Seeking understanding of priorities and goals

Transcription

1 Seeking understanding of priorities and goals u Balance reward, risk, and control u Potential priorities include: u Ubiquity/universal service u Consumer choice/competition u Community competitiveness u Control over infrastructure u Control over pricing u Control over long-term u Residential sector u Small business sector u High-tech sector

2 Data Speed Capacity Fiber-to-the-Premises B-PON, G-PON, 10G-PON NG-PON2, WDM-PON Dial -up DSL Cable Modem (through DOCSIS 3.0) DOCSIS 3.1 Wireline Technology Technology at a mature state of deployment Technology not widely deployed or standardized Technology at conceptual or developmental stage Max Bitrate kbps kbps EDGE 500 kbps 3G 1 Mbps 5 Mbps 10 Mbps 700 MHz Broadband 4G TV White Spaces Unlicensed TV Frequencies 50 Mbps 100 Mbps 200 Mbps 500 Mbps Wireless Technology 1 Gbps Gbps

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4 Framework for Options Balance risk, benefit, control u Municipal broadband u Incumbent upgrade u Partnerships u Model 1: Private risk & investment u Model 2: Public risk & private execution u Model 3: Shared risk, investment

5 Framework for Options Balance risk, benefit, control u Municipal broadband u Incumbent upgrade u Partnerships u Model 1: Private risk & investment u Model 2: Public risk & private execution u Model 3: Shared risk, investment

6 Municipal Model u Maximum risk, reward, control u Established strategies u Electric utility confers huge benefits u Key case studies u Wilson, NC u Lafayette, LA u Chattanooga, TN u Longmont, CO

7 Framework for Options Balance risk, benefit, control u Municipal broadband u Incumbent upgrade u Partnerships u Model 1: Private risk & investment u Model 2: Public risk & private execution u Model 3: Shared risk, investment

8 Incumbent Upgrade u Largely catalyzed by prospect of competition (100% overlap with Google Fiber builds) u Kudos to localities u Easy upgrade path for cable companies can deliver solid speed and good competition for FTTP u Telco upgrade path more challenging, requires significant investment

9 Framework for Options Balance risk, benefit, control u Municipal broadband u Incumbent upgrade u Partnerships u Model 1: Private risk & investment u Model 2: Public risk & private execution u Model 3: Shared risk, investment

10 Model 1: Private risk, public facilitation u City facilitates private investment u Leading private entity is Google Fiber u Strong interest by smaller companies u Reduced risk, no control, potential benefit u Facilitation can expand to tax benefits, other economic development incentives u Beware entities seeking benefits without offering investment

11 Model 1 strategy: grow your assets

12 Model 1 strategy: make data available

13 Model 1 strategy: maximize process

14 Model 1 case study: NCNGN Raleigh/Durham region Offer of existing city fiber Attention to processes Regional collaboration RFP led to agreements with AT&T Google also building in some of these communities

15 Model 1 case study: Mesa AZ Concern about impact of fiber construction on ROW, city costs Long-term strategy to build assets Focus on four target economic development areas Apple silicon manufacturing lab

16 Model 1 case study: Holly Springs, NC Town built robust rings for internal services Engineered to enable FTTP in future Highly efficient processes, alignment Fiber lease agreement with Ting Internet Ting will lease public fiber for backbone Ting will build to homes & businesses

17 Model 1 case study: Howard County, MD; Arlington County, VA; Pleasant Prairie WI Deploy fiber strategically, with focus on key economic development targets Connect to Internet peering point (could be local meet point) Locality to build & own, lease to private partners on open access basis Pricing designed to attract ISPs and nontraditional users such as building owners

18 Framework for Options Balance risk, benefit, control u Municipal broadband u Incumbent upgrade u Partnerships u Model 1: Private risk & investment u Model 2: Public risk & private execution u Model 3: Shared risk, investment

19 Model 2: Public risk with private execution u Variation on traditional municipal ownership u All risk, benefit, and full control u Emerging innovation makes use of the traditional P3 structure used in Europe and increasingly in US u Leverages private sector strengths u First time applied to broadband in US u Guaranteed revenue stream to private partner u Financial risk u Political risk

20 Model 2 case study: UTOPIA u Macquarie Capital team u Midst of complex process with range of Utopia member communities u Turn-key private financing, deployment, operations, and revenue-sharing u Guaranteed public funding in the form of a utility fee to all residents u In some communities, will not be a politically viable model (this has been true with some in Utah) u In others, can be strong model for buildout

21 Model 2 case study: Lake Oswego, OR u Symmetrical Networks team u City Council recently approved negotiation of contract for P3 u Private financing and deployment u Public service provision (in this case) through potential partnership with local ISP u Key to financing is effective public guarantee of the debt Financial projections suggest low risk, but the risk falls nonetheless to the City

22 Model 2 case study: Frontier in CT u Frontier has made preliminary proposals to a range of CT localities u Very promising development u Private financing and deployment u 15 year financial commitment by Town u Minimum level of service to all addresses, with opportunity to buy advanced services u Key will be detail regarding enforceable commitments u Build out of fiber u Note: upfront risk is minimized but no potential financial upside

23 Framework for Options Balance risk, benefit, control u Municipal broadband u Incumbent upgrade u Partnerships u Model 1: Private risk & investment u Model 2: Public risk & private execution u Model 3: Shared risk

24 Model 3: Shared Risk u Opportunity for innovation u Plays to strengths of both parties u From the standpoint of a locality, risk shared but 100% of network benefit realized u Public benefit does not show up on financial statements u Private partner gets financial benefit

25 Model 3 case study: Garrett County, MD Underserved rural areas (bandwidth caps) Fiber construction strategy for key anchors Public/private wireless to key target areas Public risk contained

26 Model 3 case study: Urbana/Champaign, IL u Private access to cities fiber in return for binding commitments, meeting 3 key goals: 1. Fiber at gigabit speeds 2. Open access ongoing commitment to wholesale service 3. No cherry-picking u Partner w/ strong customer service, local presence, but. u Right of first refusal in event of sale

27 Model 3 case study: Westminster City will own fiber only; lease to partner to operate on open access basis Ting Internet selected as partner Ting shares financing risk; City shares market risk

28 Model 3 case study: Santa Cruz, CA u City Council authorized exclusive negotiations with local company Cruzio u Council voted in December to authorize negotiations based on business model in which u City will finance, build, and own fiber and other outside plant assets u Cruzio will light and operate network and offer services

29 Model 3 case study: Huntsville, AL u City developed plan for gigabit networking and partnership a year ago u Announcement February 22 that Google Fiber will lease fiber to be deployed by Huntsville Utilities u But--the economics for a public utility may not be replicable for a city without an electric utility

30 A Few Cautions u Be skeptical of rosy projections u Be sure that risk as well as opportunity are shared u Be aware of dependencies and control u Avoid silicon snake oil: u Technology snake oil: remember BPL? u Business snake oil: unrealistic business plans that ask for no risk (or pretends there is no risk) u Unrealistic revenue assumptions