City of Baltimore Broadband Public

Transcription

City of Baltimore
Broadband Public Infrastructure Strategies Report
Final Report
August 2015
Baltimore Broadband Public Infrastructure Strategies Report. August 2015
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Table of Contents
I.
Executive Summary .................................................................................................................. 3
II.
Introduction ............................................................................................................................. 12
III.
Process...................................................................................................................................... 13
IV.
Baltimore’s Broadband Infrastructure Assets ................................................................. 18
A. Types of Broadband Infrastructure Assets ................................................................. 18
B. Mapping and Documentation of Existing Assets ....................................................... 19
C. Valuation of Existing Assets............................................................................................. 40
V.
Broadband Community Needs ........................................................................................... 46
A. Overview of Broadband Technologies ......................................................................... 46
B. What is Driving Broadband Demand? .......................................................................... 48
VI.
Opportunity Assessment for Baltimore ............................................................................ 57
A. Expanding Broadband Access & Availability ............................................................... 57
B. Overview of Business Models ......................................................................................... 59
C. Business Model Considerations .................................................................................... 61
D. Commonly Used Business Models ............................................................................... 62
E. Comparison of Commonly Used Business Models ................................................... 66
F. Playbook of Options for Consideration ........................................................................ 67
G. Matrix of Multiple Strategies .......................................................................................... 87
VII. Ownership & Governance Structure ................................................................................. 89
A. Creating a Baltimore Broadband Authority................................................................. 89
B. Ownership & Operational Details.................................................................................. 90
VIII. Action Plan and Resources .................................................................................................. 92
IX.
Appendix A: Glossary ........................................................................................................... 93
X.
Appendix B: Baltimore Broadband Maps........................................................................ 99
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I. Executive Summary
The Baltimore Broadband Strategies Report presents feasible strategies that the City can utilize to
enhance broadband services in its community. It provides a roadmap for the City to follow based on
opportunities to leverage the City’s infrastructure and policy tools to support the broadband needs of
the community. The following recommendations present the most plausible broadband initiatives for
the City to consider that have achievable goals and produce the greatest community benefits, in terms
of meeting the community’s long-term broadband needs as well as those of Baltimore’s community
anchor organizations and the City itself.
Recommended Strategies
1. Leverage the City’s Fiber-Optic Network to Provide Greater Capacity and Potential
Savings to Baltimore City Public Schools
Description:
The City should pursue the opportunity to utilize its fiber-optic network to provide wide-area network
connectivity to Baltimore City Public Schools (“BCPS”). The upgrade of the City’s fiber-optic network1
will provide sufficient excess capacity that can be utilized to deliver 1 Gbps or greater fiber-optic
services to up to 206 BCPS schools and administrative facilities throughout Baltimore.
Benefits:
The City’s fiber connectivity will help accommodate BCPS’s future needs for additional bandwidth by
providing wide-area network connectivity that can scale to greater bandwidths; supporting BCPS’s
long-term growth of classroom, teaching, and administrative technologies. Based on the analysis
conducted in this Study, the City may be able to provide these services at discounts up to 30%2 lower
than current rates while enabling more bandwidth to serve the needs of Baltimore’s students,
teachers, and administrators. Upfront investment will be required by the City to extend its current
network to each school; therefore, the business case developed in this Study should be refined to
accommodate the City’s budgetary constraints. This opportunity also requires that the City is able to
meet the requirements of the USAC Schools & Libraries Program (commonly known as E-Rate) to
ensure that BCPS’s 85% average discounts for wide-area connectivity services remain intact. It will
require the City to comply with the rules and regulations of the E-Rate program and become an E-Rate
service provider. The City has several viable options to provide this service including dark fiber and
transport service which should be considered by both the City and through discussions with BCPS to
determine the most achievable solution to meet BCPS’s wide-area connectivity needs.
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1
Upgrade of the City’s existing 800MHZ fiber-optic network to a 216-count fiber cable over a 54-mile span is anticipated for completion in
October of 2015.
2
Actual discounts, pricing and costs should be calculated by the City based on its payback and return requirements. The initial business case
utilizes a 5-year payback on a cost recovery model for the City, not including any potential debt service that the City would incur from
borrowing funds.
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Risks:
The City’s primary risk in providing fiber connectivity to BCPS is its success in executing the
implementation of this initiative. It will require the City to coordinate resources between multiple
departments including MOIT, Planning, Public Works, and Finance to ensure that the City is positioned
to aggressively implement the proposed network for BCPS. It will also require that the City establish
funding for the construction of the fiber lateral extensions off of the City’s new fiber ring to BCPS
locations as soon as the contract is approved by BCPS and E-Rate. Timing is paramount in this process
since the City must adhere to the delivery schedule for BCPS’s services to ensure the City and BCPS
maintain compliance with the E-Rate program. Failure to do so may result in BCPS losing a portion of
its E-Rate subsidies, which could result in a significant unbudgeted cost to BCPS. It may also put the
City’s capital investment in the project at risk in the event BCPS was forced to continue its contract
with the current provider.
Financial Summary:
BCPS currently maintains an E-Rate contract for Priority 1 Telecommunications or “wide-area
networking” services for approximately $5,649,600 per year with a current provider. This contract
provides connectivity to approximately 206 BCPS schools and administrative facilities. E-Rate provides
discounts averaging 85% of this total contract cost, or approximately $4,802,160. BCPS appears to pay
about $847,440 of this contract, or the remaining 15% that not covered in E-Rate funding.
If the City were to provide these services directly, it would require an initial investment of
approximately $16 million to build out to the 200+ schools and administrative offices. $14.5 million of
this cost is direct fiber-optic construction and it includes a 10% contingency, resulting in a total cot of
$16 million. Depending on BCPS’s plan for future connectivity services, the City and BCPS may utilize a
phased approach to connect schools and administrative sites over a 3-5 year period, which may allow
for a phased funding approach with appropriations of $3-5 million each year. The details of a phased
approach must be well coordinated between the City and BCPS.
The City could provide a dark fiber or lit transport option in delivering fiber connectivity to BCPS,
another decision that will need to be determined after further analysis of BCPS’s needs. If the City
provides a dark fiber solution, it will have no additional capital investments beyond capital
improvement of the newly constructed fiber. If the City provides a lit transport option, it will incur an
additional $1M in equipment costs necessary to provide these services to BCPS, resulting in a total
capital investment of $17 million. Over the first 5-year period, the City will also incur operations and
maintenance (“O&M”) costs to manage the fiber-optic network and ensure it meets the service levels
required by BCPS. The dark fiber option requires $2M of O&M costs while the lit transport option
requires $4M of O&M costs.
Based on a 5-year payback and assuming that BCPS desires a dark fiber option, the City could provide
these services for $3.6M annually by competitively bidding and winning BCPS’s E-Rate contract. This
would represent up to a 37% savings to BCPS over its current contract and the capability to provide 1
Gbps of connectivity to every school covered under the E-Rate contract. To maintain E-Rate funding,
BCPS will eventually be required to rebid this contract and the City should expect that the competitive
nature of E-Rate bidding will drive down pricing beyond the initial 5-year term; therefore, the City
should expect its annual revenues to fall after this initial 5-year period. Nevertheless, even at reduced
rates, the City can expect this contract to become a long-term revenue source that leverages its fiberBaltimore Broadband Public Infrastructure Strategies Report. August 2015
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optic network. Over a 10-year period and once the City’s payback is achieved, it is expected to
generate between $7 - $15 million in net revenues for the City.
Action Items:
The City should refine the initial business case established in this Study to determine a feasible
financial and operational scenario for providing fiber connectivity services to BCPS. The City should
also further its initial discussions with BCPS around utilizing the City’s network for BCPS’s fiber
connectivity needs while adhering to any E-Rate regulations concerning fair and open bidding
processes. BCPS’s current wide-area connectivity service contract expires in June of 2016; therefore,
the City must determine the feasibility of this opportunity quickly since a potential buildout of the
City’s network to BCPS facilities may take up to 18 months.
2. Develop a Dark-Fiber Leasing Program to Leverage the City’s New and Existing
Investments in Fiber-Optic Infrastructure
Description:
The upgrade of the City’s fiber ring presents an opportunity to develop a dark-fiber leasing program
that utilizes excess capacity to expand the availability of broadband services in key corridors of the
City. The City’s fiber ring will overbuild 54 miles of 216-count ribbon fiber on top of the existing Net800
fiber network. The project is scheduled for completion in October of 2015. Excess dark fiber strands in
this network provide an opportunity for the City to lease or sell IRU3 capacity to broadband providers
who require metropolitan fiber within Baltimore. In commercializing the fiber, the City has the
opportunity to expand broadband providers’ access to competitively priced dark fiber in Baltimore
and generate a recurring revenue stream from the use of a public asset. This program is not limited to
the City’s newly created fiber ring and can be employed throughout the majority of the City’s fiberoptic assets where excess capacity is available.
Benefits:
Providers could utilize this network to enhance their local broadband services for residents,
businesses, and community anchors by:
•
•
•
•
Providing additional direct fiber connectivity options for customers
Creating feeder and distribution networks for new fiber-based broadband deployments
Increasing the capacity and redundancy of existing broadband deployments
Providing lower costs to subscribers through a potential City-adopted incentive program that
establishes a discounted rate structure for dark fiber leasing and IRU sales
In addition, commercializing the dark fiber will provide a recurring stream to the City. The City should
market and sell dark fiber leasing and IRU services to broadband providers in Baltimore at rates that
incentivize these providers to make use of the City’s infrastructure. In return, the City will receive onetime and recurring revenues through lease and IRU programs. Leasing will provide monthly or annual
recurring revenue streams to the City while IRUs will provide a one-time upfront payment to the City
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Indefeasible Rights of Use: A contractual agreement between the operators of a communications cable in which one party
provides unrestricted use of a portion of the cable for a long period of time at a fixed price which is generally paid upfront.
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for a long-term “capital lease” of its infrastructure. These programs should immediately utilize the
City’s existing fiber-optic infrastructure and should not be limited to only the newly installed fiber ring
as described more completely in the full Report.
Risks:
The City must develop internal processes to ensure that its dark fiber meets the legal, regulatory,
performance, and cost requirements of broadband service providers. Without gaining “common
ground” with broadband service providers in these key areas, the City’s dark fiber leasing program will
be less successful; resulting in a lower volume of dark fiber leases/IRUs, less benefits to the
community, and less revenues to the City itself.
Financial Summary:
Although no significant upfront costs should be required for the City to commercialize its dark fiber
assets, some startup costs are anticipated. These include program setup costs which may include
consulting, external legal and related professional fees to structure the initial program, develop rate
structures, legal agreements, and organizational documents/charters. These costs are not expected to
exceed $400,000 in the first year and will be reduced significantly in the following years to a nominal
amount. The City may also incur some capital costs in preparing the dark fiber networks for use by
broadband service providers. This Report projects a very conservative forecast for the City’s dark fiber
services. While demand for these services may be higher than anticipated, this Study discounts the
forecast because of several reasons:
•
•
•
•
The City will be a new entrant into the dark fiber capacity market
The City has no previous experience leasing or selling IRUs for dark fiber
Public organizations generally realize a “slow start” approach to providing dark fiber
Broadband service providers may be hesitant to procuring dark fiber from a public organization
The City can expect various types of providers to utilize its dark fiber including fiber overbuilders,
mobile operators, public organizations, and wholesalers. Based on analysis of municipal dark fiber
leasing and IRU programs in cities across the country, the City can expect monthly lease rates
between $100 to $250 per strand mile, depending on the rate structure developed for the City’s
network and market acceptance of these pricing levels. The City can expect IRU rates between $250 to
$750 per strand mile for 10 to 20 year IRUs, also depending on the City’s adopted rate structure and
market acceptance of these pricing levels. Dark fiber leases and IRUs will gradually increase over time
as more adoption of the City’s network is achieved with revenues growing from $500K over the first 5
years. Over the 10-year period, the program could achieve up to $6.8 million in free cash flow after
operating expenses are paid, not including debt service.
Action Items:
Prior to commercializing its dark fiber, the City will need to determine the most appropriate
ownership, governance, and operation model for this service in conjunction with Recommendation
#7. The key items for the City to consider include:
•
•
•
•
What agency will manage the process?
Is the agency structured to manage a “utility” type of service?
How will rates be established and what rate setting process will be utilized?
How will revenues be collected and costs be paid?
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•
•
•
Who will negotiate dark fiber leases and IRUs on behalf of the City?
Who will manage the day-to-day operations of the network?
How will the City meet the service level requirements of broadband providers?
The City should identify internal resources responsible for developing answers to these key questions
including MOIT, public works, utilities, the department of transportation, and the City attorney’s office.
The City should develop the tactical plan through MOIT and in conjunction with other City
departments.
3. Leverage the Baltimore Department of Transportation’s Conduit System as a
Platform to Expand Broadband Availability
Description:
The Department of Transportation’s (DOT) extensive underground conduit system could become a key
resource to use in expanding the availability of broadband infrastructure in Baltimore. This Study analyzed
the City’s current documentation on the conduit and based on this initial analysis, this Report recommends
that the City institute a program to proof sections of the conduit that have value to broadband
development in the City. The City should engage its Department of Transportation to complete a feasible
conduit-proofing program in areas prioritized for economic and community development. On successful
proofing, the City will allocate conduit into its inventory of available broadband assets for employment with
City technology projects and in conjunction with broadband service providers.
Benefits:
The significant cost of building underground broadband infrastructure in Baltimore makes the City’s
conduit system a resource that could incentivize broadband service providers to accelerate their
deployments; reducing some of the initial investment needed to deploy fiber-optic networks in the City. In
its current state, the conduit system will need significant proofing and documentation of usable resources;
however, if the results are positive, the City will have identified an important resource that can be leveraged
with broadband service providers to expand access and availability. Similar to the City’s dark fiber networks,
the conduit systems can be leased to broadband service providers to serve more of Baltimore’s
communities. These leases may be particularly attractive for fiber overbuilders that are interested in
delivering fiber-based broadband technologies into residential and business areas.
Risks:
Although the City’s conduit system is a significant asset for use in broadband initiatives, the proofing
process will determine its overall usability in these projects. Physical proofing will determine not only the
physical condition of the pipe but also the feasibility of accessing it. Access is an important issue,
particularly in heavily built-out urban environments. The City will need to determine what infrastructure is
available that provides access to conduit including vaults, handholes, manholes, and other outside plant
structures. Sufficient proofing, access, and documentation of the City’s infrastructure are precursors to
commercializing DOT’s conduit system. Broadband providers will require certain “industry standard
specifications” to be met prior to negotiating the use of the conduit system.
Financial Summary:
If the City chooses to outsource the proofing of DOT conduit to external contractors, the City can expect to
incur labor charges at the prevailing rates for inspection of outside plant facilities. Magellan recommends
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that the City internalize this process where possible to eliminate any external costs from such contracts
where staff can be assigned to this project. Revenues attributable to the lease or IRU sale of DOT conduit
are indeterminable at present due to the current state of the asset and its overall usability in future
broadband projects.
Action Items:
The City should employ the resources of DOT to institute a proofing program for the conduit across key
areas of the City. DOT should work with MOIT to analyze, document, and digitize conduit in targeted areas
of the City (more fully described in the full Report).
4. Enable and Incentivize the Use of the City’s Vertical Assets to Promote More
Wireless Broadband Development
Description:
The City maintains ownership of vertical assets including towers and rooftops throughout various
corridors of Baltimore. These assets are currently utilized primarily for public safety communications
to support the City’s 800 Megahertz wireless network. Available capacity on these structures may be
utilized to support the future buildout of wireless infrastructure in Baltimore at rates that are more
competitive than commercial tower leasing rates. These assets are predominantly connected to the
City’s fiber ring which would enable wireless providers to gain access to high-speed fiber backhaul to
support higher speed wireless data within the City.
Benefits:
Leveraging Baltimore’s vertical assets may provide a valuable resource to accelerate wireless data and
broadband deployments throughout the City. Due to the high deployment costs of fiber-optic
broadband services that result in lethargic deployments, wireless broadband options may provide a
valuable interim option to get enhanced broadband services to residents and businesses across the
City. Where feasible, the City’s towers and rooftops can facilitate the “last mile” wireless connections,
allowing wireless broadband providers to reach more of the community and while providing a
sufficient option to expand access to broadband for residents and businesses.
Risks:
The availability of the City’s vertical structures will be subject to any City ordinances governing access
to structures that support public safety services. In the event that restrictive ordinances limit
commercial use of these towers and rooftops, the City will be limited in the amount of capacity
available to support wireless data and broadband service providers. The City will also be required to
develop an appropriate organizational structure that allows for the leasing of available space on
towers and rooftops. This organizational structure is presented more fully in Recommendation #5.
Financial Summary:
Wireless tower and rooftop leasing is not anticipated to become a significant source of revenue for
the City and is expected to achieve only a marginal net revenue after costs such as contract and
program management are accounted for by the City.
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Action Items:
The City should work with the Baltimore Police and Fire Departments to determine if any ordinances
exist that prohibit the City from leasing access to its vertical assets. In accordance with
Recommendation #5, the City should determine the most appropriate organizational structure and
contract vehicles through which it can negotiate, authorize, and approve such leases.
5. Establish an Autonomous Baltimore Broadband Authority (“BBA”) that Enables the
City to Implement Broadband Initiatives Under an Appropriate Governance and
Ownership Structure
Description:
Broadband has become the “must have utility” for the 21st century and beyond. Similar to electricity
and telephone service, broadband has become the basic building block required to grow and sustain
economic development. Going forward, broadband planning, management, and governance will be
the starting point for all other community activities and service delivery platforms. The current and
future broadband inventory and possibilities of how to use and leverage these assets are critical
elements of successful implementations of all future services for the City of Baltimore and economic
well being of the city. It is with this background and for these reasons that the City should establish a
Baltimore Broadband Authority (BBA).
Much like Metropolitan Transit Authorities or Utility Authorities, for the City to be effective in engaging
its broadband assets to expand services, it will need to adopt the right organizational structure and
governance model to serve as custodian of the assets. At present, the City has significant broadband
assets composed of conduit, dark fiber, lit fiber, vertical structures, and other City-owned properties
that can be leveraged for the benefit of bringing more broadband to Baltimore’s residents,
businesses, and community anchors. However, the City needs an organizational structure that will
receive assignment of broadband assets, manage these assets, and implement programs to
commercialize them; allowing the City to engage with other public organizations and broadband
service providers who will utilize them. This structure will be dependent on a comprehensive legal and
regulatory analysis of Baltimore’s options to determine what structures the City can utilize to
commercialize its broadband assets including utility models, non-profit organizations, and publicprivate partnerships. Once the most appropriate model is chosen, the City will need to develop the
organizational structure, governance model, regulatory filings, and legal documents to support that
model. This process will also determine how the Entity will be managed and staffed within the City.
Based on our analysis of the City’s current status, a broadband “Enterprise Fund” model may be the
most appropriate structure for the City’s broadband initiatives. It would enable the City to manage its
broadband assets within an internal organization of the City, maintain separate accounting and
records, and potentially establish a governing board composed of personnel from the City’s
departments that maintain oversight of these assets. This structure would allow the City (through this
Authority) to maintain complete control over its broadband assets yet have the structure through
which it could negotiate and enter into agreements.
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Benefits:
Consolidating Baltimore’s broadband assets under a single entity would enable the City to more easily
manage the asset base and programs associated with it. This Report proposes a number of
broadband strategies that require the coordination of multiple City departments to be implemented
effectively. This entity will be responsible for coordinating the functions, resources, and strategies
between departments to utilize the assets in broadband initiatives. This recommendation does not
envision a “new department” but rather an “Authority” that will be composed of staff from multiple
departments who maintain responsibility for their respective areas of expertise regarding broadband
assets.
Risks:
The City may face resource allocation issues associated with developing the organizational structure
for its broadband initiatives. The City will need to assess its internal capabilities for managing a
broadband infrastructure program and decide how it will supplement its existing staff to effectively
administer such a program. This includes assessing internal staff capabilities, resources, and workload
as well as considering outsourcing certain broadband infrastructure functions to external
organizations with particular capabilities in this area. The governance model must also consider key
issues in commercializing the City’s broadband infrastructure that pose political, financial, and
regulatory risk to the organization if not managed properly. Below is a list of these key questions that
must be carefully analyzed by the City:
How will joint investment in broadband infrastructure be accomplished between the City and
private sector organizations?
How will the City balance private sector goals of revenue growth and profitability with public
goals of providing affordable and easily accessible broadband services?
How will future system expansion be handled between the City and private sector providers and
what contributions will the parties make to infrastructure investments?
How will the City maintain a neutral and non-discriminatory status with broadband providers and
promote a competitive environment that benefits the City’s broadband user base?
•
•
•
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Financial Summary:
Although the City will bear internal costs to develop the Baltimore Broadband Authority, it is unclear
what resource allocations will be required of the City to establish and manage the entity. The second
phase of the Public Broadband Infrastructure Strategies project will work to determine the potential
costs borne by this program and indicate the total current resource allocation as well as any new
costs associated with the Authority.
Action Items:
The City should conduct a thorough internal review of the legal and regulatory framework under which
it can commercialize its broadband assets. This review will:
•
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•
Identify how the City will implement the BBA using internal and external resources
Determine the oversight board and roles required in the BBA
Determine the total costs to the City for implementation and management of the BBA
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Summary of Recommendations
Recommendation
Key Benefits
1. Leverage the city’s fiber-optic network to
provide greater Capacity and potential
savings to Baltimore City Public Schools
•
1 Gbps to every school
Future proof BCPS’s
technology needs
• New City revenue source
2. Develop a dark-fiber leasing program to
leverage the City’s new and existing
investments in fiber-optic infrastructure
•
3. Leverage the Baltimore Department of
Transportation’s conduit system as a
platform to expand broadband
availability
•
4. Enable and incentivize the use of the
City’s vertical assets to promote more
wireless broadband development
•
5. Establish an autonomous Baltimore
Broadband Authority (“BBA”) that
enables the City to implement
broadband initiatives under an
appropriate governance and ownership
structure
•
Total Cost
Payback or
Return
Risk
$16 Million
$7-$15
Million Over
10 Years
Moderate
Expand access & availability
New City revenue source
• Fiber-based broadband
options for businesses and
residents
$400,000
$6.3 Million
Over 10
Years
Low
More broadband access to
City neighborhoods &
business corridors
Internal
Costs Only
Payback &
Return are
TBD
Moderate
Increased fixed wireless
broadband coverage in
neighborhoods
• Greater mobile wireless data
bandwidth
• More broadband options for
businesses & residents
Internal
Costs Only
Break-Even
Scenario
Low
Creates City authority to
implement broadband
initiatives more easily & with
control
Internal
Costs Only
Not
Applicable
Moderate
•
•
Baltimore Broadband Public Infrastructure Strategies Report. August 2015.
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II. Introduction
The City of Baltimore issued a Request for Proposal (“RFP”) to secure services from consultants with
proven expertise and experience in developing planning strategies for effectively utilizing and growing
the City’s current broadband infrastructure. This infrastructure currently supports the City of Baltimore’s
municipal operations and could possibly be leveraged to provide additional services to the community. It
supports Baltimore’s various City departments such as public safety (Baltimore Police Department, “BPD”,
Baltimore City Fire Department, “BCFD”), Department of Public Works “DPW”, Department of Recreation
and Parks “Rec & Parks”, to name a few. It supports the City’s public safety organizations ensuring vital
communications are available for fire, police, and emergency responders. It supports the local
government applications and how these organizations interface with citizens. Further, it has the capacity
to enhance Baltimore’s economic and community development strategies by improving the access,
availability, and affordability of Baltimore’s local broadband services.
The City of Baltimore has an opportunity to positively influence the development of broadband services
for the benefit of the community. By utilizing its existing City-owned infrastructure, strategic investments
in new broadband infrastructure, and broadband-friendly public policy tools that are at its disposal, the
City can increase access, availability, and affordability of broadband within the City. This requires the
participation of multiple public and private entities including Baltimore’s schools, libraries, healthcare,
and community support organizations, as well as private broadband providers. This Baltimore
Broadband Strategies Report presents feasible strategies that the City can utilize to enhance broadband
services in its community. It provides a roadmap for broadband development based on opportunities to
leverage the City’s infrastructure and policy tools to support the broadband needs of the community.
Magellan Advisors was selected by the City of Baltimore through a competitive procurement to develop
the Baltimore Broadband Strategies Report. Magellan works with cities nationwide addressing
broadband and technology issues in their communities by developing feasible solutions that leverage
public sector strengths and private sector competencies. Magellan specializes in developing strategies
that result in deployment of affordable, high-speed broadband services, in conjunction with local service
providers, community anchors, businesses, and residents.
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III. Process
Magellan’s approach began with a comprehensive goal and expectation setting exercise with the City’s
project team; this was critical to determining the desired outcomes and measuring the level of success
the project achieved. We anticipated coordinating with the stakeholders involved in the project to
determine the beneficiaries of future broadband development within the City and greater community.
We suggested incorporating all relevant stakeholders into the process to achieve desirable outcomes for
economic and community development, efficient public administration, and future broadband
development.
Upon completion of this initial step, Magellan inventoried City-owned infrastructure to allow the project
team to formulate a baseline of broadband assets. The baseline helped identify what infrastructure was
available throughout the greater Baltimore region. Once documented, Magellan utilized comparisonbased valuation methods (“comps”), a Cost to Install and Market Valuation methodologies to determine
the overall value of the infrastructure. Magellan identified comps in the market for conduit, fiber, and
other assets from the current telecommunications market and derived a valuation of the City’s
infrastructure for use in negotiating use, pricing, and investment in the project. Magellan utilized
comparisons in similarly sized cities to Baltimore and in cases where municipalities sold, leased or
exchanged “in-kind” value with service providers for use of these assets.
Magellan proceeded to conduct a comprehensive needs analysis of the region, focusing particularly on
the community anchors, such as education, healthcare, City, and related organizations. In addition,
Magellan evaluated broadband availability within business and residential communities in the Baltimore
area to determine how the market is currently served and what impact the City’s broadband assets had
on expanding advanced broadband in the region. The needs analysis is a critical component to
determining how the City’s infrastructure may be utilized by service providers, valued in the market, and
expanded to meet future needs.
During the analysis, Magellan worked with the City and key community anchors within the City to
determine strategic applications of the Inter-County Broadband Network (“ICBN”) network to promote
long-term expansion of broadband in Baltimore. The ICBN is a 17-mile segment of 216-strand fiber
running through downtown Baltimore, connecting Anne Arundel County on one side, and Baltimore
County on the other. ICBN was part of a Department of Commerce Broadband Technology Opportunities
Grant (BTOP) grant awarded in 2010 to the State of Maryland. The grant was funded by the American
Recovery and Reinvestment (ARRA, or Stimulus) Act. ICBN fiber was installed in 2013, and the grant
closed in 2013.) The ICBN network also interconnects the majority of the City’s fire stations to one
another using a mix of City-owned-fiber and ICBN-installed fiber. Magellan created an overlay of the ICBN
network on top of the City’s fiber and conduit infrastructure to determine what current and future
opportunities existed to bring ICBN’s services to local community anchors in the Baltimore market. The
analysis also identified open-access opportunities whereby service providers could expand further into
the Baltimore market from other points in the ICBN. These open-access opportunities would potentially
help the City’s current providers reach more of the community and create an environment where new
providers could enter the market more easily.
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From Magellan’s study of the Baltimore market and the needs assessment, Magellan developed a
comprehensive market and demand plan that forecasts broadband expansion through use of the City’s
infrastructure. It details the types of services, types of customers, customer uptake, and growth across
the City. The market and demand plan indicates the total impact of the City’s network to the greater
Baltimore community by illustrating how the network could be used to expand advanced broadband
services. Magellan considered both direct and indirect impacts of employing the City’s infrastructure on
the City itself and the Baltimore community, including:
•
•
•
•
•
Revenue-generating opportunities from lease of the City’s broadband infrastructure assets by
broadband and utility providers, businesses, and other organizations needing fiber-optic capacity;
Revenue-sharing opportunities with broadband providers utilizing public-private partnerships;
Cost reducing opportunities for the City itself through utilizing the broadband infrastructure
assets to support more of the City’s municipal operations;
Tax base increases to the City through employing Baltimore’s broadband infrastructure as an
economic development tool to attract new business
Potential cost reductions that businesses and/or residents may receive in their services through
utilization of the City’s broadband infrastructure.
Based on an analysis of available assets and the mix of public and private organizations, Magellan
assisted the City to understand and identify optimal business models to be implemented and potential
structures that may be used to accomplish the City’s goals. This included evaluation of different public
and private ownership options. Magellan assisted the City evaluate appropriate governance options for
the potential business models that would help the City ensure that its broadband initiatives were
managed appropriately, paying particular attention to governance structures employed by local
government organizations in broadband projects. This process evaluated the regulatory and statutory
requirements for Maryland municipalities to engage in the lease, sale and exchange of broadband
infrastructure with both other public and private organizations.
The project covered the following subject matter areas:
A. Governance and Ownership Strategies
Magellan assisted the City in developing and evaluating various governance and ownership strategies
including public/private partnerships, joint ventures, special authorities and non-profit organizations. This
analysis identified the environments in which the City could engage with public and private organizations
to employ the use of its broadband infrastructure, and key issues that determined what structures best
ensured the City’s goals. Some of the key questions addressed include:
•
•
•
How will joint investment in broadband infrastructure be accomplished between the City and
private sector organizations?
What organizational and operational structures should be considered by the City and private
sector organizations in use of the City’s broadband infrastructure?
How will the City balance private sector goals of revenue growth and profitability with public goals
of providing affordable and available broadband services in the City?
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•
•
•
•
•
How will future system expansion be handled between the City and private sector providers and
what contributions will the parties make to this infrastrucutre?
How will the City maintain neutrality and non-discriminatory practices with private sector
providers, promoting a competitive environment that benefits the City’s broadband user base and
ensures compliance with state and federal statutes?
What organizational structures are optimal to ensure the City maintains compliance with state
andfederal statutes.
What changes to Baltimore law and regulation are required to support the new governance
structures?
How will the City measure success of potential engagements to ensure that public-private
partnerships have “lived up to” their goals set by the parties.
B. Financial Pro Forma Development and Business Planning
Magellan conducted significant financial and business planning to help the City determine feasible
business models and long-term financial sustainability of various broadband initiatives. Magellan
presented viable alternatives to Baltimore to help the City understand the pros and cons of each from a
financial perspective. This process developed various scenarios that Baltimore could pursue in employing
its broadband infrastructure and a pro forma financial model for each one. Magellan utilized its
Broadband Financial Sustainability Model to forecast and analyze financially feasible options for the City
and determine performance metrics for each scenario that enabled the City to determine the ones that
were most appropriate for its organization, from a risk/reward perspective. Magellan incorporated the
following functional areas into this analysis:
•
•
•
•
Demand Planning
Forecasting
Services Portfolio
Rates and Adjustments
•
•
•
•
Market Strategy
Growth Management
Financial Planning
Funding Strategy
C. Funding Strategies Analysis
Magellan worked with the City to determine viable funding solutions for those options that required a
public funding component. Magellan modeled projected capital and operating costs related to buildout
and implementation of broadband infrastructure. Magellan identified potential system revenues
generated by investments in the infrastructure to understand how these cash flows supported future
operating and capital costs as the infrastructure expands. This information was critical to accurately
predict the type and amount of funding required to make the recommended strategies sustainable and
to ensure debt service coverage. Some of the areas Magellan examined include:
•
•
•
•
•
•
Total amount of funding needed for the project
Capital versus operational funding needed for the project
Funding term, identifying short-term and long-term portions of funding
Taxable versus tax-free financing
Short-term and long-term bond analysis
Short-term and long-term loan analysis
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•
•
•
•
Institutional, regional, and local bank financing
Debt service coverage analysis
Optimizing public and private funding sources
State and Federal grant and loan programs such as FirstNET, USDA RUS and the Healthcare
Connect Fund
D. Public/Private Partnership Development
A critical step in this project was the identification of potential partnerships with both public and private
organizations. The City’s broadband infrastructure is a key asset that will have long-term, positive impact
on enhancing broadband conditions in Baltimore; however, it must be employed with the right
combination of partners from Baltimore’s local public organizations and broadband service providers.
Public partners, including local schools, hospitals, government and public safety organizations have a key
role to play in becoming users of Baltimore’s broadband infrastructure while private organizations,
including broadband and utility providers have a key role to play in delivering services to Baltimore’s
community. Magellan assisted the City to determine what roles each of these organizations would play in
the City’s broadband initiatives and how together these public/private partnerships could enhance local
broadband.
E. Coordination with ICBN
Magellan worked with the City to determine the strategic benefits of working with and partnering with
the ICBN network. Magellan identified opportunities to expand the use of the ICBN, for community
anchors, and wholesale providers. This analysis identified new opportunities for service providers to
expand services within the Baltimore market from through use of available ICBN capacity, creating a
more diverse and competitive telecommunications market with greater reach into Baltimore’s
communities.
F. Mapping and Valuation
Magellan’s team implemented comprehensive GIS-based mapping of Baltimore’s broadband
infrastructure to determine the locations of available assets for use in the project. In addition to this
infrastructure documentation process, Magellan completed a market study of Baltimore’s broadband
availability and penetration. This analysis helped determine how Baltimore was served by broadband
providers and how many users in Baltimore subscribed to broadband services, using a granular analysis
of every census tract in the City. The goals of Magellan’s analysis are to achieve the following:
1. Geocorrect documentation of the City’s conduit, fiber networks, manholes, vaults, handholes,
towers, rooftops, and related infrastructure;
2. Accessibility of this infrastructure along each route to determine how it may be expanded,
interconnected, and utilized by City departments, community anchors, utilities, and broadband
providers;
3. Initial capacity of the infrastructure its availability for use in the project, including conduit space,
innerduct, fiber strands, cable slack, tower space, rooftop space, and related infrastructure; and,
4. From the documentation of these assets, determination of their valuation using several different
approaches, including a “cost to build today” approach and a fair market valuation approach.
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The maps enabled the accurate analysis and reporting on key broadband infrastructure assets
throughout Baltimore. Once all infrastructure inventories were identified, Magellan assisted the City by
providing valuation of the City’s current infrastructure using several approaches including a “cost to
install” valuation and a market based comparison valuation.
G. Goals and Objectives
In this Study, the City desires to evaluate the opportunities to utilize its broadband infrastructure assets
and public policy tools to positively impact the development of broadband within Baltimore. The key
objectives of this study are to:
1
2
3
4
5
Document and inventory the City’s current broadband infrastructure and
determine its availability for use in potential broadband initiatives.
Determine a fair valuation for the broadband infrastructure owned by the City to
use in supporting the City’s needs for potential broadband initiatives.
Determine a range of feasible business models that the City may employ to
expand broadband in Baltimore through use of its broadband infrastructure.
Identify a range of public-private partnership opportunities that the City should
consider in expanding broadband in Baltimore.
Identify feasible ownership and operations models that the City should utilize with
public and private organizations to expand broadband in Baltimore.
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IV. Baltimore’s Broadband Infrastructure Assets
Baltimore owns a range of potential assets that may be employed for use in developing long-term
broadband strategies, termed in this study the “Broadband Infrastructure Assets.” These include outside
plant resources that have been installed by the City over many years or have been built cooperatively
between the City and local utility or telecommunications providers who provide services to residents and
businesses in Baltimore. Cities across the country have achieved success in using their broadband
infrastructure assets to serve their local communities, as described in Section IV: Goals and Objectives.
The City has substantial assets that could be utilized to improve broadband access, availability, and
affordability in Baltimore. This section lays out the initial scope of Baltimore’s assets to provide a baseline
framework from which to develop a range of utilization strategies, broadband opportunities, and
business models for the City to consider.
A. Types of Broadband Infrastructure Assets
The City of Baltimore owns the following types of broadband infrastructure assets.
Conduit Infrastructure
Conduit is protective tubing that is used in broadband communications systems to carry fiber-optic and
copper cables in underground environments. Conduit is generally constructed of high-density
polyurethane pipe and comes in various sizes to support different broadband applications. The City
owns significant conduit infrastructure that runs through many City corridors. Fiber-optic infrastructure
owned by the City is installed in much of this conduit system. In addition to the physical pipe, conduit
infrastructure includes structural elements that are used to contain fiber-optic and copper cables. These
include vaults, manholes, handholes and other structures that are placed in the ground to connect
segments of conduit.
Fiber-Optic Infrastructure
Also known as optical fiber, a physical cable constructed of extruded glass through which light signals are
carried between communications systems. The City maintains a significant amount of fiber-optic
infrastructure that is used to support municipal communications across information technology, public
safety and other functions.
Dark Fiber Infrastructure
Dark fiber provides the physical fiber-optic strand or strands for use in a communications infrastructure,
contrasted to lit fiber, whereby a transport service or “circuit” is provided for the infrastructure. For the
purposes of this report, dark fiber infrastructure denotes fiber-optic cables owned by the City and
available for use in potential broadband projects.
Lit Fiber Infrastructure
A communications service running over a physical strand of fiber-optic cabling, otherwise known as
transport service or a “circuit.” The City has implemented many lit fiber networks that provide
connectivity between municipal buildings, network-connected video cameras and wireless systems.
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Tower Infrastructure
Vertical structures such as towers and rooftops are valuable assets for wireless broadband. Service
providers utilize these assets to transmit wireless signal across an area, including signal for mobile
carriers and wireless broadband providers. The City owns some towers and has equipped certain
buildings with rooftop antennas to transmit wireless signal for public safety applications. These assets
may also be used to support mobile carriers’ and wireless broadband providers’ needs in the City.
B. Mapping and Documentation of Existing Assets
Magellan Advisors has completed a high-level analysis of these assets to help Baltimore determine their
usability in the project. This analysis has been prepared as a first step toward making use of these assets
in Baltimore’s broadband strategies; however, more work will be required to proof these assets and
determine their final usability in a project. Magellan suggests that this proofing is completed once
Baltimore is ready to move forward with its broadband strategies. As a next step, Baltimore should
further evaluate the assets that have been highlighted in this Plan and employ Department of Public
Works, Department of Transportation, and/or outside contractors to proof the conduit, fiber-optic,
facilities, and related assets enumerated in this Study. These steps entail significant “on the ground”
resources to determine the specific usability of infrastructure, namely the City’s extensive conduit
infrastructure.
By completing a thorough analysis and proofing of these assets, the City will be in a position to expand
the use of these assets for additional community uses, potentially connect new community anchors to a
municipal broadband system and develop potential partnerships with private broadband providers.
The goals of Magellan’s initial analysis is to achieve the following:
1. Geocorrect documentation of the City’s conduit, fiber networks, manholes, vaults, handholes,
towers, rooftops, and related infrastructure;
2. Accessibility of this infrastructure along each route to determine how it may be expanded,
interconnected, and utilized by City departments, community anchors, utilities, and broadband
providers;
3. Initial capacity of the infrastructure its availability for use in the project, including conduit space,
innerduct, fiber strands, cable slack, tower space, rooftop space, and related infrastructure; and,
4. From the documentation of these assets, determination of their valuation using several different
approaches, including a “cost to build today” approach and a fair market valuation approach.
Magellan Advisors utilized a process of gathering all assets owned and/or operated by the City to
determine a baseline of information for documenting, analyzing and valuing them in the Study. Magellan
worked with MOIT to review the most current maps and information regarding the City’s infrastructure
and determined the following categories of infrastructure that would be pertinent to the project. The
objective of this Study is to inventory these assets for planning purposes to evaluate potential strategies
that the City may employ to use this broadband infrastructure. Maps included in this Study are for
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illustrative purposes only. Geographically correct advertised maps are included as attachments to this
report in digital form.
1. Conduit Infrastructure
The City owns a large underground conduit network that is managed by the Baltimore Department of
Transportation (“DOT”). The conduit systems in some portions of the City have been equipped with fiberoptic cables to create the fiber networks that are described in the sections below. In other cases, conduit
is unoccupied and available for use. The condition of the conduit system in some cases is unknown. An
important next step to this Study should include a physical assessment of the conduit in particular areas
of the City where the City targets potential opportunities to use its broadband infrastructure. It is
important that this physical assessment is carried out in a cost-effective way. Due to the significant miles
of conduit owned by the City, it would be cost prohibitive to physically inspect and proof the entire
system. The City should narrow the scope of the physical assessment to only the areas where
opportunities to use City-owned infrastructure exist. In these areas, conduit infrastructure can become
an important asset to expand existing fiber-optic and copper networks, connect community anchors and
enable new distribution routes for broadband providers.
Therefore, this Study will utilize the documentation provided by MOIT to identify opportunities where the
City’s conduit system would be valuable in the broadband development process and target specific areas
within the system that should be physically inspected as a next step to this Study. This physical
inspection should employ resources, either City staff or outside contractors, to determine the condition
of the conduit. This Study will provide the conduit routes that are contained within these focus areas in a
geocorrect format that will allow the City to understand what portions of the system should be inspected
and proofed.
The City may have various opportunities to utilize its conduit system to expand broadband with
Baltimore. The sheer cost of constructing these underground facilities within the City limits makes this
infrastructure valuable for the City to utilize as a resource to expand the availability and reduce the cost
of broadband services in specific areas of Baltimore. At a high-level, the opportunities could include:
•
•
•
•
Expanding the City’s internal fiber-optic network through the conduit system to connect more
facilities, expanding capabilities, and reducing ongoing costs for wide-area network connectivity;
Expanding the City’s fiber-optic network to reach Baltimore’s community anchor organizations
(“CAIs”) to deliver them new high-speed wide-area network connectivity and potentially reduce
costs;
Make the infrastructure available to Baltimore’s utility and broadband providers, local businesses,
and other organizations that could install their own fiber networks;
Make the infrastructure available to State and Federal organizations outside of Baltimore that
maintain facilities within the City.
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Figure 4-1: Baltimore Underground Conduit Infrastructure
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2. Fiber-Optic Infrastructure
The City owns and operates multiple interconnecting fiber networks. These networks have been installed
over the past 20 years and are composed of varying types and sizes of cables with varying capacities. The
significant majority of cable utilizes underground placement and is installed within various conduit
systems; noted in the Conduit infrastructure section of this Study. Each fiber network is used for a
different purpose and all networks currently maintain active services running across them. Networks are
currently being used for many different purposes, including:
•
•
•
Internal City voice, data and video communications;
800MHZ Public Safety communications through connection with the City’s tower infrastructure;
Communication with the ICBN (“Inter-County Broadband Network”) and with community anchors
within and outside of Baltimore, including local fire stations and connections other Counties
adjacent to Baltimore
The fiber-optic networks identified for potential use in this project are discussed in detail below. They are
named according to Baltimore’s internal naming convention.
Backbone Network
The Backbone cable system is a legacy fiber network that covers the City’s downtown locations and
interconnects these facilities in a “campus style”4 network. The City’s many downtown locations are
interconnected with this network which serves the City’s internal communications needs for the facilities
in the Downtown corridor. The cable is composed of 12-48 strand loose-tube fiber-optic cable, some of
which is singlemode and others are multimode. Based on documentation, the network contains
approximately 2.5 miles of cable.
The figures on the subsequent pages illustrate the current running lines for the Baltimore Backbone
network. The pink lines illustrated in Figure 4-2 show fiber routes in the system; however, some of these
running lines may not be completely accurate as there isn’t a complete set of as-builts for these routes.
The orange lines illustrate accurate running lines for installed fiber routes based on as-built
documentation.
Based on discussions with MOIT staff, there is some fiber strand availability in the Backbone network that
could be utilized in the project. The Study assumes that 12 strands of fiber (1 buffer tube) are available in
the current network. This buffer tube is assumed to transit the entire Backbone network, meaning that
12 strands of dark fiber would be available at any point in the network. MOIT should complete a physical
survey of the network to ensure the Study’s assumption is correct. The network has available access
points along each fiber route, identified at each 90-degree turn in the cable at intersections and at each
point where a lateral extends the backbone network into a facility. Slack loops are available at various
points in the network where additional cable has been pulled into facilities or where slack has been left in
vaults or manholes. The network is substantially a linear system that interconnects Baltimore’s facilities to
one another.
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4
Campus fiber networks interconnect multiple buildings together in a small geographic area. In the case of Baltimore, the City’s
inner core of buildings form a campus style network where multiple fiber routes interconnect these facilities with one another.
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Some of the facilities in Figure 4-2 maintain dual fiber paths across the network; however, the main
trunks of the network are not substantially redundant, except across a few blocks in the downtown
corridor. As stated, the network topology is likened to a campus network rather than a service provider
network, which may introduce some technical issues that the City will need to address before employing
this asset. This does not however preclude the City from utilizing this network to supplement other Cityowned conduit and fiber infrastructure in the area.
Although the Backbone Network does not have a large available strand count, the network is valuable
because of its location in the downtown corridor where costs for underground fiber construction are
more significant than in the less dense regions of Baltimore. In these areas of the City, costs for
underground construction can be as high as $200,0005 per mile, due to the significant right-of-way
crowding, high percentage of directional boring and high cost of restoration. Depending on the technical
requirements to utilize these strands, the City could overbuild these fiber routes with high-strand count
cables or utilize a WDM6 technology to deliver individual wavelengths across each strand.
The value of the Backbone Network is the available conduit in this system. If the conduit has available
space within it, the City may be able to install additional fiber-optic cables within it. If the conduit does
not have available capacity, a second option would involve the removal of the existing 24-count fiber that
is installed and installation of a larger count fiber cable. This option could be very disruptive to City
communications that utilize the Backbone Network, because it would entail disconnecting portions of the
network and replacement with new cable. If no other options are feasible, the City could do so using a
phased approach to replace the cable, segment by segment, with a higher count fiber cable.
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5
Costs averaged across multiple “Tier 1” cities in the Northeast including New York, Boston, Baltimore and Washington D.C.
In fiber-optic communications, wavelength-division multiplexing (WDM) is a technology which multiplexes a number of optical
carrier signals onto a single optical fiber by using different wavelengths (i.e., colors) of laser light. This technique
enables bidirectional communications over one strand of fiber, as well as multiplication of capacity.
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Figure 4-2: Baltimore “Backbone” Network Aerial Maps
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Net800 Network
The Net800 Network was installed by the City many years ago and connects the 800MHZ public safety
radio system that provides coverage to police and fire departments. The majority of the network is
comprised of fiber placed in underground conduit; however, one 2-mile portion of the network utilizes
aerial fiber constructed on utility poles running along Woodbourne Ave. between Loch Raven Blvd (Route
542) and York Rd (Route 45), shown in Figure 4-3 below.
Figure 4-3: Baltimore Net800 Network Aerial Map with Overhead Fiber Segments
The network traverses the majority of Baltimore’s commercial and residential corridors. The initial
analysis has identified available splice points, vaults, handholes, and slack loops across each running line
that would accommodate future expansion, splicing, and interconnection with other facilities; however,
physical inspection of these facilities and their available capacity will be necessary prior to determining
actual use of these assets.
The network is comprised of 24-count fiber that has minor capacity for expanded use. The City is
currently overbuilding this existing cable with a new 216-count ribbon fiber that will traverse the main
ring of the network and extend to Baltimore’s towers, both City-owned and commercial. This overbuild
consists of 54 miles of total cable. The remaining 33 miles of cable will be completed by October 2015.
96 fiber strands out of the 216-count cable will be routed to each tower in a 48-in, 48-out configuration.
This configuration will use 48 total backbone fibers across the ring, which would leave another 168 fibers
available for potential broadband projects.
This resource presents a potential opportunity for Baltimore to utilize as a citywide “metro” 7 fiber
network with access to towers throughout the City. The network currently connects to 11 towers, 4 of
which are City-owned and 7 of which are commercial and privately owned. The fiber will interconnect
with all of these towers using 96 strands of the new cable terminating in tower shelters or huts. This
infrastructure could provide a fiber + wireless opportunity for the City’s broadband initiatives in
conjunction with community anchors, broadband providers, commercial tower owners, and wireless
providers. The Net800 Network could provide either dark or lit fiber capacity through the major
thoroughfares of the City with drop-offs at each tower for connectivity to wireless provider access points,
cellular nodes, and microwave radios. Figure 4-4 below illustrates the entire Net800 network.
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7
Metro Network or Metropolitan Fiber Network which provides fiber-optic connectivity throughout a City or metropolitan region
with points of presence located in key corridors.
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Figure 4-4: Baltimore Net800 Network Aerial Map
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Inter-Connect Network
The Inter-Connect Networks is owned and operated by the City; however, there is a mix of fiber cables
running through this system and it is used for various purposes. The City established a memorandum of
understanding (“MOU”) with Comcast in a joint build for use of 24 strands of fiber in the system. The fiber
utilizes the City’s conduit system in some locations and in other locations the network extends beyond
the City’s current underground conduit. The City currently utilizes fibers in this system for Closed
Captioned TV (“CCTV”) applications. Figures 4-5 and 4-6 below illustrates the fiber routes in the InterConnect Network.
Figure 4-5: Baltimore Inter-Connect Network Aerial Map
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Figure 4-6: Baltimore Interconnect Network Street Map
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Inter-County Broadband Network (ICBN)
ICBN is part of the One Maryland Broadband Network (OMBN) that was granted $115 million under the
Broadband Technology Opportunities Program funded by the American Recovery and Reinvestment Act
of 2009 (“ARRA”). In cooperation with the state-run network Maryland and Maryland Broadband
Cooperative, a rural non-profit carrier, ICBN helps connect thousands of community anchor institutions,
businesses, and households in every county in the state. ICBN also offers dark fiber leasing opportunities
to all qualified entities that commit to use the ICBN middle mile fiber as a platform for building out the
last mile to constituents. In Baltimore, the ICBN project paid for 19.5 miles of new fiber in the Baltimore
portion of the ICBN and connected 24-strand fiber at the City’s fire stations to the network. It also
deployed 18 CCTV cameras along Pennsylvania Avenue in the City. Inter-county connections from the
greater ICBN network are made into Baltimore County on Eastern Ave (Route 150) and to Anne Arundel
County to the south on Church St (Route171). These splices interconnect dark fiber strands into the
greater ICBN networks that span the greater statewide network.
Fiber from ICBN in the Baltimore utilizes a 216-strand count cable, the majority of which is available for
use. Certain allocations have been set aside for the State of Maryland and public safety applications but a
portion of the remaining stands could be usable for a broadband initiative. Because Baltimore’s portion
of the ICBN has been funded through ARRA, certain grant regulations apply to the use of these assets.
First, the ARRA program promotes the wholesaling of excess capacity in these networks to competitive
broadband providers. An important goal of the BTOP program was to make new capacity available in
middle-mile networks that could accelerate deployment of advanced broadband services in
communities. This process involves several key regulations that ensure fair and competitive access to
these systems, including:
1. “Rates and Terms: Recipients should offer wholesale broadband services at rates and terms that
are reasonable and nondiscriminatory. Many recipients set forth wholesale pricing in their
applications and, as such, those rates will be presumed reasonable and nondiscriminatory.
2. Types of Service: Customers will expect certain wholesale services to be provided including, but
not limited to, local transmission services, transport, and dedicated Internet access services.
3. Quality of Service: Customers will expect that there will be certain quality of service levels
guaranteed as part of their wholesale agreements. Agreements with requesting parties should
contain service level agreements, service level guarantees, and standards, including service
guarantees and standards related to jitter, latency, delivery ratio, and service availability.
4. Provisioning and Installation: Customers will expect that agreements for wholesale services will
contain provisioning and installation intervals and that these intervals will be reasonable and
nondiscriminatory. Customers will expect provisioning and installation timeframes that are
consistent with industry standards and practice, for example, 30 days for the provisioning and
installation of on- net circuits.
5. Repair and Maintenance: Customers will expect that agreements for wholesale services will
include provisions for repair and maintenance, as well as service outage credits. Customers will
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expect repair and maintenance timeframes that are consistent with industry standards and
practices and that recipients have established Mean Times to Repair for all offered services which
should be based on the nature of the service issue (i.e., outage, noise on the line, etc.).
6. Dark Fiber: To the extent that a recipient’s business plan involves offering dark fiber, the recipient
should consider making available various information to requesting parties including, but not
limited to, route maps, interconnection points, splice points, and type of fiber.”8
The ICBN Network presents an opportunity for Baltimore to provide a fiber-optic resource that can be
utilized to deliver more services to community anchors, utility, and broadband providers. It could also
provide an opportunity for Baltimore to attract new service providers to Baltimore through the ICBN’s
open-access, interconnection and non-discrimination requirements, which require owners of ICBN
capacity to make these services available to competitive providers in the region. ICBN interconnects with
many colocation facilities throughout Maryland, providing “on net” connectivity with other carriers and
broadband providers that may want to provide services in the City. Bringing such providers into
Baltimore may positively influence the competitive environment for broadband services in Baltimore and
help the City diversify and make new technology services available to residents and businesses. Figure 47 on the following page illustrates the Inter-County Broadband Network.
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8
Fact Sheet: Nondiscrimination and Interconnection Obligations. November 2010. Broadband Technology Opportunities
Program. http://www2.ntia.doc.gov/files/Interconnection_Nondiscrimination_11_10_10_FINAL.pdf. Accessed July 2014.
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Figure 4-7: Inter-County Broadband Network
!!ICBN!Network!
!!Primary!Roads!
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Figure 4-8: Inter-County Broadband Network (ICBN) and Net800 Network
!!ICBN!Network!
!!Net800!Network!
!!Primary!Roads!
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Flight System
The Flight Systems Network was originally part of a local cable company network in Baltimore that was
acquired by Comcast. Comcast currently owns this system; however, the City has rights to 12 strands of
fiber within this system. To date, the City has not utilized fiber capacity in this system but it has the option
to activate capacity in this network if required. Figures 4-9 and 4-10 below illustrates the fiber routes for
the Flight System network.
Figure 4-9: Baltimore Flight Systems Network Aerial Map
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Figure 4-10: Baltimore Flight Systems Street Map
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TierPoint Redundant Fiber
The City has recently built a small span of 216-count fiber between the TierPoint data center facility and
the City’s data center to provide redundant fiber connectivity for its internal communications.
Approximately 2.5 miles of fiber was built in this project; running through City owned underground
conduit. A portion of the fiber is currently being utilized for the City’s internal communications needs;
however, there is excess capacity available in the network for Baltimore’s broadband initiatives. Capacity
in this network could be utilized to interconnect with Baltimore’s larger fiber and conduit networks. This
would facilitate potential interest from carriers and broadband providers collocated in Tierpoint that may
want to serve markets within the City. It would allow them to more easily interconnect with Baltimore and
have access to dark fiber, conduit, and vertical infrastructure that the City could potentially lease, swap or
sell to these providers.
Figure 4-11: Baltimore Tierpoint Redundant Fiber Aerial Map
!!TierPoint!Fiber!
!!Primary!Roads!
!
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Figure 4-11: Baltimore Tierpoint Redundant Fiber Street Map
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3. Tower Infrastructure & Vertical Assets
The City utilizes towers and rooftops throughout Baltimore for the 800MHZ public safety radio system
that supports police and fire communications. The City owns the majority of the vertical structures
included in this Study including the following structures:
•
•
•
•
•
Curtis Bay Tower
Lombard Tower
Northwest Tower
Edmonson Tower
Rooftop Police Headquarters ECC
•
•
•
•
Rooftop Municipal Building ACC
Saint Agnes Hospital
Lake Clifton
Good Samaritan Hospital
These structures are located on City property and most have available ground space around the foot of
each structure with the exception of the rooftop facilities at Police Headquarters and the Municipal
Building. Several commercial wireless providers have collocated on City towers and the City is leasing to
them for use of the tower infrastructure. The remaining structures are commercial towers that the City
collocates on to house their 800 MHZ equipment. Other commercial wireless providers also collocate on
these towers. These towers are on private real estate and may or may not have available ground space.
In each case, a hut or housing was found at the base of each tower to collocate equipment. Commercial
towers include:
•
Television Hill
•
Harbour Court
All towers are interconnected with City-owned fiber using a 24-count cable installed by the City years ago.
This network is currently being overbuilt with a 216-count ribbon fiber that will deliver 96 strands to each
tower upgrading the existing dark fiber capacity. Each tower will maintain 48 fibers into the facility and 48
fibers out of the facility.
Available space or “slots” exist on some of the City-owned towers while others appear to be fully
occupied. Analysis of the tower occupancy and capabilities should be examined by the City as a follow-on
task to this Study to determine the potential usability of this infrastructure with wireless providers in the
area that may need additional tower space. In addition, the City should review any public safety and/or
law enforcement security policies that may restrict use of the City-owned assets for commercial use.
37
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Figure 4-12: Baltimore Tower Locations
!
38
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4. Inventory of Available Broadband Assets
Figures 4-13 and 4-14 provide a summary of the potential broadband infrastructure that would be
usable for the City’s broadband initiatives. This provides an initial indication of which assets should be
evaluated for the City’s broadband initiatives based on their potential value to the City’s
telecommunications needs as well as those of Baltimore’s community anchors and local broadband
providers.
Figure 4-13: General Fiber-Optic Inventory
Mileage
(Approximate)
Total Capacity
Available Capacity
Backbone Network
2.5
12-48 Strands
12 Strands
Net800 Network
54.2
216 Strands
168 Strands
16.2
Mixed
12 Strands
Inter-County Broadband Network
42.5
216 Strands
TBD
Flight Systems Network
4.62
12 Strands
12 Strands
Tierpoint Redundant Fiber Network
2.54
216 Strands
TBD
Resource
Figure 4-14: Tower/Rooftop Inventory (Source: FCC Antenna Structure Registration)
Resource
Type
Ownership
Height (Meters)
Curtis Bay
Free Standing or Guyed Structure
City
47.3
Lombard
City
77.7
Northwest
City
58.9
Edmonson
City
58.8
Saint Agnes
Building
City
59.4
Police Headquarters ECC
Building
City
N/A
Municipal Building ECC
Building
City
N/A
Good Samaritan
Building
City
42.7
T.V. Hill
Private
243
Lake Clifton
City
120.7
Building
Private
45.4
Harbour Court
39
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C. Valuation of Existing Assets
Valuation of Baltimore’s broadband infrastructure assets will help estimate the potential rates Baltimore
may set in commercializing their use in broadband initiatives. As the City evaluates how these assets may
be utilized, it is important to understand their value with other organizations such as community anchors
and broadband providers. For the City to employ these assets in such projects, it is important to
understand the cost, market value, and consideration provided by the City. For example, if the City were
to provide dark fiber services to community anchors in Baltimore, the City should know both the cost and
the value provided in doing so. Similarly, if the City considers leasing conduit to broadband providers, it
should derive its internal cost and the rates to charge for this access. In summary, valuation of the City’s
broadband infrastructure assets is a first and foundational step to making use of these assets for the
benefit of the Baltimore community. In addition, this valuation assumes that the City may lease its
broadband assets but wishes to retain ownership of them.
Magellan has provided an estimated valuation of Baltimore’s existing broadband assets that were under
consideration of the Study. In some cases, various assets were not included in the valuation due to their
unknown condition or existing use by the City. Conduit was not valued in this process because of its
unknown condition in many parts of the City; resulting in a potential incorrect valuation.
At a high level, valuation should be determined for conduit and fiber infrastructure, vertical structures,
ground space, and facilities included in this Study. Valuation of these assets is a complex exercise due to
many variables including their existing condition, potential restrictions on use, and market conditions in
the City of Baltimore. The methodology for valuation must be reasonable and utilize a set of assumptions
that provides a range of possible values for these assets rather than a single, “hard” number.
Municipalities across the country utilize a variety of valuation methodologies for their broadband
infrastructure; some are accurately conceived and others are not.
Baltimore should consider several principles in valuing its existing assets:
1. Determining the Cost to Install in today’s dollars
2. Determining the net present value of future cash flows generated by the assets
3. Assessing a fair market value for the assets
1. Cost to Install
The Cost to Install methodology estimates the cost for construction of Baltimore’s network in today’s
dollars. In many instances, municipalities have built their broadband infrastructure over many years and
in many cases, do not utilize the asset booking and depreciation techniques that are commonly found in
the telecommunications industry. In these cases, the book values of these assets are difficult to ascertain
because the ongoing value of the assets has not been tracked over time. In Baltimore’s case, the value of
these assets can more adequately be determined by estimating the Cost to Install this infrastructure
today. This technique provides an account of the materials, labor, and associated costs to install conduit
40
!
infrastructure (which includes manholes, vaults, handholes, and other structures), fiber-optic networks,
towers, and other wireless assets.
Fiber-optic Networks
In the Cost to Install methodology, Magellan utilized recent broadband construction costs in urbanized
environments that are comparable to Baltimore. The comparison analyzed the cost of underground
construction in urban centers for the installation of conduit, vaults, handholes, manholes, pull string,
warning tape, tracer wire, innerduct, fiber-optic cables, as-built documentation, and inspection and
quality assurance services. These costs were summed on a per mile basis to develop an urban and
suburban rate for construction to enable more accurate estimation of actual construction costs across
the two main types of topography surrounding the City’s network. Urban construction costs, which
require directional bore for all placement of conduit and increased costs for the installation of structures
such as vaults, handholes, and manholes. Suburban construction costs, which require 70% directional
bore and 30% trench for placement of conduit and lower costs for the installation of structures such as
vaults, handholes, and manholes. Suburban costs should also be understood within the context of
Baltimore City, as much of the suburban areas exhibit many of the characteristics of urban areas.
Therefore, the suburban rate is considerably higher than one would expect in a typical suburban
topography. Based on these assumptions, $270,000 per mile was used for urban construction and
$180,000 per mile was used for suburban construction. Based on the current inventory of the City’s
available fiber-optic networks, a high-level estimate using the Cost to Install methodology yields a
valuation of $24,388,200.
Figure 4-15: Cost to Install Valuation for City Fiber Networks
Resource
Mileage
(Approximate)
Urban or
Suburban
Cost Per Mile
Cost to Install
Backbone Network
2.5
Urban
$270,000
$675,000
Net800 Network
54.2
Suburban
$180,000
$9,756,000
16.2
Urban
$270,000
$4,374,000
Inter-County Broadband Network
42.5
Suburban
$180,000
$7,650,000
Flight Systems Network
4.62
Urban
$270,000
$1,247,400
Tierpoint Redundant Fiber Network
2.54
Urban
$270,000
$685,800
Total
$24,388,200
Vertical Assets
Valuation of the City’s vertical assets uses a similar Cost to Install approach. Tower construction
estimates vary widely depending on the type, materials, labor and permitting required. Tower cost
estimates were approximated based on recent tower construction projects in wireless broadband
communications projects in Florida and Pennsylvania. The Cost to Install was only calculated for City
owned towers and does not include rooftop areas where antennas may be collocated. The Cost to Install
valuation of the City’s towers is $1,280,000.
41
!
Figure 4-16: Cost to Install Valuation for City Tower Assets
Resource
Type
Ownership
Height (Meters)
Cost to Install
Curtis Bay
City
47.3
$190,000
Lombard
City
77.7
$240,000
Northwest
City
58.9
$240,000
Edmonson
City
58.8
$240,000
Lake Clifton
City
120.7
$370,000
Total
$1,280,000
2. Market Valuation
Market valuation of Baltimore’s assets depend entirely on local conditions and comparisons for the
procurement of a similar infrastructure. Because Baltimore’s assets are spread across a large geographic
area, the City will likely encounter significant fair market valuation changes across the community. For
example, conduit and fiber network infrastructure in the downtown corridor (where density is greatest
and construction costs are highest) will result in generally higher market valuations in these areas.
Broadband infrastructure assets are very similar to real property valuation in this regard.
Fiber-optic Networks
Figure 4-17 illustrates a range of rates charged by municipal providers for their dark fiber services. These
rates range from $16 - $336 per month per strand mile of fiber. Municipal dark fiber rates are generally
much lower than commercial dark fiber rates in many markets. Urban markets are considerably higher
than rural or long haul dark fiber lease rates. Markets in “NFL” cities are the highest of the urban markets.
Commercial dark fiber lease rates in NFL cities similar to Baltimore range from $250 - $2,000 per strand
mile. However, these rates are often purchased in bulk capacities with significant wholesale discounting.
Considerations should be made in Baltimore’s dark fiber networks that discount the typical commercial
rate for these services. Baltimore should not strive to set its rates commensurate with commercial dark
fiber rates for several reasons:
1. The dark fiber networks were built for purposes other than commercial leasing and they have
been depreciated through the respective departments using the fiber;
2. The cost of capital associated with financing the construction of these dark fiber networks was
considerably lower than private companies would have incurred to build these networks
3. The dark fiber networks were not initially constructed for “carrier class” service and therefore a
discounting factor should be applied; and
4. Leasing dark fiber at current commercial market rates will not incentivize the accelerated use of
the City’s dark fiber networks.
Figure 4-17: Lease & IRU Rates for Municipal Providers
42
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Year%
Organization%
State%
Monthly%
Lease%Rate%
20%Year%IRU%
Rate%
Type%
2012%
City%of%Lakeland%
FL%
$100%
%
2010%
City%of%Bartow%
FL%
$125%
%
2011%
Eugene%Water%&%
Electric%
Palo%Alto%
OR%
$21%
%
CA%
$336%
%
OR%
$16%
%
2011%
Springfield%Utility%
Board%
Gillette%
WY%
%
$12,000%
2012%
Black%Rock%Cable%
WA%
%
$1,898%
2012%
UC2B%Champaign%
IL%
%
$1,500%
2014%
Holly%Springs%
NC%
$50%
$1,000%
2011%
Rock%Falls%
IL%
$100%
$1,100%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
Per%mile,%
per%strand%
2007%
2010%
IRU%Annual%
Maintenance%
Fee%
%
Type%
Description%
Per%strand%mile%
Municipal%utility%
%
Per%strand%mile%
Municipal%utility%
%
Per%strand%mile%
Municipal%utility%
%
Per%strand%mile%
Municipal%utility%
%
Per%strand%mile%
Municipal%utility%
$500%
$12%
Per%route%mile%
(not%per%strand)%
Per%strand%mile%
$300%
Per%route%mile%
$250%
Per%route%mile%
City%IRU%to%a%
private%provider%
Cable%company%
to%a%city%
UC2B%to%private%
providers%
Municipal%utility%
$200%
Per%route%mile%
Municipal%utility%
Based on an analysis of similar rates charged by municipalities for dark fiber leasing, the City should
consider testing the market with rates ranging from $150 - $250 per month per strand mile. In this
range, the City would be more likely to drive uptake of its dark fiber services from broadband service
providers in the local Baltimore market than setting rates closer to commercial rates for these services. If
this were achieved, the City could expect to lease (or IRU) between 10% and 30% of its available dark
fiber inventory. These percentages have been adjusted down to maintain conservatism in the potential
forecast for the City’s dark fiber services due to the same factors mentioned previously in items 1-4.
Figure 4-18: Dark Fiber Inventory in Strands
Mileage%
(Approximate)%
Total%Capacity%
Available%Capacity%
Strand%Miles%
Backbone%Network%
2.5%
12^48%Strands%
12%
30%
Net800%Network%
54.2%
216%Strands%
168%
9105%
Inter^Connect%Network%
16.2%
Mixed%
12%
194.4%
Inter^County%Broadband%Network%
42.5%
216%Strands%
TBD%
Flight%Systems%Network%
4.62%
12%Strands%
12%
%
55.44%
Tierpoint%Redundant%Fiber%Network%
2.54%
216%Strands%
TBD%
%%
122.56%Miles%
%
Resource%
Total%
Total%
9,384.84%Strand%Miles%
Total dark fiber inventory based on the assets identified in this Study is 9,385 strand miles, shown in
Figure 4-18. Over a 10-year period, the City could expect to lease between about 900 to 2,800 strand
miles, using a gradual growth forecast that increases linearly at 10% per year. Based on this forecast, the
City’s free cash flow after deducting operations, maintenance and management costs would range from
$6.9 million to $36 million over the 10-year period with a weighted average cash flow expectation of $18
43
!
million. To maintain financial conservatism, the weighting discounts the total revenue forecast based on a
range of factors that may limit some usability of these assets and how the City executes these
deployments.
Figure 4-19: Free Cash Flows and Discounted Cash Flow Valuation
%
Free%Cash%Flow%Over%10%Years%
Discounted%Cash%Flow%Valuation%
10%%Total%Fiber%Utilization%
Averaging%$150%Per%Strand%Mile%Lease%Rates%
Averaging%$250%per%Strand%Mile%Lease%Rates%
%30%%Total%Fiber%Utilization%
%
$6,852,709%
$11,188,781%
%%
%
$4,680,177%
$7,687,317%
%%
Averaging%$150%Per%Strand%Mile%Lease%Rates%
Averaging%$250%per%Strand%Mile%Lease%Rates%
$21,099,805%
$35,966,342%
$14,560,783%
$24,870,982%
Discounting the free cash flows over the 10-year period at an average discount rate of 5.5% yields a
potential valuation of the dark fiber networks between $4.7 million and $24.9 million with a weighted
average valuation of $15 million.
Vertical Assets
The Market Valuation for Baltimore’s tower infrastructure assumes that towers are structurally sound
and are able to facilitate the colocation of additional wireless operators. It also assumes that the City has
cleared all public safety regulations for colocation on its towers. It assumes that a number of wireless
operators could lease slots on each tower, depending on the height of each tower, paying a rate of
$1,000 per month to the City. The City would incur additional operations and maintenance costs to
collocate private operators on these towers, which has been estimated as a percentage of total revenues
to the City as follows:
Estimated O&M costs per year
• Utilities – 3%
• Insurance – 2%
• Maintenance – 4%
• Management – 4%
• Renewal & Replacement Reserve – 15%
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Figure 4-20 illustrates the net present value of the future stream of cash flows available to the City from
the lease of these towers, over a period of 10 years. It assumes a discount rate of 4% and that the towers
have no initial cost, since initial capital costs would have been allocated to public safety and other
departments that utilize these resources. Based on a 10-year revenue-generating period, the market
valuation of the 5 City owned towers is $1.4 million.
Figure 4-20: Market Valuation for City Vertical Assets
Resource%
Curtis%Bay%
Lombard%
Northwest%
Edmonson%
Lake%Clifton%
%
Type%
Free%Standing%or%Guyed%Structure%
%
Height%(Meters)%
47.3%
77.7%
58.9%
58.8%
120.7%
Total%
Net%Present%Value%
$198,554%
$264,739%
$264,739%
$264,739%
$397,109%
$1,389,880%
45
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V. Broadband Community Needs
A. Overview of Broadband Technologies
Broadband is deployed throughout communities as wired and wireless infrastructure that carries digital
signal between end users and the content they want to access. The content comes in many forms and
from many locations across the world in the networks that connect the local community to the Internet
backbone. Websites, television, streaming video, videoconferencing, cloud services, and even telephone
service are just a few types of content that are delivered across local broadband networks. Access to this
content is made available through the type of infrastructure and kinds of connections available in the
local network. Robust local infrastructure results in faster, more reliable access to content. Conversely,
local infrastructure that is aging and built on older technologies results in slower, less reliable access to
content.
Figure 5-1: How Broadband Connects Our Communities
The majority of America still utilizes copper-based broadband infrastructure to transmit information from
a user to the Internet; this media includes twisted-pair copper telephone and coaxial cable lines. Most of
this infrastructure was installed years ago but, in many areas of the country it is still being installed in
new communities today. As time has progressed, broadband providers have continued to upgrade
equipment in their networks to make these lines faster and more reliable, however; several fundamental
issues exist with underlying copper infrastructure:
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•
Broadband signals degrade significantly as distances increase in copper-based networks.
•
Broadband signals are susceptible to electrical interference and signal degradation in copperbased networks, particularly as they depreciate.
•
Copper-based networks delivering broadband services generally utilize shared bandwidth among
pools of users that results in an uneven distribution of speed to these users.
The limitations of local copper-based networks are overcome by deployment of new technologies such
as fiber-optic infrastructure. The old standard of copper in local broadband networks is transitioning to
fiber-optic, however; the pace of this transition is slow. Costs for deployment of fiber-optic infrastructure
are extremely high, particularly in areas where no fiber-optic infrastructure exists. Providers understand
that fiber-optic broadband provides the only long-term solution to the ever-growing bandwidth needs of
homes, businesses, and community anchors. Fiber-optic broadband connectivity is considerably different
than its copper-based predecessor, in the following ways:
•
Fiber-optic technology converts broadband data signals to light and sends the light through
transparent glass fibers about the diameter of a human hair. Fiber transmits data at speeds far
exceeding current DSL or cable modem speeds, typically by tens or even hundreds of Mbps.
•
Actual speeds are always dependent on the services provisioned by the service provider who
operates the system, however; speeds generally range from 10Mbps9 to 100Gbps10
•
Telecommunications providers sometimes offer fiber broadband in limited areas and have
announced plans to expand their fiber networks and offer bundled voice, Internet access, and
video services.
•
Variations of the technology run the fiber all the way to the customer’s home or business, to the
curb outside, or to a location somewhere between the provider’s facilities and the customer
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
9
Mbps stands for millions of bits per second or megabits per second and is a measure of bandwidth (the total information flow
over a given time) on a telecommunications medium.
10
GBPS stands for billions of bits per second or Gigabits per second and is a measure of bandwidth (the total information flow
over a given time) on a telecommunications medium.!
47
!
Figure 5-2 compares traditional broadband technologies such as DSL, cable, and wireless to fiber-based
next-generation broadband. Whereas traditional broadband technologies have an upper limit of
150Mbps, next-generation broadband surpasses these limitations and can provide 1Gbps and greater.11
Figure 5-2: The Evolution of Broadband Speeds Across Technologies
Dial-Up – 56Kbps
•
•
Legacy technology
Shared Technology
ADSL – 10Mbps
•
•
First Generation of DSL
Shared Technology
ADSL2 – 24Mbps
•
•
Second Generation DSL
Shared Technology
Cable – 150Mbps
•
•
DOCSIS 3.0
Shared Technology
Fiber – 1Gbps
•
•
•
PON, Active Ethernet
Shared and
Dedicated Technology
B. What is Driving Broadband Demand?
Broadband technologies have evolved to carry more and more data because of the advancements in
online applications. Every application requires a certain amount of bandwidth on a broadband
connection to function properly. As time has progressed, we have witnessed significantly more
applications and significantly more bandwidth used by those applications. Figure 5-3 illustrates the
bandwidth requirements of common applications and the impact of multiple applications running across
a broadband connection.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
11
Actual speed and quality of service will depend on the specific service contracted by the end user, whether using a traditional
broadband service or a next-generation broadband service.
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Figure 5-3: Broadband Application Speeds and The Impact of Multiple Applications
Today, broadband subscribers across every user class are utilizing more and more online applications
and particularly those that consume larger amounts of high-quality bandwidth. Figures 5-3 and 5-4
illustrate user demands for applications today and the increases in broadband that are necessary to
accommodate this demand. Currently, broadband subscribers make heavy use of the core Internet
functions, consisting of Internet browsing, web hosting, e-commerce, virtual private network connectivity
and voice services. However, subscribers are beginning to consume more real time video and streaming
applications, which require significant bandwidth, reliability and performance out of their broadband
connections. We are still early in the lifecycle of Internet video applications and these are expected to
grow significantly over the next 10 years, replacing much of the text-based Internet.
In addition, the myriad of cloud services is driving the need for more symmetrical12 broadband as real
time and cloud applications require additional bandwidth, both in download speed and upload speed. As
more of these applications are deployed and replace traditional PC-based software, broadband
connections will need to accommodate the increased bandwidth load. Many times these applications
synchronize in real time, meaning that they are always consuming bandwidth at a constant rate rather
than only when the user is actively engaging the application.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
12
Symmetrical broadband connections provide equal download and upload speeds, such as 10 Mbps down, 10 Mbps up,
instead of traditional asymmetrical broadband services that provide unequal speeds, such as 10 Mbps down and 2 Mbps up.
49
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Figure 5-4: User Demands for Applications Over Broadband Connections
The proliferation of devices is also driving the need for more bandwidth as more devices in the home,
businesses and public places all access existing broadband connections. A report published by Google in
2012 demonstrates the amount of time the average user spends with their devices across each type of
device and how users interact with multiple devices simultaneously. Although the study’s primary goals
were to “gain a deep understanding of consumer media behavior over a 24-hour period…,” 13 an
important implied finding is that users are spending significantly more time with their devices, devices
that all require broadband connections. As these devices all vie for bandwidth on a users’ broadband
connections, the demand for more bandwidth to support more applications grow.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
13!The!New!Multi@Screen!World.!Understanding!Cross@Platform!Consumer!Behavior”!Google!2012.!
http://think.withgoogle.com/databoard/media/pdfs/the@new@multi@screen@world@[email protected].!Accessed,!
January!2015.!
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!
Figure 5-5: The Proliferation of Broadband-Connected Devices
Figure 5-6: The Use of Multiple Broadband-Connected Devices
The$New$Multi,Screen$World.$Understanding$Cross,Platform$Consumer$Behavior.”$Google$2012
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Broadband and Education
Some of the largest users of broadband services in our communities come from educational
organizations and their needs continue to grow, including K-12 schools, community colleges and higher
education. Online applications used by these organizations require not only high-bandwidth broadband,
but also services that meet strict quality and performance requirements to support real-time video and
voice applications such as distance learning and teleconferencing. In addition, educational institutions
are utilizing more online content to support their curricula, from sources such as YouTube, Vimeo and
Facebook.
Figure 5-7 illustrates the bandwidth requirements per student for common educational applications and
the quality and performance requirements of these applications. Basic educational tools, such as web
browsing and YouTube consume up to about 1 Mbps per student. However, moving up to more
advanced educational technologies such as streamed classroom lectures and 2-way video
teleconferences use significantly more bandwidth per student, 4 Mbps and 7 Mbps, when combined with
the basic educational tools. In addition these advanced tools require not only more bandwidth but also
strict broadband quality metrics that allow them to function properly, such as low latency and higher
upload speeds.
14
Figure 5-7: Bandwidth Requirements of Educational Technologies Per Student
Mbps
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
14
National Broadband Plan. “Current State of the Ecosystem” http://www.broadband.gov/plan/3-current-state-of-the-ecosystem/.
Accessed June 2014.
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Many States have instituted requirements for online testing or are in the process of doing so. Many of
the common core standards take effect this in 2014 and districts will be moving into this program this
2014-2015 school year. These tests require approximately 20Kbps per student and school districts will
be required to dimension their broadband services to accommodate online testing. For example a
school with 800 students may require up to 8 Mbps of bandwidth to ensure its online testing is
completed successfully. This 8 Mbps is in addition to the school’s existing broadband consumption,
which for some schools may be a challenge, particularly because online testing may be competing for
bandwidth with other online educational content that the school is using.
Figure 5-8: Bandwidth Requirements for Online Assessments
15
Educational institutions continue to integrate online applications into their curricula, particularly
emphasizing more video, including distance learning and online collaboration.
Broadband and Healthcare
Healthcare technology is rapidly evolving and in order to support these major advances in medical
science, broadband infrastructure needs to be in place to allow effective management of medical data
and facilitate communication between doctors and patients. Doctors are now using very advanced
diagnostic imaging systems that require large amounts of storage and bandwidth to work efficiently.
Patients rely on the Internet for the ability to interconnect with their healthcare providers virtually instead
of making in-person visits; what traditionally required an office visit in the past can now be done virtually
in many cases.
Additionally, by virtue of having high-speed, reliable broadband, healthcare organizations such as
hospitals, doctor’s offices, urgent care centers, and emergency first responders can all be connected to
the same system, enabling virtual collaboration (in real time), remote patient diagnoses and monitoring,
and other telemedicine applications. With the advancement of electronic health records, broadband
infrastructure will become one of the most critical infrastructure needs for healthcare professionals and
organizations. Currently, to support the use of electronic health records, the FCC recommends the
following minimum bandwidth speeds:
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
15
Smarter Balanced Assessment Consortium. “The Smarter Balanced Technology Framework and Testing Device Requirement”,
http://www.smarterbalanced.org/wordpress/wpcontent/uploads/2011/12/Tech_Framework_Device_Requirements_11-1-13.pdf,
Accessed July 2014.
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!
Single Physician Practice – 4 megabits per second (Mbps)
• Supports practice management functions, email, and web browsing
• Allows simultaneous use of electronic health record (EHR) and high-quality video consultations
• Enables non real-time image downloads
• Enables remote monitoring
Small Physician Practice (2-4 physicians) – 10 Mbps
• Supports practice management functions, email, and web browsing
• Allows simultaneous use of EHR and high-quality video consultations
• Makes possible use of HD video consultations
Nursing home – 10 Mbps
• Supports facility management functions, email, and web browsing
Rural Health Clinic (approximately 5 physicians) – 10 Mbps
• Supports clinic management functions, email, and web browsing
Clinic/Large Physician Practice (5-25 physicians) – 25 Mbps
• Supports clinic management functions, email, and web browsing
• Enables real-time image transfer
Hospital – 100 Mbps
• Supports hospital management functions, email, and web browsing
• Enables continuous remote monitoring
Academic/Large Medical Center – 1,000 Mbps
• Supports hospital management functions, email, and web browsing
• Enables continuous remote monitoring
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Broadband and Public Safety
We live in a changing world where public safety agencies must address new threats and challenges both
natural and man-made. It’s no longer enough for first responders to rely on a push-to-talk (PTT) network
for situational awareness. Police, fire, and emergency medical services (EMS) play the central roles in
emergency response. Mobile technology capable of sending and receiving bandwidth-intensive
information can help first responders do their jobs much more effectively and safely. These emergency
response organizations need broadband networks that let them share streaming real-time video,
detailed maps and blueprints, high resolution photographs, and other files that today’s public safety and
commercial wireless networks cannot handle, especially during major events or catastrophes.
Broadband technology and infrastructure is critical to the success of our first responders because it
provides them with enhanced situational awareness in emergency situations. By leveraging broadband
networks, public safety organizations can gain access to site information, video surveillance data, medical
information or patient records, and other information that would be useful in an emergency situation.
These networks also support and improve 9-1-1 Public Safety Answering Points (PSAPs) response time
and efficiency by establishing a foundation for transmission of voice, data, or video to the responding
entity.
New broadband technologies give first responders new tools to save lives. These tools include:
•
•
•
•
•
•
Next-Generation Radio Systems
Advanced Security Camera Systems
Gunshot Detection Systems
Chemical, Biological, Radiological, Nuclear, and Explosives Sensor Systems
Body-Worn Cameras
Next-Generation Wireless Data Systems
Broadband and Local Government
Broadband networks become key drivers of efficiency as more and more municipal applications are
enabled online. As they expand online services broadband will become an even more critical component
of the daily operations to serve communities. Applications migrated to a community network enjoy
greater availability and increased bandwidths over what has traditionally been available; creating a more
effective and efficient municipal organization. High-speed, reliable broadband enables these
organizations to:
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Improve operational efficiencies
Reduce direct and indirect costs
Enable new interactions with citizens and businesses
Respond more quickly to the local community
Ensure better preparedness in times of emergency
Provide enhancements to public safety
Provide more information to citizens and businesses
Better serve the local community
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Broadband and Community Support
In order for a community to thrive and grow, community support organizations must be in place.
Organizations such as local chambers of commerce, human services organizations, churches, and other
organizations that help connect people to the services they need in the community. These organizations
traditionally access the needs and resources available in the community and collect the data necessary
to help fill the gaps in services and investigate opportunities to solve community problems and issues.
Broadband plays a vital role in helping these types of organizations fulfill their missions. Whether it is as
simple as a community church streaming their weekly service or the local chamber of commerce
advertising their latest event through their web presence and email, broadband equips these
organizations with one of the most critical communication tools necessary to ensure they are successful
in their support roles.
Broadband availability inspires these organizations to be innovative in their use of technology and brings
a higher level of welfare to the communities they serve. Take for example All Saints Church in rural
Norlfolk County, UK. The church is utilizing its spire (the tallest structure in the area) to deliver wireless
Internet service to the surrounding community. Now, in a community that was lucky to see speeds up to
1 Mbps, speeds of over 8 Mbps are not uncommon. This community support organization has brought
broadband service into an area that was previously underserved and is helping to bridge the digital
divide that plagues many communities around the globe.
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VI. Opportunity Assessment for Baltimore
A. Expanding Broadband Access and Availability
The primary objectives of employing the City’s broadband assets are to improve access and availability of
broadband services in Baltimore. These two primary objectives are centered on expanding the amount
of physical infrastructure that is available to serve Baltimore’s broadband demand. A number of
secondary benefits can be realized by expanding access and availability of broadband, including:
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Improving Affordability
By leveraging broadband assets that are already available within the City, the amount of new
broadband construction is limited, reducing the investments necessary to provide services to end
users. The cost of new broadband construction within the City may range from $50,000 $200,000 per mile of fiber-optic infrastructure, depending on the location. In places where the
City already has available conduit and fiber-optic infrastructure, “overbuilding” may not be
necessary by broadband service providers, which will help them reduce their total costs to
provide services to end users. In some cases, costs for broadband construction are directly
passed on to end users in the fees collected by broadband service providers. In other cases,
these costs become part of a broadband service provider’s total cost of services from which
standard rates for residential and business broadband services are derived. In both cases, the
costs for broadband construction increase broadband service providers’ “bottom line.” Reducing
these costs where feasible can positively reduce costs for these providers and in turn rates paid
by end users.
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Increasing Adoption
Broadband adoption is influenced by two key factors, relevancy and affordability. The City has the
opportunity to improve affordability by increasing access to its broadband assets. Affordability
and adoption of broadband services are positively correlated. As affordability increases, so does
adoption. The City can positively impact adoption by negotiating agreements with broadband
service providers to provide “lifeline” Internet services at low costs for disadvantaged residents,
small businesses and other targeted populations in exchange for discounted use of its
broadband assets. These incentive programs can help broadband service providers deploy more
quickly and at lower costs in exchange for their participation in such lifeline programs.
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Improving Public Efficiency and Effectiveness
Leveraging the City’s broadband assets to connect more public institutions throughout the City
creates the opportunity to establish collaborative technology programs across multiple
organizations. Establishing institutional access to the City’s conduit and dark fiber networks would
create a high-speed, inter-governmental backbone through which these organizations could
collaborate with one another on Information Technology and communications projects.
Connecting schools, libraries, local government, public safety and community organizations to
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one another could facilitate the sharing of technology resources among the organizations
connected. Some of the potential benefits may include cost reductions through joint volume
purchasing agreements, application sharing and improvements to emergency operations and
communications.
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Reducing Taxpayer Spend
Improving public efficiency and effectiveness should reduce the costs of government to the local
taxpayer. If employed effectively, the City’s broadband assets can become a tool that facilitates
cost reductions, not only for the City itself but also for other public organizations across the City,
including schools, libraries and other community organizations. An inter-governmental network
connecting these public organizations should consolidate the purchasing power of all agencies
for common information technology and communications services, resulting in lower overall
costs. The network can also “futureproof” the connectivity needs of these public agencies and
protect them from increases in cost as they require additional bandwidth.
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Reducing Lead Times for Installation
The time to install and activate end users’ broadband services is significantly determined by the
availability of infrastructure in the area. Businesses are negatively impacted by fiber construction
lead times that may result in delays to activate their services. 30 days is the typical industry
standard lead-time for activation of fiber-optic broadband services, without a provision for special
construction. In many cases, the lead-time may double or triple depending on how much
additional fiber construction is necessary to reach the end user’s location. The City’s conduit and
dark fiber infrastructure can be used to supplement existing broadband service provider
infrastructure to reduce these lead times.
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Supporting Reliability and Performance
The City’s broadband assets can be used to support the reliability and performance of broadband
services across Baltimore. These assets can be employed to provide new physical route diversity
to the networks of existing broadband service providers and increase capacity in existing routes.
They can be used to increase backhaul capacity in areas of the City that are near or at their limit
and equip more commercial towers with dark fiber connectivity, increasing the bandwidth
available to mobile carriers serving Baltimore’s wireless needs. Community anchors can utilize
these assets to achieve significant upgrades in speed and connectivity between their facilities as
well as diversity for their primary connectivity.
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B. Overview of Business Models
Traditionally, broadband providers have been solely responsible for the development of broadband
services in communities. In the mid-1990s, local governments began to take notice of a developing trend
within their communities; demand for broadband services was growing. Businesses needed more
bandwidth. Schools, hospitals, and government organizations were shifting more of their operations
online. Residents were accessing more applications. As this pace accelerated, broadband supply was not
keeping up with broadband demand. To meet the demand, service providers began upgrading their
networks in the largest cities where density was the highest and where return on investment was the
greatest. In smaller communities with similar demand, service providers were reluctant to make these
investments.
This trend has become more pronounced as communities’ demand for bandwidth has increased
exponentially. Over the past 20 years, many local governments have taken an active role in ensuring their
communities are equipped with the broadband services they need. It has become a local issue for many
communities as broadband has become a public necessity. It has also become a local issue because the
infrastructure that powers broadband services is local itself; installed in underground conduits or on
poles within the community. Communities that believe it is a public necessity have taken an active role in
ensuring their citizens and businesses have access to affordable broadband services. They have done so
by using broadband-enhancing public policy and strategic investments in broadband infrastructure to
complement the networks of private broadband providers. In most cases they have developed publicprivate partnerships with these providers to utilize their public broadband infrastructure.
Figure 6-1: 500+ Municipal Broadband Providers across the Country
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Municipalities utilize a range of business models to develop broadband initiatives within their
communities. The right business model is subject to a number of factors that determine how the City will
employ, manage and expand its broadband assets within the community and what role it will play in the
market for broadband services. Every community is unique and the business model utilized by a
municipality must account for the following factors:
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Residential population factors
o Rural versus urban designations
o Total households, occupied and unoccupied
o Single family versus multi-dwelling distribution
o Demographics and age distribution
o Seasonality of the population
o Education levels
Business demographic factors
o Distribution of small, medium and large businesses
o Industries and NAICS/SIC classifications
o Home based vs. “brick and mortar” distribution
Community anchor factors
o K-12 schools and higher education
o Hospitals, doctor’s offices and clinics
o Public safety and emergency management organizations
o City and county local governments
Market factors
o Current market environment
o Number and type of broadband service providers
o Existing products and services
Geographic factors
o Terrain and topography
o Environmental factors
Organizational factors
o Funding availability
o Economic sustainability
o Organizational capabilities and readiness
Legal and Regulatory factors
o Federal statutes on regulated telecommunications services
o State statutes on municipal broadband
o State and local public utility ordinances
o State franchising statutes
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C. Business Model Considerations
Selecting the right business model for a municipal broadband project depends highly on the
community’s specific environment, market, needs, appetite for risk, funding availability, payback and
return requirements. The commonly implemented business models fall on a continuum that begins with
low risk, low impact options and ends with high risk, high impact options. Figure 6-2 illustrates this
continuum. As a municipality evaluates the various business model options from left to right, it will
encounter greater degrees of risk and reward; risk, in terms of financial, operational and regulatory risk;
reward, in terms of community benefits, revenue generation and overall profitability. The municipality
must determine the most appropriate risk/reward balance to achieve its goals. To do so, an evaluation of
each business model must be conducted that analyzes the local market, competition, funding
requirements, organizational capabilities, regulatory environment and political climate.
Figure 6-2: Available Broadband Business Models Available to Municipalities
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D. Commonly Used Business Models
i. Policy Participation Only
The municipality utilizes its public policy tools to influence how broadband services are likely to develop
in its community. This includes permitting, right of way access, construction, fees and franchises that
regulate the cost of constructing and maintaining broadband infrastructure within its jurisdiction. This
option is not considered a true business model but does significantly impact the local broadband
environment and is therefore included as one option. Municipalities that do not wish to take a more
active role in broadband development often utilize policy participation to positively impact the local
broadband environment.
Example: Santa Cruz County, CA
The Santa Cruz County board of supervisors in November 2013 approved an eight-month timeline to overhaul its
broadband infrastructure plans and regulations. Specific areas of focus include permitting fee reductions and a
proposed “dig once” ordinance that would make it easier to install new fiber-optic cables during other work on area
roads or utilities lanes. “The County will continue a focus on broadband infrastructure throughout the county to
enable businesses to function in the digital era, and students and households to have high quality access to
information and communication. The County will work with industry providers to develop a Broadband Master Plan
in order to identify focus areas within the county that will be most suitable for gigabyte services, particularly as the
Sunesys backbone line is constructed during 2014 and 2015. The County will work with service (last mile) providers to
ensure that these focus areas are deemed a priority, in order to support streaming requirements, product
development, job creation and online selling capability.”
ii. Infrastructure Provider
The municipality leases and/or sells physical infrastructure, such as conduit, dark fiber, poles, tower
space and property to broadband service providers that need access within the community. These
providers are often challenged with the capital costs required to construct this infrastructure, particularly
in high cost urbanized environments. The municipal infrastructure provides a cost effective alternative to
providers constructing the infrastructure themselves. In these cases, municipalities generally use a utility
model or enterprise fund model to develop programs to manage these infrastructure systems and offer
them to broadband service providers using standardized rate structures.
Example: City of Palo Alto, CA
In 1996, Palo Alto built a 33-mile optical fiber ring routed within the City to enable better Internet connections.
Since then, we have been licensing use of this fiber to businesses. For the past decade, this activity has shown
substantial positive cash flow and is currently making in excess of $2 million a year for the city. We now have
that money in the bank earmarked for more fiber investments."
iii. Government Services Provider
Municipalities that become government services providers utilize their networks to interconnect multiple
public organizations with fiber-optic or wireless connectivity. These organizations are generally limited to
the community anchors that fall within their jurisdiction, including local governments, school districts,
higher educational organizations, public safety organizations, utilities and occasionally healthcare
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providers. The majority of these anchors require connectivity and often, the municipal network provides
higher capacity at lower costs than these organizations are able to obtain commercially. Municipal
networks across the country have been built to interconnect cities, counties, school districts and utilities
to one another at lower costs and with long-term growth capabilities that support these organizations’
future needs and protect them from rising costs. In these cases, government service providers may be
cities, counties or consortia that build and maintain the network. The providers utilize inter-local
agreements between public agencies to establish connectivity, rates and the terms and conditions of
service.
Example: Seminole County, FL
Seminole County owns and operated a 450-mile fiber-optic network that was installed over the past 20 years by
the County’s Public Works departments primarily to serve the needs of transportation. Since that time, the
network has grown to connect the majority of the County’s facilities, 5 cities within Seminole County, Seminole
Community College, Seminole County Schools and other public network to a common fiber-optic backbone. The
network has saved millions of dollars in taxpayer dollars across the County and has become a long-term asset
that enables the County and the other connected organizations to meet their growing connectivity needs.
iv. Open Access Provider
Municipalities that adopt open access generally own a substantial fiber-optic network in their
communities. Open access allows these municipalities to “light” the fiber and equip the network with the
electronics necessary to establish a “transport service” or “circuit” to service providers interconnecting
with the local network. Service providers are connected from a common interconnection point with the
open access network and have access to all customers connected to that network. Open access refers to
a network that available for any qualified service providers to utilize in order to connect their customers.
It allows municipalities to provide an aggregation of local customers on a single network that they are
able to compete for and provide services. The concept of open access is designed to enable competition
among service providers across an open network that is owned by the municipality. The municipality
remains neutrality and non-discriminatory practices with the providers who operate on the network. The
municipality establishes a standard rate structure and terms of service for use by all participating service
providers.
Example: City of Palm Coast, FL
In 2006, the Palm Coast City Council approved a 5-Year fiber-optic deployment project funded at $500,000
annually for a total investment of $2.5 million. The network was developed to support growing municipal
technology needs across all public organizations in the area, including city, county, public safety and education.
It was also planned to support key initiatives such as emergency operations, traffic signalization, collaboration
and video monitoring. The City utilized a phased approach to build its network using cost reducing
opportunities to invest in new fiber-optic infrastructure. As each phase was constructed, the City connected its
own facilities and coordinated with other public organizations to connect them; incrementally reducing costs
for all organizations connected to the broadband network. Showing a reasonable payback from each stage of
investment allowed the City to continue to fund future expansion of the network. Through deployment of this
network, the City has realized a savings of nearly $1 million since 2007 and projects further annual operating
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savings of $350,000 annually. In addition to these savings, the City’s network provides valuable new capabilities
that enhance its mission of serving the residents and businesses of the community.
v. Retail Service Provider – Business Only
Municipalities that provide end users services to businesses customers are considered retail service
providers. Most commonly, municipalities provide voice and Internet services to local businesses. In
many cases, a municipality may have built a fiber network for the purposes of connecting the city’s
primary sites that has been expanded to connect local businesses, in effort to support local economic
development needs for recruitment and retention of businesses in the City. Municipalities that provide
these services are responsible for managing customers at a retail level. They manage all operational
functions necessary to connect customers to the network and providing Internet and voice services.
Municipalities compete directly with service providers in the local business market, which requires the
municipality to manage an effective sales and marketing function in order to gain sufficient market share
to operate at a break-even or better.
Example: Fort Pierce Utilities Authority
Primary FPUAnet services are Dedicated Internet Access, fiber Bandwidth Connections, E-Rate IP Links, and Dark
Fiber Links. FPUAnet services also include Wireless Broadband Internet and Wireless Bandwidth Connections,
which extend FPUA's fiber through wireless communications. The FPUAnet Communications mission statement
is "To help promote economic development and meet the needs of our community with enhanced, reasonably
priced communications alternatives. It all began around 1994, when FPUA began to build a fiber-optic network
to replace leased data links between its buildings in Fort Pierce. The new optical fiber system proved more
reliable and cost effective, and was built with sufficient capacity for external customers. In 2000, FPUA allocated
separate fibers through which it began to offer Dark Fiber Links to other institutions. This soon expanded to
include businesses and more service types.
vi. Retail Service Provider – Business & Residential
Municipalities that provide end users services to businesses and residential customers are considered
retail service providers. Most commonly, municipalities provide voice, television and Internet services to
their businesses and residents through a municipally owned public utility or enterprise fund of the city.
As a retail service provider that serves businesses and residents, the municipality is responsible for a
significant number of operational functions, including management of its retail voice, television and
Internet offerings, network operations, billing, provisioning, network construction, installation and general
operations and maintenance. The municipality competes with service providers in the business and
residential markets and must be effective in its sales and marketing program to gain sufficient market
share to support the operation. Many municipalities that have implemented these services are electric
utilities that serve small to midsize markets. Many of these markets are rural or underserved in areas
that have not received significant investments by broadband service providers. Retail service providers
must comply with state and federal statutes for any regulated telecommunications services. These
organizations must also comply with state statutes concerning municipal and public utility broadband
providers; a set of rules has been developed in most states that govern the financing, provision and
deployment of these enterprises.
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Example: Bristol Virginia Utilities (BVU Optinet)
BVU OptiNet is a nonprofit division of BVU, launched in 2001, that provides telecommunication services to
approximately 11,500 customers in areas around Southwest Virginia. OptiNet is known for its pioneering work
in the area of municipal broadband throughout the area. BVU is acknowledged as the first municipal utility in
the United States to deploy an all-fiber network offering the triple play of video, voice and data services. Offering
digital cable, telephone service and high-speed Internet from a remote-area utility provider makes BVU
exceptional, even on a global level.
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E. Comparison of Commonly Used Business Models
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F. Playbook of Options for Consideration
1. Implement Broadband-Friendly Public Policy Tools
What are Broadband-Friendly Public Policy Tools?
Broadband-friendly public policies are tools that cities can utilize to accelerate deployment and reduce
the cost of constructing broadband infrastructure within their jurisdictions. These policies also enable
cities to create more opportunities for the installation of broadband infrastructure in conjunction with
other public and private projects occurring within the city. Public policy tools are implemented according
to each city’s existing ordinances and processes; there is no “cookie cutter” approach to implementing
them.
Comprehensive Broadband Standards & Joint Trenching Policies
Integrating broadband “utility” standards into the City’s land development code will enable the City to
incorporate basic broadband infrastructure requirements into the land development process and
encourage broadband construction to occur in conjunction with other capital projects. Road widening,
sidewalk, trail, and lighting projects all may be opportunities for the installation of basic conduit
infrastructure at favorable costs. By installing conduit in concert with these related capital projects, the
City can avoid incurring the significant costs of constructing this infrastructure by doing so when the
ground is already open. Since the majority of costs to build broadband infrastructure in Baltimore are
incurred through trenching and boring, this strategy can alleviate some costs of constructing
underground infrastructure. The City, in alignment with its CIP, can determine which projects will help
build usable infrastructure.
This process should also be coordinated with local service providers to minimize overbuilding and to
ensure that service providers have an opportunity to place their infrastructure in capital projects as well.
Joint trenching policies between the City, utility companies, and broadband providers can facilitate more
opportunities to install conduit, fiber, and other infrastructure at much lower costs. Joint trenching
agreements are developed between public and private organizations to minimize the cost of
constructing conduit in the local area by allowing each entity to take advantage of trenches that have
been opened through each other’s projects. The City likely has some joint trenching agreements
established with utility companies and broadband providers. Standardization of these agreements
across all potential owners of underground infrastructure can be established to ensure all parties are
aware of the joint trenching opportunities as they become available.
Infrastructure Fund
The City would establish an infrastructure fund set-aside, allocating monies to build broadband
infrastructure when opportunities arose, aligned with the City’s capital project schedule. The City would
determine how much funding to allocate based on the capital project schedule and locations where the
City could favorably build infrastructure at low costs. This fund would typically roll from year to year and
maintain a reserve or set-aside for unanticipated projects.
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Record Keeping
The City maintains Geospatial Information Systems (GIS) that contain detailed maps of the community,
right of way, easements, and other information. As the City considers implementing broadband-friendly
public policy measures, it should ensure that GIS documentation of any broadband infrastructure is
made a requirement. This will allow the City to maintain a clear understanding and records of locations
of broadband infrastructure; which may include conduit, vaults, pull boxes, transitions, fiber-optic cable,
and other outside plant resources.
How Would the City Implement Broadband-Friendly Public Policy Tools?
Developing broadband friendly-pubic policies requires the City to evaluate its current land use,
permitting, construction, and right-of-way policies to determine how these can be tailored to incentivize
development of more broadband infrastructure in Baltimore. Below is a basic guide explaining how many
cities have implemented these policies:
The City should adopt General Plan policies that incorporate broadband as a public utility and create a
policy framework to promote its deployment in public and private projects as appropriate, including:
a) Tailor draft policies and standards to the City’s specific needs and adopt them into local policy,
codes, and standards (including policies, dig-once, joint trenching, engineering standards, etc.).
b) Incorporate broadband in the City’s Development Impact Fee program and the City’s Capital
Improvement Plan (CIP) as appropriate and make a commitment to fund broadband
infrastructure.
c) Identify opportunities to install broadband infrastructure in conjunction with public and private
construction projects as appropriate.
d) Develop a process so that Planning and Public Works coordinate with IT to identify projects that
could install this infrastructure at reduced costs.
e) As the City makes key infrastructure investments, maintain broadband infrastructure in the City’s
GIS system; requiring GIS-based as-builts and implementation of other means for accurate
documentation.
f) Evaluate ways to streamline the broadband permitting processes within public rights-of-way to
ensure broadband providers do not face unnecessary obstacles to building infrastructure.
g) Evaluate fees levied on broadband providers for constructing broadband infrastructure to ensure
they do not discourage broadband investment.
What Cities Have Implemented Broadband-Friendly Public Policies?
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City of Palm Coast, FL
In 2005, the City created specifications for broadband standards that were adopted by the City
Council and became part of the City’s engineering standards for all projects. Since 2005, the City
has built 30+ miles of underground conduit infrastructure at a fraction of the cost by
incorporating it into the design of water and sewer, road widening, and street lighting projects.
The City has also worked with local developers to incorporate these standards into their
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commercial and residential projects to ensure that any new or retrofit development is outfitted
with basic broadband infrastructure.
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Santa Cruz County, CA (County Organization)
Santa Cruz County has implemented a number of broadband-friendly public policies that act to
streamline, expedite, and reduce the cost of building broadband infrastructure. The County has
implemented the following:
1. A master lease agreement allowing the placement of broadband infrastructure on County
assets.
2. A new ordinance that more easily allows the installation or upgrades of broadband
infrastructure in the County rights-of-way.
3. Conduit specifications for placement of conduit during construction projects (dig once).
4. A broadband master plan to target sections of the county (such as economic vitality areas)
for additional broadband infrastructure.
What are the Risks?
Implementing broadband-friendly public policies pose little financial risk to cities because they require
little upfront funding if managed correctly. In some cases, cities have struggled with incorporating
broadband into their existing land use policies because they are unfamiliar with how to manage a new
“utility” type of asset. This requires the collaboration of multiple departments and the ability of these
departments to work together to a common goal. The City should expect that some new business and
operational processes would be required as well as changes to existing processes in order for the
policies to be effective.
2. Development of Broadband Public-Private Partnerships
What are Broadband Public-Private Partnerships?
A broadband public-private partnership (“PPP”) is a negotiated contract between a public and private
entity to fulfill certain obligations to expand broadband services in a given municipality. PPPs have gained
popularity over the past 5 years as more municipalities employ public broadband infrastructure in
conjunction with private broadband providers. PPPs leverage public broadband assets, such as fiber,
conduit, and facilities with private broadband provider assets and expertise to increase the availability
and access to broadband services. In these cases, municipalities forgo “getting into the business” of
providing retail services and instead, make their broadband infrastructure available to private broadband
providers to enhance their local networks.
Generally, municipalities provide their broadband assets, including fiber, conduit, and facilities to private
broadband providers on incentivized terms to accelerate the deployment of broadband services to the
community. In exchange for the favorable rates and other incentives, broadband providers may commit
to a number of criteria, depending on the needs of the community, as defined by the public partner.
Some of these criteria have included:
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Providing free service to public organizations, including schools, healthcare organizations, local
governments and community organizations;
Meeting price targets for specific tiers of service to residential and commercial customers;
Providing Gigabit services to residents and businesses;
Enabling low-cost “lifeline” broadband services for economically disadvantaged residents;
Equipping business parks, community redevelopment areas, and other designated places with
broadband services; and
Guaranteeing performance, availability, and reliability of services provided under the PPP.
What Questions are Important to Answer in Broadband PPPs?
Before negotiating a broadband PPP, it is imperative that the City answer key questions that will
determine what number, type, and alignment with potential broadband provider partners. These key
questions include:
1. Should the City negotiate with one or multiple broadband providers?
The decision to form a Broadband PPP with a single or multiple providers will determine how much
power the City maintains at the negotiating table with potential partners and how much of the City’s
“ask” is agreed to by the partner. In a single provider PPP, the provider will generally be incentivized by
the opportunity to capture a large market through use of the City’s broadband assets and do so with no
competition from other providers for those assets. In a multi-provider PPP, multiple providers will have
access to those assets, reducing the incentives a single provider would enjoy. However, a multi-provider
PPP would protect the City from a lack of performance or a default of a single provider, which may
render the PPP ineffective.
2. What is the range of potential partners available to the City?
The City should consider making the Invitation to Negotiate (“ITN”) open and non-discriminatory,
allowing all qualified providers the opportunity to submit their proposal to the City. The ITN should be
inclusive of Baltimore’s current broadband providers, including incumbents, cable companies, and
other competitive providers. The City should also consider the geographic scope of potential partners.
Limiting the scope of qualified applicants to only those serving Baltimore today would limit the City’s
range of proposals. The City should consider expanding this scope to cover the greater US
telecom/broadband market to include potential partners that may deliver other new and innovative
broadband solutions to the City.
3. What incentives can the City offer potential partners?
The City can make its broadband assets available to one or more partners at reduced or no cost to
incentivize providers to accelerate broadband deployments in Baltimore. These incentives may also help
providers reduce costs to citizens, businesses, and community anchors. The City should clearly identify
the assets that it will employ in the partnership, the value of these assets and the consideration given to
partners for incentivized use of the assets. Doing so will ensure the City and partner(s) clearly document
the exchange of value between the partners.
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4. What requirements should the City ask of broadband providers?
The City should clearly define its expectations in the partnership(s). These expectations may include
offering specific types of services in target areas, guaranteeing performance and quality of services and
offering low-cost “lifeline” packages for economically disadvantaged residents and businesses. The City
should identify which components are required and non-negotiable in the partnership versus those
components that may be negotiated.
5. How will the partnership be managed?
The City should anticipate the need for ongoing management of a Broadband PPP. This will require the
City to establish resources to manage the PPP. The primary management functions include measuring
the progress and performance of the partner(s), overseeing the broadband assets employed in the
partnership and managing ongoing operational functions such as new broadband buildouts.
How Would Baltimore Implement a Broadband PPP?
One option to develop a broadband PPP is to hold a competitive negotiation with one or more
broadband providers. This option is utilized when the City has determined that it will pursue publicprivate partnership(s) with private broadband providers. The public-private partnership may take
different forms, depending on the needs of the City. In Baltimore’s case, the City would bring public
broadband assets to the negotiating table with private broadband providers to achieve mutually
desirable benefits to both the City and the partner(s). The ITN is a public procurement vehicle that can be
used to negotiate and execute public-private partnerships.
In this case, the City could issue a public ITN through a public procurement that would invite broadband
providers to submit information concerning how they would make use of the City’s broadband
infrastructure to achieve a pre-defined set of goals laid out by the City. Most ITNs resemble Requests for
Qualifications (“RFQ”) or Requests for Information (“RFI”). In general, ITNs are evaluated similarly to these
types of procurements and are scored on the merits of each respondent’s ability to meet or exceed the
City’s goals. Similar to RFQs and RFIs, ITNs are generally not evaluated on price as the revenues and costs
within the project negotiated between the parties are a “moving target” and many times are not
determined until well into the negotiation. Rather, they are executed on the total value derived from the
project, in terms of economic development, new jobs, increases in the tax base, pricing for services,
quality of services, and other “non-financial” benefits.
Why Would Baltimore Utilize an ITN?
Cities utilize the ITN approach for several reasons. First, in cases where cities do not want to engage in
managing broadband resources, cities have used ITNs to negotiate the wholesale use of their assets
while retaining the underlying public ownership. Second, cities often want to utilize established
procurement vehicles through which they can negotiate “partnerships” with broadband providers. ITNs
are generally an acceptable form of procurement in most states; enabling cities to follow procurement
and negotiation guidelines that are familiar to them. Third, cities often want to ensure their
procurements are open and non-discriminatory to qualified broadband providers. ITNs utilize public
procurement channels to ensure that all qualified broadband providers are given a chance to respond to
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an ITN. This enables cities to include local incumbents, competitive providers, CELCs, and non-facilities
based providers in the procurement.
What are the Outcomes?
Outcomes are highly dependent on the City’s goals in the project, value of the broadband assets, and
desire to maintain control over how the broadband provider utilizes the assets. The City should strive to
accomplish several key items in negotiating a PPP with a private broadband provider:
1. Treat broadband providers as stakeholders in the community
a. Consider their capital requirements
b. Remember that their decision-making will be based on achieving the required return
c. Understand that their payback requirements are shorter than in the municipal world
2. Identify the target areas for broadband expansion in the PPP
a. Identify the boundaries
b. Pinpoint the City’s broadband assets for use in these target areas
c. Define the services that are expected to be provided by the broadband provider
3. Enable the provider to deploy services as quickly as possible by minimizing the following
obstacles:
a. Permitting timeframes
b. Requiring single versus bulk/blanket permits for their projects
c. Strict construction requirements for placement of conduit, fiber and facilities
4. Minimize one-time ongoing fees to keep prices for broadband services low in the local market
a. Normalize, reduce or waive permitting fees for construction projects
b. Minimize leasing fees for the City’s broadband assets such as fiber and conduit
c. Allow for lower cost construction methods where possible (in conjunction with item 1c)
5. Clearly define the consideration given and received in the project with the broadband provider
a. Determine the value given by the City to the provider in the PPP
b. Determine the value generated by the provider to the community as a result of the PPP
c. Define the timeframe for the community to receive the benefits of the PPP
6. Define how the PPP will be managed and governed
a. How will the parties conduct business with one another and maintain alignment
b. How do the parties deal with shortfalls if either party isn’t able to meet the requirements in
the timeframe desired
c. How is performance of the PPP and the partners measured?
What Cities Have Implemented Broadband PPPs?
•
Google Fiber in Kansas City, Provo, and Austin
These projects utilize a form of public-private partnership whereby each municipality developed
agreements for the use of municipal broadband infrastructure and/or policy incentives to attract
the provider to the City.
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•
Axcess Ontario, NY
Axcess Ontario builds the fiber infrastructure to supply/lease telecom technology, which enables
carriers to provide service to their customers. Axcess Ontario collaborates with broadband
providers such as Verizon Wireless and Time Warner Telecom to leverage its fiber-optic network
to bring more broadband services to the community.
What are the Risks?
Broadband PPPs are relatively new to local governments but their popularity is growing because they
align public organizations and private providers, leveraging each other’s core strengths. In most cases,
PPPs alleviate municipalities from the requirements to provide retail or wholesale broadband services
and allow them to employ their broadband infrastructure and policies with providers who take on these
responsibilities.
Fundamental alignment between the public and private partner(s) is important for successful PPPs.
Municipal goals must be balanced with private sector goals and strategies. These goals and strategies
must fulfill each party’s critical needs and must be forged early in the process. The identification and
selection of the right partner(s) is paramount to success in the project. Execution risks can be high for
municipalities that do not have a clear understanding of the true needs of their communities or those of
broadband providers.
3. Become an Infrastructure Provider
What is an Infrastructure Provider?
As an Infrastructure Provider, the City would commercialize its dark fiber and conduit. Becoming an
infrastructure provider would allow Baltimore to lease excess capacity in its conduit and fiber-optic
networks to broadband providers and other companies that need access to metropolitan fiber.
Constructing new fiber-optic networks in Baltimore would be a costly proposition, with construction costs
reaching $250,000 or more per mile of installed conduit. Therefore, in areas where the City maintains
existing conduit and the fiber-optic network has available capacity, these resources can be a valuable
alternative to building new network infrastructure. Cities across the country lease their conduit and dark
fiber networks to providers, helping them gain greater access to local markets and connect more
customers with high-speed broadband services.
How Would Baltimore Develop a Dark Fiber & Conduit Leasing Programs?
The Department of Transportation’s (DOT) extensive underground conduit system could become a key
resource to use in expanding the availability of broadband infrastructure in Baltimore. This Study
analyzed the City’s current documentation on the conduit and based on this initial analysis, this Report
recommends that the City institute a program to proof sections of the conduit that have value to
broadband development in the City. The City should engage its Department of Transportation to
complete a feasible conduit-proofing program in targeted areas of the City (more fully defined in the
complete Report). On successful proofing, the City will allocate conduit into its inventory of available
broadband assets for employment with City technology projects and in conjunction with broadband
service providers.
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The significant cost of building underground broadband infrastructure in Baltimore makes the City’s
conduit system a resource that could incentivize broadband service providers to accelerate their
deployments; reducing the initial investment needed to deploy fiber-optic networks in the City. In its
current state, the conduit system will need significant proofing and documentation of usable resources;
however, if the results are positive, the City will have identified an important resource that can be
leveraged with broadband service providers to expand access and availability. Similar to the City’s dark
fiber networks, the conduit systems can be leased to broadband service providers to serve more of
Baltimore’s communities. These leases may be particularly attractive for fiber over-builders that are
interested in delivering fiber-based broadband technologies into residential and business areas.
Physically proofing the entire conduit system would likely be cost prohibitive for the City. Instead, the City
could employ a strategy of proofing only the segments of the conduit that have value for potential
broadband projects. The City’s Economic and Community Development Department should identify
regions of the City that are targeted for economic revitalization and other community programs and
based on these areas, identify the conduit assets owned by the City and institute a program to physically
proof them. Utilizing the maps provided by MOIT and the Department of Transportation, the conduit
running lines have been established across some portions of the City. Physically proofing specific
portions of the conduit will determine its overall usability in future broadband programs that the City
may develop with community anchors, broadband service providers, and for its own internal purposes.
Proofing involves the process of physically inspecting underground conduit, handholes, vaults, manholes,
and other structures to verify continuity across these facilities. In municipal environments, proofing is
generally carried out by public works personnel or by outside plant construction contractors if an
external firm is preferred. Proofing costs will vary depending on a variety of factors that include
topography and placement of underground facilities, size and condition of the facilities, and the local
transportation environment (namely auto, bicycle, and pedestrian traffic). High-density urban
environments such as Baltimore will yield higher per mile proofing costs ranging from $2,000 - $9,000
per mile. The downtown corridor would likely incur the highest per mile proofing costs; therefore, it is
important for the City to consider the specific segments of conduit that should be proofed based on the
target areas for broadband development.
As it is documented, the conduit needs to be accurately represented in the City’s GIS systems for
accurate documentation. Building on the existing conduit documentation, the City should strive to
continuously update and refine its GIS maps of usable conduit. When employed in broadband projects,
this documentation will become essential to manage these assets, particularly when one or more
organizations are collocating in the conduit. The City will be required to manage access, security,
operations, and maintenance issues with these organizations and be prepared to guarantee service
levels and uptime.
The City’s conduit and dark fiber assets have the potential to provide a new resource to broadband
providers to reach more potential subscribers within the City. Based on the most recent mapping data
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illustrated through the Maryland Broadband Map 16 , Baltimore has fiber-optic coverage within the
downtown core; however, in many of the outer lying areas of the City, there is sparse coverage or none
at all. In these cases, broadband providers may still be able to build fiber into local service areas but the
cost of doing so is generally prohibitively expensive for potential subscribers.
Where City fiber (and conduit) exists, it generally has the capacity to provide a range of services to
broadband and telecommunications providers to expand and enhance their networks, including:
1. Point-to-Point Connectivity – Individual fiber connectivity between a customer and a broadband
provider over a dedicated strand or multiple strands of fiber.
2. Backhaul Connectivity – Individual fiber connectivity between a broadband provider’s current
access networks and its headend and/or connectivity to points of presence or data centers.
3. Distribution Networks – Multiple strands of fiber that is used to deploy distribution equipment
such as GPON and Active Ethernet into commercial and residential service areas.
4. Mobile Backhaul – Multiple strands of fiber that is used to connect cell towers and micro-cell sites
to a wireless broadband provider’s backbone network.
5. Wholesale Metro Transport – Multiple strands of fiber that are used by a wholesale
telecommunications provider to provide connectivity services to broadband providers in a
metropolitan environment.
Overbuild of the Net800 network with 216-count fiber provides an opportunity to interconnect business
and residential districts with fiber infrastructure. This new capacity could be utilized to provide a
backbone route that allows broadband service providers to reach these areas with new metro fiber
routes. Many of these districts, within 100 – 1000 feet of the fiber infrastructure, could easily be
connected. Other areas further from the network require additional construction from the Net800
network to reach individual residential and business districts within the City. The farthest point from the
Net800 network to the City boundary is 3.37 linear miles and 4.87 route miles (miles following Baltimore
street lines).
Enabling these services will require the City to first implement the an organizational structure to manage
its dark fiber leasing program and work with broadband providers to determine the locations, access
points, capacities, and other features within the City’s network. If these tasks can be accomplished,
Baltimore’s communities could receive the benefits of greater accessibility, more options, and greater
affordability in their broadband services.
The City would provide two infrastructure products:
•
Dark Fiber or Conduit Lease: A contractual agreement between the operators of a
communications cable in which one party provides an operating lease of dark fiber resources to
the other party for a recurring fee and potentially a one-time “installation” or “activation” cost.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
16
http://www.mdbroadbandmap.org/
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•
IRU or Indefeasible Rights of Use: A contractual agreement between the operators of a
communications cable in which one party provides unrestricted use of a portion of the cable for a
long period of time at a fixed price, which is generally paid up front.
The City should be prepared to offer both products, which are identical in the physical assets provided
but different in the contractual obligations between the parties. Generally, IRUs are utilized by
broadband providers that have the capital available to pay all costs for the service in a one-time, upfront,
and discounted payment; allowing them unrestricted use of the fiber for the term of the agreement and
the opportunity to capitalize the expense on their balance sheet. An IRU becomes an asset of the
broadband provider rather than an expense as in a dark fiber lease. The City, through the BBA, will need
to support and negotiate the terms of these IRUs and leases.
What Cities Have Implemented Dark Fiber and Conduit Leasing Programs?
•
City of Lakeland, FL
Lakeland Electric leases dark fiber to its largest customer, Lakeland Regional Medical Center.
Associated clinics and healthcare facilities within the geographic area of the hospital connect to
the network. The hospital's personnel manage its own network so costs are predictable and
information systems talent is onsite. The hospital uses 10 Gbps connections between facilities for
advanced telehealth applications. To date, the City of Lakeland has also connected 45 Polk County
Schools with dark fiber for a total of $1,173,337. The agreements are for the life of the fiber, 2025 years. Colo5, offering colocation services, disaster recovery, and cloud services, is expanding to
Lakeland and will be connected via Lakeland Electric. The company has recently finished
constructing a secure building in Lakeland that will serve a number of customers including, Level
3, TW Telecom, Verizon, Fiberlight, and Brighthouse. Lakeland’s dark fiber leasing provides about
$225,000 per year in revenue to the general fund though he declines to estimate how much the
municipal government saves by using its own infrastructure instead of leasing from Verizon or
some other provider.
•
City of Palo Alto, CA
For businesses that rely on the Internet, the City of Palo Alto Utilities (CPAU) offers fiber-optic
based bandwidth connectivity between business addresses in Palo Alto or to the world through
Equinix’s Palo Alto Internet Exchange (PAIX). Palo Alto provides dark fiber connectivity on a permile basis to businesses and service providers across the City. The City connects approximately
80 commercial customers across its 41-mile fiber network and generates a few million dollars of
revenue per year from leases of dark fiber from its customer base.
What are the Risks?
A key obstacle is broadband provider adoption. Broadband providers must be willing to utilize the City’s
conduit and dark fiber resources to extend their networks into communities that currently lack services
today. This is not a simple process and the City should not anticipate overwhelming enthusiasm from the
broadband provider community initially. Broadband providers are not generally accustomed to doing
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business with local governments as owners of networks. Service providers may have concerns regarding
the quality, performance, and reliability of the City’s conduit and dark fiber as well as the City’s general
capabilities to manage service levels customary within the telecom industry. It is imperative that the City
proof any existing duct, fiber, vaults, and other components of its fiber-optic network that will be utilized
by broadband providers.
Competitive broadband providers, such as CLECs and AAVs are generally more willing to entertain
utilizing the City’s resources than local incumbents may be; however, the City should conduct thorough
and equal outreach to all interested service providers to ensure that each is given an equal opportunity
to utilize the City’s network. This opportunity presumes that the City will have established the BBA or a
similar entity that is capable of conducting this outreach.
Incenting the use of the City’s dark fiber networks can help overcome the potential obstacles to
adoption. The City maintains the leverage to implement several incentives that could result in favorable
response from broadband providers, the most powerful being the setting of rates. Maintaining rates
below the competitive market will incent use of the network and the City can “dial down” rates for dark
fiber to incent more broadband providers to utilize its network. This will also reduce revenues to the City
from broadband providers; therefore, the City should be cautious of reducing rates too far and risk the
financial sustainability of the project. A balance will need to be achieved between the rates for service
and the speed of uptake.
A Potential Dark Fiber Leasing Scenario
The City will incur some startup costs in its dark fiber leasing program including program setup costs
including consulting, external legal, and related professional fees to structure the initial program, develop
rate structures, legal agreements, and organizational documents/charters. These costs are not expected
to exceed $400,000 in the first year and will be reduced significantly in the following years to a nominal
amount. The City may also incur some capital costs in preparing the dark fiber networks for use by
broadband service providers. These costs are not currently known but will become apparent once the
City and broadband providers analyze particular segments of the dark fiber networks for use.
The forecast for dark fiber services has been developed under conservative assumptions because the
true market for these services is not yet known. The City will effectively pioneer the municipal dark fiber
service within Baltimore; the actual value of this network will remain somewhat uncertain until the City’s
product is introduced. While demand for these services may be higher than anticipated, this Study
discounts the forecast because of several reasons:
•
•
•
•
The City will be a new entrant into the dark fiber capacity market;
The City has no previous experience leasing or selling IRUs for dark fiber;
Public organizations generally realize a “slow start” approach to providing dark fiber in their
jurisdictions; and
Broadband service providers may be hesitant to procure dark fiber from a public organization.
The City can expect various types of providers to utilize its dark fiber including fiber over-builders, mobile
operators, public organizations, and wholesalers. Based on analysis of municipal dark fiber leasing and
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IRU programs in cities across the country, the City can expect monthly lease rates of $150 to $250 per
strand mile, dependent on the rate structure developed for the City’s network and market acceptance of
these pricing levels. The City can expect IRU rates of $250 to $750 per strand mile for 10 to 20 year IRUs,
again dependent on the City’s adopted rate structure and market acceptance of these pricing levels.
Dark fiber leases and IRUs will gradually increase over time as more adoption of the City’s network is
achieved with revenues growing from $500K in the first 5 years. Over the 10-year period, the program
could achieve up to $9.4 million in free cash flow after operating expenses are paid, not including debt
service.
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4. Become a Government Services Provider
What is a Government Services Provider?
A Government Services Provider is a public organization that provides broadband, telecommunications,
and other technology services to other public institutions. Cities that maintain broadband and
technology resources often look for opportunities to provide these assets to other public organizations
in the local market because they have a common goal of serving local constituents. Often times, cities
that maintain fiber-optic networks are successful at providing these resources to other public
organizations in their jurisdiction; enabling more public organizations to be connected to high-speed
broadband networks. Rather than each organization building individual fiber-optic networks, which
would be cost prohibitive, they come together to share each other’s assets to expand their capabilities
and reduce costs. Cities that own large fiber-optic networks have excelled at connecting these
organizations, which include counties, school districts, libraries, public safety organizations, and
community centers. These networks also have the capabilities to support long-term municipal and
community needs, including:
•
•
•
•
•
Providing fiber connectivity between facilities and between agencies;
Providing SCADA connectivity for water, sewer, and electric utilities;
Providing wireless connectivity for schools, community centers, city halls, and other public places;
Enabling application sharing between local agencies for administration, planning & zoning, GIS
departments, police, fire, dispatch, and emergency operations; and
Smart City applications such as intelligent traffic systems, programmable street lighting, smart
grid, and video surveillance systems.
How Would the City Become a Government Services Provider?
This Report has identified a number of potential opportunities for the City to pursue in providing
broadband services to other public organizations in the Baltimore area. Baltimore City Public Schools is
one of those key opportunities that the City should consider in this endeavor. To some degree, the City is
already a service provider to its other departments. MOIT provides IT and connectivity services to
municipal departments to support their business needs. Becoming a Government Services Provider
could expand MOIT and/or other departmental roles to serve external public organizations, such as
Baltimore City Public Schools, local universities such as Johns Hopkins and Morgan State, public libraries,
community centers, and homeless shelters. The City’s conduit systems, fiber-optic networks, towers, and
related infrastructure could be leveraged to supply connectivity, broadband, Internet, and application
services to other public organizations.
This Report has already pinpointed some key opportunities for the City to consider in serving other
public organizations; however, there are more needs out there beyond the scope of this Report.
Immediately, the City’s broadband assets could be utilized to provide fiber-optic connectivity to schools,
universities, hospitals, clinics, and community organizations that all fall under the public domain. The City
should undertake several key steps:
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1. Determine what broadband assets the City will dedicate to the project
a. Department of Transportation Conduit
b. City-owned fiber-optic networks
c. City-owned towers and rooftops, where wireless may be required
d. City property that may be required
2. Determine the right organizational structure for the City to use to manage these services
a. Internally managed by the City
b. Externally managed through a third-party
3. Decide how the City will contract with other public organizations for services
a. Inter-local agreements
b. Standard contracts
c. State contract vehicles
4. Determine how the program will be financed by the City
a. Startup costs
b. Ongoing operations & maintenance
c. Capital expansion projects
5. Identify key regulatory programs that the City will need to manage
a. USAC Schools and Libraries program (E-Rate)
b. ICBN Open-Access policies governing open and non-discriminatory access of network capacity
put forth by the Department of Commerce and NTIA
c. Universal service fund (USF) compliance
d. Other federal, state and local communications taxes
6. Create a Feasibility Study/Business Plan that incorporates items 1-5 into a comprehensive plan
Examples of Cities Have Become Government Services Providers
•
City of Columbia, MO
The City of Columbia and Columbia Water & Light own and operate an extensive fiber-optic
network that provides high-speed connectivity to the City and electric utility. In addition, fiber
connectivity is provided to Columbia Public Schools, the University of Missouri, the Tiger Institute,
and other community anchor institutions in the Columbia area. The City forms interlocal
agreements between agencies to transact business with schools, universities, public healthcare
organizations, and others to contract for services. Columbia’s network has enabled these
organizations to receive high-speed connectivity at 1 Gbps and 10 Gbps for significantly lower
costs than would otherwise be available.
•
City of Bartow, FL
The City of Bartow owns and operates a 100-mile fiber-optic network covering central Polk County,
FL. The City utilizes the network to provide connectivity between its facilities and communications
services to all of its utilities (water, sewer, and electric). The City also provides low-cost Gigabit
connectivity to a large number of Polk County Public School locations in and around the City. The
County has also connected to the network and Bartow provides fiber connectivity to many of the
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County sites throughout its jurisdiction. The City, County, and School District all benefit from 1
Gbps and 10 Gbps connectivity and the network has benefited the community by keeping the
budgets for these public organizations lower in terms of their communications costs.
What are the Risks?
Execution risk can be high for larger cities with many departments and distributed controls in place. The
City will need to coordinate the activities of multiple departments including MOIT, Public Works, and
Transportation to employ the broadband assets and make them available to other public organizations.
A secondary risk is potential “fall-out” from broadband and telecommunications providers in Baltimore. If
the City provides broadband and technology services to other public organizations, local providers may
lose business in the event the City provides a more competitive, lower cost offering. This does not
present a risk necessarily but may create a hostile environment whereby providers are competing with
the City for the services to these other public organizations. For example, if the City provides fiber
connectivity to the 200+ Baltimore City Public Schools, the local provider may lose that business, which
could be several million dollars of revenue per year. This may negatively influence the relationships that
the City maintains with providers in the area. This should not dissuade the City from providing a superior
quality, more competitive solution to the schools; however, the City should be aware of how doing so
may negatively affect the partnerships it forges with local providers.
A Government Services Provider Scenario: Fiber to Baltimore City Public Schools
In the 2013–14 school year, Baltimore City Public Schools (“BCPS”) served approximately 84,000 students
through 195 schools and programs for grades pre-K through grade 12. BCPS is a significant user of
educational and instructional technologies that support its students’ needs. Many of these technologies
require high-speed broadband Internet and connectivity between schools to enable students, teachers,
and administrators to use them effectively. The need for additional bandwidth between schools grows
significantly as more online applications are enabled by BCPS.
Over the past several years, BCPS has expanded its Wide Area Network17 (“WAN”) to connect more
schools and administrative facilities to a high-speed fiber-optic backbone. In its most recent Information
Technology Plan 2011 – 2014, BCPS has laid out key technology-driven strategies that will “improve
student achievement and effective management systems in the support of quality instruction. These
include the following:
1. Integrate the use of technology tools and digital content to engage students in daily instruction.
2. Ensure that staff is highly skilled and capable of effectively using technology tools and digital content.
3. Improve the readiness and service levels of existing infrastructures, including all networks, mission
critical application systems, and technical support systems in order to sustain and enhance school
administrative functions and system wide operational processes.
4. Provide universal access to high performance technology tools.
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17
Wide Area Network provides private broadband connectivity services between multiple facilities owned by the same
organization, enabling technology and communications to be transported securely over a managed network.
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5. Improve the instructional uses of technology through research and evaluation.”18
The BCPS WAN is a critical resource that enables the District to implement many of the educational
technologies required in its curricula. This network connects approximately 206 schools and
administrative facilities to one another across a fiber-optic backbone. BCPS procured the WAN through a
competitively bid E-Rate contract; via the USAC Schools and Libraries Program19 which allows BCPS to
receive discounts up to 85% on its telecommunications services. BCPS currently maintains an E-Rate
contract for Priority 1 Telecommunications or “wide-area networking” services for approximately
$5,649,600 per year with a current provider. This contract provides connectivity to approximately 206
BCPS schools and administrative facilities. E-Rate provides discounts averaging 85% of this total contract
cost, or approximately $4,802,160. BCPS appears to pay approximately $847,440 of this contract through
its own funding, or the remaining 15% that is not covered in E-Rate funding. BCPS’s current contract for
these services is in force through June of 2016, based on public information disclosed in the most recent
USAC E-Rate filings for BCPS, including Form 470 and Form 471.
The City’s fiber-optic network has the potential to become a key resource to provide WAN services to
BCPS. BCPS has expressed interest in utilizing the City’s fiber network in the past for its connectivity
needs. Facilitated by the current overbuilding project, which will equip the Net800 network with an
additional 216-county fiber-optic cable, this network could be extended to connect the majority to BCPS
sites to a City-owned fiber-optic backbone. The City’s fiber connectivity will help accommodate BCPS’s
future needs for additional bandwidth by providing wide-area network connectivity that can scale to
greater bandwidths; supporting BCPS’s long-term growth of classroom, teaching, and administrative
technologies.
Based on the analysis conducted in this Study, the City may be able to provide these services at
discounts up to 30% less20 while enabling more bandwidth to serve the needs of Baltimore’s students,
teachers, and administrators. Upfront investment will be required by the City to extend its current
network to each school; therefore, the business case developed in this Study should be refined to
accommodate the City’s budgetary constraints. This opportunity also requires that the City is able to
meet the requirements of the USAC Schools & Libraries Program (commonly known as E-Rate) to ensure
that BCPS’s 85% average discounts for WAN services remain intact. It will require the City to comply with
the rules and regulations of the E-Rate program and become an E-Rate service provider. The City has
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
18
http://www.baltimorecityschools.org/cms/lib/MD01001351/Centricity/Domain/8052/PDF/201114_InformationTechnologyPlan.pdf
19
E-Rate is the commonly used name for the Schools and Libraries Program of the Universal Service Fund, which is
administered by the Universal Service Administrative Company (USAC) under the direction of the Federal Communications
Commission (FCC). The program provides discounts to assist most schools and libraries in the United States (and U.S. territories)
to obtain affordable telecommunications and Internet access. It is one of four support programs funded through a Universal
Service fee charged to companies that provide interstate and/or international telecommunications services.
20
Actual discounts, pricing and costs should be calculated by the City based on its payback and return requirements. The initial business case
utilizes a 5-year payback on a cost recovery model for the City, not including any potential debt service that the City would incur from borrowing
funds.
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several viable options to provide this service and should determine the most appropriate option
discussions with BCPS.
Figure 6-1 illustrates the total costs and revenues to the City in providing WAN connectivity services to
BCPS. If the City were to provide these services directly, it would require an initial investment of
approximately $16.4 million to build out to the 200+ schools and administrative offices. $14.5 million of
this cost is direct fiber-optic construction and it includes a 10% contingency, resulting in a total cost of
$16 million. In addition, program startup costs of $400,000 are estimated for legal, regulatory,
professional, technical, and other services necessary to launch the program. Depending on BCPS’s plan
for future connectivity services, the City and BCPS may utilize a phased approach to connect schools and
administrative sites over a 3-5 year period, which may allow for a phased funding approach with
appropriations of $3-5 million each year. The details of a phased approach must be well coordinated
between the City and BCPS.
The City could provide a dark fiber or lit transport option in delivering fiber connectivity to BCPS, another
decision that will need to be determined after further analysis of BCPS’s needs. If the City provides a dark
fiber solution, it will have no additional capital investments beyond capital improvement of the newly
constructed fiber. If the City provides a lit transport option, it will incur an additional $1M in equipment
costs necessary to provide these services to BCPS, resulting in a total capital investment of $17.2 million.
Over the first 5-year period, the City will also incur operations and maintenance (“O&M”) costs to manage
the fiber-optic network and ensure it meets the service levels required by BCPS. The dark fiber option
requires $2M for O&M costs while the lit transport option requires $4M for O&M costs.
Based on a 5-year payback and assuming that BCPS desires a dark fiber option, the City could provide
these services for $3.6M annually by competitively bidding and winning BCPS’s E-Rate contract. This
would represent up to a 35% savings to BCPS using a potential dark fiber strategy or 28% savings if using
a lit fiber strategy. In both cases, the City would have the capability to provide 1 Gbps of connectivity to
every school covered under the E-Rate contract. To maintain E-Rate funding, BCPS will eventually be
required to rebid this contract and the City should expect that the competitive nature of E-Rate bidding
will drive down pricing beyond the initial 5-year term; therefore, the City should expect its annual
revenues to fall after this initial 5-year period. Nevertheless, even at reduced rates, the City can expect
this contract to become a long-term revenue source that leverages its fiber-optic network. Over a 10year period and once the City’s payback is achieved, it is expected to generate $7 - $15 million in net
revenues for the City.
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Figure 6-3: City of Baltimore Costs & Charges for WAN Connectivity to BCPS
!!
!Program'Startup'Costs'
E1Rate!Legal!&!Regulatory!Professional!Services!
Technical!Advisory!&!Engineering!Services!
Program!Management!&!Compliance!
Total!Program!Startup!Costs!
!
Capital'Costs'
Fiber!Construction!Costs!
Including!10%!Contingency!for!Fiber!Construction!
City!of!Baltimore!Equipment!
Core!Switching!
CPE!
Network!Management!
Additional!Staffing!
Total!Capital!Costs!
!
!
!
!
!
!
!Dark!Fiber!Option!!
!Lit!Fiber!Option!!
!
! !$100,000!!
!$200,000!!
!$100,000!!
!$400,000!!
!
!
!$100,000!!
!$300,000!!
!$100,000!!
!$500,000!!
!
!$14,515,250!! !
!$15,966,775!!
!
!$14,515,250!!
!$15,966,775!!
!
!$400,000!!
!$218,000!!
!$50,000!!
!$100,000!!
!$16,734,775!!
!$15,966,775!!
!
Operations'&'Maintenance'Costs'
Annual!O&M!Costs!54!Miles!of!Backbone!+!84!Miles!of!
Laterals!
Annual!Network!Management!&!Staffing!Costs!
Total!O&M!Costs!
Including!20%!Contingency!for!Unknown!Costs!
Total!Operations!&!Maintenance!Costs!
!
!
!
!
!
!$276,000!!
!$386,400!!
!$386,400!!
!
Over'5'Years'
Total!Capital!Costs!
5!Year!O&M!Costs!
Total!Costs!to!City!of!Baltimore!
!
!
!
!$16,366,775!! !
!$1,932,000!!
!$18,298,775!!
!$17,234,775!!
!$2,982,000!!
!$20,216,775!!
!
Annual!Cost!Recovery!Needed!for!5!Year!Payback!
!
!$3,659,755!! !
!$4,043,355!!
!
Minimum!Annual!Charge!to!BCS!To!Achieve!5!Year!Payback!
!
!$3,659,755!! !
!$4,043,355!!
!
E1Rate!Funding!Analysis!
E1Rate!Portion!
BCPS!Portion!
!!!
!
Savings!to!BCPS!
!
!$298,477!! !
!$240,937!!
!
Savings!Percentage!to!BCPS!
!
35%! !
28%!
!$276,000!!
!$276,000!!
!$150,000!!
!$426,000!!
!$596,400!!
!$596,400!!
!!!
!$3,110,792!!
!$548,963!!
!$3,436,852!!
!$606,503!!
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5. Become an Open Access Provider
What is an Open Access Provider?
An open access provider owns and operates the physical fiber-optic network and transport services
through which retail service providers deliver services to end users. Instead of providing dark fiber, an
open access network provides a wholesale transport connection to service providers. Retail service
providers purchase services from the provider to reach end users using fiber-optic connections. This
model alleviates the open access provider from managing any end user services or customers. It allows
retail providers to use the open access network to reach more customers without the need to build
costly fiber infrastructure to subscribers; the open access provider is responsible for this function. Cities
find open access a compelling business model because it allows them to attract multiple service
providers to their networks, which helps stimulate competition and keep prices low for subscribers.
In an open-access network, the City would not provide any retail services directly but would provide a
new wholesale fiber solution to service providers that would utilize the network to serve residents,
businesses, and community anchors within Baltimore. In doing so, the City could potentially provide a
new source of broadband access to service providers while maintaining neutrality and nondiscrimination and alleviating competitive risks with Baltimore’s existing service providers. In an open
access network, the City’s customers are service providers rather than retail customers, allowing the City
to maintain transparency and avoid any direct “customer service” issues with customers using the
network.
How Would the City Become an Open Access Provider?
Becoming an open-access provider would require the City to create an appropriate organizational and
operational structure to manage wholesale telecommunications services. Some considerations for the
City to evaluate in implementing an open-access network include the additional operations and
management responsibilities required to maintain the network, recruitment, negotiation and provision of
new services, and financing requirements to build the network. The City will be also responsible for
implementing and maintaining network electronics to manage services on the network. While this
equipment is simple to manage it does require the City to have technical resources and the right
operational structure to provision and monitor services as they are deployed.
In order for service providers to consider providing services over Baltimore’s network, the City must
establish Service Level Agreements (SLA) that are similar to what service providers receive in the current
telecommunications industry. The City will also need to define business and operational processes to
manage the network and ensure that service providers’ needs are met. Further, deployment of an openaccess network requires new funding for construction of last-mile fiber, network electronics, operational
support systems, and potentially new staffing or an outsourced network operator who will manage the
network on the City’s behalf.
Service providers would interconnect with the City’s open-access network through a Network-to-Network
Interface (NNI) with the City’s network electronics. The City would strategically deploy field equipment,
known as Optical Line Terminals (“OLTs”), in service areas throughout the City to serve local business
districts (and potentially neighborhoods in the future). This equipment would connect back to a
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centralized colocation facility or data center where service providers would interconnect with the City’s
network. Several data centers are currently available in the City that could accommodate these needs.
Service providers would request new connections to their customers from the City. Once a customer
signed with a service provider, the service provider would order transport service to the new customer.
Once the service provider signed a service order with the City and paid any upfront charges, the City
would build the last-mile fiber connection to the end customer and provision a transport service through
its network back to the interconnection point with that service provider. The City would charge a monthly
recurring fee to the service provider for use of the transport service for a certain contract term and at a
certain bandwidth. The City would maintain a rate structure based on bandwidth, with increasing charges
for more bandwidth. This would allow the City to upcharge the service providers as customers utilize
more bandwidth and implement a tiered pricing structure from lower-speed services to 1 Gbps and 10
Gbps services.
What Cities Have Become Open Access Providers?
•
Danville, VA
The city’s high-performance, open-access fiber network, nDanville, has provided broadband
connectivity to Danville businesses since 2007. Danville was the first municipality to deploy a fully
automated, Layer 3 open-access network, nDanville, with more than 135 miles of fiber, passes
more than 1,000 business locations, including every parcel in five business parks. Current
customers have access to 100 Mbps fiber connections capable of delivering a wide variety of
services, and 1 Gbps and 10 Gbps connections are available upon request. A major network
expansion focused on the medical community led the city to receive one of the two 2011
Founders Awards from the Intelligent Community Forum, and the city was designated by the
Forum as a Smart21 city in 2010, 2011 and 2012. In 2012, nDanville will complete its first FTTH
residential service deployment to approximately 500 homes. Engineering and permitting on the
FTTH expansion is complete and construction is expected to start before the end of 2011. The
first customers should be able to receive services in early spring 2012.
• City of Palm Coast, FL
In 2009, the City employed its 60 mile municipal fiber-optic network to become the first open
access system in Florida. The City actively builds new fiber-optic capacity to businesses and
community anchors in the community of 75,000 citizens. Businesses on the network have their
choice of multiple providers through the City’s active Ethernet transport system. The City enables
service providers to deliver their services to customers in Palm Coast over an all fiber 10 Gbps
network that enables businesses to receive significantly more bandwidth at low costs. Prices for
symmetrical fiber connections start at $100 per month for businesses. The network has
supported Palm Coast’s economic development programs to lower the cost of doing business in
the City and help recruit new businesses to the area. The network currently connects nearly all
public organizations, 100+ businesses, and multiple service providers to a community network,
owned and operated by the City’s IT department.
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What are the Risks?
The City’s key risks in developing an open access network include the burden of managing an active
telecommunications services network and securing participation from local service providers. To operate
an open access network, the City would need to maintain management and operations personnel with
relevant expertise and skills to ensure service level guarantees to both customers and their service
providers. In an open access network, the City’s customers are service providers who require strict
service level agreements to certify an open access network for use. Providers will often test these
networks to ensure service quality before use. The City would need to achieve and enforce these service
quality guarantees to attract and secure service providers on its network. Providers are often skeptical of
municipal capabilities to perform these functions and a lengthy process of recruitment may ensue to
convince providers to use an open access network.
One alternative would be to enlist the services of a network operator to manage the City’s open access
network. Cities have done so when the requirements to manage these networks stray too far from their
core competencies. There are many network operators capable of performing these functions but the
services would come at a cost. These costs would need to be analyzed in a financial plan for the network
to determine if outsourcing the management of the open access network could be sustained financially.
G. Matrix of Multiple Strategies
The City has many options to evaluate as it considers how select on the most effective strategies to meet
the broadband goals of the community. The previous section laid out the key opportunities and some of
the most feasible approaches; however, the City can utilize multiple strategies simultaneously to
accomplish its goals. In many cases, these strategies complement one another but in a few cases, they
conflict with one another. The flowchart in Figure 6-4 illustrates some of the key decisions that the City
should make in selecting the best strategies. This guide is intended to help the City understand which
strategies complement one another and which work against one another.
Figure 6-4: Matrix of Complementary Business Models
Scenarios
Public Policy
Public-Private
Partnerships
Infrastructure
Provider
Government
Services
Provider
Open-Access
Provider
Retail
Provider
1
2
3
4
5
6
Scenarios 2-6 in the Matrix illustrate the business models that are generally complementary with one
another. Other combinations are possible; however, the intent is to convey which business models
generally work well with one another to help the City hone in on the most viable ones.
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Public policy tools can and should be implemented regardless of whether the City decides to move
forward with any of the other scenarios presented in the Report. Even if the City chooses not to allocate
funds to the broadband-friendly public policy tools, namely through the establishment of an
infrastructure fund, the City can still positively affect broadband development in Baltimore. Public Policy
tools can also be implemented in conjunction with any of the scenarios. Some of these public policy tools
have little if no costs associated with them. In all cases, these tools complement the other strategies and
business models.
PPPs are generally utilized in cases where the city chooses to divest active participation in broadband
development to a partner. In these cases, the city will forgo other active business models and rely on the
partner to accelerate broadband deployment in the community. The city will negotiate a partnership
agreement that uses its current broadband assets to leverage the capabilities and incentivize a
broadband provider to serve the community. Often, this will be the sole broadband initiative that the city
engages in, eliminating other initiatives that may conflict with the partnership, including other business
models.
Infrastructure provider and government services provider models generally coexist with one another.
Cities often provide conduit and dark fiber to other government organizations while leasing spare
capacity to private service providers in the marketplace. These models complement one another well
because the city’s offerings to other public organizations do not conflict with the offerings to private
service providers. Generally, cities maintain competitive pricing for their services to other public
organizations and wholesale offerings to broadband providers.
Government services provider models also work well with open-access models. In cases where cities
have deployed open-access networks, these systems provide the opportunity for broadband providers
to serve other public organizations with a variety of end user services. Although the city may provide
physical fiber or transport services to these organizations, retail Internet, voice, video, and other services
often are provided by broadband providers. In these cases, the models complement one another
because the city maintains connectivity to other public organizations while broadband providers deliver
the actual end user services. In addition, cities help service providers reach more of the business and
residential markets, allowing them to utilize municipal fiber through which they deliver their end user
services. There is generally no competition between the city and the provider in these cases because the
city is only providing the “pipe” to reach the end customer while the provider delivers the actual service.
Cities that utilize open access tend to focus on a providing transport service rather than dark fiber. In
doing so, many times they will reserve their dark fiber for future expansion needs of the open access
network and often will no longer provide a dark fiber offering to the market. Transport services are
generally tiered based on bandwidth with higher fees levied as bandwidth increases. Cities who operate
open access networks realize that offering dark fiber would conflict with their transport service offering
because a similar dark fiber offering would not allow the city to regulate bandwidth or levy additional fees
to providers; therefore, the infrastructure provider model is not generally utilized in conjunction with the
open-access model.
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VII. Ownership & Governance Models
A. Creating a Baltimore Broadband Authority
Much like Metropolitan Transit Authorities or Utility Authorities have done in the transportation and
utility sectors, for the City to be effective in employing its broadband assets for the benefit of its
community, it will need to adopt the right organizational structure and governance model. Presently, the
City has significant broadband assets composed of conduit, dark fiber, lit fiber, vertical structures, and
other City-owned properties that can be leveraged for the benefit of improving broadband services for
Baltimore’s residents, businesses, and community anchors. However, the City does not maintain an
organizational structure that is able to effectively manage these assets and implement programs that will
employ them in broadband initiatives.
Leveraging the City’s broadband assets for commercial purposes will require the City to maintain control
over them while establishing an organizational structure to facilitate key management, business and
operational functions to facilitate their use. A Baltimore Broadband Authority (“BBA”) is envisioned as the
organization within the City that will be charged with these functions. The exact structure of the BBA will
be subject to State of Maryland and local statutes; however, it should function as an independent body
within the City that is chartered to employ broadband assets and coordinate their use with other internal
departments.
Local governments have formed such organizations to leverage publicly owned broadband assets that
are under their control. They are implemented somewhat but are similar in structure and goals. Several
examples of these include:
Nelson County Broadband Authority
“The Nelson County Board of Supervisors serves as the Broadband Authority that oversees the Nelson
County Broadband Project. The Nelson County Broadband Project is the design and construction of a
combined fiber-optic and wireless middle mile network. The objective is to provide a state of the art highspeed network backbone generally through the center of Nelson County from north to south, providing
the ‘highway’ for private providers to enhance and expand broadband Internet services in the county.”
http://www.nelsoncounty-va.gov/government/board-of-supervisors/broadband-authority/
The Nelson County Broadband Authority has established a set of powers governing its activities, officers,
contract signatories and books and records. Its bylaws can be found at the following website:
http://www.nelsoncounty-va.gov/wp-content/uploads/Signed-Adopted-Bylaws.pdf
The Authority has also established formal fees and charges for lease of its broadband assets and
adopted them through resolution. The resolution can be found at the following website:
http://www.nelsoncounty-va.gov/wp-content/uploads/Current-Rates-Fees-Charges-as-of-10-2013.pdf
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B. Ownership & Operational Details
Several key questions must be addressed in establishment of the BBA:
1. What is the structure of the BBA and what powers will it be granted?
The BBA’s bylaws should address general organizational structure items including the type of
organization, statutory authority, number of board members, voting and elections, quorum, term of
board membership, meetings, officers and signatories. The BBA will be required to maintain powers
for legal contracting for the commercial use of City-owned broadband assets with other public
organizations and private organizations. It will be required to set and adopt a formal rate structure
for these assets that is compliant with any State of Maryland, Maryland Public Service Commission or
Federal Communications Commission regulations regarding public lease or IRU of dark fiber,
transport service, tower space and physical property.
2. How will the BBA be staffed?
The BBA may employ a “task force” style of membership composed of subject matter experts within
the City’s departments that currently manage the City’s broadband assets. This would likely include
personnel from MOIT, Department of Transportation, Utilities, Economic Development and/or
Community Development.
3. Who will seat the BBA board?
Departmental management may facilitate a “board of director” role from those departments that
currently manage the pool of broadband assets. This may include departmental directors from MOIT,
Department of Transportation, Utilities, Economic Development and/or Community Development.
The City should also consider the pros and cons of seating the board with several key community
members that represent stakeholder needs within greater Baltimore.
4. How will the BBA be funded?
The City will need to examine funding strategies for the BBA in accordance with Maryland Municipal
Code and enterprise fund establishment, being cognizant of cross-subsidization, loan and
transparency requirements that may pertain to “regulated utilities.” Although this Study has not
anticipated Baltimore to provide any “regulated telecommunications service” the City should conduct
an internal legal and regulatory review if it decides to pursue the creation of the BBA and
corresponding enterprise fund.
5. To whom does the BBA report?
The BBA may report to the Baltimore City Council, a council subcommittee or other City designated
committee that is composed of key stakeholders within the Baltimore community. The City should
consider these options in accordance with State of Maryland and local ordinances governing “special
authorities.”
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6. How will the BBA transact business?
The BBA will be required to sign contracts, purchase equipment and services, lease and sell services,
bill customers, accept payments and other operational functions associated with a broadband
authority. The BBA must establish and execute an operations plan that allows it to do business in a
manner similar to a wholesale fiber-optic and physical infrastructure provider.
7. How will revenues and costs be accounted for by the BBA?
An “Enterprise Fund” may be the most appropriate fiscal structure for the City’s broadband initiatives
to ensure that its broadband asset base is accounted for according to Maryland Municipal Code. The
enterprise fund would establish separate books, record keeping, controls and auditing procedures
for the BBA apart from the existing accounting environment that is “shared” among multiple
departments within the City (Department of Transportation, MOIT, Utilities). The City should evaluate
possible “asset transfer” considerations that would assign the portion of the City’s conduit, dark fiber,
towers and property to the enterprise fund and become designated as the “broadband assets.”
These assets would maintain their own revenues and costs. Costs that are currently incurred by
departments that manage these assets would be proportionally allocated to the enterprise fund for
its percentage of each department’s assets that are contributed to the fund for broadband purposes.
8. How will the broadband assets be inventoried and employed?
The BBA should establish a pool of common broadband assets that are agreed upon by the City’s
internal departments that can be utilized in broadband initiatives. The BBA would not likely maintain
any operations and management (O&M) functions for these assets, instead these functions would
continue to be carried out by the departments that currently provide O&M, to eliminate any
duplication of costs.
An important precursor to this step is the proper documentation of broadband assets across the
entire organization so that a single GIS-capable data repository is available to the BBA and
departmental staff to ensure accurate record keeping. Assets identified in Section V should be
physically inspected, verified and updated within the GIS system per the requirements to
commercialize the broadband assets. This may require a “checklist” be completed to verify that
conduit, dark fiber, tower space, and physical property are in the condition required for a broadband
initiative. Once these assets are inventoried and verified as usable, the BBA would employ them with
public organizations and broadband service providers.
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VIII. Action Plan & Resources
To be developed with the MOIT team.
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IX. Appendix A: Glossary
3G – Third Generation
4G – Fourth Generation
ADSL – Asymmetric Digital
Subscriber Line
ADSS – All-Dialetric SelfSupporting
AMR/AMI – Automatic Meter
Reading/Advanced Metering
Infrastructure
ATM – Asynchronous Transfer
Mode
Bandwidth
Bit
BPL – Broadband over
Powerline
BPON – Broadband Passive
Optical Network
Broadband
CAD – Computer Aided Design
CAI – Community Anchor
Institute
CAP – Competitive Access
Provider
The third generation of mobile broadband technology, used by smart phones,
tablets, and other mobile devices to access the web.
The fourth generation of mobile broadband technology, used by smart
phones, tablets, and other mobile devices to access the web.
DSL service with a larger portion of the capacity devoted to downstream
communications, less to upstream. Typically thought of as a residential
service.
A type of optical fiber cable that contains no conductive metal elements.
Electrical meters that measure more than simple consumption and an
associated communication network to report the measurements.
A data service offering that can be used for interconnection of customer’s
LAN. ATM provides service from 1 Mbps to 145 Mbps utilizing Cell Relay
Packets.
The amount of data transmitted in a given amount of time; usually measured
in bits per second, kilobits per second (kbps), and megabits per second
(Mbps).
A single unit of data, either a one or a zero. In the world of broadband, bits
are used to refer to the amount of transmitted data. A kilobit (Kb) is
approximately 1,000 bits. A megabit (Mb) is approximately 1,000,000 bits.
There are 8 bits in a byte (which is the unit used to measure storage space),
therefore a 1 Mbps connection takes about 8 seconds to transfer 1 megabyte
of data (about the size of a typical digital camera photo).
A technology that provides broadband service over existing electrical power
lines.
BPON is a point-to-multipoint fiber-lean architecture network system which
uses passive splitters to deliver signals to multiple users. Instead of running a
separate strand of fiber from the CO to every customer, BPON uses a single
strand of fiber to serve up to 32 subscribers.
A descriptive term for evolving digital technologies that provide consumers
with integrated access to voice, high-speed data service, video-demand
services, and interactive delivery services (e.g. DSL, Cable Internet).
The use of computer systems to assist in the creation, modification, analysis,
or optimization of a design.
Community anchor institutions (CAIs, sometimes called anchor institutions)
are usually non-profit organizations that often provide essential services to
the public. Universities, colleges, community colleges, K12 schools, libraries,
health care facilities, social service providers, government and municipal
offices are all community anchor institutions.
(or “Bypass Carrier”) A Company that provides network links between the
customer and the Inter-Exchange Carrier or even directly to the Internet
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Cellular
CLEC – Competitive Local
Exchange Carrier
CO – Central Office
Coaxial Cable
CPE – Customer Premise
Equipment
CWDM – Coarse Wavelength
Division Multiplexing
Dark Fiber
Demarcation Point (demarc)
Dial-Up
DLEC – Data Local Exchange
Carrier
Downstream
DSL – Digital Subscriber Line
DSLAM – Digital Subscriber Line
Access Multiplier
DWDM – Dense Wavelength
Division Multiplexing
E-Rate
EON – Ethernet Optical Network
Service Provider. CAPs operate private networks independent of Local
Exchange Carriers.
A mobile communications system that uses a combination of radio
transmission and conventional telephone switching to permit telephone
communications to and from mobile users within a specified area.
Wireline service provider that is authorized under state and Federal rules to
compete with ILECs to provide local telephone service. CLECs provide
telephone services in one of three ways or a combination thereof: 1) by
building or rebuilding telecommunications facilities of their own, 2) by leasing
capacity from another local telephone company (typically an ILEC) and
reselling it, and 3) by leasing discrete parts of the ILEC network referred to as
UNEs.
A circuit switch where the phone lines in a geographical area come together,
usually housed in a small building.
A type of cable that can carry large amounts of bandwidth over long
distances. Cable TV and cable modem service both utilize this technology.
Any terminal and associated equipment located at a subscriber's premises
and connected with a carrier's telecommunication channel at the
demarcation point ("demarc").
A technology similar to DWDM only utilizing fewer wavelengths in a more
customer-facing application whereby less bandwidth is required per fiber.
Dark fiber provides the physical fiber-optic strand or strands for use in a
communications infrastructure, contrasted to lit fiber, whereby a transport
service or “circuit” is provided for the infrastructure.
The point at which the public switched telephone network ends and connects
with the customer's on-premises wiring.
A technology that provides customers with access to the Internet over an
existing telephone line.
DLECs deliver high-speed access to the Internet, not voice. Examples of
DLECs include Covad, Northpoint and Rhythms.
Data flowing from the Internet to a computer (Surfing the net, getting E-mail,
downloading a file).
The use of a copper telephone line to deliver “always on” broadband Internet
service.
A piece of technology installed at a telephone company’s Central Office (CO)
and connects the carrier to the subscriber loop (and ultimately the customer’s
PC).
An optical technology used to increase bandwidth over existing fiber-optic
networks. DWDM works by combining and transmitting multiple signals
simultaneously at different wavelengths on the same fiber. In effect, one fiber
is transformed into multiple virtual fibers.
A Federal program that provides subsidy for voice and data circuits as well as
internal network connections to qualified schools and libraries. The subsidy is
based on a percentage designated by the FCC.
The use of Ethernet LAN packets running over a fiber network.
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EvDO – Evolution Data Only
FCC – Federal Communications
Commission
Fiber-Optic
FDH – Fiber Distribution Hub
FTTN – Fiber to the
Neighborhood
FTTP – Fiber to the premise (or
FTTP – Fiber to the building)
GIS – Geographic Information
Systems
GPON- Gigabit-Capable Passive
Optical Network
GPS – Global Positioning System
GSM – Global System for Mobile
Communications
HD – High Definition (Video)
HFC – Hybrid Fiber Coaxial
ICT – Information and
Communications Technology
IEEE – Institute of Electrical
Engineers
ILEC – Incumbent Local
Exchange Carrier
IP-VPN – Internet ProtocolVirtual Private Network
ISDN – Integrated Services
Digital Network
ISP – Internet Service Provider
ITS – Intelligent Traffic System
EvDO is a wireless technology that provides data connections that are 10
times as fast as a traditional modem.
A Federal regulatory agency that is responsible for regulating interstate and
international communications by radio, television, wire, satellite and cable in
all 50 states, the District of Columbia, and U.S. territories.
Also known as optical fiber, a physical cable constructed of extruded glass
through which light signals are carried between communications systems.
A connection and distribution point for optical fiber cables.
A hybrid network architecture involving optical fiber from the carrier network,
terminating in a neighborhood cabinet with converts the signal from optical to
electrical.
A fiber-optic system that connects directly from the carrier network to the
user premises.
A system designed to capture, store, manipulate, analyze, manage, and
present all types of geographical data.
Similar to BPON, GPON allows for greater bandwidth through the use of a
faster approach (up to 2.5 Gbps in current products) than BPON.
a space-based satellite navigation system that provides location and time
information in all weather conditions, anywhere on or near the Earth where
there is an unobstructed line of sight to four or more GPS satellites.
This is the current radio/telephone standard developed in Europe and
implemented globally except in Japan and South Korea.
Video of substantially higher resolution than standard definition.
An outside plant distribution cabling concept employing both fiber-optic and
coaxial cable.
Often used as an extended synonym for information technology (IT), but it is
more specific term that stresses the role of unified communications and the
integration of telecommunications, computers as well as necessary enterprise
software, middleware, storage, and audio-visual systems, which enable users
to access, store, transmit, and manipulate information.
A professional association headquartered in New York City that is dedicated
to advancing technological innovation and excellence.
The traditional wireline telephone service providers within defined geographic
areas. Prior to 1996, ILECs operated as monopolies having exclusive right and
responsibility for providing local and local toll telephone service within LATAs.
A software-defined network offering the appearance, functionality, and
usefulness of a dedicated private network.
An alternative method to simultaneously carry voice, data, and other traffic,
using the switched telephone network.
A company providing Internet access to consumers and businesses, acting as
a bridge between customer (end-user) and infrastructure owners for dial-up,
cable modem and DSL services.
Advanced applications which, without embodying intelligence as such, aim to
provide innovative services relating to different modes of transport and traffic
management and enable various users to be better informed and make safer,
more coordinated, and 'smarter' use of transport networks.
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Kbps – Kilobits per second
LAN – Local Area Network
LATA – Local Access and
Transport Areas
Lit Fiber
Local Loop
MAN – Metropolitan Area
Network
Mbps – Megabits per second
MPLS – Multiprotocol Label
Switching
ONT – Optical Network Terminal
Overbuilding
OVS – Open Video Systems
PON – Passive Optical Network
QOS – Quality of Service
1,000 bits per second. A measure of how fast data can be transmitted.
A geographically localized network consisting of both hardware and software.
The network can link workstations within a building or multiple computers
with a single wireless Internet connection.
A geographic area within a divested Regional Bell Operating Company is
permitted to offer exchange telecommunications and exchange access
service. Calls between LATAs are often thought of as long distance service.
Calls within a LATA (IntraLATA) typically include local and local toll services.
A communications service running over a physical strand of fiber-optic
cabling, otherwise known as transport service or a “circuit.”
A generic term for the connection between the customer’s premises (home,
office, etc.) and the provider’s serving central office. Historically, this has been
a wire connection; however, wireless options are increasingly available for
local loop capacity.
A high-speed intra-city network that links multiple locations with a campus,
city or LATA. A MAN typically extends as far as 30 miles.
1,000,000 bits per second. A measure of how fast data can be transmitted.
A mechanism in high-performance telecommunications networks that directs
data from one network node to the next based on short path labels rather
than long network addresses, avoiding complex lookups in a routing table.
Used to terminate the fiber-optic line, demultiplex the signal into its
component parts (voice telephone, television, and Internet), and provide
power to customer telephones.
Building excess capacity. In this context, it involves investment in additional
infrastructure projects to provide competition.
OVS is a new option for those looking to offer cable television service outside
the current framework of traditional regulation. It would allow more flexibility
in providing service by reducing the build out requirements of new carriers.
A Passive Optical Network consists of an optical line terminator located at the
Central Office and a set of associated optical network terminals located at the
customer’s premise. Between them lies the optical distribution network
comprised of fibers and passive splitters or couplers. In a PON network, a
single piece of fiber can be run from the serving exchange out to a
subdivision or office park, and then individual fiber strands to each building or
serving equipment can be split from the main fiber using passive splitters /
couplers. This allows for an expensive piece of fiber cable from the exchange
to the customer to be shared amongst many customers, thereby dramatically
lowering the overall costs of deployment for fiber to the business (FTTB) or
fiber to the home (FTTH) applications.
QoS (Quality of Service) refers to a broad collection of networking
technologies and techniques. The goal of QoS is to provide guarantees on the
ability of a network to deliver predictable results. Elements of network
performance within the scope of QoS often include availability (uptime),
bandwidth (throughput), latency (delay), and error rate. QoS involves
prioritization of network traffic.
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RF – Radio Frequency
Right-of-Way
RMS – Resource Management
System
RPR – Resilient Packet Ring
RUS – Rural Utility Service
SCADA – Supervisory Control
and Data Acquisition
SNMP – Simple Network
Management Protocol
SONET – Synchronous Optical
Network
Streaming
Subscribership
Switched Network
T-1 – Trunk Level 1
T-3 – Trunk Level 3
Tier 1 Network
Tier 2 Network
Tier 3 Network
UNE – Unbundled Network
Elements
Universal Service
Upstream
a rate of oscillation in the range of about 3 kHz to 300 GHz, which
corresponds to the frequency of radio waves, and the alternating currents
which carry radio signals.
A legal right of passage over land owned by another. Carriers and service
providers must obtain right-of-way to dig trenches or plant poles for cable
systems, and to place wireless antennae.
A system used to track telecommunications assets.
Also known as IEEE 802.17, is a protocol standard designed for the optimized
transport of data traffic over optical fiber ring networks.
A division of the United States Department of Agriculture, it promotes
universal service in unserved and underserved areas of the country with
grants, loans, and financing.
A type of industrial control system (ICS). Industrial control systems are
computer controlled systems that monitor and control industrial processes
that exist in the physical world.
An Internet-standard protocol for managing devices on IP networks.
A family of fiber-optic transmission rates.
Streamed data is any information/data that is delivered from a server to a
host where the data represents information that must be delivered in real
time. This could be video, audio, graphics, slide shows, web tours,
combinations of these, or any other real time application.
Subscribership is how many customers have subscribed for a particular
telecommunications service.
A domestic telecommunications network usually accessed by telephone, key
telephone systems, private branch exchange trunks, and data arrangements.
A digital transmission link with a total signaling speed of 1.544 Mbps. It is a
standard for digital transmission in North America.
28 T1 lines or 44.736 Mbps.
A tier 1 network is an Internet Protocol network that participates in the
Internet solely via settlement-free interconnection, also known as settlementfree peering.
A tier 2 network is a network that peers with some networks, but still
purchases IP transit or pays settlements to reach at least some portion of the
Internet.
A tier 3 network is a network that solely purchases transit from other
networks to participate in the Internet.
Leased portions of a carrier’s (typically an ILEC’s) network used by another
carrier to provide service to customers.
The idea of providing every home in the United States with basic telephone
service.
Data flowing from your computer to the Internet (sending E-mail, uploading a
file).
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UPS – Uninterruptable Power
Supply
USAC – Universal Service
Administrative Company
VDSL – Very High Data Rate
Digital Subscriber Line
Video on Demand
VLAN – Virtual Local Area
Network
VoIP – Voice over Internet
Protocol
VPN – Virtual Private Network
WAN – Wide Area Network
WiFi
WiMax
Wireless
Wireless Internet
Wireline
An electrical apparatus that provides emergency power to a load when the
input power source, typically main power, fails.
An independent American nonprofit corporation designated as the
administrator of the Federal Universal Service Fund (USF) by the Federal
Communications Commission.
A developing digital subscriber line (DSL) technology providing data
transmission faster than ADSL over a single flat untwisted or twisted pair of
copper wires (up to 52 Mbit/s downstream and 16 Mbit/s upstream), and on
coaxial cable (up to 85 Mbit/s down and upstream); using the frequency band
from 25 kHz to 12 MHz.
A service that allows users to remotely choose a movie from a digital library
whenever they like and be able to pause, fast-forward, and rewind their
selection.
In computer networking, a single layer-2 network may be partitioned to create
multiple distinct broadcast domains, which are mutually isolated so that
packets can only pass between them via one or more routers; such a domain
is referred to as a Virtual Local Area Network, Virtual LAN or VLAN.
A technology that employs a data network (such as a broadband connection)
to transmit voice conversations using Internet Protocol.
A virtual private network (VPN) extends a private network across a public
network, such as the Internet. It enables a computer to send and receive data
across shared or public networks as if it were directly connected to the
private network, while benefitting from the functionality, security and
management policies of the private network. This is done by establishing a
virtual point-to-point connection through the use of dedicated connections,
encryption, or a combination of the two.
A network that covers a broad area (i.e., any telecommunications network that
links across metropolitan, regional, or national boundaries) using private or
public network transports.
WiFi is a popular technology that allows an electronic device to exchange data
or connect to the internet wirelessly using radio waves. The Wi-Fi Alliance
defines Wi-Fi as any "wireless local area network (WLAN) products that are
based on the Institute of Electrical and Electronics Engineers' (IEEE) 802.11
standards".
WiMax is a wireless technology that provides high-throughput broadband
connections over long distances. WiMax can be used for a number of
applications, including “last mile” broadband connections, hotspot and cellular
backhaul, and high speed enterprise connectivity for businesses.
Telephone service transmitted via cellular, PCS, satellite, or other technologies
that do not require the telephone to be connected to a land-based line.
1) Internet applications and access using mobile devices such as cell phones
and palm devices. 2) Broadband Internet service provided via wireless
connection, such as satellite or tower transmitters.
Service based on infrastructure on or near the ground, such as copper
telephone wires or coaxial cable underground or on telephone poles.
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X: Appendix B: Baltimore Broadband Maps
Digitized maps are provided in attached Google Earth KMZ file labeled Baltimore.kmz
Residential Broadband Penetration by Census Tract
99
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Number of Wireline Providers By Census Block (Baltimore Broadband Map Data 10-20-2014
100
!
Cable Modem Broadband Coverage By Census Block (Baltimore Broadband Map Data 10-20-2014)
101
!
DSL Broadband Coverage By Census Block (Baltimore Broadband Map Data 10-20-2014)
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!
Fiber-Optic Broadband By Census Block (Baltimore Broadband Map Data 10-20-2014)
103

City of Baltimore Broadband Public

Transcription

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