HomeMy Public PortalAboutResolution 20-15 Broadband Master Plan 2020 Y
City of McCall
RESOLUTION 20-15
A RESOLUTION OF THE CITY OF MCCALL, IDAHO, ADOPTING THE 2020 MCCALL
RAPID BROADBAND MASTER PLAN, PROVIDING FOR RELATED MATTERS, AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, the 2020 McCall Rapid Broadband Master Plan was prepared by EntryPoint Networks for
the City of McCall and the plan will assist the City and the community in developing a municipal fiber
utility; and
WHEREAS, the 2017 McCall Area Comprehensive Plan was adopted by the McCall City Council on
January 11, 2018; states its intent, at Economic Development Goal 2, Policy 2.5, to "Improve broadband
and fiber-optic capacity within the city to enable improved telecommuting opportunities, cottage
industries, and attraction of businesses that require high speeds of connectivity."; and
WHEREAS, McCall City Council adopted Resolution 18-15 on July 12, 2018 declaring broadband
internet to be an essential service; and
WHEREAS,This RAPID model has been proven successful in other Idaho Cities like Ammon, ID; and
WHEREAS, the Federal Communications Commission (FCC) has deemed broadband internet access
service to be an essential telecommunications service under Title II of the Communications Act of 1934;
and
WHEREAS, low population density and other factors hinder private sector deployment of broadband in
rural areas, such that 39% of rural Americans lack access to broadband internet access service; and
WHEREAS, Federal and State efforts to promote broadband internet access should not erode
longstanding requirements to ensure universal access to all essential communications services that are
reliable and affordable for residents of the City of McCall.
NOW, THEREFORE, BE IT RESOLVED, by the Mayor and City Council of the City of McCall,
Valley County, Idaho that:
McCall Rapid Broadband Master Plan is adopted and a copy of the Plan is attached hereto as Exhibit 1,
and by this reference incorporated herein.
This resolution shall be in full force.and effect upon its passage and approval.
Adopted this 23rd day of July 2020.
% Robert S. Giles, Mayor
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Broadband Master Plan
Prepared for the McCall City Council
July 2020
– Prepared By –
www.entpnt.com
Broadband Master Plan – Report to McCall City Council – Prepared by EntryPoint Networks Page | 1
Broadband Master Plan July 2020
Contents
I. Executive Summary
II. Strategy
III. Infrastructure
IV. Assessment of Existing Broadband Infrastructure
V. Market Analysis
VI. Community Engagement Plan
VII. Business Model – Automated Open Access
VIII. Network Design
IX. Project Partners
X. Cost Analysis & Phasing
XI. Financing Considerations
XII. Legal Considerations
XIII. Risk Analysis
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Broadband Master Plan July 2020
Executive Summary
The McCall, Idaho I.T. Department has worked with EntryPoint Networks to
develop this Broadband Master Plan to assist with a planning and decision-
making process for deploying and operating broadband infrastructure for its
municipal fiber deployment within the City of McCall. The information in this
report will be used to assist in the planning and implementation of a network
that seeks to lower broadband costs and increase network value for residents,
commercial entities, and anchor institutions. Additionally, this report is designed
to assist City leaders in understanding the operational implications, important
risk factors, and a realistic cost framework for developing and operating city
owned fiber optic infrastructure.
The Broadband Master Plan is a living document that will evolve as the City
completes the backbone and pilot phase of the network and as it progresses
from planning to implementation to operational activities.
In addition to lowering costs and delivering significant improvements in network
speeds, additional objectives for the network include positively impacting
economic development, livability, public safety, education, healthcare,
emergency communications, smart grid capabilities, efficient government
services, universal access, environmental stewardship and smart city
applications.
City leaders will be able to use this document to lay the groundwork to solve
near-term and long-term challenges. This report seeks to provide the data
needed for City leaders to thoughtfully plan and implement a strategy that will
benefit residents, businesses, and anchor institutions for years to come. The key
focus of the report is on the following primary activities:
1) Network Design & Architecture
2) Construction
3) Network Operations
4) Customer Acquisition
5) Risk Management
In addition to lowering
costs and delivering
significant improvements
in network speeds,
additional objectives for
the network include
positively impacting
economic development,
livability, public safety,
education, healthcare,
emergency
communications, smart
grid, efficient
government services,
universal access,
environmental
stewardship and smart
city initiatives.
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Broadband Master Plan July 2020
Strategy
Deploying a large-scale fiber optic network is a significant public works and
information technology project.
Key Strategic Ideas guiding this Plan include the following:
1. Universal Access – The economy is now an information economy and the
importance of digital infrastructure continues to grow in significance. The
City of McCall has an interest in ensuring that the City has robust digital
infrastructure and adopts policies and projects that make 1 Gig network
access available and affordable throughout city limits.
2. Foster Competition & Choice – The City seeks to understand initiatives that
will increase the number of service providers and types of services that are
available to McCall residents.
3. Focus on Customers – City leaders seek to understand the needs and
interests of network stakeholders and then align policies, initiatives, and
projects with those interests.
4. Foster Innovation & Economic Development – City leaders are interested in
leveraging the network to foster entrepreneurship and business development
throughout McCall.
5. Mitigate Risk for the City, Constituents, and Partners –City leaders are
particularly interested in implementing a business model which mitigates
financial and operational risks to the City and its partners while at the same
time helping the City achieve its other objectives.
Universal
Access
Cust om er
Focused
Mitigate Risk
for the Cit y
Create
Competition
& Choice
Innovation &
Economic
Growt h
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Broadband Master Plan July 2020
Infrastructure
Comparison of Available Media
The primary media used for internet access today in the United States includes
DSL, Cable, Wireless and Fiber Optic cable.
DSL stands for Digital Subscriber Line and it is one of the technologies used to
provide Internet connectivity to homes and businesses. DSL uses existing
telephone lines and a transceiver to bring a connection into a home or business
and allows the household to use the Internet and make telephone calls at the
same time. Frontier / Ziply is the incumbent telephone company in McCall and
uses DSL technology. DSL is asymmetrical (the download speed is much faster
than the upload speed) and is capable of download speeds up to 100 Mbps.
However, most consumers accessing the internet via DSL access speeds between
5 – 25 Mbps.
Coaxial Cable uses copper cable designed with one physical channel that carries
the signal surrounded by a layer of insulation and then another physical channel,
both running along the same axis – hence the coaxial name. Coaxial cable is
primarily used by cable TV companies to connect transmission facilities to
customer homes and businesses to deliver cable T.V. and internet access.
Charter/Spectrum is the incumbent cable company in the McCall area. Coaxial
Cable is asymmetrical and is capable of download speeds up to 940 Mbps.
Fiber Optic Cable sends information down strands of glass known as optical
fibers which are about the size of a human hair. These fiber optic strands are
capable of transmitting 25 Tbps today and researchers have successfully
demonstrated a transmission experiment over 1045 km with a data-rate of 159
Tbps (https://phys.org/news/2018-04-fiber transmission.html). Fiber-optic cables carry
information between two places using optical (light-based) technologies which
convert electrical information from the computer into a series of light pulses.
Fiber Optic Cable is capable of symmetrical speeds up to 25 Tbps.
Because the difference in capacity between fiber optics and alternative media is
so significant, fiber optics should be the foundational media for any new
broadband infrastructure project when financially feasible.
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Wireless Internet access is made possible via radio waves communicated to a
person's home computer, laptop, smartphone, or similar mobile device. Wireless
Internet can be accessed directly through providers like AT&T Wireless, Verizon
Wireless, T-Mobile or by a wireless Internet Service provider (WISP).
5G is the 5th generation of technology used in cellular networks and refers to a
standard for speed and connection. Because of the extensive marketing around
the emergence of 5G, many people wonder whether 5G will replace fiber optic
cables. In fact, 5G depends on fiber optic infrastructure. All wireless technologies
work best the faster they get back to fiber optics. The graphic above is not to
scale (fiber has much greater capacity than the illustration represents) but this
illustrates the magnitude of the difference between the different media types.
The emergence of 5G is very early but there is a potential revenue opportunity
for 5G carriers to operate on City infrastructure and contribute to the ongoing
cost of network operations. Cellular networks can be symmetrical or
asymmetrical and are sometimes capable of download speeds up to 2,000 Mbps
Wi-Fi is common in homes and commercial buildings and is a way to deliver a
network connection from a network hub over a wired connection to wireless
devices via a wireless access point. Most people access the internet over a
wireless connection, but it is important to remember that wireless connectivity
ultimately depends on a wired connection and wireless access works best the
faster it gets back to a wire.
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Upload vs Download Speeds
In addition to the fact that fiber optics offer exponentially greater bandwidth
than DSL and cable, fiber optic cable also offers the ability to deliver symmetrical
speeds. In an asymmetrical connection, the download speeds are much faster
than upload speeds.
Upload speed is the amount of data a person can send in one second and
download speed is the amount of data a person can receive in one second.
Upload speeds can be especially important for businesses, including home-based
businesses or people who work from home. Applications that depend on good
upload speeds include sending large files, cloud applications like Google Docs
and Dropbox, VoIP, FaceTime, Skype, hard drive backups and In-house web
hosting.
Assessment of Existing Broadband Infrastructure
A 2017 Deloitte Consulting analysis summarizes the current needs and realities
for legacy broadband infrastructure in the United States this way:
“The United States requires between $130 and $150 billion over the next 5–7
years to adequately support broadband competition, rural coverage and wireless
densification.
Despite the demand and potential economic benefits of fiber deployment, the
United States lacks the fiber density in access networks to make the bandwidth
Length & Type of Media Approx Size 10 Mbps 20 Mbps 100 Mbps 1,000 Mbps
4-Minute Song 4 MB 3 sec 1.5 sec 0.3 sec 0.03 sec
5-Minute Song 30 MB 26 sec 13 sec 2.5 sec 0.2 sec
9-Hour Audio Book 110 MB 1.5 min 46 sec 9.2 sec 0.9 sec
45-Minute TV Show 200 MB 3 min 1.5 min 16 sec 1.7 sec
45-Minute HDTV Show 600 MB 8.5 min 4 min 50 sec 5 sec
2-Hour Movie 1.0-1.5 GB 21.5 min 10.5 min 1.5 min 8 sec
2-Hour HD Movie 3.0-4.5 GB 60 min 32 min 4.5 min 25 sec
Large Archive File 10 GB Too Long Slow Better 80 sec
Impact of Bandwidth on Applications
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advancements necessary to improve the pace of innovation and economic
growth.
Some wireline carriers are reluctant or unable to invest in fiber for the consumer
segment despite the potential benefits. Expected wireline capital expenditures
range between 14–18 percent of revenue. Wireline operating expenditures can
be 80 percent of revenue. Fiber deployment in access networks is only justified
today if a short payback period can be guaranteed, a new footprint is being built,
repairs from rebuilding after a storm or other event justifies replacement, or in
subsidized geographies where Universal Service funds can be used. The largest
US wireline carriers spend, on average, five to six times more on operating
expenses than capital expenditures. Excessive operating expenditures caused, in
part, by legacy network technology restrict carriers’ ability to leverage digital
technology advancements. Worse, as legacy networks continue to descale, the
percentage of fixed costs overwhelms the cost structure leading to even greater
margin pressure.”
Citation: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/technology-media-
telecommunications/us-tmt-5GReady-the-need-for-deep-fiber-pov.pdf
The Deloitte report is not specific to infrastructure in McCall, Idaho, but the
conclusions from the Deloitte report are generally applicable. Telco and Cable
operators in U.S. cities often have fiber to an aggregation point and then legacy
infrastructure from the aggregation point to the premise.
The primary finding of the Deloitte report is that legacy infrastructure needs to
be replaced with Fiber Optic cable in the near-term to meet bandwidth
demands. There is no indication that incumbents intend to replace legacy
infrastructure with Fiber Optic infrastructure in the near term and even if they
did, this upgrade would solve the base infrastructure problem but it would not
solve for the lack of competition or premium pricing for Gig speeds.
Legacy copper and coaxial infrastructure will need to be replaced with state-of-
the-art infrastructure in order to meet the ever-growing demands for greater
bandwidth and faster speeds. An important question is whether unique value
can be derived by having the City and its residents own and control this
infrastructure or whether private companies should continue to own and
operate all communications infrastructure.
Ideal infrastructure includes more than just the fiber optic cables running
throughout the City. Important infrastructure considerations include the
electronics at both ends of the fiber as well as systems that manage and control
the network. As the City deploys its infrastructure, the following are important
considerations guiding its decision-making framework:
“The United States
requires between
$130 and $150
billion over the next
5–7 years to
adequately support
broadband
competition, rural
coverage and
“The primary finding
of the Deloitte report
is that legacy
infrastructure needs
to be replaced with
Fiber Optic cable in
the near-term to
meet bandwidth
demands.”
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• Capacity & Speed: The demand for bandwidth and speed will continue to
grow.
• Emerging Services and Applications: 5G, connected vehicles, edge
computing, and virtual reality are all examples of emerging applications that
have infrastructure dependencies. An important consideration is how flexible
the business model and technology systems are to enable whatever may
come.
• Local Control: An advantage of a network that is locally controlled is that the
network can be much more responsive to local needs and may enable
innovation and adaptation for emerging opportunities.
• Local Resilience: Many communities are not locally resilient against attacks
on internet infrastructure. It is possible to design networks in a way that
provides residents and businesses with a network that is locally resilient if,
for some reason, middle mile connections are severed.
• Privacy & Security: Subscribers are becoming increasingly sensitive to
security, privacy, and confidentiality controls.
• Risk Analysis: Consideration of the risks for all potential network
stakeholders is an essential part of the planning process.
Market Analysis
In McCall, most residents and businesses subscribe to wireline internet services
from the cable operator (Cable One/SparkLight) and telephone incumbent
(formerly Frontier, now Ziply). Additionally, residents in McCall have a wireless
connectivity option available through Wilderness Wireless.
SparkLight
SparkLight advertises the following residential ISP services in northern Idaho:
Speed (Mbps)
[Down / Up]
Introductory Pricing
[contract required]
Standard Pricing
[not including taxes & fees]
Data Caps
100 / 10 $39.00 $55.00 300 GB
200 / 20 --- $65.00 600 GB
300 / 30 --- $80.00 900 BG
940 / 50 --- $125.00 1,200 GB
Shared Network – Speeds are “Up To” not guaranteed.
Speeds are not Symmetrical
Additional Data - $10.00 per 100 GB used
Availability depends upon location – not available in all areas.
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Ziply Fiber
Ziply recently bought out the Frontier Communications infrastructure in McCall
and advertises the following package in McCall:
Speed (Mbps)
[Down / Up]
Introductory Pricing
[contract required]
Standard Pricing
[not including taxes & fees]
25 / 2 $41.00 $59.00
Shared Network – Speeds are “Up To” not guaranteed.
Speeds are not Symmetrical
Soft Data Caps apply to all service plans
Availability depends upon location – not available in all areas.
Wilderness Wireless
Wilderness Wireless offer the following residential services in McCall:
Speed (Mbps)
[Down / Up]
Standard Pricing
[not including taxes & fees]
Install Fee
[not including taxes & fees]
8 / 2 $59.00 $129.00
10 / 3 $69.00 $129.00
12 / 4 $79.00 $129.00
Shared Network – Speeds are “Up To” not guaranteed.
Speeds are not Symmetrical
Soft Data Caps apply to all service plans
Availability depends upon location – not available in all areas.
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Marketing & Community Engagement Plan
Introduction
RAPID is the City of McCall’s answer to the community's need for better internet
connectivity. A faster and more economical method to get quality internet
access to a home or business. RAPID is an open access network that will use
McCall’s existing underground fiber to allow multiple internet providers to offer
citizens in McCall city limits residential and commercial high-speed internet
through a single web portal.
The RAPID product/service will be made available to the community in stages as
infrastructure construction is completed on a year by year basis until the
network is available throughout the city. Each phase will require a carefully
planned and executed marketing effort to gauge strengths, discover
opportunities, maximize the reach, realize potential, and communicate plans to
maintain excellent service throughout the life of the utility.
This plan is intended to serve as an initial general outline and guide to McCall
City Council, Information Systems staff and those on the planning project team
for addressing the important elements of the plan in reference to sales,
advertising and marketing. The Outreach plan includes:
• Project market objectives
• Phased Planning
• Brand identity
• Key messages strategies and tactics
• Community Engagement programs
• Roles and responsibilities, reporting and evaluation
This plan is not intended to supersede any existing or future communications
plans developed or implemented by Information Systems staff. The plan will be
executed in concert with Infosys, the project team, and public relations staff.
Project Market Objectives
The overarching objectives of the RAPID Market plan are as follows:
• Garner recognition, visibility, and community-wide support for the
product/service
• Educate the public how the product works and can improve connectivity
• Position RAPID as a critical utility with citizens
• Highlight successful cost savings with successful Local Improvement
District (LID) participation.
• Outline features and benefits
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• Obtain feedback from test group, stakeholders, and customers
Phased Outreach Objectives
• Phase 1A – Test Area
• Phase 1B – First LID
• Phase 2 – Ongoing Phases Service Plan
Target Audiences
This plan is designed to reach a wide variety of stakeholders. Below are the
general target audiences. Specific organizations and individuals are detailed in
the appendix to this plan. (Note: We consider the media to be a vehicle, rather
than an audience.)
• Citizens of McCall/Government and public officials
• Technology industry policymakers, business leaders and regional
economic development officials/professionals
• Potential service residential and business customers
Phased Targeting
• Phase 1A (Test Area)
o Homes within the test area as identified. (See Project Phase
Section Below)
• Phase 1B (First LID)
o Home and businesses within area as identified currently holding
adequate underground fiber lines.
• Phase 2
o All home and businesses within all areas in the City of McCall with
appropriate underground infrastructure.
Brand Identity
RAPID requires strong name and logo recognition in the community for
developing a brand identity that raises awareness, generates enthusiasm and
creates visibility. Specifically, we recommend a logo font and tagline to be
utilized on all communication materials relating to the plan, including but not
limited to:
• Websites, digital media, and advertisements
• Transportation, vests, hats
• Onsite Work signage
• Contractors serving RAPID
• Correspondence, Press releases and Presentations
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• Public notices
• Fliers and door hangers
• Community partner’s web posts and newsletters, plans and drafts
• Recommended logo and taglines will be designed to promote continuity
of message and establish a unified identity. Through a creative play on
words, the proposed tagline theme will position the plan as a forward-
thinking initiative with an emphasis on building the future and guiding
the Library’s vision for tomorrow. The brand identity is used as a unifying
theme to foster support and elevate the value and importance of the
RAPID product/service
• The current/proposed
logo:
• The current/ proposed tagline: Connecting the City of McCall
Key Messages
Effective outreach requires a commitment to communicating an agreed-upon
platform of key messages. The following three key messages are intended to
serve as a guide for communicating with target audiences about RAPID:
What
RAPID is a faster and cheaper way to get quality internet access to your
home or business.
Why
RAPID allows multiple internet providers to offer you high speed internet
services to both residential and commercial customers through a single
webpage allowing better connectivity at reduced costs.
How
RAPID uses McCall's existing underground fiber network.
Key Messages and Proof Points
The three key messages are repeated below with proof points to support them.
This is not intended to be a word-for-word script; persuasive communications
require that spokesperson(s) convey the key messages in their own words. To
ensure consistency in the messages, we recommend that RAPID spokesperson(s)
refer to and utilize the guide prior to communications with elected officials,
opinion leaders, media, and other interested stakeholders.
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• The City of McCall has identified Internet as an essential service.
• Fiber optic connections are much faster, less expensive to operate and
future proof
• We currently have inadequate connectivity limiting capacities in McCall
and the region.
• There are three parts to the RAPID fee structure.
o City Utility Fee- A monthly fee, only charged if you have ongoing
internet service and can be canceled any time.
o Internet Service- A monthly fee, only charged if you have ongoing
internet service and can be canceled any time.
o House Connection- A onetime fee with option to finance over 20
years or if your property is already connected to fiber there is no
house connection fee.
• The cost of the RAPID installation can be paid overtime or in one lump
sum.
• Subscribers will be able to choose from several Internet Service Providers
• The costs of internet access will depend on the Internet Service Provider
the customer selects.
• The costs for everyone will go down as more residents participate
because the total cost of the infrastructure will be shared by a bigger
percentage of the population.
• RAPID will give its citizens more control over things like online education,
remote work, telemedicine, online entertainment options and aid area
businesses with future development.
• The installation of fiber to the property will increase the value of a
property.
The RAPID project will be maintained by the Information Systems Manager and
staff. Updates will be publicized through all media channels, including digital,
and a dedicated fiber network website.
Strategies and Tactics
To develop widespread participation and community buy-in for the RAPID
project and service, we propose the following overarching communications
strategies to occur at three key milestones of the project:
• Phase 1A – The TEST PHASE, a residential area is identified.
Participants receive service at no cost during the Pilot Phase period as
well as delayed or discounted installation fees in return for required
opinion and feedback as a part of the process. The feedback is then
used to further improve product/service and to educate the
community on the unique features of this system.
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• Phase 1B – The FIRST LID PHASE, a residential area is identified as a
first launch area for service.
• Phase 2 – The RAPID SERVICE/INSTALLATION PHASE continues across
all areas of the system as the infrastructure is built. Construction may
move from highest demand areas to lower demand areas. Strategy:
Support the RAPID project by generating interest in targeted phase
area.
Specific Tactics May Include the Following –
Evaluation & Education
Document the current state of broadband in McCall and determine the
level of interest among residential users and business owners through
surveys, neighborhood outreach, and door to door sales activities.
Community Survey
A City specific website (rapidmccall.com) has been deployed and
includes a survey for residential and business owners and will be used to
determine priorities for consumers and issues that are of interest to
potential network customers. Responses will be used to develop an
education and promotion program to increase understanding of the
value proposition offered by the City.
Publish Educational Information
A website has been created and will be used to outline the core
message of broadband as a utility and will educate potential
subscribers on the value proposition offered by the City.
Customized videos will be used to educate online visitors on the
following:
a. Functionality of the community fiber network
b. Options for services
c. Frequently Asked Questions (FAQ’s)
d. Inquiry Form where community members can submit questions to the City
Mapping Community Interest
The website will include an “I am interested” sign-up form with
associated heat map where residential and business property owners
can register as someone interested in City fiber.
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Marketing & Promotion
Press Releases will be used to promote the City fiber program, drive
traffic to the fiber website with the goal of educating community
members and generate interest and encourage community participation
in the survey. The City will also use all available social media platforms
(Facebook, Twitter, etc.) to promote the fiber network.
Neighborhood Entrance and Yard Signs
As fiber construction begins in a neighborhood, McCall will post signs at
neighborhood entrances announcing the construction to let residents
know they can still sign-up to get connected while crews are in the
neighborhood.
As homes are connected in the neighborhood, yard signs will be placed
in the yards of subscribers, with their permission, indicating that the
home is a new customer and will enjoy a fiber broadband connection.
The City will partner with an internet Banner Ad company to deliver
targeted Banner Ads to the neighborhoods that are next in line for sign-
up and construction.
Open House Events
McCall will hold a series of Open House events where residents and
business owners can hear an educational presentation about the fiber
project, become educated about the benefits of fiber and automated
open access, and get questions answered.
Open Houses will be promoted using the City website, social media
platforms, banner ads, flyers, and door hangers.
Open House events are intended to educate residents, promote the
network, and identify Fiber Champions in the various neighborhoods
(fiber zones). Fiber Champions are individuals that are committed to
promoting the network within their neighborhood. Fiber Champions
are also incentivized to have their neighborhood prioritized for
construction as construction will often move from highest to lowest
demand.
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Work with Staff to Generate Interest from Local News Outlets
• Organize and hold public meetings to officially launch RAPID.
• Develop a media advisory and press release to publicize the public
meetings and public launch of RAPID.
• Pitch media and schedule interviews with Project Leader to discuss
RAPID.
Utilize Neighborhood, Community, and Referral Programs to Market RAPID.
• Leverage existing partnerships and foster new relationships to promote
and educate the community on RAPID.
• Create programs that reward current users for referrals and new
subscribers
• Work with HOA’s to develop large scale interest in focused areas.
• Use current utility customer databases to generate interest in RAPID.
• Utilize door hanger construction notifiers (We are working on RAPID next
door)
• Reach out to community partners to mention the public meeting through
websites and their social media platforms such as blogs, Facebook, and
Twitter.
• Prepare short articles on RAPID for inclusion in community partners’
newsletters, websites, etc.
• Create and distribute flyers to post on community bulletin boards and
hand out at city events.
• Distribute e-blasts to community partners at key milestones in the
process.
Influence Public Using Social Media to Promote RAPID and Build Interest.
Create and individual RAPID social media page to pair with the website.
Consistent coordinated updates with varying levels of frequency.
Create a foundation for social media communications in the future with
customers.
• Develop a system and staff for coordinating RAPID content.
• Build the number of Facebook followers using other city social pages.
• Utilize multimedia (videos, etc.) to maximize publicity.
• Distribute press releases, op-eds, and meeting announcements through
social media channels.
• Regularly monitor the channel to address comments and questions and
ensure all posts are consistent with the overall message of RAPID.
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Fiber Champions
Fiber Champions assist sign-up efforts within their designated
neighborhood (fiber zone). They organize and lead Cottage Meetings
where neighbors come together to discuss the McCall fiber program.
McCall leaders and employees provide support to the Fiber Champions
in their efforts. Fiber Champions drive conversations and contractual
commitments of neighbors via the Door-to-Door Sign-up and Education
campaign. Format of meetings will depend on pandemic protocols in
place at the time.
Door-to-Door Sign-up Effort
City representatives (could be an independent group representing the RAPID
project or city staff or a combination) contact residents and business operators
within the planned network footprint to answer questions about the network
and ascertain the potential subscribers’ intentions regarding their participation
in the network. [Yes (Opt-in) or No (Opt- out)].
This direct person-to-person contact gives everyone in the community an
opportunity to ask questions, clarify their understanding and express their level
of interest in participating. The method of contact will depend on the pandemic
protocols in place at the time. To maximize the effectiveness of this process,
prior to canvassing a neighborhood, door hangers are distributed to every home
and business informing property owners that a representative will be stopping
by or contacting them to explain the opportunity, answer questions and get their
Opt-in / Opt-out decision.
Roles and Responsibilities
The City of McCall Information Systems Department in conjunction with the
Communications Department will control RAPID in all external and internal
communications related to development phases.
Evaluation
At multiple times throughout all phases of the project, staff will collect feedback
and evaluations regarding the installation services and internet connections.
Identification of the most relevant metrics may be developed in advance and
may include the following:
• Feedback with the goal to analyze quality in service and installation.
• SWOT with each phase.
• Technical measurements as identified by InfoSys
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Target Media
Below is a list of targeted media, grouped by local outlets and industry/trade
publications. We anticipate that most of the interest during the strategic
planning process will come from local media, primarily print outlets. The final
master plan will present the McCall Public Library with an opportunity to
promote its vision regionally and through targeted trade media.
Local Outlets:
• McCall Star-News
• McCall Magazine
• Visit McCall
• Local Blogs & Podcasts
• Radio - KDZY
• Radio - STARR
• KTVB, KBOI, KIVI
• Idaho Business Review
• Idaho Statesman
Goals & Objectives
The objective of the McCall Community Engagement Plan is to achieve a
minimum of a 60% take-rate for homes and businesses within the City.
Additionally, a scale of 1,800 subscribers is an important target for the
project to be operationally sustainable over the long run. In the financial
section later in the report, the financial models are built to a target of a
60% take-rate. The modeling can easily be adjusted to match actual take-
rates.
Business Model – Automated Open Access
Automated Open Access is a model where the network operator places
electronics at both ends of the network and subscribers can dynamically select
service providers in real-time. Software Defined Networking is used to automate
various network management tasks.
In this model, multiple service providers can deliver services simultaneously and
independently across a single wire. When a subscriber selects a new service
provider, the provisioning is done using automation and therefore happens on-
demand. The automated provisioning creates a marketplace for services which
includes ISP’s and private networks for other services. The ability to switch
service providers on demand increases choice and competition. This network
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model also includes the ability to provide local network resilience via local
communications if connections over the middle mile are down.
Network Design
The Automated Open Access model uses a Switched Ethernet Network
architecture rather than a Passive Optical Network (PON) architecture.
Switched Ethernet Network
The Switched Ethernet architecture provides a dedicated connection for each
customer rather than a shared connection and the customer experience is
significantly better than in a shared architecture. This is due to the fact that the
throughput of switch-based architecture is superior to a bus-based architecture
during times of network congestion.
Passive Optical Network (PON)
Passive Optical Networks (PON) and Coaxial (Cable) networks follow a Bus
architecture. A Bus architecture is a shared architecture. A splitter is placed in
the field and a connection is often shared between 32 or 64 premises. The Bus
Architecture leads to more packet collisions on the network which can result in
high amounts of packet loss during congestion. Additionally, it is more difficult to
isolate and troubleshoot faults in the network with a bus topology.
Passive Optical Network (PON) Design
Switched Ethernet Network Design
Proponents of PON Architecture will argue that PON is less expensive than an ethernet design. That was true
historically. The illustration below shows that the variable costs of a switched ethernet deployment is now
equal to PON. This change in pricing differences was driven by the fact that all Data Center deployments use
Switched Ethernet architectures and the enormous growth of Data Centers over the past 20 years has driven
down the cost of Ethernet electronics.
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Project Partners
Middle Mile
“Middle-mile” is an industry term that describes the network infrastructure that
connects local networks to service providers at an Internet Exchange Point. The
“last mile” is the local part of a communication network which connects a service
provider to a customer. Current Middle Mile options include SparkLight (10 Gig),
Syringa Networks (10 Gig) and Ziply (1 Gig), the company that acquired the
Frontier assets.
Approximately 2,500 customers can be served by a 10 Gbps circuit. Peak usage is
an important data point for monitoring and is used to inform capacity planning.
As the customer base in McCall grows, capacity will need to be adjusted. The
cost of the middle mile connection should be allocated on a per subscriber basis
Internet Service Providers (ISP) Partners
An Internet Service Provider gives subscribers access to the internet. Because the
City of McCall network will be organized as an Open Access Network, it will have
multiple ISP’s offering services to subscribers.
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The Internet Service Providers (ISP) listed below have expressed a verbal interest
in being service providers to McCall subscribers. The participation of these ISP’s
will be formalized through an MOU process.
Internet Service Providers –
• Wilderness Wireless – https://ww2.wildwisp.com/index.html
• Fybercom – https://www.fybercom.net/
• QwikNet – http://qwk.net/
• Sumo Fiber – https://sumofiber.com/
Cost Analysis & Phasing
Backbone Build-Out | 2019 - 2022
Backbone Phase 1 (2019) - Red (Currently Installed)
Backbone Phase 2 (2020) – Yellow
Contractor: Idaho Site Prep
Spring Mountain Blvd Route
Construction Labor: $340,435.00
Materials: $46,000
Distance: 18,000 linear feet
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Deinhard Route (Bid – 2020 Additional Route)
Construction Labor: $214,063.00
Materials: $30,000.00
Distance: 11,000 linear feet
Backbone Phase 3 (2021/2022) Green
Projected Construction Labor: $420,000.00
Materials: $60,000.00 (est.)
Residential Pilot (2020) – 25 Homes
A residential pilot is planned for 2020 that will include between 20 – 30 homes
on Alpine Street and Davis Avenue. The residential pilot will allow the McCall
leadership to test financial models and customer acquisition strategies and will
also provide a demonstration of the system the city is deploying. This location is
proposed as the pilot project area because it consists of primarily full-time
residents and local workforce, the Phase 1 fiber backbone already exists in this
area, and the density of the lots will keep installation costs lower than
neighborhoods with large, dispersed lots.
Local Improvement District #1 (2021) – 300 Homes
Pending a successful residential pilot project in 2020, the Broadband Committee
will seek approval for the first Broadband Local Improvement District in 2021
which will include approximately 300 homes.
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High Level Network Design
A high-level network design was done for the residential pilot neighborhood to
build a cost model for that project. The Biarri Networks Fiber Optic Network
Design Tool was used to create the design and calculate materials costs for these
designs. The main cost categories for deploying and operating broadband
networks are separated to optimize the costs in each of the following categories:
Infrastructure Capital Costs (Financed over 20-25 years)
Network Maintenance & Operations
Services
Infrastructure Capital Costs
The cost modeling that follows assumes the City has established its fiber optic
backbone.
Monthly Infrastructure Cost
The first illustration of Infrastructure Capital Costs per premise assumes a 60%
take-rate and a project that is 100% underground. The data in the line items in
this model come from a combination of the Biarri Network Design tool, actual
bids for materials, and network buildout experience.
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Take-rate is a variable that is critical to project success because the operational
sustainability of a project depends on crossing a certain take-rate threshold and
take-rate has a meaningful impact on the cost per premise.
Monthly Infrastructure Cost Modeled From 25 Premises
The second illustration of Infrastructure Capital Costs per premise assumes a
60% take-rate and a project that is 100% underground. We can adjust these
variables on a neighborhood by neighborhood basis as needed.
Why Take-Rate is Important
The following table illustrates the impact of take-rate on total cost per premise
with a rate of 60% as neutral on impact.
Take-Rate Cost/Sub Subscribers Difference vs. 60% Take-Rate
5.00% $33,800.03 202 - ($30,161.63)
10.00% $17,348.23 403 $16,451.80 ($13,709.83)
15.00% $11,864.30 605 $5,483.93 ($8,225.90)
20.00% $9,122.33 807 $2,741.97 ($5,483.93)
25.00% $7,477.15 1,009 $1,645.18 ($3,838.75)
30.00% $6,380.36 1,210 $1,096.79 ($2,741.97)
35.00% $5,596.94 1,412 $783.42 ($1,958.55)
40.00% $5,009.38 1,614 $587.56 ($1,370.98)
45.00% $4,552.39 1,815 $456.99 ($913.99)
50.00% $4,186.79 2,017 $365.60 ($548.39)
55.00% $3,887.67 2,219 $299.12 ($249.27)
60.00% $3,638.40 2,420 $249.27 $0.00
65.00% $3,427.48 2,622 $210.92 $210.92
70.00% $3,246.69 2,824 $180.79 $391.71
75.00% $3,090.00 3,026 $156.68 $548.39
80.00% $2,952.91 3,227 $137.10 $685.49
85.00% $2,831.94 3,429 $120.97 $806.46
90.00% $2,724.41 3,631 $107.53 $913.99
95.00% $2,628.20 3,832 $96.21 $1,010.20
100.00% $2,541.61 4,034 $86.59 $1,096.79
Monthly Infrastructure Fee $21.19
Costs at 60% Take Rate
100% Buried
Description Common Drop Total
Labor - Hours 20.83 5.00 25.83
Labor - Dollars $1,250.00 $300.00 $1,550.00
Equipment $370.72 $57.25 $427.97
Materials $483.62 $158.71 $642.33
Supplies $93.27 $5.63 $98.90
Restoration $48.10 $1.76 $49.86
Hut/Cabinet $108.07 $5.90 $113.97
Feeder Fiber $36.02 $0.99 $37.01
Engineering $31.10 $1.03 $38.13
Professional Services $148.42 $15.16 $163.58
Electronics $166.67 $350.00 $516.67
Subscriber Acquisition $0.00 $0.00 $0.00
Total $2,741.97 $896.43 $3,638.40
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Full City-Wide Deployment Infrastructure Network Operations
The following Table summarizes the anticipated cost structure for Network
Maintenance & Operations. This schedule produces a monthly M&O fee for the
Broadband Utility at $22.66 per month. The City would need to subsidize
network operations until enough scale is established to achieve sustainability.
Network Management & Operations Cost Structure
The numbers and categories in this model are derived from many years of
experience with actual costs for Broadband projects. Labor costs are modeled to
reflect Idaho wages.
Staffing Modeling for Internal Network Operations
The following Table models the cost structure for the positions needed for the
City of McCall to operate the network with City employees. The model provides
sufficient resources for network management and operations. The model does
not include resources for construction. The cost structure improves with
economies of scale (subscriber growth). The City will need to subsidize this
department through the first 6-7 years of operations and that investment will be
paid back by operational surpluses as subscribers grow beyond 1,800. The work
that will be done by the Network Operations Department includes network
Residential M&O Subscriber Monthly Annual Percentage
Costs/Accruals/Reserves $22.66 $584,592 $7,015,103 100.00%
Power $1.41 $36,288 $435,452 6.21%
Co-Lo Fees $0.35 $9,072 $108,863 1.55%
Labor $8.00 $206,400 $2,476,800 35.31%
Office $0.58 $15,016 $180,187 2.57%
Vehicles $0.73 $18,770 $225,234 3.21%
Tools $0.21 $5,443 $65,318 0.93%
Equipment $1.18 $30,344 $364,128 5.19%
Supplies $0.12 $3,128 $37,539 0.54%
Dig-line $0.19 $5,005 $60,062 0.86%
Maintenance $1.18 $30,344 $364,128 5.19%
Call Center $0.36 $9,385 $112,617 1.61%
Network Operations Center (Monitoring) $0.36 $9,385 $112,617 1.61%
Equipment Refresh costs (Reserves) $2.00 $51,600 $619,200 8.83%
Licenses Fees (SaaS, Etc.) $2.00 $51,600 $619,200 8.83%
Rentals $0.50 $12,900 $154,800 2.21%
Business Insurance $0.00 $0.00 $0.00 0.00%
Bad Debt $0.46 $11,887 $142,648 2.03%
Equipment Replacement $0.02 $626 $7,508 0.11%
Taxes and Fees (Property) $0.00 $0 $0 0.00%
Middle Mile $2.00 $51,600 $619,200 8.83%
Reserves $1.00 $25,800 $309,600 4.41%
Total $22.66 $584,592 $7,015,103 100.00%
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monitoring, network management, outside plant repairs, & new customer
installations. Losses in Years 1-6 is being mitigated by leveraging existing City
resources.
Position
Fully
Compensated
Hourly Rate
Fully
Compensated
Monthly Cost
Fully
Compensated
Annual Cost
Manager $48 $8,251 $99,008
Network Admin $39 $6,795 $81,536
I.T. Technician $28 $4,853 $58,240
Outside Manager $28 $4,853 $58,240
Outside Plant Tech $22 $3,883 $46,592
Subscriptions & Staffing Projections
Subscribers Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
New Subscribers 20 300 300 300 300 300 300 300 300 0
# of Subscriber at year end 20 320 620 920 1,220 1,520 1,820 2,120 2,420 2,420
Labor Allocation $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00
Cash Flow from Labor $960 $16,320 $45,120 $73,920 $102,720 $131,520 $160,320 $189,120 $217,920 $232,320
Staffing Projections Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Manager 0 0 0 0 0 0 0 0 0.5 0.5
Network Admin 0 0 0 0.5 1 1 1 1 0.75 1
IT Technician 0 0 0.5 0 0 0.5 0.5 1 1 1
Outside Plant Manager 0 0 0 0 0 0 0 0 0 0
Outside Plant Laborer 0 0.25 0.5 0.5 0.5 0.5 1 1 1 1
Position Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Manager $0 $0 $0 $0 $0 $0 $0 $0 $49,504 $49,504
Network Admin $0 $0 $0 $40,768 $81,536 $81,536 $81,536 $81,536 $61,152 $81,536
IT Technician $0 $0 $29,120 $0 $0 $29,120 $29,120 $58,240 $58,240 $58,240
Outside Plant Manager $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Outside Plant Laborer $0 $11,648 $23,296 $23,296 $23,296 $23,296 $46,592 $46,592 $46,592 $46,592
Total $0 $11,648 $52,416 $64,064 $104,832 $133,952 $157,248 $186,368 $215,488 $235,872
Net $960 $4,672 -$7,296 $9,856 -$2,112 -$2,432 $3,072 $2,752 $2,432 -$3,552
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Financial Pro-Forma of Full Project Costs – 10 Year Build – Ethernet Architecture
Projected Business Services Monthly Costs 100% Underground
Infrastructure $21.19
Maintenance and Operations $39.95
ISP Service (Dedicated 1 GB Symmetrical) $49.99
Monthly Total $111.13
Projected Residential Services Monthly Costs 100% Underground
Infrastructure $21.19
Maintenance and Operations $22.66
ISP Service (Dedicated 1 GB Symmetrical) $9.99
Monthly Total $53.84
Projected Phase 2 $630,498.00
Projected Phase 3 $420,000.00
Projected Cost Per Premise (Common and Drop)* $3,638.40
Estimated Subscribers 2,420
Total Cost (Common & Drop) (Includes $7,537,943.70
Professional Services Included
Total Projected Project Costs $7,537,943.70
* Assumes 100% underground, 60% take rate & short-term interest
rate of 8% and long-term bond rate of 4% for 25 years.
The Residential $9.99 monthly ISP fee listed above is based upon current pricing from the list of ISPs
interested in providing services in McCall.
The differences between Residential and Business pricing are based on the need for many businesses
to have 24x7 customer support.
Projected Subscription Costs
Project Pro-Forma
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Projected Capital Expenditures & Funding
Timeline Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10+ Total
Capital Costs
Phase 1 $630,498 $0 $630,498
Phase 2 $0 $420,000 $420,000
Subscriber Drops $17,929 $268,929 $268,929 $268,929 $268,929 $268,929 $268,929 $268,929 $268,929 $0 $2,169,361
Subscriber Common $54,839 $822,590 $822,590 $822,590 $822,590 $822,590 $822,590 $822,590 $822,590 $0 $6,635,559
Interest Reserve
(Drops) $2,911 $49,482 $43,661 $43,661 $43,661 $43,661 $43,661 $43,661 $43,661 $0 $358,018
Interest Reserve
(Backbone) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total $706,177 $1,561,001 $1,135,180 $1,135,180 $1,135,180 $1,135,180 $1,135,180 $1,135,180 $1,135,180 $10,213,436
Short Term Financing
New Backbone $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Retired
Total $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Build $72,768 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $0 $8,804,920
Total $72,768 $1,164,287 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $1,091,519 $0
Long Term Funding
New Backbone $0 $0 $0
New Build $1,216,680 $1,135,180 $1,135,180 $1,135,180 $1,135,180 $1,135,180 $1,135,180 $1,091,519 $8,804,920
Total Backbone $0 $0 $0 $0
Total Build $1,216,680 $2,351,860 $3,487,039 $4,622,219 $5,757,399 $6,892,579 $8,027,758 $9,119,277
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Projected Income & Cash Flow
Timeline Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 +
Subscribers
New Subscribers
20
300
300
300
300
300
300
300
300
-
# of Subscriber at year
end
20
320
620
920
1,220
1,520
1,820
2,120
2,420
2,420
Income Statement
(Revenue)
Infrastructure Fees $2,543.40 $43,237.75 $119,539.66 $195,841.57 $272,143.48 $348,445.39 $424,747.30 $501,049.21 $577,351.13 $615,502.08
Maintenance and
Operations $2,719.03 $46,223.54 $127,794.50 $209,365.46 $290,936.42 $372,507.38 $454,078.34 $535,649.30 $617,220.26 $658,005.74
Total Revenue $5,262.43 $89,461.29 $247,334.16 $405,207.04 $563,079.91 $720,952.78 $878,825.65 $1,036,698.52 $1,194,571.39 $1,273,507.82
Operating Costs
(Expenses)
Maintenance and
Operations -$2,359.03 -$40,103.54 -$110,874.50 -$181,645.46 -$252,416.42 -$323,187.38 -$393,958.34 -$464,729.30 -$535,500.26 -$570,885.74
M&O Labor Difference $960.00 $4,672.00 -$7,296.00 $9,856.00 -$2,112.00 -$2,432.00 $3,072.00 $2,752.00 $2,432.00 -$235,872.00
Middle Mile Difference
(assuming $2,500/mo.) -$14,760.00 -$10,920.00 -$3,720.00 $3,480.00 $10,680.00 $17,880.00 $25,080.00 $32,280.00 $39,480.00 $43,080.00
Equipment
Refresh/Replacement $0.00 $0.00 $0.00 -$3,384.00 -$5,544.00 -$7,704.00 -$9,864.00 -$12,024.00 -$14,184.00 -$16,344.00
Interest Reserve -$2,910.72 -$49,482.19 -$43,660.76 -$43,660.76 -$43,660.76 -$43,660.76 -$43,660.76 -$43,660.76 -$43,660.76 $0.00
Debt Service Reserve -$2,543.40 -$37,009.97 -$32,655.86 -$32,655.86 -$32,655.86 -$32,655.86 -$32,655.86 -$32,655.86 -$32,655.86 $0.00
M&O Reserve -$360.00 -$6,120.00 -$16,920.00 -$27,720.00 -$38,520.00 -$49,320.00 -$60,120.00 -$70,920.00 -$81,720.00 -$87,120.00
Total Expenses -$21,973.15 -$138,963.71 -$215,127.12 -$275,730.08 -$364,229.04 -$441,080.00 -$512,106.96 -$588,957.92 -$665,808.88 -$867,141.74
Net (Revenue vs
Expenses) -$16,710.72 -$49,502.42 $32,207.04 $129,476.95 $198,850.86 $279,872.77 $366,718.68 $447,740.59 $528,762.51 $406,366.08
Loan Payment
Backbone $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Build Out $81,780.00 $158,081.91 $234,383.82 $310,685.73 $386,987.64 $463,289.55 $539,591.46 $612,958.68
Total Loan Payments $81,780.00 $158,081.91 $234,383.82 $310,685.73 $386,987.64 $463,289.55 $539,591.46 $612,958.68
Net -$16,710.72 -$49,502.42 -$49,572.96 -$28,604.96 -$35,532.96 -$30,812.96 -$20,268.96 -$15,548.96 -$10,828.96 -$206,592.60
Cash Flow
Capital Expenditures -$703,265.93
-
$1,511,519.00
-
$1,091,519.00
-
$1,091,519.00
-
$1,091,519.00
-
$1,091,519.00
-
$1,091,519.00
-
$1,091,519.00
-
$1,091,519.00 $0.00
Money Borrowed $0.00 $1,164,286.93 $1,143,911.91 $1,135,179.76 $1,135,179.76 $1,135,179.76 $1,135,179.76 $1,135,179.76 $1,135,179.76 $0.00
Net -$703,265.93 -$347,232.07 $52,392.91 $43,660.76 $43,660.76 $43,660.76 $43,660.76 $43,660.76 $43,660.76 $0.00
Revenue $5,262.43 $89,461.29 $247,334.16 $405,207.04 $563,079.91 $720,952.78 $878,825.65 $1,036,698.52 $1,194,571.39 $1,273,507.82
Cash Expenses -$1,399.03 -$35,431.54 -$118,170.50 -$171,789.46 -$254,528.42 -$325,619.38 -$390,886.34 -$461,977.30 -$533,068.26 -$806,757.74
Loan Payments -$81,780.00 -$158,081.91 -$234,383.82 -$310,685.73 -$386,987.64 -$463,289.55 -$539,591.46 -$612,958.68
Net Cash $3,863.40 $54,029.75 $47,383.66 $75,335.66 $74,167.66 $84,647.66 $100,951.66 $111,431.66 $121,911.66 -$146,208.60
Accrued Interest -$2,910.72 -$49,482.19 -$43,660.76 -$43,660.76 -$43,660.76 -$43,660.76 -$43,660.76 -$43,660.76 -$43,660.76 $0.00
Unrestricted Cash -$705,216.65 -$385,814.49 $6,539.96 $14,959.80 $2,991.80 $2,671.80 $8,175.80 $7,855.80 $7,535.80 -$233,328.60
Reserve
Interest Reserve $2,910.72 $49,482.19 $43,660.76 $43,660.76 $43,660.76 $43,660.76 $43,660.76 $43,660.76 $43,660.76 $0.00
Debt Service $2,543.40 $37,009.97 $32,655.86 $32,655.86 $32,655.86 $32,655.86 $32,655.86 $32,655.86 $32,655.86 $0.00
Maintenance and
Operations $360.00 $6,120.00 $16,920.00 $27,720.00 $38,520.00 $49,320.00 $60,120.00 $70,920.00 $81,720.00 $87,120.00
Total Reserve $5,814.11 $92,612.17 $93,236.62 $104,036.62 $114,836.62 $125,636.62 $136,436.62 $147,236.62 $158,036.62 $87,120.00
Total Cash -$699,402.54 -$293,202.32 $99,776.58 $118,996.42 $117,828.42 $128,308.42 $144,612.42 $155,092.42 $165,572.42 -$146,208.60
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Broadband Master Plan July 2020
Financing Considerations
Because project feasibility is ultimately a function of getting people to sign up
and remain loyal to the network, there needs to be a value proposition that
mobilizes customers to subscribe. For that to happen, subscribers need a
compelling solution and the network needs to create cash flow predictability and
bankable contracts to attract financing for the project. NetEquity in San
Francisco visualizes these dependencies in this way:
NetEquity Stack
Isfandiyar (Asfi) Shaheen developed the NetEquity Stack above. Mr. Shaheen is a
Global Broadband Infrastructure Thought Leader based in San Francisco. He is
working to provide fiber optic connectivity to unconnected countries around the
world.
People are hungry for Services
Services are hungry for Infrastructure
Infrastructure is hungry for Capital
Capital is hungry for Cash Flow Predictability
Cash Flow Predictability is hungry for Bankable Contracts
Bankable Contacts result from Aligned Incentives
Aligned Incentives requires Trust
Trust comes from Having the Same Vision
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Legal Considerations
The McCall City Attorney should prepare a separate analysis describing the City’s
legal authority to build, own, and operate broadband infrastructure and include
legal and risk-related considerations for organizing a broadband utility.
Risk Analysis
The following is an analysis of the main risk factors facing the City of McCall as it
pursues its fiber-to-the-premise deployment. Nine Risk Factors are analyzed:
1. Subscriber Churn Risk
2. Take-Rate Risk
3. Project Execution Risk
4. Equipment and Technology Risk
5. Community Engagement Risk
6. Cost Modeling Risk
7. Timeline Risk
8. Regulatory Risk
9. Middle Mile Risk
Subscriber Churn
Subscriber Churn is the risk that customers sign up and then do not remain
subscribers to the network.
Likelihood: Today customers are primarily driven by cost, speed, and customer
service. Churn is possible and is a consequence of the customers pursuing an
option to get better value from an alternative solution. The likelihood of churn is
high if a new market solution simply replicates the incumbent model. The
likelihood of churn goes down under a Business Model where 1) the customer is
financially responsible for the drop to their property and 2) where the value
proposition is strong enough to make the customer voluntarily committed to the
network.
Impact: The impact of churn on the network is potentially catastrophic if it
reaches a level where the capital and operational cost of the abandoned
infrastructure cannot reasonably be shared by remaining subscribers.
9
Risk Factors >
Likelihood
Impact
Mitigation
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Mitigation: Churn can be mitigated by implementing a business model that
makes customers voluntarily committed to the network and by assigning
financial responsibility to customers for their lateral connection.
Take-Rate Risk
Take-rate risk is the risk that the City builds out the network and ends up with a
take-rate that is lower than expected.
Likelihood: Take-rate risk is possible and is a function of the value proposition of
the network and how well that value proposition gets communicated and
managed before construction starts. High take-rates lead to lower network costs
for subscribers. This creates a virtuous cycle where lower costs lead to higher
take rates. The reverse is also true.
Impact: The worst-case scenario is one where lower take rates lead to higher
costs and churn which create a death spiral that negatively compounds until the
network is not sustainable.
Mitigation: Manage demand aggregation before construction begins and give
consumers a value proposition that makes them voluntarily committed to the
network infrastructure.
Project Execution
Project Execution includes strategy, planning, project management and
fulfillment of the project plan and operational execution.
Likelihood: Project execution failure is possible and is a function of the
effectiveness of project planning, management, controls, and execution.
Impact: The severity of impact is in proportion to the effectiveness of project
management and execution. A worst-case scenario is one where project
execution affects the value proposition, which in turn affects take-rate and
churn.
Mitigation: Hire or partner with skilled project managers and key strategic
partners. Create alignment among key team members on the project plan and
operational plan. Develop project controls that are monitored and reported to
senior leadership monthly.
Equipment & Technology Risk
Equipment & Technology Risk includes both software and hardware solutions
and is the risk that equipment failure rates are higher than expected, major
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software bugs are unresolved, operational reliability is lower than expected,
and/or that the technology lifecycle leads to faster obsolescence than is
expected. For a network, the size of McCall, an additional risk is scalability risk.
Middle Mile risk covered in the Middle Mile pricing section.
Likelihood: Solutions with short deployment histories, unreliable references,
unclear quality control and test procedures, weak professional teams, and poorly
architected scalability abstractions present increased equipment and technology
risk.
Impact: The impact of this risk category is moderate because it is possible to vet
both software and hardware systems to assess this risk. The base technology of
the network will be fiber optic cable and that has sufficient history to present a
minor risk to the project. Remaining risks include electronics and software
systems.
Mitigation: Implement thorough due diligence processes with trained
professionals to scrutinize references, architecture, software abstractions,
quality control systems and the professional histories of vendors being
considered.
Community Engagement
Community Engagement is the marketing, education and communication
processes and strategies used to inform residents and businesses about the
value proposition offered by the network.
Likelihood: Community Engagement risk is possible but nonetheless a risk that
can be managed and monitored. Poor planning, management and execution
increases the level of risk. Community engagement can be handled by internal
City staff, but risk increases if staff member resources are inadequate for a
project of this size. There is an abundant supply of marketing professionals
available to assist with community engagement processes.
Impact: Community engagement is a key driver of project success due to the
relationship between community engagement and take-rate.
Mitigation: Leverage the skills of competent marketing professionals and
provide sufficient resources to make it easy for every resident to learn the basic
value proposition for the network in comparison to alternatives through a
variety of marketing, education and communication strategies.
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Cost Modeling Risk
Cost Modeling Risk is the risk that cost modeling significantly underestimates
actual design, construction, and/or operational costs.
Likelihood: There is enough industry data to reasonably validate cost estimates.
Impact: Cost overruns can have a moderate to disastrous impact on network
sustainability.
Mitigation: Validate financial assumptions against industry assumptions, market
conditions, and account for local economic variables.
Timeline Risk
The current plan is to connect 300 homes per year over a 10-year period. This
can be a successful strategy. It is a measured approach and is similar to the
strategy the Ammon, Idaho has followed for its buildout. Before finalizing this
strategy there are several considerations that should be evaluated:
1) Each LID phase requires legal, financing and accounting transaction costs.
Building the network with fewer LID’s will lower the overall transaction
costs for the project.
2) Maintenance & Operations does not break even until there are roughly
1,800 subscribers. Building at a faster pace will result in an accelerated
period to break-even.
3) Interest Rates are at an unprecedented low currently and building over a
10- year period may expose later project years to some interest rate risk.
In the approach followed by Ammon, none of the fiber network loans were
organized as City debt. The loans were directly between the subscribers via the
LID and the lending institution.
Likelihood: Costs are certain to be higher for an extended buildout period.
However, there are execution risks for accelerating the buildout and these trade-
offs need to be weighed by City leaders.
Impact: Costs will be incrementally higher for an extended build-out schedule
and M&O will have a longer ramp to sustainability.
Mitigation: The City can control the buildout schedule following a cost / benefit
analysis of the options. An important consideration is alignment with
construction partners. If the city is going to outsource construction, it should
consult with potential construction partners about the alternative construction
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schedules to make sure that the city’s strategy is amenable to key construction
partners.
Regulatory Risk
Regulatory Risk is the risk that State or Federal regulations become an
impediment or barrier to the city successfully building or operating a municipal
network. Idaho state law is unclear on whether cities have the right to build and
operate a municipal network. Because the law is unclear, cities have pursued
Judicial Confirmations to establish the right to build and operate fiber optic
infrastructure. Two of the cities that have followed this path are Ammon and
Mountain Home.
Likelihood: There is a reasonable amount of risk that an incumbent operator
could make a claim to stop McCall from building a competing network.
Impact: If a claim were to be brought against McCall, the likely process is that it
would take an extensive amount of time and cost to contest or appeal the claim.
Mitigation: The McCall City Attorney can oversee an effort to follow the same
process followed by Ammon and Mountain Home to seek and receive Judicial
Confirmation that the City has the authority to build this infrastructure.
Middle Mile Risks
Middle Mile risks include the following:
1) Lack of redundant options on divergent paths,
2) Pricing risk, and
3) The risk of being stranded or isolated without a viable path to an internet
exchange point.
Likelihood: The closest internet exchange point is in Boise. McCall does have a
divergent middle mile path to Boise via the three Middle Mile options, but
bandwidth capacity is a potential issue going forward.
The most likely risk is that incumbent middle mile carriers will not provide
competitively priced, high bandwidth middle mile options.
The risk of getting isolated or cut off from internet access is possible but has a
low likelihood of occurring.
Impact: Each of the Middle Mile Risks could have a significant impact on network
success. The most likely risk is pricing risk followed by insufficient Middle Mile
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capacity. The obvious impact of pricing risk is that the per premise cost will
increase.
Mitigation: The way the City can mitigate and possibly eliminate Middle Mile
Risk is by working with the County to build and operate its own Middle Mile
connection back to Boise. This may seem daunting to the City and the County,
but it is worth doing a separate analysis and comparison of projected costs to
proposals from existing incumbents. A significant benefit of the City & County
working together to enable a permanent path to Boise is that the infrastructure
could be paid off over 30 years and would provide abundant bandwidth to
County residents and businesses.
N
0 0.25 0.5 0.75 10.13 Miles
FIBER INSTALLATION PROJECT
FIBER PULLING & SPLICING
WITHIN PREVIOUSLY
INSTALLED CONDUIT
FIBER PULLING AND
SPLICING WITHIN CONDUIT
TO BE INSTALLED 2020
FUTURE INSTALL
City of McCall
RAPID Fiber Loop
Deinhard \
Boydston
Route
Phase 1A
Phase 1A
Phase 1A
Phase 1 B
Phase 2
Phase
2Phase 2
Phase 3
Phase 3
Phase 4
Phase 5
Phase 5
Phase 6 Phase 1 B
Phase
Phase 1 B
Phase 1A
Phase 2
Phase 3
Phase 4
Phase 5
Phase 6
Project Years
FY 20
FY 21