Phase 1 and 2 Exec Summary

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Icon Broadband TechnologiesIcon Broadband TechnologiesA Division of Icon Engineering,, Inc.A Division of Icon Engineering,, Inc.

6745 Bells Ferry Road6745 Bells Ferry RoadWoodstock, Georgia 30189Woodstock, Georgia 30189

Community Broadband Planning StudPage County, Virgin

Phase I and IIFinal RepoMarch 31, 200

Executive Summary


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Page County, VA Community Broadband Planning StudyPhase I and II Final Report March 31, 2008 Page 4

ICONBROADBANDTECHNOLOGIESICONBROADBANDTECHNOLOGIES

Executive Summary

Synopsis

A telecommunications planning study has been completed for Page County, Virginia that is designed to

answer questions relating to the need for broadband infrastructure, options for providing connectivity,

ways to organize potential networks and address funding requirements. The study management team was

comprised of key county stakeholders representing economic development, healthcare, public schools and

higher education, and leaders from the business community. Detailed results of individual tasks

completed in accordance with Virginia Department of Housing and Community Development (DHCD)

grant requirements are provided in the full report.

Funding for this study was provided by DHCD using Community Development Block Grant funds. U.S.

Department of Housing and Urban Development data indicates 9,296 low to moderate income (LMI)

households located throughout the County and comprising over 40% of total households. Each of the five

census tracts contain a minimum of one block group of households (total of thirteen block groups) in

excess of 51% LMI. The recent economic downturn in the U.S. is clearly evident in Page County, as

unemployment rates have risen to their highest level in the past twelve months. The unemployment rate

in Page County was 8.6% as of February 2008, compared to only 3.8% for all of Virginia.

Unemployment Rates

Past 12 Months

Page County Virginia United States

Source: Virginia Employment Commission, Page County Profile; Last Updated 4/5/2008


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As a Dillon Rule state, Virginia municipalities must have explicit authority to provide services. The State

has recognized that communication networks in rural areas are not advancing at the same rate as in urban

areas, and lawmakers have provided (and continue to refine) legislative avenues for rural communities to

help themselves. The Code of Virginia authorizes municipalities to provide qualifying communication

services, defined specifically as ...a communications service, which shall include but is not limited to,

high-speed data service and Internet access service, of general application, but excluding any cable

television or other multi-channel video programming services. Municipalities are also authorized to

enter into public-private partnerships to provide services, and construct and lease dark fiber.

Municipalities may not provide services that are 1) functionally equivalent and 2) readily and generally

available from each of three or more nonaffiliated companies1. Finally, a municipality is authorized to

construct facilities to serve its own departments and governmental entities, as well as those of an

adjoining locality, so long as charges do not exceed costs to provide service. Likewise, facilities can be

sold and communication services received as full or partial consideration of the sale.

One such avenue for municipal provision of communication services is the Virginia Wireless Service

Authorities Act (the Act). The Act authorizes the formation of an authority to construct facilities, issue

revenue bonds and provide qualifying communication services. Additionally, the Act authorizes localities

to convey or lease, with or without consideration, any system or facilities to an Authority. Furthermore,

the Act mandates only the word Authority be included in the name of the authority.

Although localities are authorized to provide retail communication services through the formation of a

Wireless Services Authority, the State encourages municipalities to pursue partnerships with private

providers for the delivery of services. Communication facilities owned by a locality must be made

available to private providers of communication services on a non-discriminatory basis (herein referred to

as Open Access). Grant funding for communication projects is scarce and municipal borrowers must

look for multiple sources of financing in addition to issuing bonds. After careful review of legal statutes

and potential funding sources, three business and infrastructure models have been developed for the

Countys consideration:

1 Code of Virginia 56-484.7:2. Approval.


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Model Choices Dark Fiber Network

Community Network

plus Dark Fiber

(Recommended Model)

Wholesale Network

Model

Model CharacterizationOwnership and No Service

ProvisioningOwnership and InterimService Provisioning

Ownership and FullService Provisioning

Network Ownership: County or Authority County or Authority County or Authority

Network Management:County, Authority, or Third

PartyCounty, Authority, or

Third PartyCounty, Authority or Third

Party

Source of Network Fees: Backhaul traffic

Backhaul traffic, fromAccess Networks and

Access to the Customerwith the Authority as

Provider of Last Resort fordata services only. Other

services could be providedover unused fiber byprivate providers

Access to the Customer

Requirements for Vendors

using network:

Access Network &Customers

Access NetworkElectronics and Customers

Customers

Infrastructure Platform:

Building dark fiber to lease.Vendors lease fiber basedon the number of strands

and locations needed.Vendor places equipment atboth ends to light network.

An Internet Protocol (IP)service layer is provided

over a basic network, suchas a fiber or Wireless

Network.

Build optical fiber networkand supply the electronicson the front-end and back-

end.

Level of Sophistication: Low Moderate to High Moderate to High

Approx. Initial Cost Range:

$30-35k per mile$30k-35k per mile plus

$100k Central Office (CO)

$30-35k per mile plus$100k CO plus $900 per

additional customer

Decision Contributors

1. If the Authority does not provide services directly to customers, it can consider owning or leasing

the network, and managing and operating the network; i.e. Govern the Network.

2. If there are not more than three private service providers offering functionally equivalent services,

the Authority can serve customers in competition with private service providers (Virginia Law).

Based on the needs of the other providers (if present), the County should consider hiring a third

party to manage and operate the network.3. Where no private service providers are offering functionally equivalent services, the Authority

can own, manage and operate the network, and serve as provider of last resort until such time as

at least three private service providers are providing functionally equivalent service. Under

Virginia Law, the Authority can offer only data (Internet) services directly to end-use customers,

but the Authority can also offer dark fiber and transport services.


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First Option: Dark Fiber Leasing

A dark fiber optic network would be built starting with deployment in the largest aggregate demand

regions after at least one vendor has entered into an agreement to lease fiber. Fibers would be spliced into

the vendor network at an agreed upon location(s). The fiber transport network would be dark and it

would be up to the service provider to light the fiber (i.e. installing their own electronics), build the access

network to the customer and serve the customer. The service provider would pay the network owner

(County or Authority, depending on whether the Authority is providing services) for transport fees which

would include a maintenance and support component of the distribution network. Depending on funding

available, the total distribution network size can be initially smaller with room to grow and expand in the

future. As a rule of thumb, one fiber would be required per home passed for 100 percent penetration

(with a reduced number of fibers between remote field cabinets; at least one cabinet would be needed in

each community).

Second Option: Community Network Plus Dark Fiber

A 144 strand fiber optic network would be built to overlay or augment existing telecommunications

networks (copper, coaxial cable, wireless, etc.) that would serve the dual purpose of being a backhaul

distribution network and a new access network for customers located within approximately 500 feet of the

fiber. Some of this fiber could also be made available for dark fiber leasing. The network owner would

provide for the front-end Network Operating Center (NOC) with equipment racks, routers, building

environmental controls, back-up power, patch panels, connection to a main network for bandwidth and

backhaul of traffic out of the county, and an outside plant fiber distribution transport network which

would require one fiber per home served. Fees collected would be for transport of network traffic, which

would include a maintenance and support component of the distribution network.

The network owner (County or Authority) would also light the fiber and could build essentially a Fiber

to-the-Premise (FTTP) access network. Fees collected by the network owner would be for access to the

customer (which would also have maintenance, support, access network facilities and equipment

replacement components included, etc.). Depending upon funding available and subscriber demand, the

total distribution network can be sized upward or downward with a requirement of one unused fiber for

every new customer added.

If no service providers express interest in building access networks and expanding service areas, the

Authority could continue to expand wireless services and begin serving customers over the FTTP network


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as a provider of last resort. Virginia law requires that when at least three service providers are providing

functionally equivalent services, the Authority must discontinue providing retail services (except for

governmental units and subdivisions of government). If this would occur, the Authority could still collect

revenues, but it would be from service providers in lieu of customers.

This model represents the most likely scenario because of its flexibility to meet the needs of a variety of

service providers. This network could start out serving a relatively few customers and grow over time. It

would be guaranteed a certain amount of revenue (based on initial agreements with local governments,

schools and any anchor tenants) before construction. While it is the initially recommended model, its

selection is subject to change based on private provider input. It offers a path to migrate into a wholesale

model as additional businesses want to purchase services and private provider interest increases as the

potential for customers is better defined.

Third Option: Wholesale Model

A completely lit optical fiber-to-the-premise (FTTP) network would be built to include all of the

electronic components necessary to serve the customer premise where cost feasible. Some of the lit

strands would still be available at remote locations for service provider backhaul connectivity, but the

service providers would be paying for lit fiber in lieu of leasing dark fiber and installing their own

electronics. Depending upon funding available and subscriber demand, the network size can be adjusted

upward or downward in a phased approach.

Private Provider Interest

A County investment in broadband infrastructure provides a method for private providers currently

offering services to expand their service area or offer new technology products. Ultimately, the business

model selected will depend upon private provider interest in using the new infrastructure and the revenue

generating capabilities of the network. Private providers currently offering services in the County, as well

as regional fiber owners, long haul network carriers, and wireless firms operating in other areas of

Virginia were invited to provide written response indicating their interest in exploring partnership

opportunities with the County to deploy high bandwidth services. They were provided with the results of

the Countys broadband needs assessment, demographic profile, locations and numbers of potential

subscribers, and the planning information necessary to determine the business case for deploying

advanced services. Providers currently serving portions of Page County and others offering services in

neighboring counties have expressed interest in exploring opportunities to leverage a fiber network

investment. A summary of the initial responses are as follows:


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Embarq Corporation: Embarq currently provides DSL services within the more populated areas of the

County, and has expressed interest in exploring partnerships that would enable them to expand broadband

into the less densely populated areas of the County.

Shentel: Shenandoah Telecommunications Company provides regulated and non-regulated

telecommunications services in the Northern Shenandoah Valley. Shentel owns towers within Page

County and is currently providing paging services. They have indicated interest in working with the

County to explore various options for broadband services and use of a fiber optic network.

Comcast Cable: As the owner of the former Adelphia cable system in the County, Comcast has verbally

expressed interest in exploring the mutual benefits of a public/private partnership to deploy additional

fiber within the County. As a large national cable and high speed Internet provider, Comcast seeks to

upgrade older networks to provide a consistent product offering across all markets that includes higher

speeds of Internet access than the Page County system is capable of today.

Rural Broadband Network Services (RBNS): RBNS is an ISP (highspeedLINK) headquartered in

Harrisonburg and currently providing some wireless services within Page County. They have expressed

interest in both using an open access fiber network to expand services and providing managed services

under various business model scenarios.

Virginia Broadband (VABB): VABB is a provider of wireless and wireline network services,

specializing in rural broadband deployments. This firm is currently in partnership with four Virginia

counties and three municipal townships. Currently servicing portions of Rappahannock County, they see

a natural extension into Page County and are interested in accessing a fiber network for wireless backhaul

to their own fiber facilities in Fredericksburg, Culpepper and Warsaw. A county-owned fiber backbone is

attractive to VABB as a way to reduce transport costs and access high capacity Internet access at

competitive pricing.

Premier Technical Services (PTI): PTI is a Virginia corporation providing communication services and

support to a diversified client base which includes Federal agencies, state and local governments,

commercial enterprises, prime contractors, trade associations, nonprofits and the U.S. military.

Headquartered in Luray, this company is keenly aware of the need for cost effective high bandwidth

options for expanding services and attracting jobs to Page County. PTI will benefit from a fiber network


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in the County as a means to enhance the level of services they currently provide to their Page County

customers, and improve efficiencies of these services. Additionally, PTI proposes to explore partnership

options to deploy broadband wireless services to reach customers where fiber access is not feasible.

Costs to build a fiber optic distribution network(s) are presented in Table ES-1. As developed, costing

anticipates a fiber connection from Luray through Stanley to Shenandoah with connectivity to

approximately twenty-five schools, health care facilities and municipal buildings. The network could also

serve additional customers located within about five hundred feet of the fiber for approximately nine

hundred dollars ($900) per additional customer. The network is robust enough to also handle telephone

and cable television traffic administered by private partners. The costs are only for the network and do

not include the costs of adding incremental customers (the premise drop or connection to the customer

and equipment at each individual incremental customer).

Based on this studys work, the following steps for providing broadband infrastructure are recommended.

Acknowledge that at a minimum the infrastructure costs in Table ES-1 (page 26) will likely be

borne by the County or local municipalities in order to encourage private provider(s) to offer

services throughout the County.

Ideally this network should provide direct fiber connectivity to schools, health care facilities,

major business employers, emergency and municipal locations with wireless as last mile access

outside of the immediate area.

Seek letters of intent from partners who would deliver Internet and other services over a

community owned fiber network for data transport. Current providers have indicated interest in

further discussions to explore public/private partnerships to expand services into less densely

populated areas of Page County.

Build the recommended network only when sufficient revenue is guaranteed through agreements

with local governments, schools, health care and anchor customers to provide sufficient revenue

to defray the majority of the annual costs. Migrate to the wholesale model only when sufficient

private partner(s) have been identified and committed to the project to ensure that the network

will not be a burden on local government operations.


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Summary of Study Findings by Task

Community Needs Assessment and Asset Inventory:

One objective of the Community Broadband Planning Study is to document the availability of

communication technologies throughout the study area and to assess the amount of demand by residential

and business end-users. Communication technologies as defined in this study include any form of

Internet access, pay TV, and telephone delivered by any medium. Residential and business surveys were

distributed randomly throughout the study areas and to all government offices; public school and higher

education personnel were interviewed for more in-depth responses.

DSL service is currently available to a majority of business consumers and the densely population

residential areas within each towns limits. Many of those located beyond DSL service areas indicate a

desire to subscribe to service if it were available. Current DSL customers express frustration with

unreliable service, citing network outages due to weather and unreliable telephone infrastructure. Cable

modem Internet service is currently available within the town limits and to a portion of residential areas

extending just outside the towns and used by only a small percentage of subscribers. Dial-up Internet

access is in use by 58% of residents and 19% of businesses; the majorities indicate a desire to subscribe to

higher speed service if it were available and affordable.

Figure ES-A: Telecommunication Infrastructure which follows, highlights the current availability of

broadband services in Page County.


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Businesses requiring higher speed access than is currently available account for 31% of respondents and

81% of all businesses express some level of dissatisfaction with current providers. Although the majority

of business users were unsure as to how much bandwidth they are currently receiving, one-half of all

businesses (50%) state the greatest amount of frustration is attributed to slow speed and a lack of

bandwidth. The majority of businesses using dial-up state speeds are inadequate, and 24% of broadband

users (DSL and cable modem) are also dissatisfied with the speed (bandwidth) they are receiving. The

majority of dissatisfied businesses are located in Luray.

Price will be a limiting factor in decisions to purchase higher bandwidth. Of those businesses that are

currently dissatisfied, 37% cite price as a reason. Current monthly expenses for Internet or data access do

not exceed $50 per month for the majority (56%) of businesses. Of those businesses citing price

dissatisfaction, the majority are DSL subscribers; monthly spending is split nearly evenly between $30-

$50 per month and $51-$100 per month. This indicates significant pressure for new broadband access

methods at pricing below current DSL service pricing, or significantly higher access speeds for the same

pricing.

Educational institutions exhibit the greatest bandwidth need, primarily to distribute distance learning

resources among individual schools. Current Internet connections are sufficient at this time for Internet

access due to the bandwidth management policy implemented by the school Technology Director.

Videoconferencing is used between Luray High School and Page County High School for sharing classes

between the schools, but current connections to the other schools are insufficient to expand this valuable

learning resource. Lord Fairfax Community College maintains a satellite location in Luray, and the

current Internet infrastructure includes two T1 links purchased through Network Virginia. The two T1

links provide a total of 3 Mbps of connectivity to support a distance learning room and two classrooms.

This amount of bandwidth is sufficient for current needs, but future needs may require an upgrade to

higher speeds.

The public libraries located in each town are in need of Internet access in excess of current, affordable

services. Internet access connections at each of the libraries are shared between public users and staff

access to the library circulation system in Harrisonburg and bandwidth is strained. The Luray and

Shenandoah branches connect to the main library network and the Internet through a 512 Kbps frame

relay connection purchased from COVANET at State contracted rates. The Stanley branch is connected

via 1.5 Mbps DSL service from Embarq. None of the library branches offer wireless Internet access to

users with wireless-enabled laptops or other devices. While each branch has had inquiries as to this


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service most commonly from business travelers, the limited bandwidth would be further strained by

additional users. Each of the library branches maintain differing hours of operation, and all are closed on

Sundays. Luray and Shenandoah offer later hours only one evening per week. These hours of operation

may be insufficient to accommodate working families not arriving home from work until 6:00 pm or later.

Municipal facilities currently need dedicated bandwidth between sites and including public safety, to

enable a secure, cohesive network and Internet access for all locations. While Internet access is not

currently an issue, connectivity between sites using current available technologies is slow and the

bandwidth inadequate. Additionally, municipalities are currently unable to offer a number of e-

government services that would improve service to the communities.

Nearly all healthcare locations subscribe to DSL service. This business segment reported mixed reviews

of satisfaction with current speeds; one half describes their current speed of access adequate to meet their

current needs, with the remainder subscribing to 1.5 Mbps service that is inadequate to meet current

needs. A gap exists however, in that doctors do not have universal access from their homes as high-

speed service is not available in all areas.

All survey participants were questioned as to their interest in wireless as an Internet access option; 82% of

residents and 76% of businesses indicate they are very to somewhat likely to use wireless service if it was

available and affordable.

Survey Response Mapping

Responses to the end-user surveys were geocoded based on address of respondent and mapped to analyze

current computer and Internet use, methods of Internet access, voice and video service methods and

expense, and satisfaction with current services. Spatially displaying responses to survey questions and

overlaying with various demographic and economic mapping features resulted in identification of specific

locations of need and consumer interest in acquiring higher speed access.

Figure ES-B: Internet Connection and Survey Responses which follows highlights the predominate use

of dial-up as an Internet connection method.


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users beyond the library staff and the few computer stations. The libraries are another key resource for

students and job seekers, and their location within each community makes them optimal resources for

Internet access and training. Additionally, current library hours of operation may be insufficient to

accommodate working families and students.

Any investment in bringing broadband to Page County must be supported by marketing the benefits and

facilitating training opportunities to the community. Private providers should also be encouraged to

market services, availability, and benefits to citizens. Help desk support will be a critical component of

increasing usage of the Internet and promoting high speed technology adoption.

Network Design, Last Mile Connectivity Options and Cost Considerations

Network Design

The focus and priority of the rural broadband grant program is to initially ensure reliable, high speed

connectivity to businesses, education institutions, and health care facilities. Although not a priority focus

initially, broadband infrastructure to address the needs of residential end-users in the more rural areas of

Page County is needed. A fiber optic distribution network was investigated for connectivity to the

priority end-users (anchor customers), which can also be used to support a wireless last mile solution to

reach the more rural areas. Fiber optics is considered one of the most future-proof technologies available

today.

Since the program encourages an emphasis on collaborations with private-sector providers and to

maximize the provision and affordability of services to the communities at large, an open access fiber

distribution network has been proposed. Such networks allow all providers to have equal access to the

network and network services at competitive rates. While the network has been proposed as open access,

it is anticipated that Page County, possibly through an authority, could provide Internet access over a

limited network if no viable private providers are found.

Options for a county that desires to promote affordable broadband services are limited in large part by

Virginia Law. The reader is referred to Section 5.2 of the main report for a detailed look at the options

and restrictions afforded by the law. One option which is clearly allowed is for a County2 to lease dark

fiber (fiber optic cable which is not powered or lit). The benefit to a provider is that significant outside

2 County as used generically in this report might refer to either the County government or an authority created by theCounty (e.g. SWBA).


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plant costs can be transferred from a capital expense to an annual lease expense. The party(s) leasing the

fiber would need to arrange for lighting the network which could be used for point-to-point backhaul

transport and/or an access network could be built off the distribution network to provide services directly

to end-users. The dark fiber could be managed by the county or an authority of the county.

Network Architecture

A base network architecture has been proposed which has the following features:

It provides highly reliable network connectivity to the health care, municipal facilities and schools in

the three major communities of Luray, Stanley and Shenandoah within Page County.

Businesses and residents within a distance of approximately 500 feet of the fiber can also be served by

the same network.

The network architecture is sufficiently robust to provide voice, data and video services if required.

The network provides a migration path to economically serving additional customers if desirable.

The network can be provisioned and operated from a single location in one of the three communities.

In order to collect transport as well as access fees, a hybrid network could be designed and built where

both dark and lit fibers are provided.

The implications of these decisions are that there must be a fiber backbone between the three

communities sufficient to transport the data from every customer back to the central location.

Additionally there must be fiber access within each community which passes within approximately five

hundred feet of any health care, municipal or school facility. A fiber network has been laid out (Figure 3-

2B and 3-2C) which meets these requirements. A 48 count fiber backbone connecting the three

communities would carry data traffic back to a central office or Network Operations Center while 144

count fiber within each community would provide access to potential customers. The network could be

built in sections starting with the community where the connections to a long haul Internet provider are

made, extending to additional areas as funds and potential customers become available.

The outside plant would consist of approximately 17.5 miles of distribution fiber and 7.5 miles of access

network. The basic cost of the outside plant infrastructure for the network described is approximately

$824,000. Network costs, Network Interface devices3, and installation would increase that cost to

approximately $1,430,000 for a network sufficient to serve 500 customers. Potentially this network

3 The network Interface device or NID is the portal located at any customers premise which connects to thenetwork.


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could reach as many as 115 businesses and approximately 2,300 residences within approximately 500 feet

of the fiber build, with an incremental cost of approximately $900 per customer added (beyond 500

customers). The network and outside plant infrastructure could handle VoIP (Voice over IP), Internet and

IP video without additional changes. The private partner would provide the IP video content if video

services were being provided. The network could be scaled upward based on private partner participation

and higher than expected community interest. It could also be scaled downward, possibly replacing the

intercommunity fiber links with wireless, if private partners cannot be obtained.

If Built, Would the Network Be Able to Sustain Itself?

If the fiber distribution network was built, would its presumed use generate enough revenue to sustain

itself and who would use the network? To answer this question fully, the potential partners delivering

services or the services offered by the County or an authority have to be fully developed. To date, the

project has clearly not progressed to that point. As an approach to answering the question, two steps have

been taken. The first of these is the distribution of a Request for Interest (RFI) to potential providers and

other stakeholders in the area. That document, issued on February 25, 2008, described a likely fiber

deployment scenario detailing the number of potential customers that could be reached by the network.

While all responses received by the time this document was published have been included, it is likely that

additional ones may be received over the coming weeks or months. In aggregate they will detail the

private partnership possibilities available to the network as proposed and may suggest avenues not fully

envisioned in the original network.

The second step was the development of a financial model for the operation of an all fiber network

capable of handling voice, data and video traffic. A number of different scenarios have been detailed in

the body of the report. Synopses of two of these, a completely dark fiber network and a community

network (municipal facilities-only) are summarized in this section. The second of these two synopses

addresses the initially recommended option.

One initially possible consideration for the county is a dark fiber only model4. Such a model would

follow routes desirable to the leaser and could incorporate service to the municipality on a fee basis or as

an exchange of services in partial or full payment for the dark fiber. While in theory there could be many

4 This model envisions an extensive dark fiber network devoted to a single provider. ACommunity Network model might include some point to point dark fiber as for example betweentwo branches of a bank.


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entities, each leasing some portion of a given fiber bundle, in practice there would likely be only one.

For purposes of examining initial feasibility, a dark fiber network is assumed to connect the communities

of Luray, Stanley and Shenandoah and pass schools and municipal facilities. This leasing scenario would

cover the cost to build and maintain at an annual cost (debt service plus maintenance) of approximately

$2,400 per mile ($60,000 annually for a 25 mile network). The dark fiber is capable of carrying video

and telephone services in addition to data services if the provider has the network equipment and other

electronics necessary to provide such service.

Major points on this model are:

1. The dark fiber would be built out to encompass a considerable area of the county allowing

the provider(s) to offer services without having to fund the infrastructure.

2. For revenue self-sufficiency, lease rates would have to cover the cost to build the fiber

infrastructure, the annual cost for pole attachments, and any ongoing maintenance costs.

3. Unless the agreements to lease the fiber are in place before the construction, the County will

have limited leverage to demand the revenue level necessary to make debt obligations. The

decision to proceed with such a model would be based on an agreement with one of the

private provider responders to the RFI.

The Community Network Plus Dark Fibermodel envisions a fiber build connecting the communities of

Luray, Stanley and Shenandoah, and connecting the schools and municipal buildings along that route.

The network could also provide services to any businesses or homes within approximately five hundred

feet of the route (not shown in model which follows). That model also assumed that the basic build cost

would be partially funded (50%) by grants. Many variations based on funding techniques, services

offered, potential partners and take rates (number of customers) could be developed, some of which will

be viable and some of which will not.

Some of the salient points from the community network model are as follows:

A network providing data services to the municipal customers along the basic fiber route

would probably cover operating expenses but not the cost to build the envisioned network.

The outside plant network would be capable of providing data and other services to

additional customers within drop distance (approximately 500 feet) of the network.

Virginia Law allows only for providing data services by the county or authority and subject

to some restrictions.


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The cost to add each customer beyond the initial build (500 customers) is approximately

$900.

While the operational cost for each customer is very low, the benefit of extending services to residential

customers only makes sense in the context of a general benefit to the community. Should large numbers

of additional customers be added to the network, the extent of customer support, costs of billing, and

other issues would need to be included beyond the level shown. The network, with an Authority or other

municipal entity operating as a provider could deliver such services. Additional subscribers could also be

served by a private provider utilizing the fiber not required to serve the Countys direct needs. Under that

scenario, the fiber not utilized by the County would be leased to the provider on a dark fiber basis.

The County would only provide the fiber; the provider would light and provide services over the fiber to

the end user. The only operating requirements from the County would be for maintenance to the fiber

(repairs) and governance concerning how and by whom splicing to connect to the end user is

accomplished.

The financial model for this option is discussed in more detail in section 7 of the main report. Its

profitability will vary based on the number of customers and other network decisions. A summary of the

model for a worst case scenario includes the following assumptions:

Assumption 1: The network serves only 22 municipal/governmental facilities with very high speed

Internet (10-100 Mbps) at a monthly cost of $250 per location served.

Assumption 2: Grants pay for approximately 50 percent of the construction cost of the network.

Under this scenario the shortfall per year for the fifteen year amortization of the project is approximately

$50,000 per year (model assumed no principal payments during year one and two). The cash flows under

this scenario per year are shown immediately following. Under this scenario, a limited number of anchor

tenants, dark fiber leasers, wireless providers or other clients would make the basic network revenue

neutral.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

AnnualCashFlow($)

-16,119 -19,552 -45,586 -46,570 -47,572 -48,594 -49,636 -50,698 -51,780 -52,882


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To reiterate the basis of this worst case scenario model, the cash flow in this example is negative for all

years. If the model were adjusted to pay principal and interest in all years, the shortfall each year would

be approximately equal to the annual payment to repay the loan. This base case assumes 50 percent

(50%) grant funding; without grant funding, the shortfall would be approximately doubled. Funding at

100 percent (100%) would make the network as shown approximately self-sufficient. Details of the

major revenue and expenditures are shown in the following tables. Essentially the costs of operating such

a network are the cost of leasing and utilities for a central office location, a part time IT staffer, Internet

access fees, pole attachment fees and maintenance. These functions might most economically be handled

using IT personnel with other duties with existing space, if available, leased from local governments.


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The final model considered (Page 4), the Wholesale Model is discussed in detail in Section 7 of the

main report. It is a permissible model under Virginia Law, but it is not believed to be a model

which is feasible for the initial deployment.

Typical Fees and Revenues

Open access network fees vary from one community project to the next. Examples of fees charged to

service providers desiring to use an open access fiber optic network is provided in Appendix C for the

Grant County, Washington Zipp Network. While these are offered for information purposes, the

community will need to decide a balance between the network cost, what if any contribution will be made

to encourage local development, grants if any and the extent of any income which is required or operating

losses which can be tolerated. Some information helpful in developing those rates is provided in the

following table.

Table ES-1: Typical Charges to Service Providers for Use of an Open Access Network

ServiceMo.

ChargeComments

Standard Service Except as noted, these charges would apply if the fiber network was lit bythe community. In other words, the service provider is paying for accessto the customer through equipment owned by the community network.

Residential InternetService per Subscriber

(A similar service offeredby the County as aprovider of last resort)

$5

($22)

Upper figure ($5) is an access fee for a service provider offering Internetservice to a customer over a County owned and operated network. Thelower figure is an approximate fee which might be charged for Internetservice over a Community owned and operated network with the County

providing Internet service as the provider of last resort. The wholesalecost of the Internet content will be $1-$2 per customer per month. Stillthe incremental cost per customer of $900 means that it would take fouryears to pay for the equipment alone. This option may be attractive as away to support the economy or meet other goals

Commercial InternetService per Subscriber

$30-$50 Incumbent telephone providers may easily receive $100 per month toprovide a local loop, highly reliable, connection providing 1.5 mbps (T1)of data access. The monthly charge is very reasonable so long as thisdegree of reliability can be provided. To reach this pricing, Quality ofService guarantees would be required for this level of value. As a servicecompeting with DSL at that level of service, the monthly charge will belittle higher than for residential service

Video Service perSubscriber

$5 A cable provider may pay $30 per month for video content which ismarketed for around $50. This leaves only $20 for network operations,connectivity to the customer, other fees and profit.

Phone Service (PerPOTS port)

$5-$8 Phone service requires little bandwidth but high reliability. The cost ofconnecting from a County network back to a vendor owned voice switchwill likely determine the possible fees. A VoIP provider might beinterested in such an arrangement; the incumbent provider is unlikely to

be interested as they currently own their own infrastructure.

Wireless Internet perwireless customer

$1-$3 Wireless providers generally compete with dial-up Internet servicecustomers while having to contend with relatively high incremental costsfor serving each customer. This limits their ability to pay access fees forInternet transport.


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Organization and Network Operations

Network organization and operations models vary. Depending on state law, options include networks

being owned and/or operated by the municipality, authority of the municipality, joint action agency,

council of governments (COG), cooperatives, for-profit entities, etc.

In regards to municipal provision of communication services, Virginia does allow local governments to

provide services but with restrictions. Section 5.2 of the report discusses the impact of Virginia Law in

more detail, including allowances for public entities to provide qualifying communication services.

The following briefly addresses some of the restrictions and permissible roles of municipalities in relation

to the focus of open access networks.

A locality can build a network and provide services to its departments, boards, agencies, etc. and to

adjoining localitys so long as the charges for equipment, infrastructure, and/or services do not exceed

the cost of providing the service. Dark fiber can be leased by any locality, electric commission or

board, industrial development authority, or economic development authority. Under no

circumstances can the locality or authority be involved in marketing or promoting the services of the

lessee or purchaser.

The Virginia Wireless Services Authority Act authorizes a locality to convey or lease to [an]

authority, with or without consideration, any systems or facilities for the provision of qualifying

communications services and contract, jointly or severally, with any authority for the provision of

qualifying communications services. Localities are still held to the requirements of the qualifying

communication services and service gap provisions (not more than three providers). This legislation

provides the method by which projects can be financed by an authority.

Communities that want to provide a catalyst for service expansion and an enticement to service providers,

but do not have the expertise in-house to manage and operate a network and want to limit their investment

in a network, will invest in the dark fiber only (no equipment). If services are to be provided to

municipalities and other political subdivisions or agencies only, then they will also contract with another

entity to manage and operate the network. This approach minimizes the extent of staff and training

needed by the municipality. This option should only be undertaken after agreements are in place to lease

such fiber. Generally, communities that have begun such projects before partner agreements have been

completed have had unsatisfactory results.


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In order to provide a full range of retail services across a network, staff requirements would typically

include a customer service representative/sales representative, billing clerk, technical field personnel,

technical office personnel to manage the Network Operating Center (NOC) equipment, and probably a

system manager. In addition other costs would include marketing materials, software and invoices, office

and facility space with equipment and furnishings, and training costs. Municipalities that are already

providing other services such as public power (electric) and water and wastewater treatment services are

in a much better position to provide voice, video and data retail products.

Funding Resources

Funding concerns for such an initiative are usually categorized into at least two (2) investigations; capital

expenses and sustainability of operating, maintaining and provisioning the network. Capital expense

funding is usually addressed by analyzing long-term amortization borrowing opportunities with interestrate impact, as well as potential subsidized funding through grants, against the ability to generate

sufficient revenue to meet the annual debt service obligations. If possible, capital funding obligations are

met by long-term contracts (often associated with providing services to businesses and large bandwidth

users) while annual network sustainability funding is paid for through services provided to residential

customers and shorter-term contracts.

Usual capital funding for municipal projects include revenue or general obligation bonds. Other creative

financing models include buying shares in a for-profit operating entity, customer ownership through acooperative, forming a legal public-private partnership, etc. Given that the historical charter for local

government units is to be non-profit entities and not venture capitalists, it is recommended the more

traditional methods of government funding be pursued such as federal and state grants and low interest

loans, issuance of bonds, or incurring debt. Advantageous approaches within these resources can be

investigated such as wrap-around debt and refinancing existing debt. Continuing to investigate forming

cooperative and sharing costs among the owners who are the customers also has merit. Input from the

Lower Shore Broadband Cooperative in Maryland is recommended to learn more about the pros and cons

of a cooperative structure.

Section 6.0 Funding of the report provides discussion on capital costs versus sustainable costs, assets,

potential partners, funding success stories and funding resources.


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Conclusions and Recommendations

The results of the 2,500 residential surveys and 500 business surveys indicate a general dissatisfaction,

particularly with the level of Internet bandwidth available, strength of signal (cell phone and television),

and affordability. Schools and health care facilities (Page Memorial Hospital) have Internet access

currently at no more than about 3 Mbps. This is clearly insufficient bandwidth to utilize the many

learning tools available in more urban areas nor to provide high speed, real time telemedicine connections

between Page County and urban health centers. If cost were no object, these services could be obtained

from existing providers, but affordability effectively limits what is available. Combining this background

and the Virginia Rural Broadband Planning Initiative (VRBPI) objective of ensure community

sustainability through broadband deployment, the consultants have developed the planning steps

necessary to reach the VRBPIs goals. VDHCD which administer this program has indicated that they

may support these programs with additional funding particularly if the network approach utilizes an open

access approach which maximizes the availability of the network to private providers. As a means to

factor in the private provider interest, a Request for Interest (RFI) has been sent to interested parties.

Based on that interest, much of which may not be known at the completion of this study, the planning

document recommendations can be used to direct the County toward a final solution.

There is a problem with developing a telecommunications network without fully understanding what

providers might want in order to utilize a county network. That problem is that the size and scope of the

network cannot be planned without knowing what providers might be interested in accessing.

Conversely, without knowing the size and scope of a proposed network, private providers will not know

their level of interest. To avoid this problem, the consultants have developed a basic network which

addresses the basic VRBPI desire to provide communications to schools, health care facilities and

municipal buildings. The network utilizes fiber interconnectivity which can be extended to serve a

considerable number of businesses and residences by adding the final connectivity from the proposed

network to the end user. Those numbers of potential customers (approximately 2300 potential customers)

were included in the RFI along with a potential route location to assist private providers in their

responses. The final network decisions can be based on the extent of interest. If an increased network

scope can be justified based on the interest, it can be expanded following the planning steps proposed. In

order to meet the minimum objectives of the VRBPI, the cost of the community network includes the

County entity providing Internet services to customers along the distribution and access route.


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The planning steps necessary to reach the project goals are:

1. Utilize a County Authority as the basic entity to provide network services over the Countys

network. Under Virginia and Federal law, an authority can provide services (Internet access) and

has rights (negotiating pole attachment agreements), not granted to counties.

2. Utilize the RFI results in conjunction with tools provided with this study to evaluate the potential

financial viability of these partnerships. The interest will also indicate whether a more extensive

network would make financial sense or whether even the most basic fiber network is viable.

Following evaluation of potential partners, a dark fiber network might become attractive.

3. Obtain preliminary commitments from any anchor tenants (schools, hospitals, municipalities,

businesses) that would agree to utilize the network. The potential revenue from these clients can

serve as support for the viability of the network as the County looks for funding sources.

4. Finalize the basic network design as necessary based on the results of Item 2 and the study

results. The approximate network costs developed in this way will serve as the basis for

requested funding. Apply for such funding utilizing the sources suggested (Section 6.0), State

funds which have been proposed for this purpose, or County funds. Based on the scope of the

final network, long-term amortized bonding may be required.

5. Utilize consultants for the final planning, design and construction of the network. Prominent

within this step will be execution of pole attachment agreements, permits for rights of way,

detailed outside plant and central office design, construction and network turn-up.

Phase 1 and 2 Exec Summary

Documents

Transcript of Phase 1 and 2 Exec Summary