1. Lompoc Broadband Utility
Presentation to the
Digital Cities
1 April 2005
Steve Blum
Tellus Venture Associates

2. Very satisfied with choices?
The Situation TV
High Speed Internet
Phone
Very satisfied with choices?
85 chs, local, no HDTV or DVR ?
16%
Up to 1.5 mbps
Full range of service
38% (phone)
27% (DSL)
300+ chs, inc. HDTV& DVR, no local
22%
300+ chs, HDTV& DVR, no local
Although some upgrades were planned by incumbent service providers in Lompoc, none plan to invest in advanced technology.

3. Council asked staff: Can we do it ourselves?
Tellus Venture Associates, McKibben Consulting hired for feasibility study
Research and analysis conducted in 2003
Analysis based on four hard criteria:
How much people are spending now,
Which services do they want to buy today,
Which technologies work now,
Given all the characteristics of the Lompoc market, which business model works best.
Setting benchmarks that reflected real-world experience elsewhere and verifiable demand and opinion in Lompoc allowed staff to evaluate feasibility with a cold, quantitative eye.

4. A business case for broadband can be made in Lompoc
Capital funding required:
$26.3 M
Year 15 metrics:
Annual revenue
$11.7 M
Operating profit
$3.9 M
Subscribers
10,400
Internal rate of return
5.3%
A system offering television, telephone and high speed Internet service can deliver a superior and expandable level of service with a positive return on investment, by relying on a robust business case that can weather market risks.

5. Would offering one or two services be economically viable?
Fiber: Internet Only
Fiber: No Phone
Capital funding required:
$30.0 M
Year 15 metrics:
Annual revenue
$2.4 M
Operating profit
($0.3 M)
Subscribers
5,700
Internal rate of return
N/A
Capital funding required:
$28.3 M
Year 15 metrics:
Annual revenue
$8.0 M
Operating profit
$1.5 M
Subscribers
10,100
Internal rate of return
(8.1%)
Offering only Internet service via a fiber optic network would not be self-supporting; offering Internet and television service alone is possible.

6. What does wireless add? WiFi Only Fiber + WiFi
Capital funding required:
$1.2 M
Year 15 metrics:
Annual revenue
$1.3 M
Operating surplus
$0.3 M
Subscribers
5,100
Internal rate of return
12.2%
Capital funding required:
$26.7 M
Year 15 metrics:
Annual revenue
$11.7 M
Operating surplus
$3.1 M
Subscribers
10,400
Internal rate of return
5.8%
Combining a rapid WiFi network deployment with the build out of a fiber optic system could provide the best of both worlds with little additional risk.

7. Is a High-Speed Broadband Network Feasible for Lompoc?
Financially justified? √
Economically advantageous?
Serve a public purpose?
It is technologically and economically feasible for the City of Lompoc to build, own and operate a state-of-the-art municipal utility broadband telecommunications system.

8. Current Status LompocConnect network is now being tested
>100 Tropos access points, >20 Motorola Canopy backhauls, ProntoNetworks OSS
Council has approved a price of $19.99/month
One level of Internet access at launch
Council & staff determining:
Scope, timing, implementation plan;
Financing strategy
Combination of lease & internal loans
Broadly-based popular demand led council and staff to focus on learning what all citizens wanted, both in terms of service and the proper role for the city to play. Staff responded with implementable proposals that relied on proven demand, services, technology and business models that can and do work today.

9. Contact:
Stephen A Blum
President
Tellus Venture Associates

10. Municipal & Private Broadband Utilities
Planning • Development • Management
Feasibility Studies • Financial Analysis • Market Assessment
Fiber Optic • Wireless • Satellite
Stephen A Blum
President
Tellus Venture Associates
5100 Coe Avenue, Suite 186 • Seaside, California USA