1. Broadband Feasibility Study Report
CCG Consulting and Finley Engineering May 22, 2018

2. Project Goal
To determine the financial feasibility of constructing a citywide fiber network to provide gigabit-capable broadband throughout the City.

3. The Feasibility Study Engineering design for citywide fiber
Speed tests / bill analysis
Financial business plans
Risks and benefit analysis
Written report.

4. Benefits of Broadband Expand customer choice
Digital divide – provide affordable broadband for everybody
Education
Economic development
Work-at-home economy
Healthcare

5. Potential Risks TDS expanding download capabilities
Reaction of TDS to competition
5G might bring wireless broadband
Operational risks from entering a highly technical business
Ability to market and sell

6. Consequences of Not Building Fiber
Increasing prices
Affordability / digital divide
TDS monopoly / death of DSL

7. Network Design Build fiber past every resident and business.
Includes some existing fiber
Selected PON technology
Neighborhood nodes
Biggest issue is getting access to existing poles

8. Cost of the Network
Buried Lowest Land & Buildings $ 0.4 M $ 0.4 M Operational Assets $ 0.3 M $ 0.3 M Customer CPE $ 0.3 M $ 0.3 M Fiber Electronics $ 1.7 M $ 1.7 M Drops $ 3.1 M $ 2.1 M Fiber $ 8.3 M $ 5.8 M Software $ 0.2 M $ 0.2 M Total $ 14.3 M $ 10.8 M

9. The Pole Issue
Access to Empire Electric poles is much higher than industry average
Burying the whole network equally as expensive
Might be possible to bypass downtown poles in alleys

10. Business Models Considered
Single Provider – the City is the ISP.
Open Access – allows multiple ISPs access to the network.

11. Financial Results – Retail Scenario
Funding with Bonds
All-Buried. Bond of $19.3 M. With 50% penetration loses $19.6 M over 25 years.
With lowest construction costs. Bond is $14.6 M. With 50% penetration rate loses $11.8 M over 25 years.
Funding with Sales Taxes
All-Buried. Sales Tax Bond of $15.9 M. With 50% penetration makes $9.4 M over 25 years.
With lowest construction costs. Sales Tax Bond of $12.3 M. With 50% penetration rate makes $11.0 M over 25 years.
Open Access. Loses about $15 M more than retail scenario

12. Open Access Scenario
City has nearly the same network costs with only cost of customer CPE going to the ISP.
Would be difficult to attract multiple ISPs to Cortez.
Underperforms other scenarios by approximately $15 M over 25 years.

13. Digital Divide Scenario
Would build fiber to every home.
Would provide free minimal broadband, perhaps 5 Mbps download.
With tax financing should slightly outperform the retail scenarios.

14. Key Findings of the Study
Many customers getting slower data speeds than what they are purchasing
Bills show pricing done by customer.
Funding with traditional bonds doesn’t work
Funding with sales tax or other tax can generate significant profits over time.
Open access is not feasible
Pole access is a huge issue

15. Recommended Next Steps
Residential survey to understand market demand.
More engineering work to quantify cheaper options for pole access
Explore possibility of sales tax financing
Consider the possibility of building to everybody
Community education
Understand the many steps required to build and operate a fiber business.

16. Contacts
Doug Dawson, President, CCG Consulting (202) Chris Konechne, Finley Engineering (507)