028,971 $ 4,333,156 $ 4,670,431 $ 4,528,757 Interest Borrowings $ 677,572 $ 926,525 $ 1,314,264 $ 1,819,634 Subtotal: Interest Expenses $ 677,572 $ 926,525 $ 1,314,264 $ 1,819,634 NET INCOME $ 2,351,399 $ 3,406,631 $ 3,356,167 $ 2,709,123 Debt Principal Payments Borrowings $ 1,147,148 $ 1,482,446 $ 1,785,668 $ 2,131,308 Subtotal: Principal Payments $ 1,147,148 $ 1,482,446 $ 1,785,668 $ 2,131,308 Reserve Fund Requirements Operating Reserve Fund $ 3,436 $ 3,769 $ 3,877 $ 3,916 Renewal & Replacement Fund $ 105,690 $ 147,120 $ 174,460 $ 198,373 Capital Expansion Fund $ 105,690 $ 147,120 $ 174,460 $ 198,373 General Fund Repayment $ - $ - $ - $ - al: Annual Reserve Fund Requirements $ 214,816 $ 298,009 $ 352,797 $ 400,662 Subtotal: Cumulative Reserves $ 1,310,250 $ 1,631,373 $ 1,711,502 $ 1,759,375 Capital Spending Capital Budget $ 48,000 $ 60,000 $ 2,884,000 $ 7,708,600 Other Subtotal: Capital Spending $ 48,000 $ 60,000 $ 2,884,000 $ 7,708,600 TOTAL NON-OPERATING, CAPEX AND R$ 1,409,964 $ 1,840,455 $ 5,022,466 $ 10,240,570 Cash Flow Beginning of Year $ 5,903,610 $ 8,246,780 $ 7,780,599 $ 7,294,284 Add: Net Income $ 2,351,399 $ 3,406,630 $ 3,356,166 $ 2,709,123 Add: Depreciation $ 958,026 $ 1,306,522 $ 1,534,226 $ 1,726,870 Add: New Funding $ 48,000 $ 60,000 $ 2,884,000 $ 7,708,600 Add: General Fund Infused Cash $ - $ - $ - $ - Less: Non-Operating, CAPEX and RE $ (1,409,964) $ (1,840,455) $ (5,022,466) $ (10,240,570) End of Year $ 7,851,071 $ 11,179,482 $ 10,532,526 $ 9,198,307 Year-to-Year Delta $ 1,947,461 $ 2,932,702 $ 2,751,927 $ 1,904,023 Page 139 of

140 20 Year Pro Forma Phase 1 Phase 1-2 Phase 1-3 Phase 1-4 Service Revenues Uptake (Sched: 100%) 0% 0% 0% 100% Rate: (Sched: $1500); (Bus: $720); (Anch: $400) (Bus: 35%) 35% 35% 35% 35% (Anc: 10%) 10% 10% 10% 10% Year # Anchors - Schools $ 587,520 $ 777,600 $ 907,200 $ 907,200 Business $ 4,165,301 $ 5,741,237 $ 6,527,002 $ 6,527,002 Poles Attachments $ 129,600 $ 172,800 $ 201,600 $ 201,600 Subtotal: Service Revenues $ 4,882,421 $ 6,691,637 $ 7,635,802 $ 7,635,802 Installation Revenues Schools $0.00 $0.00 $0.00 $0.00 Business $0.00 $0.00 $0.00 $0.00 Anchor &Pole Attachment $0.00 $0.00 $0.00 $0.00 Subtotal: Installation Revenues $0.00 $0.00 $0.00 $0.00 Equipment Rental Revenues Schools $0.00 $0.00 $0.00 $0.00 Business $0.00 $0.00 $0.00 $0.00 Anchor & Pole Attachment $0.00 $0.00 $0.00 $0.00 Subtotal: Equipment Rental Revenues $0.00 $0.00 $0.00 $0.00 TOTAL REVENUES $ 4,882,421 $ 6,691,637 $ 7,635,802 $ 7,635,802 Cost of Services Direct Staffing $ - $ - $ - Data Center Rack and Power (UM) $ 11,900 $ 11,900 $ 11,900 $ 11,900 Broadband Transport & Internet Costs $ - $ - $ - Dark Fiber Leasing $ - $ - $ - $ - Vehicle Maintenance $ - $ - $ - $ - Facilities Maintenance, Power, Environmental $ 24,162 $ 24,162 $ 24,162 $ 24,162 Miscellaneous $ 128,847 $ 177,421 $ 201,858 $ 220,758 Network & Headend Maintenance $ 23,923 $ 23,923 $ 23,923 $ 23,923 Pole attachments $ - $ - $ - Software Maintenance $ 6,143 $ 6,143 $ 6,143 $ 6,143 Utilities $ 10,475 $ 10,475 $ 10,475 $ 10,475 Network Operations Outsource Contract $ - $ - $ - Subtotal: Cost of Services $ 205,450 $ 254,024 $ 278,461 $ 297,361 GROSS PROFIT $ 4,676,971 $ 6,437,615 $ 7,357,340 $ 7,338,440 Sales, General, and Administrative Expenses Administrative Staffing $ 236,723 $ 236,723 $ 236,723 $ 236,723 Professional & Legal Fees $ 29,136 $ 29,136 $ 29,136 $ 29,136 Sales Commissions & Marketing Expense $ - $ - Reporting & Compliance $ 28,565 $ 28,565 $ 28,565 $ 28,565 Travel & Entertainment Expense $ 14,568 $ 14,568 $ 14,568 $ 14,568 Office Expense $ 14,568 $ 14,568 $ 14,568 $ 14,568 General Overhead $ 29,136 $ 29,136 $ 29,136 $ 29,136 Cost Allocation for City Services $ - $ - Bad Debt Expense $ - $ - $ - $ - Subtotal: Sales, General & Administrative Expenses $ 352,696 $ 352,696 $ 352,696 $ 352,696 EBITDA $ 4,324,274 $ 6,084,916 $ 7,004,664 $ 6,985,744 Page 140 of

141 Depreciation & Amortization Depreciation $ 774,436 $ 1,094,636 $ 1,310,636 $ 1,501,780 Amortization $ 10 $ 10 $ 10 $ 10 Subtotal: Depreciation & Amortization $ 774,446 $ 1,094,646 $ 1,310,646 $ 1,501,790 EBIT $ 3,549,828 $ 4,990,270 $ 5,693,997 $ 5,483,953 Interest Borrowings $ 207,366 $ 318,737 $ 626,143 $ 1,061,444 Subtotal: Interest Expenses $ 207,366 $ 318,737 $ 626,143 $ 1,061,444 NET INCOME $ 3,342,461 $ 4,671,533 $ 5,067,854 $ 4,422,510 Debt Principal Payments Borrowings $ 1,905,823 $ 3,289,070 $ 3,716,795 $ 4,204,355 Subtotal: Principal Payments $ 1,905,823 $ 3,289,070 $ 3,716,795 $ 4,204,355 Reserve Fund Requirements Operating Reserve Fund $ 4,186 $ 4,550 $ 4,734 $ 4,875 Renewal & Replacement Fund $ 108,030 $ 150,240 $ 192,840 $ 265,266 Capital Expansion Fund $ 108,030 $ 150,240 $ 192,840 $ 265,266 General Fund Repayment $ - $ - $ - $ - Subtotal: Annual Reserve Fund Requirements $ 220,246 $ 305,030 $ 390,414 $ 535,407 Subtotal: Cumulative Reserves $ 3,488,074 $ 4,649,570 $ 5,578,103 $ 7,017,092 Capital Spending Capital Budget $ 48,000 $ 72,000 $ 78,000 $ 78,000 Other Subtotal: Capital Spending $ 48,000 $ 72,000 $ 78,000 $ 78,000 TOTAL NON-OPERATING, CAPEX AND RESERVES $ 2,174,069 $ 3,666,101 $ 4,185,209 $ 4,817,762 Cash Flow Beginning of Year $ 21,878,528 $ 19,347,294 $ 19,207,731 $ 3,714,541 Add: Net Income $ 3,342,461 $ 4,671,533 $ 5,067,854 $ 4,422,510 Add: Depreciation $ 774,446 $ 1,094,646 $ 1,310,646 $ 1,501,790 Add: New Funding $ - $ 1 $ - Add: General Fund Infused Cash $ - $ - $ - $ - Less: Non-Operating, CAPEX and RESERVES $ (2,174,069) $ (3,666,101) $ (4,185,209) $ (4,817,762) End of Year $ 23,821,366 $ 21,447,342 $ 21,401,043 $ 4,821,079 Year-to-Year Delta $ 1,942,839 $ 2,100,078 $ 2,193,311 $ 1,106,538 Page 141 of

142 APPENDIX E. MUNICIPAL BROADBAND BUSINESS MODELS MUNICIPAL BUSINESS MODELS Selecting the right broadband business model for a local government depends highly on a number of factors that will dictate the most appropriate option for the organization. These include competitive and market factors that define what options fit well within the current environment, organizational and operational capabilities of the local government and financial and risk factors that determine what risks, rewards, and funding commitments an organization is willing to make to a broadband initiative. Figure 34: Inputs to Selecting the Right Broadband Business Model Competitive Environment Community Needs Organizational Capabilities Operational Requirements Financial & Funding Capabilities Risk & Reward Tolerance The commonly implemented business models fall on a continuum that ranges from low risk, low investment options to higher risk, high investment options. Figure 36 illustrates this continuum. As a local government evaluates the various business model options along the continuum, it will encounter greater degrees of risk and reward; risk, in terms of financial, operational, and regulatory risk; reward, in terms of community benefits, revenue generation, and overall potential for profit. In addition, moving up the continuum also implies greater local government participation in the delivery of broadband services. Public policy and infrastructure only options are considered passive business models, whereby the government does not operate a broadband network versus Public Services Providers, Open Access Providers, and Retail Provider Options, whereby the government operates a broadband network. Public-private partnerships are not classified as a particular business model but instead fall along the continuum because these partnerships take many forms. Local governments must determine which business models meet their organization s risk/reward tolerance to achieve the community s broadband goals. In many cases, multiple options may be selected by an organization; however, in some cases, a local government will not utilize multiple models, as they may conflict for one another. For example, local governments generally utilize public policy with any of the business models, as the policies implemented by a local government will complement all of the other business model Page 142 of

143 options. Conversely, a local government would not likely implement a retail model and publicprivate partnerships together, as these would lead to competition between the local government and one or more private partners. Next, is a description of each business model and examples of local governments that have implemented them. POLICY PARTICIPATION ONLY Public policy tools influence how broadband services are likely to develop in the community. This includes permitting, right of way access, construction, fees, and franchises that regulate the cost of constructing and maintaining broadband infrastructure within its jurisdiction. This option is not considered a true business model but does significantly affect the local broadband environment and is therefore included as one option. Municipalities that do not wish to take a more active role in broadband development often utilize policy participation to positively impact the local broadband environment. Example: Santa Cruz County, CA The Santa Cruz County board of supervisors in November 2013 approved an eight-month timeline to overhaul its broadband infrastructure plans and regulations. Specific areas of focus include permitting fee reductions and a proposed dig once ordinance that would make it easier to install new fiber-optic cables during other work on area roads or utilities lanes. The County will continue a focus on broadband infrastructure throughout the county to enable businesses to function in the digital era, and students and households to have high quality access to information and communication. The County will work with industry providers to develop a Broadband Master Plan in order to identify focus areas within the county that will be most suitable for gigabyte services, particularly as the Sunesys backbone line is constructed during 2014 and The County will work with service (last mile) providers to ensure that these focus areas are deemed a priority, in order to support streaming requirements, product development, job creation, and online selling capability. INFRASTRUCTURE PROVIDER Municipalities lease and/or sell physical infrastructure, such as conduit, dark fiber, poles, tower space, and property to broadband service providers that need access within the community. These providers are often challenged with the capital costs required to construct this infrastructure, particularly in high cost urbanized environments. The utility infrastructure provides a cost-effective alternative to providers constructing the infrastructure themselves. In these cases, municipalities generally use a utility model or enterprise fund model to develop programs to manage these infrastructure systems and offer them to broadband service providers using standardized rate structures. Page 143 of

144 Example: City of Palo Alto, CA In 1996, Palo Alto built a 33-mile optical fiber ring routed within the city to enable better Internet connections. Since then, we have been licensing use of this fiber to businesses. For the past decade, this activity has shown substantial positive cash flow and is currently making in excess of $2 million a year for the city. We now have that money in the bank earmarked for more fiber investments." GOVERNMENT SERVICES PROVIDER Municipalities that become a government service provider will utilize a fiber-optic network to interconnect multiple public organizations with fiber-optic or wireless connectivity. These organizations are generally limited to the community anchors that fall within their jurisdiction, including local governments, school districts, higher educational organizations, public safety organizations, utilities, and occasionally healthcare providers. The majority of these anchors require connectivity and often, the municipal network provides higher capacity at lower costs than these organizations are able to obtain commercially. Municipal and utility networks across the country have been built to interconnect cities, counties, school districts, and utilities to one another at lower costs and with long-term growth capabilities that support these organizations future needs and protect them from rising costs. In these cases, government service providers may be cities, counties, or consortia that build and maintain the network. The providers utilize inter-local agreements between public agencies to establish connectivity, rates, and the terms and conditions of service. Example: Seminole County, FL Seminole County owns and operated a 450-mile fiber-optic network that was installed over the past 20 years by the County s Public Works department primarily to serve the needs of transportation. Since that time, the network has grown to connect the majority of the county s facilities, five cities within Seminole County, Seminole Community College, Seminole County Schools, and other public network to a common fiber-optic backbone. The network has saved millions of dollars in taxpayer dollars across the county and has become a long-term asset that enables the county and the other connected organizations to meet their growing connectivity needs. OPEN-ACCESS PROVIDER Municipalities that adopt open-access generally own a substantial fiber-optic network in their communities. Open-access allows these municipalities to light the fiber and equip the network with the electronics necessary to establish a transport service or circuit to service providers interconnecting with the local network. Service providers are connected from a common interconnection point with the open-access network and have access to all customers connected Page 144 of

145 to that network. Open-access refers to a network that is available for any qualified service providers to utilize in order to connect their customers. It allows municipalities to provide an aggregation of local customers on a single network that they are able to compete for and provide services. The concept of open-access is designed to enable competition among service providers across an open network that is owned by the municipality. The municipality retains neutrality and non-discriminatory practices with the providers who operate on the network. The municipality establishes a standard rate structure and terms of service for use by all participating service providers. Example: City of Palm Coast, FL In 2006, the Palm Coast City Council approved a 5-Year fiber-optic deployment project funded at $500,000 annually for a total investment of $2.5 million. The network was developed to support growing municipal technology needs across all public organizations in the area, including city, county, public safety, and education. It was also planned to support key initiatives such as emergency operations, traffic signalization, collaboration, and video monitoring. The city utilized a phased approach to build its network using cost-reducing opportunities to invest in new fiber-optic infrastructure. As each phase was constructed, the city connected its own facilities and coordinated with other public organizations to connect them; incrementally reducing costs for all organizations connected to the broadband network. Showing a reasonable payback from each stage of investment allowed the city to continue to fund future expansion of the network. Through deployment of this network, the city has realized a savings of nearly $2 million since 2007 and projects further annual operating savings of $350,000 annually. In addition to these savings, the city s network provides valuable new capabilities that enhance its mission of serving the residents and businesses of the community, while generating over $500,000 annually in new outside revenue generated from use of the network. RETAIL SERVICE PROVIDER BUSINESS ONLY Municipalities that provide end users services to business customers are considered retail service providers. Most commonly, municipalities provide voice and Internet services to local businesses. In many cases, a municipality may have built a fiber network for the purposes of connecting the city s primary sites that has been expanded to connect local businesses, in effort to support local economic development needs for recruitment and retention of businesses in the city. Municipalities that provide these services are responsible for managing customers at a retail level. They manage all operational functions necessary to connect customers to the network and providing Internet and voice services. Municipalities compete directly with service providers in the local business market, which requires the municipality to manage an effective sales and marketing function in order to gain sufficient market share to operate at a break-even or better. Example: Fort Pierce Utilities Authority Page 145 of

146 Primary FPUAnet services are Dedicated Internet Access, Fiber Bandwidth Connections, E-Rate IP Links, and Dark Fiber Links. FPUAnet services also include Wireless Broadband Internet and Wireless Bandwidth Connections, which extend FPUA's fiber through wireless communications. The FPUAnet Communications mission statement is "To help promote economic development and meet the needs of our community with enhanced, reasonably priced communications alternatives. It all began around 1994, when FPUA began to build a fiber-optic network to replace leased data links between its buildings in Fort Pierce. The new optical fiber system proved more reliable and cost effective and was built with sufficient capacity for external customers. In 2000, FPUA allocated separate fibers through which it began to offer Dark Fiber Links to other institutions. This soon expanded to include businesses and more service types. RETAIL SERVICE PROVIDER BUSINESS & RESIDENTIAL Municipalities that provide end user services to businesses and residential customers are considered retail service providers. Most commonly, municipalities provide voice, television, and Internet services to their businesses and residents through a municipally owned public utility or enterprise fund of the city. As a retail service provider that serves businesses and residents, the municipality is responsible for a significant number of operational functions, including management of its retail voice, television and Internet offerings, network operations, billing, provisioning, network construction, installation, general operations, and maintenance. The municipality competes with service providers in the business and residential markets and must be effective in its sales and marketing program to gain sufficient market share to support the operation. Many municipalities that have implemented these services are electric utilities that serve small to midsize markets. Many of these markets are rural or underserved in areas that have not received significant investments by broadband service providers. Retail service providers must comply with state and federal statutes for any regulated telecommunications services. These organizations must also comply with state statutes concerning municipal and public utility broadband providers; a set of rules has been developed in most states that govern the financing, provision, and deployment of these enterprises. Example: Bristol Virginia Utilities (BVU OptiNet) BVU OptiNet is a nonprofit division of BVU, launched in 2001, that provides telecommunication services to approximately 11,500 customers in areas around Southwest Virginia. OptiNet is known for its pioneering work in the area of municipal broadband throughout the area. BVU is acknowledged as the first municipal utility in the United States to deploy an all-fiber network offering the triple play of video, voice, and data services. Offering digital cable, telephone service, and high-speed Internet from a remote-area utility provider makes BVU exceptional, even on a global level. Page 146 of

147 PUBLIC PRIVATE PARTNERSHIP A broadband public-private partnership is a negotiated contract between a public and private entity to fulfill certain obligations to expand broadband services in a given area. In recent years, PPPs have been increasingly implemented as more municipalities employ public broadband and utility infrastructure in conjunction with private broadband providers. PPPs leverage public broadband assets, such as fiber, conduit, poles, facilities with private broadband provider assets, and expertise to increase the availability and access to broadband services. Municipalities forgo the getting into the business of providing retail services and instead, make targeted investments in their broadband infrastructure, and make it available to private broadband providers with the goal of enhancing their communities. In this type of model, the Town would be considered an Infrastructure Provider who maintains permanent ownership interest in the broadband infrastructure (e.g., conduit and perhaps dark fiber) that is funded by the Town for a piece of the action, generally a negotiated revenue share paid by the provider. Example: The Town of Jupiter, FL In 2013, the Town of Jupiter completed construction of its initial fiber ring, which was planned to interconnect city facilities at 1 Gbps and 10 Gbps speeds. Previous to this, AT&T provided 50 Mbps connections between the town's facilities at $75 thousand annually. The town constructed its ring for $400 thousand and expects a nearly 5- year payback on this investment. Since completion of the town's ring, the town has been working with a national service provider to form a Public Private Partnership to deploy fiber to the business and fiber to the home services throughout the Jupiter town limits. Fiber end user services are currently unavailable in Jupiter; this agreement would introduce them for the first time. Under the initial agreement, the town would build out the broadband infrastructure and would connect the commercial and residential structures to the network at its cost. The network would remain under ownership of the town, and the partner provider would use the network to deliver fiber-based telecommunications services to the town's constituents. For its investment, the town would receive a revenue share of gross profits generated off the network. Under this agreement, the town would receive a revenue stream from its investment and would bring a faster, competitively priced service to its constituents. Example: The Covenant of Rancho Santa Fe, CA The Covenant of Rancho Santa Fe (RSF) was established in 1928 as a country residential community located in San Diego County, CA. Today it is one of the most exclusive, beautiful, and desired rural communities in the country. The community includes a world class golf course and over 1,800 homes with an average home price of approximately $3 million. Rancho Santa Fe is home to many famous people including movie stars, politicians, sports figures, and corporate Page 147 of

148 executives/ceos. Several years ago, RSF requested an upgrade to its telecommunications facilities, specifically asking for a FTTH build. Its incumbent providers agreed, however requested that RSF pay the capital required to build out the network which was estimated at $20 million at the time. The RSF Board declined their offer, and instead undertook a FTTH Feasibility Study that outlined the options available to bring fiber-based service offerings to its community. Since the study was completed, RSF has decided to self-fund the buildout, maintaining long-term ownership of this very important community asset, and has embarked on the process to develop a Public Private Partnership. RSF has identified numerous potential partners that would operate the network while providing its residents, businesses, and anchors with state of the art fiber-based telecommunications services. RSF is currently negotiating the partnership with the selected partner and the network is due to be operational in 2017/2018. Figure 35: Comparison of Municipal Broadband Business Models Page 148 of

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150 2011 STRATEGIC PLAN - Fact Sheet Attachment 2 AMENDMENT #3 CONTRA COSTA TRANSPORTATION AUTHORITY OPERATIONAL IMPROVEMENTS ON PARALLEL ARTERIALS PROPONENT: CONCORD PROJECT NO: 1222 FUNDING SOURCES ($ X 1000): Local Measure C (Esc. $) 2,893.1 TOTAL $ 3, Measure C funds shown in escalated dollars. Actual commitment is in 1988 dollars as shown in Appendix A. DESCRIPTION: This project will improve traffic flow along the I- 680/SR242 corridor in Central County by improving the efficiency of traffic operations on the parallel arterials in downtown Concord. Traffic signals in this corridor will be retimed on an area-wide basis, and CCTV cameras and fiberoptic interconnect cable will be installed throughout the corridor to improve real-time traffic monitoring, central communications, and systemwide incident management. STATUS: Design to start by January Construction completion and signal retiming are targeted for June 17, 2015 Appendix C Page 150 of 150