Fiber Optics and Economic Development in Allegany County: presentation to the Chamber of Commerce. July 22, 2012
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1 Fiber Optics and Economic Development in Allegany County: presentation to the Chamber of Commerce July 22,
2 What We Did: three areas of inquiry Broadband in the consumer market: how it serves residents, businesses (students in their homes) Broadband for economic development Broadband in the public sector market: how the public sector uses (and provides) broadband 2
3 Why is fiber important? 3
4 Why is fiber important? Such speed distinctions might seem insignificant. But with larger files, downloading delays of just a few seconds can stretch into crucial minutes or hours and over time result in losses across many aspects of life, some experts say, beyond entertainment and games, affecting fields such as public safety, education and economic growth. The United States as a whole lags in speed, coming in 25th behind South Korea, which has the fastest speeds in the world. Even Romania clocks in ahead. Source: New York Times, September 13, 2011 CTC
5 Broadband and Economic Development: data Limited scholarly analysis Extensive consultant and advocacy analysis Akin to any ED investment in infrastructure not an enterprise 5
6 Scholarship on rural job creation 2006: MIT/Carnegie-Mellon, Sharon Gillette and others 2007: Brookings Institute, Crandall, Lehr, et al. 2010: Public Policy Institute of California, Jed Kolko 6
7 Fiber-to-the-Premises Benefits o Enormous long-term benefits o Future-proof communications infrastructure o Recognizes broadband as an essential service o Delivers benefits beyond the balance sheet like education Risk: not self-sustaining o Challenging to assume it will cash flow on a standalone, self-sustaining basis o May require public commitment to long-term support
8 Fiber: benefits beyond the financial statements Education o Distance learning o Broadband essential to school participation o Online educational content at all ages o Core expectation of college students Health care o Aging in place o Basic hospital and clinic functions o Medical efficiency and accuracy Energy o Foundation for future smart grid CTC
9 Fiber in Allegany County OMBN fiber will bring unprecedented potential for costeffective expansion to strategic economic development targets OMBN fiber may catalyze investment olast-mile construction orural sourcing of broadbanddependent jobs 9
10 Strategic Options: potential fiber investment Route 220, industrial parks Untenanted locations within blocks of OMBN fiber (rural-sourcing) Key locations already scheduled for construction by OMBN: o Riverside Ind. Park, McMullen Bldg., North Branch Ind. Park, Mexico Farms Rd. Downtown Cumberland fiber-to-thepremises (FTTP) 10
11 SEGMENT AERIAL MILES U.G. MILES COST/AERIAL MILE COST/U.G. MILE TOTAL AERIAL COST TOTAL U.G. COST TOTAL COST Sacred Heart $71,900 $209,000 $93,470 $62,700 $156, Frederick St $71,900 $209,000 $0 $62,700 $62,700 Memorial Hospital $71,900 $209,000 $0 $41,800 $41,800 Frostburg Business Park $71,900 $209,000 $0 $62,700 $62,700 FSU $71,900 $209,000 $25,165 $73,150 $98,315 7 Commerce drive $71,900 $209,000 $28,760 $104,500 $133,260 TOTAL ESTIMATED COST $554,945 11
12 Downtown Cumberland FTTP 12
13 Fiber: attractiveness of residential housing Foundational for attracting information economy workers and companies o Key differentiator for businesses o Essential amenity in homes for young and educated demographic o Telework: attracts workers whose jobs are elsewhere (federal government requires) Home value impact (the Fiber to the Home Council says that fiber increases home value in Europe by $7,000) 13
14 Residential attractiveness. Example of Youth Demographic Patrick Lucey CTC/NAF analyst 20-something Active online gamer Cable Modem (17Mbps/5Mbps) Subscriber, Streaming only, via Xbox to TV Estimated monthly bandwidth: Gigabytes
15 Fiber: attractiveness of commercial real estate Broadband is most important selling point in commercial real estate behind price, parking, and location 61% of commercial owners and managers say inbuilding broadband = competitive advantage Half say multiple provider options increase occupancy by up to 19% 34% say the issue of broadband access arises in 75% of negotiations with prospective tenants Source: Comcast survey
16 Complexities Public fiber ownership is complex and entails risk o Capital and maintenance costs o Likelihood of use Risk reduction strategies o Partnership with State for efficiency and to reduce construction/maintenance costs o On US 220, potential for broad-based public-private collaboration o Identification of service provider partners in advance 16
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