Getting Bandwidth To Businesses

Transcription

NUMBER OF MUNICIPAL FTTP SYSTEMS TOPS 100
May/June 2011 • Vol. 32 • No. 4
Formerly Broadband Properties
M A R K
Y O U R
C A L E N D A R S
April 24 – 26, 2012
(Tuesday – Thursday)
InterContinental Dallas
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www.bbcmag.com
email: [email protected]
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Public-Private
Partnerships That Work
Q&A With Tom Nugent,
Verizon Enhanced Communities
TO SPONSOR OR EXHIBIT:
email [email protected] or call
505-867-2668
GET CONNECTED AT THE SUMMIT
AN AbUNDANCE OF VERY
USEFUL INFORMATION
“Overall, the Summit was extremely
insightful. There was a plethora of very
useful information and tons of networking
opportunities across the industry.”
– John Jones, IT Project Manager
Los Alamos County
ENjOYED LEARNING AbOUT
TRENDS, DIRECTIONS
GREAT INSIGHT, EDUCATION
AND NETWORKING
“The Broadband Communities Summit
provides a great source of information.
I really enjoyed the discussion of trends
and future directions.”
“This Summit provided great insight, education
and networking.”
A LOT OF EFFORT INTO pRESENTATIONS
“It’s obvious that all speakers put a lot of effort into their
presentations. I enjoyed them all and loved the mix.”
– Lori Reeves, Vice President, Property & Building Solutions
Forest City
– Steve Belter, President
Indiana Dataline
– Brian Pagnella, Senior Consultant
Broadband Realty Advisors
HELpS YOU STAY
AHEAD OF THE GAME
“This Summit is a great way for people to stay
ahead of the game and understand competition.”
A WEALTH OF TOpICS TO CHOOSE FROM
“The Summit was very well organized, with a wealth of topics to choose
from. The Rural Broadband Program had outstanding speakers!”
– James Sherry, Technical Services
ADVA Optical Networking
– Marion Ware, Executive Director
Carroll Media Center
KNOWLEDGEAbLE, HELpFUL SpEAKERS
“The Summit provided a great speaker lineup. They were
sincere believers of broadband, experienced and helpful.”
– Bill Vallee, Broadband Policy Coordinator
State of Connecticut
OFF THE CHARTS FOR QUALITY
AND CONTENT
OppORTUNITIES TO MEET
FOLKS IN THE FIELD
“Broadband Communities Magazine has become
essential reading for those of us in the fiber
community in the United States, and this year’s
Summit was off the charts for quality and content.”
“The speakers were informative and engaging.
They provided a great overview of industry trends.”
– David Girvan, Networking & IT Specialist
United Electric Coop
THE NUTS AND bOLTS OF bROADbAND
“For a rookie like me, this Summit provided the nuts and
bolts of broadband.”
“This was a very thought-provoking event with great
opportunities to meet folks in the field.”
– Jim Baller, President
The Baller Herbst Law Group, PC
A OVERVIEW OF INDUSTRY TRENDS
– Bryan George, Senior Operations Manager
Venterra Realty
– Matt Schmit, Broadband Consultant
University of Minnesota
Here’s what attendees are saying about the 2011 Summit! Make plans to attend the 2012 Summit now.
April 24 – 26, 2012
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InterContinental Dallas
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www.bbcmag.com
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To sponsor or exhibit: email [email protected] or call 505-867-2668
Editor’s Note
Community
Building
EDITORIAL DIRECTOR
Scott DeGarmo
PUBLISHER
Nancy McCain
[email protected]
Corporate Editor, BBP LLC
Steven S. Ross
[email protected]
Editor
Masha Zager
[email protected]
ADVERTISING SALES
Irene G. Prescott
[email protected]
Marketing Specialist
Meredith Terrall
[email protected]
DESIGN & PRODUCTION
Karry Thomas
Contributors
Joe Bousquin
David Daugherty, Korcett Holdings Inc.
Richard Holtz, InfiniSys
W. James MacNaughton, Esq.
Henry Pye, RealPage
Bryan Rader, Bandwidth Consulting LLC
Robert L. Vogelsang, Broadband Communities Magazine
BROADBAND PROPERTIES LLC
PRESIDENT & CEO
Scott DeGarmo
SENIOR VICE PRESIDENT
CHIEF FINANCIAL OFFICER
Himi Kittner
VICE PRESIDENT,
BUSINESS & OPERATIONS
Nancy McCain
Audience Development/Digital Strategies
Norman E. Dolph
CHAIRMAN OF THE BOARD
Robert L. Vogelsang
VICE CHAIRMAN
The Hon. Hilda Gay Legg
BUSINESS & EDITORIAL OFFICE
BROADBAND PROPERTIES LLC
1909 Avenue G
Rosenberg, Tx 77471
281.342.9655, Fax 281.342.1158
Www.broadbandcommunities.com
Broadband Communities (ISSN 0745-8711) (USPS 679050) (Publication Mail Agreement #1271091) is published 7
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Copyright © 2011 Broadband Properties LLC. All rights
reserved.
2
The Web may be worldwide, but many of its
benefits are hyperlocal.
W
ith this issue, the magazine
known for almost 10 years as
Broadband Properties, and
before that as Private & Wireless Broadband, becomes Broadband Communities. We’re excited about the
name change because it highlights broadband’s capacity to strengthen and even
create communities – not just virtual
communities of interest but real, placebased communities.
In an interview in this issue, Verizon’s
Tom Nugent says the communications
platform Verizon uses in FiOS-enabled
buildings can “help make an apartment
a longer-term home and help build a
community.”
That’s consistent with my personal
experience of using broadband in a large
apartment community and, more recently, in a small town. Paradoxically, the
same technology that helps me stay in
touch with distant relatives and share obscure etymologies in a worldwide wordlovers’ forum also lets me know what produce I’ll find at my local farmers market
and what’s showing at the local art gallery.
Because affordable high-speed broadband is a necessity for business, broadband also builds communities by encouraging economic activity (or, at the very
least, by keeping employers from leaving).
This issue focuses on municipal fiber
networks – which are often launched specifically for purposes of economic development – and features Santa Monica City
Net, Palm Coast FiberNET and others
that have succeeded at this mission. The
Municipal Broadband section reveals
their successful strategies.
We’ve also expanded our online fiber
deployment database at www.fiberville.
com to include the local benefits of fiberto-the-home networks. Here’s a sampling
of the information we’ve collected about
the community benefits from fiber:
• HomeServe USA expanded its call
center in the Chattanooga area “because of the availability of highquality employees combined with the
robust telecommunications and data
infrastructure available in the area.”
• Media General opened a new printing
production facility in Bristol, Tenn.,
to produce and distribute seven
Southwest Virginia newspapers. Jim
Hyatt, Media General’s regional VP
and publisher, said high-speed data
transfer and reliable fiber optics were
the main reasons for locating the facility there.
• Danville (Va.) Dental Associates recently opened its fourth office and
says the nDanville network made it
possible. Dr. Albert Payne said the
company “wouldn’t go out there if the
network wasn’t available for us. You
want to have access to all the charts
from all the different locations at one
time.”
• The State of the City report for Monmouth, Ore., said the city has been
judged “cool” by big-city and national
media: “One of the biggest ‘coolness’
factors turns out to be the availability of broadband Internet and other
modern telecom services. … Key [to
business] is the availability of a broadband connection so that they can access their markets.”
Write and let me know how your community is benefiting from broadband.
| BROADBAND COMMUNITIES | www.broadbandcommunities.com | May/June 2011
[email protected].
Table of Contents
DEPARTMENTS
MUNICIPAL BROADBAND
Editor’s Note . . . . . . . . 2 Advertiser Index. . . . . 80
Bandwidth Hawk . . . . . 4 Calendar . . . . . . . . . . 80
The Public Option | 36
By Masha Zager ■ Broadband Communities
Our annual census of municipal fiber projects now tops 100.
Santa Monica City Net:
How to Grow a Network | 44
IN THIS ISSUE
Provider Perspective
Onward Leads to Upward | 6
By Bryan J. Rader ■ Bandwidth Consulting LLC
Starbucks’ customer focus offers lessons for service providers.
Owners Corner
Getting the Best Bulk
Services for a Community | 8
Affordable broadband from City Net allows bandwidth-hungry
entertainment firms to stay and grow in Santa Monica.
Municipal FTTH Deployment Snapshot:
Palm Coast FiberNET | 48
This new open-access network already has two active service providers and can claim credit for keeping a major business in town.
By Henry Pye ■ RealPage Inc. and
Scott Craig ■ Davis, Craig and Taylor
Choosing a bulk-services package requires care and expertise.
Next-Generation Internet Entrepreneurs | 50
Metrics
How to Allocate Bandwidth | 10
Forging Successful
Public-Private Partnerships | 52
By Alexander Chaney ■ Korcett Holdings Inc.
Profiling subscribers helps estimate their bandwidth needs.
Why We Need More Fiber
Economic Development
Pros Say Broadband Is Crucial | 12
How the lack of adequate, affordable broadband keeps West
Virginia from competing for businesses.
In Chattanooga, the “City with a Gig,” city leaders reach out to the
next generation to develop the Next Big Thing.
By Craig Settles ■ Industry Analyst, Speaker, Author
Municipalities and private operators can work together to deliver
broadband by leveraging the strengths of each party.
Sibley County Spreads
The Word About FTTH | 56
A countywide fiber initiative in Minnesota is using the FTTH
Council’s fiber-to-the-home primer to educate residents.
Fiber Deployment Roundup
“What Would You Do With a Gig?” | 14
Barriers to Municipal Networks | 58
Property of the Month
The Courtyards at U. Mich. | 22
Kutztown’s Unique Digital Video Solution | 60
Google is now building FTTH in both Kansas Cities.
By Christopher Mitchell ■ Institute for Local Self-Reliance
In many states, municipalities encounter hurdles or outright prohibitions when they try to solve their own broadband problems.
By Joe Bousquin ■ Broadband Communities
Students at The Courtyards have 100 Mbps of Internet bandwidth,
plus a separate IPTV stream they can access via Ethernet or Wi-Fi.
By Wes Waite ■ Blonder Tongue Laboratories Inc.
Hometown Utilicom in Kutztown, Pa., wanted to keep services affordable for residents. Blonder Tongue helped the company deliver
digital video without set-top boxes.
Service Provider Strategies
An Interview With Tom Nugent,
Verizon Enhanced Communities | 26
Technology
Billing Subscribers in a Changing Market | 63
VEC’s national sales director talks about demand for connectedhome applications and how broadband creates communities.
FTTH Market Report
FTTH Deployment Trends: The Bounceback | 32
By Steven S. Ross ■ Broadband Communities
The latest analyses from researcher Mike Render of RVA LLC show
that deployments should begin rising again later this summer.
Behind every successful service operator is a billing system that can
serve the operator’s strategic goals as well as its operational needs.
Outside-Plant Design:
Fusion Splicing vs. Connectorization | 66
By David Stallworth ■ OFS
Should connectorization replace fiber splicing in the outside plant?
Before answering the question, first count all the hidden costs.
The Law
No Online Cable Systems – For Now | 75
ABOUT THE COVER
Santa Monica’s Fiber Optic Team (l to r): Dan Suzewitz, Juho
Choi, Sarkis Metspakyan, Jory Wolf, Al Dave, Gary Carter
By Carl E. Kandutsch ■ Attorney
Online video isn’t protected by cable regulations, says a U.S. District Court. But that may not be the end of the story.
May/June 2011 | www.broadbandcommunities.com | BROADBAND COMMUNITIES |
3
1101010010_THE_BANDWIDTH_HAWK_0101101011
Muni or Private Networks?
Why Not Partner?
No bandwidth hawk can be happy about restrictions on public broadband.
Municipalities and private operators both have more to gain by partnering to
provide broadband.
N
orth Carolina, after years of
considering – and rejecting – a
ban on public broadband, has
just become the 19th state to restrict
municipally owned networks. The
state’s four existing municipal networks
will be allowed to stay in business, but
they cannot spread their overhead costs
by accepting invitations to expand into
neighboring communities.
As a bandwidth hawk, I firmly believe
that anyone – private companies, municipalities, other levels of government,
electric utilities, anyone – should have
the right to build fiber-to-the-home networks. Though some incumbent telecom
providers have now arrived at the same
conclusion, others have not – even if they
have no intention of upgrading their own
services in many municipalities.
What’s their problem?
• Municipalities and muni-owned
utilities are not rushing to build fiber
networks; they do so as a last resort,
when private enterprise cannot make
its own business case to do the job.
• There are only about 100 municipally owned fiber-to-the-premises
networks, including those still under
construction. Most are small, and
many serve only businesses. Hardly
a massive competitive threat.
• Private companies can offer services
on many municipal networks without having to pay the up-front cost
of building the networks. Seems like
a good deal, but few take advantage.
Does the Playing Field Tilt?
Some private companies and some politicians insist that government networks
compete unfairly with private networks,
4
even though governments (and their investment bankers) have shown great reluctance to move forward when adequate
privately funded bandwidth is available.
Municipalities do have some advantages, such as greater access to capital at
lower interest rates. They do not have to
pay taxes or franchise fees and can internalize some of the benefits of broadband – economic growth, better health
and education services, smarter electric
grids. On the other hand, municipalities
are vulnerable to predatory pricing –
private operators can cut their prices
in response to municipal competition
while raising them elsewhere to compensate. And municipal business plans
and budgets are public documents that
can be read by anyone.
Overall, if municipalities have any
advantages, they are small. Otherwise
there would be thousands of municipal
networks instead of dozens.
Perhaps incumbent providers are
worried about competition from Google
or other potential municipal partners.
Austin, Texas, was a finalist for a Googlefinanced 1 Gbps network, but, according to a member of Austin’s Technology
and Telecommunications Commission,
the city was restricted by Texas law in
how it could deal with Google. Google
chose Kansas City, Kan., instead.
Rather than worrying about municipalities and their partners, why don’t incumbents become municipal partners in
places where they cannot make a private
business case to upgrade their networks?
Outside the United States, such publicprivate partnerships are common. They
build half the fiber networks in Europe
and account for about a quarter of European premises passed by fiber.
Graham Richard, technology entrepreneur and a former mayor of Fort
Wayne, Ind., says public-private partnerships are key to improving broadband in
the U.S. “For our communities to be
competitive, we must move to a Gigabit
Nation,” he says. “That is the concept
behind the Smart City Bond. It will take
new partnerships and new financing
models. I believe a combination of public and private financing and the use of
respective talent and resources can help
reduce capital costs or at least better leverage resources to get more communities on the FTTH pathway.”
As for North Carolina, the scorecard
is damning: lost construction jobs because FTTH networks won’t get built.
Lost work-at-home jobs. Lost opportunities to attract growing industries that
rely on fiber bandwidth and reliability.
Shocking disregard for North Carolina
companies that manufacture FTTH
equipment. Republicans won elections
last fall promising a “laser-like focus on
job creation.” Yet every Republican in
the North Carolina legislature voted to
kill broadband-borne jobs. Mission accomplished. v
About the Author
Contact the Hawk at [email protected].
Provider Perspective
Onward Leads to Upward
By listening to its customers and returning to its core values, Starbucks made
a dramatic comeback. PCOs can follow the same path.
By Bryan Rader ■ Bandwidth Consulting LLC
I
n 2008, one of my favorite companies, Starbucks, was falling apart.
After a dozen years of adding new
stores and new products and expanding its markets, the company became a
leading indicator of a troubled economy.
People stopped purchasing $4 lattes and
instead made coffee at home or went
to McCafé.
With sales declining at a distressing rate and the stock price falling even
faster, Howard Schultz, Starbucks’
chairman and founder, feared that “the
company’s very survival was at risk.”
Schultz decided to rejoin the company as
CEO and take control of the situation.
As he states in his new book about
his return, “Onward,” he came back
with passion and a plan to stabilize the
company and transform it by refocusing
on core values and innovation. The marketplace was shifting, the company had
new competitors and Starbucks was no
longer considered special.
The book is about Starbucks’ journey from a low point three years ago to
a new success through smarter growth,
accelerated revenue, a re-engaged staff
and a huge drove of loyal coffee drinkers
around the world.
Schultz summarizes his triumph.
“Reliving those two years has given me
a chance to reflect on a remarkable ride.
I hope it inspires others to consider the
untapped potential within their own
organizations.” He continues, “Yes, it is
possible to rise, fall and rise again, recapture dreams, dream bigger and succeed
in our ever-changing, complex world.”
I like his message for Starbucks, for
companies facing a long climb and for
private cable operators (PCOs) and the
entire industry. PCOs are in a challenging moment too, with more competitors
6
for properties, increasing online video
use by consumers and fewer investors in
the market.
Onward for PCOs
PCOs face an “Onward” moment right
now that requires examine the industry
and businesses and re-engaging customers in the same way Schultz led Starbucks in the past few years.
I believe the transformation has
already begun. At the Independent
Multi-Family Communications Council (IMCC) open meeting at the 2011
Broadband Properties Summit, PCOs
gathered with property owners to discuss the market and opportunities for
the future.
The meeting used a concept that
was very similar to one of Schultz’s. He
developed a website, MyStarbucksIdea.
com, where visitors could enter suggestions for improving their Starbucks
experiences. In the first 24 hours, the
company received more than 7,000 suggestions. “Give customers free coffee on
their birthdays.” “Start a rewards card.”
By the end of the first week, 100,000
people had voted. Many of the more
popular ideas were implemented.
The open IMCC meeting was only
the beginning of the PCO version of
an online suggestion site for customers. Real estate owners were asked about
their perceptions of service providers
and offered valuable feedback. “Some
of my best experiences have been with
PCOs. Some of my worst experiences
have been with PCOs.”
They were specific. “You understand my market. You understand how
to work with my community manager.
You are always the most responsive. If
I called a telco, an MSO and a PCO
with a problem, I guarantee you that the
PCO would respond first. And that’s
important.”
What can PCOs do more of? “Focus
on ways to use technology to help my
business. Wi-Fi in the common areas.
Cable that doesn’t require a set-top box
for high-end fitness centers. More packages for my international customers.”
IMCC recently used property owner
feedback to design a Standards of Excellence guide for PCOs. “This is great,”
the participants said. “This details exactly what we want to see from our service providers. We can even give you
more ideas to be successful.”
Great! That’s exactly the spirit of
MyStarbucksIdea.Com, as well as the
goal for PCOs today: renew spirit, reengage with customers and get on the
path to future success.
“Onward” was a great approach for
Starbucks. It is a great plan for PCOs,
too, because “onward” leads to “upward.” And that’s the path I expect
PCOs will see over the next few years. v
About the Author
Bryan Rader is CEO of Bandwidth Consulting LLC, which he founded in 2007 to
assist providers with their performance in the multifamily market. Prior to starting
Bandwidth Consulting, he founded and ran private cable operator MediaWorks for
10 years. You can reach Bryan at [email protected] or at 636-536-0011.
Learn more at www.bandwidthconsultingllc.com.
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Owners Corner
Getting the Best Bulk
Services for a Community
Though bulk services make sense in student living and some other verticals,
choosing the right services for a particular community isn’t easy.
By Henry Pye ■ RealPage Inc. and Scott Craig ■ Davis, Craig and Taylor
G
etting the best bulk and premium
services for a student living community requires three essential
steps: First and foremost, ascertain what
services are necessary to meet the majority of residents’ expectations. Second, obtain apples-to-apples bids from multiple
providers. Third, determine the solution
that maximizes value for the community.
Success can be measured only by
how cost-effectively the service meets
residents’ expectations – realistic or otherwise. Although gauging those expectations is far from an exact science, experienced decision makers who receive
input from an experienced community
management team can arrive at an effective approximation.
Each community is unique and requires its own solution. Even adjacent
communities with the same providers,
unit mixes, rent levels and management
companies can require slightly different
bulk services. One-size-fits-all solutions
either fail to meet resident expectations
or wastefully exceed them.
Complicating matters, expectations
shift rapidly with advances in technology and service offerings. Internet bandwidth has been increasing by 20 percent
or more per year. Sitewide Wi-Fi has
become standard for new deployments
in many verticals. New multiplatform
video services allow residents to view
the same programming on almost any
Internet-enabled device.
Because residents’ expectations are
not always realistic, owners must attempt
to influence those expectations from the
outset – for example, by explaining that
8
wireless Internet is unlikely ever to be as
responsive as a wired connection. Students typically consume bandwidth with
little understanding of the underlying
technology. If a service fails to perform
as they feel it should, their satisfaction
with the community plummets.
Compare Apples to apples
The second challenge is to obtain applesto-apples proposals. Getting proposals
usually poses little difficulty. However,
getting proposals that allow for direct,
point-by-point comparison takes significant effort. Providers have different
technologies, programming lineups,
service tiers, rate structures, financing
costs, contracts and so forth. All these
variables affect the value proposition.
To make matters worse, some providers understandably promote services
and comparisons that emphasize their
strengths. In recent years, many providers have tried to undercut competitors’
prices by bidding lower service levels or
excluding equipment. Cable television
can be much cheaper without channels
like ESPN or the digital converter boxes
needed to actually receive the channels!
Regardless, do your best to obtain
proposals that are roughly equivalent
and, if possible, discount the monthly
expense to current dollars and add the
result to any up-front costs to obtain a
total value for each provider.
Total value = (up-front costs)
+ (present value of monthly
expense over contract term)
Cost has multiple components. The
cost of Internet services, for example,
includes infrastructure, bandwidth, upgrade management, legal and other liabilities, and taxes and fees. Many video
providers charge more than 14 percent of
base costs in taxes and fees. Determining
which solution maximizes value is also
complicated by differences in infrastructure, existing contracts, budgets, ownership structures and other factors.
Owners must be particularly cautious about short-term fixes. Bulk service
agreements are long-term contracts in
markets whose services constantly evolve.
Short-term fixes, especially those focused
on immediate cost reduction, often lead
to greater long-run costs. Owners should
evaluate these services strategically.
Though no one solution will both
meet residents’ expectations and be
cost-effective for every community,
by identifying expectations, obtaining
apples-to-apples bids and strategically
analyzing options, owners can maximize the value of bulk services to their
communities. v
About the Authors
Owners Corner is written by Henry Pye and industry peers. Henry is vice president
of Velocity Advisory Services for RealPage (www.realpage.com). He can be reached at
[email protected]. Scott Craig is a partner at Davis, Craig and Taylor and can
be reached at [email protected].
Everyone has a goal.
Ours is to help you reach yours.
It’s really simple. You want a flexible partner who will keep your residents happy
and boost your business. That’s Time Warner Cable. Our goal is to eliminate
hassles, holdups, and vacancies. Your residents enjoy an unsurpassed entertainment
stream. You benefit from a healthy, new revenue stream. You expect nothing less.
Time Warner Cable delivers.
To learn more about partnering with Time Warner Cable, simply contact
Joanne C. Luger at 703.345.2749 or email [email protected]
© 2011 Time Warner Cable Inc. All rights reserved, Time Warner Cable and the eye/ear logo are trademarks of
Time Warner Inc., used under license.
How to Allocate Bandwidth
To gauge bandwidth for multifamily housing, find out what devices and
applications subscribers are using – and what they will use in the future.
By Alexander Chaney ■ Korcett Holdings Inc.
T
hree years ago, shared Internet
services in multiple-dwelling units
required modest bandwidth. Most
subscribers had, at most, a desktop and
a laptop. Their needs were essentially
limited to emailing, Web surfing and,
in some cases, viewing low-resolution
video. Today, a typical subscriber has
a desktop, a laptop, a smartphone, a
streaming video device, a tablet and an
online gaming device. New technology
that has a significant impact on current
bandwidth usage includes
width use. Infrastructure in many multifamily communities was designed to
provide a static amount of bandwidth
over the service term. With today’s bandwidth-hungry consumer devices and applications, nearly all older networks face
oversaturation that will ultimately lead
to unhappy and vocal subscribers.
1. Streaming media via Netflix, Amazon, Apple, Pandora and Sirius/XM.
Each of these streaming technologies
requires massive amounts of bandwidth per device.
2. Smartphones and tablets that can
browse the Internet and use the same
streaming data technologies that are
available on full-size computers.
Many media outlets now offer their
own streaming media applications
(apps) for mobile devices.
3. Game consoles. Modern gaming
systems download massive data
files for each new game title played.
Even more significant are massively
multiplayer online games, which require low-latency, high-volume data
streams.
4. BitTorrent, a peer-to-peer file-sharing technology that allows users to
download and upload media files,
such as documents, music files and
even full-length feature films.
5. Videoconferencing. As more and
more of the workforce telecommutes,
bandwidth-hungry applications such
as videoconferencing and virtual
meetings are becoming pervasive.
1. Profile subscribers. A typical college student has a significantly different usage pattern and number of
devices than, for example, a typical
married couple or a retiree household. How many devices does your
typical subscriber have? Do you have
a mixed-profile site? Are you allowing all types of traffic? The answers
to these questions are all critical to
understanding and profiling your
typical subscriber.
2. Manage bandwidth intelligently.
Providing a bandwidth pipe that is
sized properly for a particular property is more important than offering
bandwidth that sounds great in marketing literature. Offering subscribers
a 50/50 pipe may seem like a good
idea – what subscriber would not
want one? In practice, however, providing much more upload capability
than most users require may encourage behavior that degrades services
These and other trends have direct,
appreciable impacts on overall band-
10
Predicting Performance
To predict and address Internet access
performance issues, multifamily owners
and providers do the following:
for all other residents. For example,
subscribers may set up their own torrents and streaming video servers on
the network (this can create copyright-infringement problems in addition to degrading the network). What
starts as a great marketing gimmick
can become a significant negative experience for subscribers.
3. Review emerging technology.
Keep a vigilant eye on emerging
usage trends so you can anticipate
bandwidth demand. Changes can
happen very quickly; for example,
the launch of the video game “Call
of Duty” immediately added millions of gamers averaging several
hours per day using this new bandwidth-intensive game.
No one can predict the next big,
bandwidth-hungry device or application. All that can be predicted is that a
constant supply of new devices and applications will drive an unending appetite for bandwidth.
Given the increasing demand for
more and faster Internet access, hardwired connections are here to stay for
the foreseeable future. Although new
wireless technologies such as LTE will
suffice for normal, day-to-day administrative usage, they will not replace
hardwired Internet connections. Proper
bandwidth management is an ongoing
and iterative process that begins with
understanding and profiling your subscribers. v
About the Author
Alexander Chaney is the director of engineering at Korcett Holdings. He can be
reached at [email protected]. Korcett Holdings is dedicated to the development and
deployment of next-generation managed service solutions.
Puzzle Solved!
After 30 years and 900,000 access lines, Brian Schrand has a passion for
building fiber networks. The challenge of building a high-performance network –
on time and within budget was a complex puzzle that didn’t seem to have
an answer. He knew when he saw the Clearview Cassette, that it was an
industry-changing technology that could reduce the cost of fiber deployment in
the central office, OSP and access network.
Andy Betscher, field operations specialist at Cincinnati
Bell concurs, “The simplicity of the Clearview Cassette
and its ability to be installed into different enclosures
gives our technicians the ease and efficiency we need to
significantly minimize labor cost.”
Join us the first Tuesday of every month at www.FiberPuzzle.com for a live
web-based discussion group on fiber challenges – and solutions.And to get our
take on a fiber deployment puzzle you’re currently facing, drop Brian a note at
[email protected].
Solving the fiber puzzle, 12-ports at a time.
800.422.2537
www.ClearfieldConnection.com
www.FiberPuzzle.com
Economic Development Pros
Say Broadband Is Crucial
“What are we waiting for?” asked one respondent in a recent survey about
broadband in West Virginia.
E
conomic development leaders in
West Virginia are not happy about
the quality of broadband access in
their state. What’s more, they believe the
lack of high-speed broadband impedes
economic development. Here is what
some of them said in a recent survey:
• “You are not in the game without it.”
• “I have a project pending [and] will
probably lose it based on costs of
broadband.”
• “The lack of high-speed service in
the rural areas totally extinguishes
the possibility of new small-business
start-ups.”
• “Prospects don’t look here because
of the lack of high-speed, affordable, reliable broadband. … Current
speeds of up to 3 Mbps, while [they]
may be suitable for residential use,
are not suitable for business.”
• “Not only do too many areas still not
have broadband, but too many places
where people live do not have it, and
that affects the quality-of-life issue
when attracting a prospect to live,
work and play in West Virginia.”
• “We were looking at a possible location of a data center and the lack of
affordable, large-capacity broadband
was a deciding factor in [the company’s] not locating in West Virginia.”
• “We need the middle-mile and
trunk-line services in West Virginia
to remain competitive for many of
today’s industries. What good is it
if we get high-speed [access] to every place in West Virginia when we
can only reach each other and do not
have the facilities to get out of the
state and into the major lines?”
• “[We] lost a company that looked at
an existing building located in an
12
area that doesn’t have high-speed access. They ended up locating in another area.”
• “What are we waiting for?”
In the online survey, which was sponsored by Citynet, a competitive business
provider, 77 percent of economic development professionals said policies to
promote affordable broadband Internet
were “very important.” In addition, 78
percent said that modern, reasonably
priced broadband Internet infrastructure is “extremely important” or “very
important” in competing against other
locations for jobs.
On a 10-point scale, the economic
development officials rated broadband
Internet infrastructure at 8.56, slightly
more important than road improvements
(8.26) and water infrastructure (8.26).
High Priority for
Site Selection
Seventy-eight percent of respondents
said businesses that consider locating in
their areas place high priority on access
to affordable, high-speed Internet when
they evaluate sites, and 66 percent said
the cost and capacity of broadband service are factors more than half the time
for new business prospects.
Even though the number of survey
respondents was too small for the results
to be statistically significant, the findings still point to broadband Internet
access as a crucial factor in today’s economic development, according to Jack
Canfield, president of Jack Canfield
LLC, of Charleston, W.Va., who conducted the survey.
“The consensus is clear from volunteered comments,” Canfield says.
“Twice as many leaders familiar with
programs in other states believe the
cost of large-capacity broadband service in West Virginia is more expensive than it is in adjoining states.”
About 41 percent of respondents called
broadband service in their areas “not
very good.”
Citynet’s president and CEO, Jim
Martin, says, “West Virginia’s technology infrastructure deficit must be addressed by our state’s policymakers. As a
West Virginia resident, I am concerned
about future job creation if we do not
aggressively deal with the lack of affordable broadband infrastructure suitable
for economic development.”
Some survey participants said they
had lost business prospects in part due
to lack of broadband capacity, speed or
cost. Most said they were very familiar
or somewhat familiar with broadband
expansion programs, such as middlemile infrastructure, being implemented
in adjoining states.
The online survey was conducted
between April 26 and May 3, 2011.
The questionnaire was emailed to 57
West Virginia professionals who have
economic development responsibilities
across the state. The list of those professionals was obtained from the official
website of the West Virginia Department of Commerce. Twenty-eight of
the 57 responded by the May 3 deadline, a response rate of 49 percent. The
survey was conducted by Jack Canfield,
LLC, using SurveyMonkey, an online
computer survey program. Respondents
were not identified individually, and
only the cumulative results were published. The entire survey can be viewed
at www.westvirginia.com. v
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‘What Would You Do With a Gig?’
Faced with challenging economic conditions, local governments improve
their odds by making sure businesses have access to adequate broadband.
M
any supporters of municipal broadband are discouraged by North Carolina’s Level Playing Field/
Local Government Competition Act and other recent initiatives that outlaw municipal builds or raise their
costs. (For a summary of these initiatives, see Barriers to
Municipal Broadband in this issue.) Despite these setbacks,
however, a surprising number of public and public-private
fiber projects continue to move forward in many states.
Public fiber projects tend to focus on community needs
for economic development and advanced applications. Over
the last several years, communities’ goals and expectations
for these projects have become more nuanced. Smaller communities, such as Cortez, Colo., and the towns collaborat-
ing on the New Hampshire FastRoads project, see fiber as
table stakes for the modern economy. They don’t expect
broadband to be a magic bullet. Rather, they expect it to
help them make the most of their innate advantages, such
as convenient location, beautiful scenery and appealing
lifestyle.
Some larger communities are using fiber infrastructure
to advance specific applications. For example, Chattanooga
is working with software vendors to integrate and tailor a
smart-grid application. The result will be “useful and actionable information” for the municipal electric utility – and,
eventually, lower electric bills for the city’s residents.
Municipal
Fiber Systems
EPB Completes Its Fiber Buildout
In March, EPB Fiber Optics finished
building fiber to the home throughout
its entire 600-square-mile service area,
which includes Chattanooga, Tenn., and
surrounding areas. The project was completed a full two years earlier than originally planned. Already the operator of
the largest municipal fiber system in the
United States, EPB hoped to extend its
network into a neighboring county, but
the legislation that would have permitted
this extension was withdrawn by sponsors in the face of opposition. For now,
EPB Fiber Optics will remain within the
utility’s traditional service area.
The smart-grid system that was the
original impetus for EPB’s fiber build is
still under development and will not be
completed until 2012. EPB recently collaborated with vendors Alcatel-Lucent
and Tantalus Networks on a new soft-
14
ware interface that will deliver electricity
usage data to meter data management
systems. This high-speed, low-latency
interface will allow EPB to collect large
volumes of real-time data.
Defining the interface between
Tantalus’ data communications system
and the meter data management system
was a key step toward EPB’s vision of a
smart-grid management system. “Smart
meters are delivering exponentially
greater volumes of data,” says Eric Murray, president and CEO of Tantalus. “In
a modern power distribution network
like Chattanooga’s, nearly every compo-
Check
out the new
Fiber Deployment
blog on BBCmag.com
for timely news
about FTTH
projects.
– MZ
nent – meters, reclosers, transformers –
will communicate with the utility on a
regular basis. The challenge is how to
manage the torrent of data, transform it
into useful and actionable information
and make it available instantly to all appropriate departments, such as billing,
customer service, asset management,
engineering and operations, in a usable
format.”
Another municipal utility whose fiber
network supports a smart electric grid is
BVU in Bristol, Va. BVU recently announced its collaboration with the Tennessee Valley Authority (TVA) to reduce
About the Author
Masha Zager is the editor of Broadband Communities. You can reach her at
[email protected].
peak electricity demand. This project
saves money for BVU customers and
helps TVA reduce costs for all the power
distributors in its service area.
Through a 10-year agreement with
TVA, BVU will begin to reduce its peak
load for up to 100 hours annually by
making slight voltage adjustments at
seven distribution substations. It will
also be able to control the voltage remotely, using its fiber network.
TVA has agreed to pay BVU nearly
$900,000 for the demand reduction,
and BVU will apply the payment toward its automated metering project,
which will yield still more cost savings
for BVU customers.
“These types of opportunities to provide better, more efficient service to our
customers confirm our decision, years
ago, to invest in the most advanced fiber
optic broadband system available. Our
broadband technology continues to provide new solutions in a variety of applications,” says Wes Rosenbalm, president
and CEO of BVU.
nesses, both large and small, to run
their enterprises more effectively and efficiently.”
Fibrant, the municipal telecom
provider in Salisbury, N.C., is now using Minerva Networks’ IPTV software
to deliver video services. The city’s new
TV services include HDTV, wholehome digital video recording, VoD and
Internet TV. The Minerva solution also
features a TV widget engine for delivering third-party applications, including
news feeds, stocks, weather and traffic
information, visual voice mail, caller ID
and social networking services. Minerva
also plans to help Fibrant deliver local
community television, online education
services and digital signage.
LUS Fiber Raises the
Internet Access Ceiling
LUS Fiber, the citywide FTTH network
operator in Lafayette, La., increased its
system Internet connection to 10 Gbps
to meet subscriber demand for Internet
services. “This is an exciting next step
by LUS Fiber to literally lift the ceiling
off of Internet access, and in doing so,
[make] Lafayette more attractive to new
and existing companies [that] want to
create new jobs for Lafayette,” says Joey
Durel, city and parish president. “We are
now only one of a handful of communities in the world with this level of accessible Internet capacity – and only one of
the few in the world to have a system like
this which is owned by its citizens. That
is the differentiating factor – the success
of LUS Fiber is passed on to and enjoyed
by all Lafayette’s citizens.”
Terry Huval, director of LUS, adds,
“We are impressed that our customers
are utilizing our system so intensely. Although our fiber system has an operating
speed of 20 Gbps and higher, our draw
on the Internet is a function of more
customers using this system for higherdemand applications. Of special note is
the utilization of our services by busiMay/June 2011 | www.broadbandcommunities.com | BROADBAND COMMUNITIES |
15
”The alternative is to do nothing tonight
and sit on our hands, waiting for a private
company to come in and do something.”
– Selectman Peter d’Errico of Leverett, Mass.
UTOPIA Expands Its Footprint
The Utah Telecommunications Open
Infrastructure Agency (UTOPIA), the
fiber optic network owned by a consortium of Utah cities, has begun to expand
its network and add nearly 400 institutions in eight Wasatch Front cities. The
new additions include schools, health
care providers, public safety agencies,
public housing facilities, a library and
a variety of government facilities and
other institutions. The expansion is financed by $16 million in broadband
stimulus funds.
UTOPIA will also begin a residential expansion this summer in Centerville, one of the eight cities whose anchor institutions will benefit from the
broadband stimulus grant. Retail service
providers will begin to advertise their
services in Centerville even before construction begins. Scheduling advertising
first helps determine whether enough
demand exists to justify construction
costs in any particular area.
“I’ve been very impressed with the
work that they’ve done,” says Larry
Wright, a Centerville City Council
member, who was opposed to participating in UTOPIA three years ago,
when the network used a different business model.
Collaborative Projects
in New England
Towns across western Massachusetts
are voting on legislation that will allow
them to participate in WiredWest, a regional telecommunications cooperative.
To join WiredWest, each town must
vote twice, at consecutive town meetings, to establish municipal light plant
legislation (so-called because a centuryold mechanism for allowing Massachusetts cities to operate their own electric
utilities was updated in 1996 to include
16
telecommunications systems). As of
mid-May, 19 towns had finalized the
legislation, 11 others had passed their
first votes, and more towns were getting
ready to vote. Every vote so far has been
in favor of joining.
WiredWest plans to build and operate an open-access, community-owned
fiber optic network that offers comprehensive, affordable and reliable Internet,
phone and television services to all residents, businesses and institutions that
want service.
According to Steve Nelson, a delegate from the town of Washington,
“People are unhappy now about having poor Internet service, but things
are only going to get worse if we don’t
take action. By joining together in the
WiredWest cooperative to deploy an
advanced fiber network, we can assure a
bright future for our region.”
One town that voted to establish
municipal light plant legislation, Leverett, is still considering whether to join
WiredWest or proceed on its own, according to local press. At the time of the
vote, selectman Peter d’Errico noted,
“The point of this [referendum] is to
establish the institutional framework to
move forward. The alternative is to do
nothing tonight and sit on our hands,
waiting for a private company to come
in and do something.”
FastRoads, a collaboration of the
New Hampshire Community Development Finance Authority, the Monadnock Economic Development Corporation, the 34 towns of the Monadnock
region and WCNH.net (the eight towns
of the Upper Valley–Lake Sunapee region), awarded a design and project
management contract for its regional
broadband network to Design Nine
and is soliciting bids from engineering
companies. The network, which is part
of the broadband stimulus–funded Network New Hampshire Now project, will
include last-mile networks in the towns
of Rindge and Enfield as well as middlemile components and anchor-institution
access throughout the region.
FastRoads’ goal is to ensure that
the region’s businesses, institutions and
residents have the right infrastructure to
support jobs and sustainable economic
development. The towns and cities of
the area offer an excellent quality of life,
a relatively low cost of living and superb
recreational activities, and the area is located within reasonable distances of major urban areas. Widespread availability
of business-class broadband has the
potential for accelerating economic development while maintaining the quality of life and without incurring risks of
overurbanization.
ECFiber, an FTTH project of some
two dozen towns in Vermont, has begun
constructing its first phase after several
years of planning. This spring, conduit
was laid to connect the central office
to the rest of the network, power and
equipment were installed in the network
operations center, the equipment to connect the network to the Internet was put
in place and poles for aerial fiber began
being installed. As of mid-May, the fiber itself was still awaiting arrival, with
delivery dates possibly affected by the
tsunami in Japan.
The first phase of ECFiber, in which
parts of four towns will be built out,
has been funded by promissory notes
issued by ECFiber and purchased by local residents. The original plan was to
use municipal capital lease financing for
the entire project, but the collapse of the
market in 2008 made that plan impractical. If the first phase confirms the project’s projected costs and take rates, ECFiber intends to go back to the private
capital markets to fund the remainder.
Seattle to Bring Fiber Internet
Service to Pioneer Square
As the next step in Seattle’s effort to
bring high-speed fiber internet to Pioneer Square, a historic downtown district that houses art and entertainment
venues as well as businesses and government offices, the city is publishing
a request for proposals for Internet service providers to offer fiber optic–based
broadband to businesses.
“Businesses have told us the Internet service available to them in Pioneer
Square is ‘barely adequate,’” says Mike
McGinn, mayor of Seattle. “Today we
are one step closer to bringing them the
extremely fast Internet service they need
to compete in the global economy.”
A former mayor, Charles Royer,
adds, “This is something we have needed
and is coming at the right time, just as
new-economy firms are filling up Pioneer Square office space.”
In February, McGinn announced
in his State of the City address that Seattle City Light and the Department
of Information Technology would lay
conduit under four blocks of in Pioneer
Square. Fiber optic cable can be pulled
through the conduit to provide Internet
connectivity to nearby businesses.
“What we are able to get in Pioneer
Square right now is about half the speed
of what you’d be able to get in your
home,” said Jeff Strain, founder of Undead Labs, a game development company based in Pioneer Square. “Fiber Internet is essential in order for us to keep
our company here.”
The city expects two or three Internet service providers to submit proposals
and make Internet service available by
September. If no proposals are received,
the city will take steps to make service
available directly.
New Municipal Projects
The city of Cortez, Colo., went live
with the first phase of its FTTH network and is now serving local businesses. “The multiphase FTTH plan for
Cortez is an open-access/open-service
model of deploying high-capacity fiber
to the community,” says Rick Smith, the
city’s general services director.
The Southwest Colorado Council of
Governments secured the initial project
funding, which came from a state grant
of $1 million from oil, gas and coalleasing rights. The city provided a 25
percent match for the grant funds and
expects to see its investment funneled
back into the economy of Cortez and
the surrounding area when it offers large
The Internet service available in Pioneer Square
is barely adequate, says Seattle Mayor Mike
McGinn. Now the city is a step closer to bringing
businesses the service they need to compete.
employers and data center providers
the bandwidth and technology to grow
their businesses from Colorado. The city
aims to “make metro-style broadband
affordable in a rural Colorado setting”
in hopes that available broadband along
with its strategic location in the Four
Corners area, its high quality of life and
its outdoor lifestyle will make it an attractive location for business.
The Cortez network used a complete
FOX FTTH Solution from cable and
connectivity supplier OFS. The solution
includes a customized fundamental network design plan using OptiCost modeling software, Fortex DT All-Dielectric
gel-free cable with AllWave ZWP fiber,
Orbital fiber distribution cabinets and
full-spectrum optical splitters.
According to John George, director
of systems and applications engineering for OFS, fiber was installed through
underground conduit to the fiber distribution cabinets and to the businesses
covered in the first phase. The citywide
design provided by OFS incorporates
the anchor institutions already connected by the city; in future phases, the
network will be expanded to additional
service areas with additional fiber rings
and distribution cabinets.
The city of Ammon, Idaho, lit the
first 2.5-mile section of its new fiber
network in May. The network will begin
by serving municipal agencies, and it is
expected to pay for itself by reducing the
city’s monthly telecom costs. Eventually,
it will be operated as an open-access network for the benefit of the community.
The city says on its website, “We expect the early beneficiaries of this ‘open’
policy commitment to be community
anchor institutions, such as law enforcement, public safety, emergency responders and our local schools. We are already
working to help a number of these agen-
cies meet their broadband needs. It is
our hope that creating this open network will also entice businesses [that]
require robust and affordable broadband services to consider settling their
operations in Ammon. We also anticipate being able to give you, the Ammon
residents, more choices in broadband
services and providers and at better rates
and much faster speeds than currently
available through fiber technology.”
The city of Opelika, Ala., awarded a
contract to Alcatel-Lucent for a GPON
fiber-to-the-home network that will
deliver triple-play services, including
IPTV, to as many as 13,500 residential
subscribers.
The town of Tillsonburg, Ontario,
was awarded $487,000 through the
Ontario Government’s Rural Connection Broadband Program to expand
high-speed internet service to two major industrial parks and more than 600
businesses and public institutions in the
community.
In Dubuque, Iowa, the City Council
approved funding for a second feasibility study to determine whether current
technology and marketplace conditions
make a municipal telecommunications
utility more viable now. The city’s first
study was conducted in 2005.
The commissioners of Todd County,
Minn., voted unanimously to spend
up to $20,000 to match a grant for an
FTTH feasibility study. One of the
prime movers of the municipal broadband initiative is the Todd County Livestock Advisory Council, whose members
need fast connection speeds to participate in the global agriculture market.
Arvig Communications Systems, a
local independent telco that provides
fiber-based services in a portion of the
county, committed $20,000 toward the
feasibility study, and Todd County will
17
The city of Cortez, Colo., hopes that affordable
high-speed broadband along with its strategic
location, high quality of life and outdoor lifestyle
will make it an attractive business location.
also apply for a $40,000 foundation
grant.
Chelan County Returns
Stimulus Grant (With Regrets)
Chelan County Public Utility District (PUD) in Washington State,
which has operated an open-access fiber
network for nearly a decade, received a
broadband stimulus grant in 2010 to extend the network to 16,000 additional
residents in the district’s rural areas. In
April, the PUD commissioners voted to
withdraw from the project when they
found that costs were higher than anticipated and they could not meet the
construction schedule. General Manager John Janney said expenses could
have risen as much as $34 million over
initial projections.
The original grant would have pro-
vided $25 million to extend fiber over
the next three years to areas of Chelan
County not yet served by high-speed
broadband. The PUD at first calculated
its share of the costs at about $8 million.
However, it did not take into account
that many transmission poles would
need to be replaced to carry the new fiber optic lines, which would have taken
an estimated three years beyond the
time limit allowed by broadband stimulus funding. The costs of building in difficult terrain and in winter conditions
to meet the tight schedule also raised
the estimated price tag for the buildout.
Finally, many of the rural lines would
have had to be placed underground in
uncertain terrain because electrical lines
in those areas were underground.
Commissioners voted to accept the
federal grant last September after about
two-thirds of customers indicated they
favored taking the grant if it required a
rate increase of no more than 3 percent
(about $1.50 per month on the average
PUD bill). However, a majority favored
rejecting the grant if the rate increase
were higher. That echoed community
sentiment in survey taken a year earlier.
Chelan PUD discussed with the
Rural Utilities Service (RUS), the grantmaking organization, whether it could
trim costs by reducing the geographic
scope of the project. However, RUS officials said the agency would not approve
such changes in scope.
PUD management concluded it
could not meet the original scope,
schedule and budget and recommended
that the PUD withdraw before it received any money.
The PUD recently added a line extension policy for the roughly 70 percent
of county residents who have access to
the existing fiber network. Now, potential customers can receive fiber service if
they agree to pay any installation costs
above $1,500.
The PUD is also developing a new
long-term strategic plan for fiber, which
it hopes will identify new options for
providing broadband services.
Public-Private
Partnerships
Google Selects Kansas City, Mo.
Yes, that’s Missouri. After we had all
gotten used to the idea that Google was
building its first gigabit fiber network in
Kansas City, Kan., Google turned its attention eastward and included Kansas
City, Mo., in the project. Google plans
to begin offering service to residents
on the Missouri side of the border in
early 2012.
Like Kansas City, Kan., the Missouri city put intense effort into its
Google application. Its GoogleKC coalition included representatives of city
government, the local electric utility,
economic development organizations,
the chamber of commerce, the school
district, some of the same nonprofits
18
Both Kansas Cities, in Kansas and Missouri,
will now partner with Google
to build gigabit fiber networks.
that were involved in the Kansas City,
Kan., project, and an inclusive group of
local business and community leaders.
The city greeted Google’s announcement as “the beginning of what promises to be an incredible opportunity for
its residents.” The mayors of the two cities have pledged to work with each other
and Google to make the most of the net-
work for both communities by improving public services, advancing education
and sparking economic development.
A major partner for Google in Missouri is Kansas City Power & Light
(KCP&L), an investor-owned utility
that will provide access to its electrical
poles, infrastructure and existing fiber
network to enable Google to bring high-
Bringing Google Fiber
to Kansas City, Kan.
“I’m not a broadband czar, and I don’t
have any technical expertise,” said
Brent Miles, president of the Wyandotte County (Kansas) Economic Development Council and organizer of
Kansas City, Kan.’s, (KCK) successful
bid to become a Google Fiber Community. At the Broadband Properties Summit Economic Development
Program in April, Miles explained
that he views the world through the
lens of economic development. That
worldview, he said, helped KCK put
together a winning application.
Introducing Kansas City, a city that
few in the audience were familiar with until Google’s
March 30 announcement, Miles said it was a “cow town”
located near the geographic center of the United States.
The city and county, which have a unified government,
operate a municipal electric utility and have revived
the region’s economic fortunes through a number of
creative public-private partnerships with major-league
sports teams and with the International Speedway
Corporation, which runs the NASCAR racetracks. “We
do large, complex, public-private partnerships that are
unique,” Miles said. “Google is just the latest and the
greatest.”
KCK has several economic development goals: recruiting new companies, retaining and growing existing companies and changing the culture to address problems of
low skills and chronic unemployment.
The third goal is the most difficult of
the three. What excited KCK about
the Google project is that it could
contribute to all the city’s goals.
Miles quickly realized that gigabit
fiber throughout the city could make
it a more hospitable environment for
data centers, call centers, technology
entrepreneurs and many other types
of companies. “We were getting lots
of calls – everyone from insurance
agents to application developers,”
he said.
Corporate site selection involves
what Miles called a “process of elimination.” Companies
cross a city off their site selection lists if, for example, its
sewer plant or its electric plant is lacking in capacity. KCK
has always focused on investing enough in infrastructure that it wouldn’t be crossed off anyone’s list. With
gigabit fiber connections, the city will never lose a deal
because of inadequate connectivity.
Miles’ next challenge is to measure the impact of
the new network. “We want to have a great career as a
Google city,” he said.
But how will KCK decide whether the network has
been a success? “We need new measures,” Miles said.
“Not just square feet of new plant. How do we measure
new technology start-ups? We’ve been asking our technology entrepreneurs, ‘What would you do with a gig?’”
Deploying service over Kansas City Power
& Light’s infrastructure will allow Google to
significantly reduce both costs and time.
speed Internet services to the city. Deploying service over KCP&L’s existing
infrastructure will allow Google to significantly reduce both its costs and the
time needed for engineering, permitting
and construction.
KCP&L’s history of bold initiatives
includes negotiating a landmark carbon
offset agreement with the Sierra Club,
launching an urban smart-grid demonstration project and introducing all-
electric vehicles to its fleet.
“Today is an exciting day for our
company, our customers and the Kansas City region,” said Mike Chesser,
chairman and CEO of KCP&L and its
parent company, Great Plains Energy.
“KCP&L’s electrical infrastructure,
one of the most reliable systems in the
United States, combined with Google’s
state-of-the-art fiber optic technology,
will deliver Internet service at speeds
unknown anywhere else.” v
Vendor Spotlight
Alcatel-Lucent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.alcatel-lucent.com
Design Nine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.designnine.com
Minerva Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.minervanetworks.com
OFS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.ofsoptics.com
Tantalus Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.tantalus.com
19
Deployer Spotlight
States with deployments
referenced in this article
Alaska
North American Deployers
Ammon, Idaho
BVU
ww.ci.ammon.id.us
ww.bvu-optinet.com
Cortez, Colo.
www.cityofcortez.com
Dubuque, Iowa
www.cityofdubuque.org
Google
www.google.com
LUS Fiber
www.lusfiber.com
Opelika, Ala.
www.opelika.org
Seattle, Wa.
www.seattle.gov
ECFiber
www.ecfiber.net
Tillsonburg, Ontario
www.tillsonburg.ca
EPB Fiber Optics
www.epbfi.com
Todd County, Minn.
www.co.todd.mn.us
UTOPIA
www.utopianet.org
FastRoads
www.newhampshirefastroads.net
Fibrant
www.fibrant.com
WiredWest
www.wired-west.net
Additional
DEPLOYMENTS
Comcast launches Metro Ethernet services in 20 major markets … Many stimulus-funded
fiber projects break ground … SureWest to undertake major FTTH build in Kansas City area …
Fiber projects around the world
Read all these stories and more in the digital edition at
www.bbpmag.com/bbponline.php
20
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3/15/2011 12:28:00 PM
The Courtyards at the
University of Michigan
By Joe Bousquin ■ Contributing Editor, Broadband Communities
This issue’s featured property is The Courtyards, a 100 Mbps, fiber-connected student housing community in Ann Arbor,
Mich., that stands out with an independent IPTV stream. Broadband Communities thanks Education Realty Trust’s Susan
Jennings and Scott Casey for their assistance in preparing this feature.
S
cott Casey has seen the future of
student housing, and it doesn’t
include subscription-based cable
television.
“We’ve got properties that are subscription-based cable and ones that are
bulk,” says Casey, vice president of technology at Memphis, Tenn.-based Education Realty Trust (EDR), which owns
or manages 34,000 beds in 10,500 units
across 23 states. “If it’s subscriptionbased and the kids have to go out and
get it, they’re just not doing it.”
In fact, Casey reports, fewer students
are showing up at school with TVs these
days. Instead, roommates often coordinate to have one main television in a
common area and use their own laptops
for watching personal programming.
“They hang one TV on the wall so
they can game or watch sporting events,”
Casey says. “Otherwise, they’re in their
rooms, watching TV on their laptops.”
Of course, all that individual watching
can gobble up bandwidth quickly. “Stu-
22
In student housing, Internet video soaks up
whatever bandwidth is available. To keep
network traffic flowing, EDR added a separate
IPTV stream accessed via Ethernet or Wi-Fi.
dent housing has been hit hard over the
last year as video streaming has become
more prevalent than ever,” Casey says.
“It saturates your network and consumes a lot of bandwidth.”
To keep Internet video from saturating the network at The Courtyards, a
320-unit, 896-bed community in Ann
Arbor that serves University of Michigan
students, EDR, together with the owner,
decided to add an independently fed
IPTV stream – even though the property already had standard cable television service.
EDR manages the property for
owner Kensington Realty Advisors,
which supported the idea. “Our residents are very sophisticated in their use
About the Author
Joe Bousquin is a contributing editor to Broadband Communities and a journalist
with more than 15 years’ experience writing about finance, real estate and technology.
You can reach him at [email protected].
| BROADBAND COMMUNITIES | www.broadbandcommunities.com | MAY/JUNE 2011
of technology, and we have a reputation
of being ahead of the technology curve
to accommodate their needs,” says Jim
Lee, senior principal at Kensington.
Although The Courtyard offers 100
Mbps data speeds to its residents over
a fiber-to-the-building network – EDR
has targeted a 100 Mbps minimum for
all its communities – the IPTV stream
doesn’t use that bandwidth. Instead, it
comes in through a separate feed routed
separately to students’ laptops or iPads
over a hard-wired Ethernet or 802.11n
wireless connection. The service is accessed via a channel-guide application
downloaded to students’ PCs.
In the future, a resident will be able to
route the IPTV stream to a TV that has
a Wi-Fi or Ethernet port or to a device
such as a game console or a DVD player
that can be connected to a TV. “HDTV
is awesome to watch, and having more
channels available whenever and wherever I am is very cool,” says Brittany
Smith, a University of Michigan student
and resident of The Courtyards.
Champaign, Ill.-based Pavlov Media, which provides the other services
at the property, helped EDR deploy the
system, but the video signal is provided
by a separate, third-party vendor, which
has not been publicly identified because
the system is still in beta test mode.
The IPTV headend has a much
smaller footprint than a traditional
video headend. “If you look at a typical video headend, you’ve got six racks
and 96 receivers because you need one
receiver per channel,” Casey says. “With
this deployment, the IPTV stream
feeds the electronics in our MDF and
IT rooms. You’re looking at just a few
pieces of equipment.”
Less complexity also means lower
cost. Providing IPTV programming
represents a $30,000 to $40,000 capital investment, Casey says, compared
with $50,000 to $75,000 for cable service, plus the necessity of fiber, Ethernet
and coaxial infrastructure. That’s why
he believes that standard cable TV service could soon be supplanted by IPTV.
“We’re actually trying, to some extent,
to get out of the cable TV business at
some point in the future,” Casey says.
For the students at the Courtyards,
what’s happening behind the scenes
doesn’t matter – they care about what
they can access on their screens. So far,
the deployment has helped in that regard, boosting The Courtyards’ leasing
velocity by 33 percent over last year.
“I call them the pampered generation,” Casey says. “These kids don’t care
how it works or how much it costs. But
they show up with every piece of technology and electronics imaginable, and
they expect really high-speed Internet –
as fast as or faster than they had at home
with their parents and as fast as what
they can get on campus.”
With an independent IPTV lineup
and dedicated 100 Mbps speeds to their
laptops, EDR’s pampered kids at The
Courtyards are getting exactly that.
Basic Property Information
Property description: The Courtyards,
adjacent to the University of Michigan
campus, offers park-like courtyards, a
cybercafé, recreational facilities, tanning capsules, quiet-study and meeting
rooms, high-speed Internet access, cable
television, an outdoor badminton court,
a mini-movie theater with surround
sound and a music practice room with
a piano.
Privacy is paramount – bedrooms
are all single-occupancy, and each has
Property of the Month Highlights:
The Courtyards at the
University of Michigan
• This large student-living community was built in 2008 by
Kensington Realty Advisors and is managed by Education Realty Trust.
• Pavlov Media provides bulk 100 Mbps Internet access, delivered
via fiber to the building, along with cable television service.
• IPTV service, added in 2010, is supported by a separate fiber-tothe-building infrastructure and accessed via Ethernet or Wi-Fi.
• Vendors include Cisco, D-Link and Ruckus Wireless.
MAY/JUNE 2011 | www.broadbandcommunities.com | BROADBAND COMMUNITIES |
23
Students gather in the living room to watch the
big game on a big TV. The rest of the time, they
watch video on their laptops. Landline phones?
Those are soooo 20th century.
its own bathroom. Convenience is maximized through access to city and campus transportation.
EDR developed the property with
Kensington. EDR also manages it and
provides residence life programming in
concert with the university.
Greenfield or retrofit? Greenfield for data
network, retrofit for IPTV
Number of residential/commercial units:
896 beds in 320 units
Building style: Three five-story, mid-rise
buildings
Percent of units occupied: Planned 100
percent occupancy in 2011–2012
Time to deploy? 12 months
Date services started being delivered: The
property opened in 2008. IPTV services became available to students
in August 2010 for the start of the
2010–2011 school year.
Technology
The following answers were provided by
EDR’s Scott Casey.
How does fiber get to the property? AT&T
brings a Metro Ethernet circuit to
the headend in the building and
hands it off to Pavlov Media, which
provisions it to the property. We
have fiber to the headend and fiber
running between the buildings.
How is the signal distributed inside the
property? Fiber is run through conduit from the main distribution
frame (MDF) to each intermediate
distribution frame (IDF). Cat 5e
cable delivers the signals between the
IDFs and each unit.
This is a pure Ethernet system
from end to end. At each IDF, the
fiber is connected to a D-Link
DEM-310GT gigabit transceiver,
24
which converts the signal so that it
can ride over copper and passes it to
our D-Link switches – we use the
D-Link DES-3550, DES-3526,
DES-3010PA and DES3627. Then a
Cisco 3550 router provisions bandwidth to the units from the IDF
closets via Cat 5e cable, which is
home-run to the apartments.
The IPTV signal is an MPEG4
H.264 encoded IP stream delivered
to the MDF room and then distributed via single-mode fiber optic cable
to communications rooms throughout the community. At each communications room, the Ethernet signal
is switched to Cat 5e cable. Students
can access it via either a hard-wired
connection or over Wi-Fi, using a
channel-guide application that they
download to their laptops. The exact
configuration of our IPTV equipment is proprietary, and we cannot
share it because of a confidentiality
agreement with our vendor.
What type of gear is used? We use Cisco
routers, D-Link switches and Ruckus
Wireless access points. Pavlov Media
is our partner for installation, setup
and ongoing management of the
network and cable system.
How did you deal with wiring and plug
access within the units? The Courtyard has a gigabit backbone. For the
original network, this was new construction, and all wiring was done
while rough-in was completed.
How do you provide wireless signals within
units? We have an enterprise-grade
managed 802.11n Wi-Fi network
using Ruckess Wireless equipment.
How much square footage did you have
to dedicate to the network inside the
building? We have a 10-by-10-foot
space for the MDF, and each IDF
is approximately 4 by 4 feet. We
share space with other mechanical
systems.
Services
Does the building have triple-play services?
No, we offer Internet and cable TV.
Students can use VoIP in their units
if phone service is needed, and they
prefer that. We have stopped installing hard-wired Cat 3 or Cat 5 telephone lines in our buildings, as our
student residents don’t subscribe to
landline service.
Are there technology amenities beyond
triple play? Wireless is free throughout the property. We also offer study
rooms, a movie theater and game
rooms.
Are there IP-based systems for managing
the property? We have an IP-based
surveillance system that automatically captures a feed for all entrances
and exits and is recorded for review
in case of a security event.
Do residents have a choice of service providers? No
Who provides support? If residents have an
issue or technical challenge, whom do
they call? Our partner, Pavlov Media,
offers 24/7 support.
Business
Who owns the network? Pavlov Media
owns the network equipment during
the term of the agreement.
Does the property owner have “skin in the
game”? Who paid for what? Cabling
infrastructure and the IPTV infrastructure are owned by Kensington
Realty Advisors.
Was there a door fee? No
Are services automatically included in the
rent? Standard cable service via Pavlov, IPTV via our third-party partner and Internet access are all included in the rent. Starting next fall,
IPTV will no longer be included in
the rent; students will have the option of subscribing.
If residents are billed directly, who handles billing and collection? Education
Realty Trust’s management company, Allen & O’Hara Education
Services, bills students and/or their
parents directly.
Who markets the services? Allen &
O’Hara Education Services
What has the return been on this implementation, in dollars or otherwise? We
do not measure a financial return
on the system. For us, as a studenthousing operator, this is an amenity
that is offered as part of the rent,
and is simply a requirement for our
residents. It’s really about offering an
all-inclusive technology solution. I
think probably the biggest driver is
the bandwidth and the wireless access that we’ve installed. The IPTV
is kind of just icing on the cake because these kids judge you by what
you’re providing them.
I would say all that is helping
increase our leasing velocity, but it’s
not the only factor – we’ve done a
great job with marketing, and the
property is still brand-new. It’s a
beautiful place to live. It’s a great location. You walk out your front door,
and you’re almost on campus. There
are a lot of other factors as well, but
the technology is a big part of it.
Onsite Experience/
Lessons Learned
What was the biggest challenge? Determining the amount of bandwidth
needed today and provisioning for
the future. We started putting in 1
gigabit ports, so you can start out
with 100 Mbps and at any time you
can turn it up to 200 or 500 Mbps.
The challenging part is knowing
when to say “Enough is enough” because if you put in 500 Mbps, they
are going to use it.
Managing residents’ expectations for Internet bandwidth is a
daily challenge. The need for additional bandwidth changes every
six months and is dictated by the
technology and online requirements
presented by our residents. Failing in
this area could be detrimental to our
future leasing.
One interesting thing we have
found, however – and it’s somewhat
counterintuitive – is that when you
give residents faster speeds, they
don’t consume as much of the bandwidth on a percentage basis. We
think they’re getting done [with
their work] faster, so they’re spending less time on the Internet. We’ve
started increasing user speeds at all
of our properties, and it’s actually
proven true.
You say you’re trying to get out of the cable
TV business. Could you explain? For
the first time in 10 to 15 years, the
cable TV industry is changing. For
years, the cable companies were talking people into signing 15-year contracts with them, and that kind of
thinking is over and done with.
We’re always trying to look three
years into the future for evaluating
cable TV contracts. I want to write
language saying that if we renew a
contract that starts off as bulk, I have
the ability to switch to subscriptionbased services at any time.
It gives us the ability to get out of
the cable TV business if our residents
aren’t subscribing to it. If the providers want to come in and market to
the students to subscribe, that’s fine,
but we’re not owning the equipment,
we’re not paying a monthly fee for
cable anymore. Personally, I believe
IPTV has the potential to become
the prevailing technology over the
next few years, and I really believe
that five years down the road, when
we build a property, we’re not going to put any cable headend in at
that property.
What would you say to owners who want
to deploy a similar network? Build for
the future and don’t let the vendors
dictate what your network build
should be. As I said on a panel at
the Broadband Properties Summit
in Dallas this year, don’t let your
vendors and developers tell you what
you need. It’s not that they have bad
intentions, but they don’t always
have the technology or market expertise to know what you need for
your residents. v
25
SERVICE PROVIDER STRATEGIES
An Interview With Tom Nugent,
VEC’s national sales director knows he has a good product to sell. But the real
story may be in the services Verizon is honing for the MDU market – and for
the entire FiOS footprint.
T
om Nugent and his team are responsible for Verizon’s national accounts with property owners, developers, managers and real estate investment
trusts (REITs). He came to the job earlier
this year after leading a 220-person division within Verizon that grew a $760 million business serving medium-size organizations. He began his career with GTE in
1995 after earning his undergraduate degree from the University of South Florida.
Recently, Broadband Communities
had the opportunity to chat with Tom
about his vision for VEC.
Broadband Communities: What
in your background prepared you for
VEC?
Tom Nugent: I started out with GTE
handling enterprise accounts in the
Southeast. After Bell Atlantic and
GTE merged and properties progressed
through new broadband generations, I
found the whole FiOS build intriguing.
As I positioned managed services with
small and medium businesses across the
nation, we were constantly doing fiber
buildouts, whether SONET, Ethernet
or FiOS. So I was already familiar with
the technology itself and certainly understood the need for fiber.
BBC: What should property owners
know about what VEC offers?
TN: We’re entering a phase in which the
broadband platform is outweighing the
importance of ancillary income alone.
The way consumers leverage data and
TV platforms has led to exponential
bandwidth demand growth. Putting in
26
mand], you’re going to lose out down
the road to owners and REITs that invest in fiber deployments.
BBC: In an existing building, why not
bring fiber to the basement and reuse
the existing copper to the unit?
TN: I think bandwidth is the number
one fiber advantage. The second, whether
it’s real or perceived, is that residents see
value in having that direct fiber access.
One of the challenges we overcame early,
of course, is doing this with as little disruption as possible, while keeping up the
aesthetics of the building.
BBC: You get in and out awfully
quickly.
TN: It depends on the structure and the
Putting the wrong infrastructure into a
building will handicap you in the middle
to long run of the building’s life.
the wrong infrastructure will handicap
you, as the property owner, in the middle to long run of your building’s life.
If you don’t have that infrastructure [to
support the growth in bandwidth de-
region of the country. After [contract]
signature, once we’ve got an agreed design, buildings can be retrofitted within
90 to 120 days. We’re starting to see several regions and several builders break-
About the Author
Steve Ross is the corporate editor of Broadband Communities. You can reach him
at [email protected]. Contact Tom Nugent of VEC at [email protected].
ing ground again, and greenfield infrastructure goes up much more quickly
because we embed the fiber into the wall
structure.
BBC: At what point do you get involved in a new building’s design?
TN: We ideally want to be involved up
front as our partners are doing the design of the building, well before they
break ground. However, we have been
successful with FiOS builds regardless
of the building construction phase. Our
goal is to work cooperatively on design
that meets the client’s needs.
Concierge Services
BBC: Can you talk a bit about Concierge and what it might offer down
the road?
TN: Concierge is an amenities management platform that lays the foundation
for communication among neighbors,
communities and property managers. It
has a range of functions, such as package tracking, resident alerts and mobile
applications. A resident can ask for help
with a maintenance ticket, view cameras
on a property or order a pizza using a
smartphone, a TV or a computer. We’ve
even taken it out into the communities so
there’s a unified wallet that a resident can
leverage to buy locally and to buy globally. Most recently, we added Groupon,
1-800-Flowers, OpenTable reservations
and things of that nature that really set
a property apart from others. The idea
is to create that stickiness so that when
residents’ leases are up, they think twice,
three times, four times, and then they resign rather than look at a new property.
We’re seeing a growing interest in
more than just voice, data and video.
With Concierge specifically, we’ve seen
that owners and property managers take
a keen interest in communicating with
their residents in ways that stimulate
feedback. It’s more than just the portal and more than just the Web access.
People now are on the go and want to
interact remotely, so mobile applications
are hot.
The next thing that’s coming is the
whole concept of the Connected Home –
everything from being able to control
your lights and your security and manage your energy use not only to meet
VEC’s new Connected Home services hit
multiple hot buttons for residents – cost saving,
carbon footprint reduction, security and,
not least, the “cool” factor.
your economic goals but also to reduce
your carbon footprint. It has been huge,
and it’s driven by the residents. We’ve
got platforms in place that we’re launching with developer packages throughout
2011 that will enable buildings to differentiate themselves.
BBC: Is that integrated with Concierge, or is that a separate thing?
TN: It will be loosely linked. You can
have one without the other.
BBC: What does it cost owners?
TN: Our Concierge platform is free
of charge for FiOS-enabled buildings.
Owners can leverage Concierge as a communications channel with residents and
a building-based social network to help
make an apartment a longer-term home
and help build a community. The Connected Home platform, which enables
management of lights, camera monitoring, door locks, energy consumption
and more, is a paid-for platform.
BBC: Who pays for Connected Home –
property owners or tenants?
TN: Connected Home is paid for by the
residents. We are finalizing the developer offers and have pilots starting that
include bulk options allowing builders
to buy on behalf of their residents at discounted rates.
BBC: A year ago, property owners
were worried about these platforms’
adding to their workloads. This year,
those complaints seem muted. What
improvements did you make?
TN: I wish I could say that Verizon alone
was driving this. The reason Concierge
and Connected Home are catching fire
is simply that consumers are driving the
need for these applications. What we’re
seeing is that this is a differentiator to
help property managers, owners and
REITs attract and retain clients. There’s
also a small opportunity, and I would
stress small opportunity, to drive additional revenues.
BBC: Any particular location or housing type causing the buzz?
TN: No. We see potential for Concierge
and Connected Home across luxuries,
high-rises, across geographies, across
REITs, property owners and property
managers all the way down to the residents. It hits multiple hot buttons. Can I
save on energy? Can I reduce my carbon
footprint? Am I consciously doing right
by the world? Another hot button is this
whole concept of safety and security, the
ability to manage and monitor via cameras, the ability to turn lights on and off
automatically so that when I’m stepping
outside at night, the lights can come
on for me, or when I’m about to come
home, I can turn on the lights before
I get there. I can monitor the environment via cameras to make sure it’s safe.
The final hot button is the “cool”
factor. A lot of folks like the cool convenience of being able to control their
appliances, their bills and their lights all
via their mobile pads or phones, via the
Web and via the TV.
BBC: Down the road, app developers could create other applications
for FiOS communities – telehealth,
distance learning and so forth. Is that
something VEC specifically, or Verizon
as a whole, is considering?
TN: Health & Wellness is a corporatewide initiative of which Verizon Enhanced Communities is on the leading
edge. We’ve partnered with Healthsense,
and we’re in negotiations currently with
several properties to embed wireless
nurse calls and monitoring systems with
FiOS as the underlying technology.
27
Folks are using it in different situations. One is in traditional senior care,
and you also see this in naturally aging
communities. Loved ones and caregivers
are interested in remote management and
remote monitoring so family members
can live an independent lifestyle longer.
Often Health & Wellness enhances
our ability to pull through additional
revenues while delivering high-end services to the senior community. Health &
Wellness is how we’re changing the story
and making it resonate with a growing
population of baby boomers and seniors,
while driving revenue back to Verizon.
What Property Owners
Need to Know
BBC: When property owners start
negotiating with VEC, what do they
need to know ahead of time, and how
do you tell them, “It’s not just triple
play anymore”?
TN: Our business development managers
are trained in all these services in each of
the regions where we’ve deployed FiOS.
But we’ve taken it one step further; we’ve
adopted the concept of having sales engineers who are technically savvy when
they talk about these applications and
what they mean to a property – not only
to the folks who make decisions about
ancillary income and infrastructure but
also to the folks in charge of IT and marketing. We try to take a more strategic or
consultative approach to selling.
BBC: But the triple play still drives revenue, doesn’t it?
TN: We do believe the triple play of
voice, video and data is still a primary
driver today. But we see the applications
in Connected Home, in Concierge and
in Health & Wellness as what’s going to
take us over the top in years to come.
Defining the Client
BBC: Who are your clients? Are they
end-user customers, building owners
and managers, or both?
TN: Both. We have a unique strategy
in the B-to-B relationship. We want to
strike as many of those mutually beneficially relationships as possible to get to
the B-to-C relationship.
28
BBC: Is there any particular contact
point at VEC for people who have
new apps or new ideas for you? How
did you match up with Groupon, for
example?
TN: Mike Weston, director of marketing for VEC, leads our business development efforts. His team does strategic
planning and product design specific to
the multifamily market.
The Fiber Advantage
BBC: Why can all this be done only
through fiber? Many of these applications don’t need the high bandwidth.
TN: Some of it has to do with bandwidth,
and some of it has to do with crystal clarity and reliability. We believe that fiber
accommodates exponential bandwidth
growth for the years and decades to
come. We see mobile devices connecting
at an exponential rate, we see gaming increasing, we see video demand climbing,
we see the additional applications that
we haven’t even taken to market yet all
driving bandwidth consumption. Without an infrastructure that’s going to grow
with the building, [property owners] are
going to be left in the age of the dinosaurs. We truly believe that, and we’ve
seen that many of our large national,
regional and individual owner partners
agree. They are seeing the benefits of being able to attract and retain residents via
technology as an amenity.
BBC: So what about the old story line
of ancillary income?
TN: We certainly address ancillary income via cooperative marketing agreements. We see the property as a partner
in the business. However, ancillary income is not the lead value we bring to
the table, nor do we lead with it. Clients
want a superior product that differentiates their property. In addition, they
want reliability – and FiOS is a highly
reliable network.
When you start talking about applications that people not only become
accustomed to but also become dependent on, such as Connected Homes and
Concierge and certainly critical Health
& Wellness applications, you can’t have
a network going down. So we’ve built a
highly reliable fiber infrastructure.
BBC: What do you think is responsible for the entrepreneurial quality
of VEC? Is it more entrepreneurial because it has a more focused mission
or because of the technology?
TN: One of the things Verizon Enhanced Communities has been afforded
by Verizon is investment. The company
has invested a great deal in FiOS, but
it has also seen that it is incredibly important to target the very niche MDU
market. That approach requires a little
more finesse and a little more touch and
a little more creativity than the mass
rollout of FiOS. Eric Cevis [the Verizon
vice president responsible for VEC] has
acted as a visionary. He has taken the investment that Verizon has made in VEC
and consistently shown a return on that
investment, not only for the corporation
in the form of revenues, average revenue
per user (ARPU) and expense-to-revenue metrics but also in consumers’ eyes.
BBC: We see Verizon Enhanced Communities as something of a laboratory for all of FiOS and for the whole
broadband industry down the road.
TN: Innovation is something that VEC,
and Verizon as a whole, prides itself on.
VEC has been afforded the opportunity
to work with a special segment of the
market. We have listened to the multifamily industry to deliver specific technologies and applications. I think you’re
constantly going to see this where we are
today and in what we’ll do tomorrow.
BBC: What you’re really saying is that
you’ll be adding to ARPU with more
services.
TN: I think that’s a fair statement. On
the Concierge platform, more than
180,000 living units (and growing) have
Concierge services. And what we see
in those properties is solid growth in
Verizon penetration rates. That’s good
not only for the property that might be
partnering with us to drive that penetration, but also, obviously, for Verizon.
We’re seeing that across each one of our
geographies, and we’re seeing it across
each one of the different MDU styles,
whether it’s a garden style, a mid-rise or
a high-rise, luxury facility.
When we talk about Connected
Home, we have multiple properties in
negotiations right now. What we’ve
seen in both owner-occupied and rental
properties is that they are really trying
to figure out how they leverage this connected home to help differentiate their
properties via these “green” packages.
BBC: Do groups come to you knowing that you have the platform?
TN: We are spreading the word about
Concierge, Connected Home and
Health & Wellness through many channels, including the recent Broadband
Properties conference. Each one of these
application services goes through rigorous trials. We try to put on the glasses of
the consumer – the MDU user, the tenant, the senior-living resident, those who
would be interested in Connected Home
or health applications. If it can pass the
consumer test and we see a demand for
it, we make sure we have a platform that
will deliver. So I see an upward pressure
in communities, with residents saying,
“Hey, we’re very interested in this health
and wellness application or energy application.” Candidly, that’s really what
we think turned the tide, as the REITs
and the building owners are hearing the
same thing. Their customers want this
service, and they need help to deliver it.
BBC: And it’s not costing them out of
pocket, really.
TN: It does not have to cost the owner.
In fact, the consumer is willing to pay
because it provides value, whether it’s an
economic return or whether it hits the
green, the safety or the cool benefits.
Wellness is the same way. When you
start talking about the security and wellbeing of providing care remotely, that’s
a huge value, and we’re trying to offer
this at a very low cost to the end user.
Some of the building owners have said
they want to bake this in, so for those
owners we establish bulk offers with discounted rates.
BBC: You gave up the requirement
for a two-year contract commitment
from FiOS consumers. Are you going
to continue that policy?
TN: In some scenarios, we don’t believe
we need a contract to keep that retention
rate up – and consumers like [not havMay/June 2011 | www.broadbandcommunities.com | BROADBAND COMMUNITIES |
29
ing two-year commitments]. We’re also
looking at such policies as direct deposit
to insure that we can get past some of the
credit challenges for customers who want
to use FiOS services.
Mobile Networks
BBC: In the next few years, Verizon
and AT&T are putting their money
into mobile networks, bringing fiber
to cell towers, erecting more cell sites
and so forth. We expect more mobile
connections will be made through
users’ home networks, via either WiFi or femtocells. Are you thinking the
same way and planning for that?
TN: Absolutely. Mobility touches every
aspect of our business, whether on the
traditional telecom side or the core Verizon Wireless side. Verizon has an aggressive fiber-to-the-cell-site initiative.
That is very public, and we will continue
to invest in Verizon Wireless platforms.
On the FiOS side, we deploy Wi-Fi
routers with each data install to enable
a connected lifestyle.
BBC: Are you seeing property owners
interested in turning function rooms
into work centers?
TN: We have seen a groundswell of
work-at-home customers. We have seen
some buildings that have set up work
stations in common areas, but I think
more predominantly we’ve seen it at the
end-user level, [customers] turning parts
of their residences into home offices.
BBC: When VEC first started bringing
fiber to MDUs, owners had a lot of
reservations about it. Are you still encountering those reservations, or has
everyone more or less seen the light?
TN: One of the franchise areas that we
recently opened is Washington, D.C.
I was [there] yesterday talking to our
business development managers and
sales engineers who are actually going
out into the FiOS-enabled wire centers.
The positive response by the communities has been overwhelming. There is
pent-up demand there, and people are
very excited to experience FiOS and
bring that to their residents.
It was amazing that they would almost recite the value proposition that
we’ve been preaching for several years
now, saying, “Please come in and offer
us a choice. We need fiber for reliability,
for speed, for crystal-clear pictures.”
With that said, we certainly have areas where properties are in lucrative legacy contracts with cable providers and
candidly, that’s not the business we’re
in. So when those contracts expire, and
[owners] want to move over to the value
of Verizon for their tenants, we expect to
capture some of those properties.
Our business motto is that we’re
here to help owners attract and retain
residents. We have business professionals in each of the FiOS regions that are
happy to talk to owners and walk them
through what they as business owners
can derive and what their residents can
derive from enabling a property with
FiOS. And we can also bring in our engineering teams to address any concerns
out there with regard to greenfield or
retrofit properties. v
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The ultimate network
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D3375-1
FTTH Market Report
FTTH Deployment Trends:
The Bounceback
Market researcher Mike Render predicts that, thanks to stimulus funding,
FTTH deployments should start rising later this summer and into 2012.
B
etter late than never. The number
of homes passed by fiber should
start rising by the third quarter
of 2011 on a year-over-year basis, thanks
largely to construction funded by the
stimulus package passed in February
2009. “We’re starting to see a bounceback,” says market researcher Michael
Render of RVA LLC.
When Render spoke with 50 recipients of American Relief and Recovery
Act grants in March 2011, he found
that more that 70 percent were already
in construction or planned to be build-
FTTH Homes Passed, March 2011
(Cumulative, North America)
19,966,200
18,249,900
17,227,000
16,000,000
11,763,000
32
15,170,900
13,825,000
11,000,000
8,003,000
6,000,000
1,000,000 19,400
9,552,300
6,099,000
3,625,000
4,089,000
110,000
35,700
189,000
180,300
72,100
970,000
2,696,846
1,619,500
Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11
-4,000,000
Source: RVA LLC
Almost one American home in every five is now passed by fiber.
Deploying fiber to 1,000 homes enables the
launch of 35 home-based businesses. That’s one
of the most inexpensive job-creation strategies
available to the federal government.
ing by May. Almost all the others were
in the design or engineering phase or
awaiting government approvals. Unfortunately, two of the 50 were unable to
find suitable funding for the 20 percent
local match and returned their hardwon grants to the government.
Though the unspent money is unlikely to be recycled to other network
builders, Render’s numbers offer good
reasons for the government to support
more fiber builds. Render says passing
1,000 homes with fiber, at a cost of less
than $1.5 million, creates 35 homebased jobs (there are home-based busi-
20,914,476
21,000,000
nesses in 13 percent of FTTH homes,
and 23 percent of that group say their
businesses could not exist without
FTTH). No other large federal program
stimulates job creation as cheaply.
There’s a productivity bonus, too:
RVA’s 2010 consumer survey shows 9
percent of FTTH customers claimed
fiber made their home businesses pos-
sible or more efficient. Doubling the
broadband bitrate adds a half percentage
point to the number of home businesses
among broadband subscribers. (At the
sample size used, the chances of this
statistical association being spurious are
only about 1 in 10.)
When he spoke at the Broadband
Properties Summit 2011 in Dallas,
Render noted that “among [the nearly
600] small rural telcos [that already
have FTTH], 70 percent say they are
continuing to build out with fiber, and
the rest are considering expansion.” He
also noted that “several reasonably large
Canadian providers” started to deploy
FTTH last year, mainly to compete
with cable companies that are deploying
DOCSIS 3.0.
About the Author
Steve Ross, Broadband Communities’ corporate editor, can be reached at steve@
bbcmag.com.
FTTH Market Report
FTTH Homes Marketed, March 2011
20,000,000
19,344,791
18,167,300
16,992,600
18,000,000
16,000,000
12,369,000
12,000,000
10,082,065
10,000,000
7,996,400
8,000,000
6,643,000
5,079,999
6,000,000
4,000,000
Mar-03
0
0,
30
18 0
9,
00
41 0
3,
22
1
1,754,300
829,700
18
0
Sep-02
3,218,600
,0
0
11
0
,1
0
0
Mar-02
72
,7
0
19
Sep-01
35
,4
0
0
2,000,000
0
16,048,500
13,875,600
14,000,000
Sep-03
Mar-04
Sep-04
Mar-05
Sep-05
Mar-06
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Source: RVA LLC
The number of homes marketed for FTTH rose by almost 1.2 million, a gain slightly above the previous six months.
FTTH Homes Connected, March 2011
7,094,800
6,452,300
5,804,800
5,275,000
4,422,000
3,760,000
2,912,500
2,142,000
31 0
2,
70
00
50
1,011,000
671,000
548,000
3,
21
00
6,
,0
78
14
00
,7
64
00
,0
38
00
,5
50
,3
22
5,
50
0
0
0
1,478,597
10
7,500,000
7,000,000
6,500,000
6,000,000
5,500,000
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
Source: RVA LLC
New FTTH connections accelerated slightly, and homes connected as a percentage of homes
passed remained steady at 32 percent, up from 29 percent two years ago.
FTTH Video Homes Connected, March 2011
5,000,000
4,969,000
4,505,005
4,500,000
4,048,600
4,000,000
3,529,700
3,500,000
3,000,000
2,850,000
2,500,000
2,250,367
2,000,000
1,641,000
1,500,000
90
0
0,
26
00
11
0,
0
00
40
0
1,
10
,9
87
,5
00
5
67
37
-
9,
92
1,
500,000
5
1,000,000
1,054,000
611,400
408,800
Source: RVA LLC
FTTH served almost 5 million homes with video by March 2011, more than double the number in
September 2008. Net additions for FTTH video are running well over 1 million households a year.
Growth in Homes Passed
by Fiber
Although FTTH deployment slowed in
the past two years, it certainly did not
stop. By March 2011, fiber connections
were available to about 21 million American homes – almost one in five. About
7 million homes are now connected to
FTTH service in North America, making fiber a major economic force in the
video and data industries.
Leichtman Market Research notes
that cable companies added about the
same number of broadband subscribers
with DOCSIS as telcos did with FTTH
and DSL technologies. Verizon lost DSL
subscribers and gained FiOS subscribers
last year, so FiOS outpaced all other
technologies in customer growth.
“Some providers have lowered their
activity,” said Render. “We’re going to
have ups and downs, and of course we
are down a bit in activity in the last two
years. Verizon is close to reaching its
original [deployment] targets.”
Between September 2010 and
March 2011, Render found, an additional 948,000 homes were passed with
fiber, despite the recession and the worst
winter weather in a decade. That’s less
activity than in the previous six months
but similar to the same period a year
earlier (1,022,900 homes were passed in
the six months ending March 2010). In
general, more construction occurs during the summer months than in winter.
However, there is no denying that
the industry is feeling pain. FTTH deployers in North America – almost all in
the U.S. – passed more than 2.21 million additional homes in the six months
ending March 2008 and 2.06 million in
the six months ending September 2009.
Recent activity, therefore, is only about
half what it was at its peak.
Growth in Homes Marketed
The pace of marketing continued to
quicken as well. The increase in homes
marketed for FTTH rose to almost 1.2
million between September 2010 and
March 2011, a gain slightly above the
previous six months and well above the
year-earlier period. However, the latest six-month increase was far below
the 2.2 million record logged for the
corresponding spring-summer months
in 2009.
The number of FTTH homes connected is also rising, though slowly. The
raw number of connections added for
the latest six months, 647,500, is slightly
above the September-to-March total of
529,800 a year earlier but well below the
record 853,000 of the spring-summer
months in 2009. The rate of homes connected as a percentage of homes passed
remained steady at 32 percent, up from
29 percent two years ago.
33
FTTH Market Report
2,500,000
North American Homes
2,000,000
1,500,000
1,000,000
500,000
0
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Passed
2,010,000
1,904,000
1,549,300
2,210,700
2,062,000
1,345,900
2,056,100
1,022,900
1,716,300
948,276
Marketed
1,861,399
1,563,001
1,353,400
2,085,665
2,286,935
1,506,600
2,172,900
944,100
1,174,700
1,177,491
Connected
340,000
467,597
663,403
770,500
847,500
662,000
853,000
529,800
647,500
642,500
Video Connected
147,900
202,600
442,600
587,000
609,367
599,633
679,700
518,900
456,405
463,995
In the six months that ended in March 2011, FTTH growth rebounded from recessionary lows by all
measures. However, the increases in the number of homes marketed, homes connected and homes
taking video are still well below long-term trends.
Overall FTTH Take Rate and Non-RBOC Take Rate
(Cumulative, North America, March 2011)
60%
51.0%
41.3%
52.4%
53.1%
52.4%
51.8%
52.4%
49.0%
48.2%
47.4%
50%
51.5%
43.7%
52.6%
51.9%
49.0%
40%
35.4%
31.2%
28.4%
35.9%
28.8%
34.5%
30%
30.4%
31.8%
32.5%
34.1%
36.4% 36.7%
26.0%
29.0%
20.8%
19.9%
22.3%
26.8%
20%
18.4%
10%
0%
Source: RVA LLC
Overall take rates (homes buying services as a percentage of homes marketed) continue to rise.
FTTH Video is Growing fast
Almost 5 million households subscribed
to FTTH video services by March 2011,
more than double the number in Sep-
tember 2008. Net additions for FTTH
video are running well over 1 million
households a year. Verizon’s 2010 annual report shows how valuable FiOS
Growth or Decline, Half Over Half
Passed
Marketed
Connected
Video Connected
Apr-06
-57%
252%
23%
1620%
Sep-06
333%
27%
176%
0%
Mar-07
-5%
-16%
38%
37%
Sep-07
-19%
-13%
42%
118%
Mar-08
43%
54%
16%
33%
Sep-08
-7%
10%
10%
4%
Mar-09
-35%
-34%
-22%
-2%
Sep-09
53%
44%
29%
13%
Mar-10
-50%
-57%
-38%
-24%
Sep-10
68%
24%
22%
-12%
Mar-11
-45%
0%
-1%
2%
The seasonal pattern shows growth each summer and a lag in winter. The six months ending in
March 2011 showed strength compared with the past two years, despite particularly bad weather.
34
has been for the company: FiOS revenues for the year totaled $7.5 billion.
Of that, $6.8 billion was for video and
data. Only $700 million was for landline voice.
FTTH customers younger than 40
are especially interested in broadband
video applications, Render found. Older
FTTH customers value online face-toface health care above other video services. One in six older customers would
also use FTTH for online courses.
For the universe of FTTH providers, the numbers of new FTTH homes
marketed, connected and taking video
rebounded in the six months that ended
in March 2011. There was more activity
than in comparable periods of the previous two years, despite particularly bad
weather. (Again, the seasonal pattern
shows growth each summer and a lag in
winter.)
However, these metrics are also well
below long-term trends. The percentage
growth rate has slowed both because of
the recession and because the market is
growing in absolute size.
The Frontier Effect
Overall, FTTH take rates (homes buying services as a percentage of those
marketed) continue to rise. The Fall
2010 numbers were distorted by Verizon’s spinoff of Frontier, which had the
effect of moving close to 600,000 FiOS
homes passed into the “non-RBOC”
category. This raised Verizon’s average
take rate to 36.4 percent but dropped
the non-RBOC average to 49 percent.
Using Verizon’s post-spinoff rate as a
base, take rates for RBOCs (the data is
almost entirely from Verizon) continued
to climb from September 2010 to March
2011.
RVA sees a “base case” that could result in fewer-than-forecast new FTTH
customers connected in 2011 and 2012.
But many factors could push the forecast
higher, including slightly higher-thanexpected job growth or home sales. v
For more information about the report discussed in this article, see www.RVALLC.
com. A video of Mike Render’s talk at the
2011 Summit is at bbcmag.com.
FTTH Market Report
FTTH Take Rate, RBOCs
(Cumulative, North America, March 2011)
40%
30%
25.0%
Take rates specifically for RBOCs (the data is almost entirely from Verizon) continued to climb in
the past six months, but they build on Verizon’s
2010 spinoff of lower take-rate areas to Frontier.
27.0%
28.0%
29.5%
32.4%
31.0%
23.0%
20%
19.0%
17.6%
14.6%
15.5%
9.8%
10%
8.3%
3.0%
0%
Sep-04
Mar-05
Sep-05
Mar-06
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Source: RVA LLC
Percent of US Households Passed and Connected to FTTH,
2006–2011
20%
16%
Passed
14%
Connected
15.7%
15.1%
Over 18 percent of all U.S. homes are now passed
by fiber, making FTTH technology a major
player in broadband and video services. Over 6
percent of all U.S. households were connected to
FTTH by last month. Source: RVA LLC.
13.0%
11.9%
12%
9.9%
10%
8.1%
8%
6.8%
5.3%
6%
4%
18.2%
17.3%
18%
3.5%
2%
0.6%
0%
Mar-06
1.8%
0.9%
Sep-06
2.5%
Mar-07
Sep-07
3.8%
3.2%
1.3%
Mar-08
Sep-08
6.2%
5.6%
5.0%
4.6%
Mar-09
Sep-09
Mar-10
Aug-10
Feb-11
FTTH Homes Connected (Base Forecast)
Annual Change – North America 2001–2014
1,800,000
1,603,066
1,600,000
1,387,181
1,400,000
RVA sees a “base case” that could result in fewer
FTTH customers connected in 2011 and 2012. But
many factors could push the forecast higher.
1,575,953
1,529,968
1,200,000
1,118,770
1,476,867
1,353,986
1,313,165
1,000,000
800,000
697,890
600,000
81
36
177,271
41
,
,3
9
18
56
5,
200,000
3
400,000
82,398
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2012 2013 2014
Calculated by RVA for September of each year
Fate of Stimulus Grant Money for FTTH
Networks, March 2011
(Source: RVA)
In Construction
Render’s survey of companies that received
broadband stimulus funds to build FTTH
networks found that most recipients were
either already building their networks or
preparing to do so.
Preparing To Start Construction
Awaiting RUS Approval
Environmental Assessment
Engineering
Construction Planned in Future
Declined Funding
0%
5%
10%
15%
20%
25%
30%
35%
40%
35
The Public Option
More than 100 local governments – or groups of local governments – have
now decided to offer fiber-based broadband to local residents or businesses.
O
ver the last year, this magazine’s
count of municipal fiber-to-thepremises systems rose to 106
from 88 – an increase of 20 percent – in
spite of several cities having abandoned
their projects.
Though the recession slowed some
builds, many municipalities moved
from early stages into full deployment.
Others whose networks were already
operational are expanding beyond their
original service areas or adding new
types of customers and services.
Public entities usually build fiber
networks to give their communities a
competitive edge. However, they don’t
follow a single model. They face varying
legal and competitive landscapes, employ different financing methods, enter
into many kinds of partnerships, operate their systems in diverse ways, deliver
different sets of services to different
types of customers and bring varying
resources and competencies to the task.
Local differences outweigh the simple
fact of public ownership.
Although several municipal broadband projects have met with vehement
opposition, including lawsuits and legislative action, the majority appear to
be uncontroversial. Many are under the
radar altogether, and others are sources
of civic pride.
Who’s on the List?
All the deployers on this list
• Are owned by public entities or consortia of public entities, or in a few
cases (St. Joe Valley Metronet, Gahanna Net, Goshen Fiber Network) by
consortia of public and private entities
• Operate all-fiber networks that connect local homes and/or businesses
to the Internet or are actively planning such networks
36
• Make available – directly or through
retailers – such services as voice, Internet access and video (or are planning such services).
Excluded are the many municipalities that own or operate institutional
fiber networks exclusively for city facilities and schools, those that only lease
dark fiber, as well as those that provide
broadband access only over cable or
wireless networks.
This list includes municipalities with
functioning networks or with approved
operation and attract third-party service providers more easily. UTOPIA, in
Utah, is an early example of an FTTH
network built by a consortium of cities. More recent projects that include
dozens of municipalities are ECFiber in
Vermont, FastRoads in New Hampshire
and WiredWest in Massachusetts (the
last does not appear on this list because
it is still in a formative stage).
Other examples include a number of countywide networks as well as
LENOWISCO, which comprises three
Collaborative FTTP projects are becoming
more common because they let deployers take
advantage of economies of scale. Three big New
England projects involve dozens of communities.
plans and projects that are actively under way. However, plans do not always
materialize; a few projects well beyond
the wishful-thinking stage that appeared on last year’s list now seem to
be moribund. Others, although still in
existence (and still on this list), are far
behind where they were expected to be
at this point. Some projects may never
become operational.
Collaborative projects are becoming more common; these can achieve
economies of scale in construction and
counties and a city. Urbana-Champaign
Big Broadband is a consortium initiated by the University of Illinois (a state
agency) and includes two cities, Urbana
and Champaign.
Even a network owned by a single
town or city may provide service beyond
city limits. For example, Jackson Energy
Authority in Tennessee and NetQuincy
in Florida both serve areas adjacent to
the cities that own them. At least two
cities – Windom, Minn., and Williamstown, Ky. – are using broadband stim-
About the Author
[email protected].
ulus grants to expand their community
networks beyond city borders. (Windom built an FTTH network in 2004,
and Williamstown’s original network
was hybrid fiber-coax. Both are using
FTTH for their expansions.)
In Washington State, though each
public utility district operates its own
network, most or all belong to the
Northwest Open Access Network (Noa
Net), a coalition of public utility districts that have linked their fiber optic
networks to achieve economic feasibility in underserved areas. NoaNet offers
long-haul transport and last-mile access
to wholesale communications providers
throughout the Pacific Northwest.
Municipal Utilities
Municipalities are more likely to become
broadband providers when they are already in the business of providing electric
power. There are several reasons for this:
• Citizens in these munipalities are
already used to the idea of government-provided utility services. Many
public power utilities were set up in
response to the failure of the private
sector to deliver adequate services,
and residents accept that government might launch public communications utilities for the same reason. In most cases, citizens have had
positive experiences with their municipal utilities and are prepared to
buy additional services from them.
• Public power utilities already have
the back-office systems needed for
providing telecom services.
• Many power utilities are installing communications networks for
smart-grid applications; once they
begin planning these networks, they
often realize the networks are also
suitable for business or residential
broadband. Municipal utilities that
are Tennessee Valley Authority distributors have been in the forefront
of combining smart-grid and telecom applications.
In some places, such as Wilson, N.C.,
the city operates a municipal electric utility but sets up the telecommunications
utility as a separate entity or department.
A few cities, such as Salisbury, N.C., do
not have municipal electric utilities at all.
Because municipal electric utilities have often
been strong presences in their communities for
the better part of a century, many citizens are
willing to buy additional services from them,
including telecommunications.
Who Are the Customers?
A typical path for growing an FTTP
network organically is to start with an
institutional network that serves municipal office buildings or utility substations, then extend fiber to commercial buildings or business parks, begin
residential deployment with MDUs and
greenfield developments, and finally
reach single-family households and
small businesses. This list shows deployers at various points along this path.
Thirty of the municipal networks
on the list deliver fiber-based services
to businesses only, apparently with no
immediate plans to extend fiber to the
home. (Some deliver residential broadband services via cable or wireless; most
do not serve residences at all.) A few
that began as business-only networks,
such as Gainesville Regional Utilities
(Florida), now serve MDU or greenfield
housing developments as well.
Cedar Falls Utilities (Idaho), which
originally served businesses with fiber
and residences with hybrid fiber-coax, is
building out fiber to the home throughout its service area. Several other municipal providers that once planned to
follow a similar path, such as Ashland
Fiber Network, have been stymied by
lack of funding.
Most of these deployers are small- to
mid-sized cities or groups of cities outside major metropolitan areas – large
enough to carry out complex undertakings but small enough to be poorly
served by private carriers. The smallest
is Pend Oreille Public Utility District
(Washington), whose pilot project covered 10 households (“all 10 consumers
have the broadband bug and attest they
would be hard pressed to ever revert
back to dial-up,” the PUD’s website re-
ported). The network is now expanding
thanks to broadband stimulus funding. The largest is EPB of Chattanooga,
Tenn., which has made fiber available to
about 170,000 premises.
Wholesale or Retail?
Municipalities are more likely than private deployers to allow third-party providers on their networks – either because
state laws require them to do so, because
they do not have the expertise to provide services themselves or because they
want to offer a wider variety of services
than they can provide on their own. (See
Forging Successful Public-Private Partnerships in this issue for an in-depth
exploration of a municipality-service
provider collaboration.)
Twenty-six municipal networks, or
about a quarter of the total, allow or
plan to allow multiple retail service providers to deliver services. Eight others
that do not have an open-access model
have contracted with a single thirdparty service provider to deliver services.
Some municipal providers are both
wholesalers and retailers. For example,
ECFiber, now building its first phase, is
conceived as an open-access network but
plans to offer retail services until it grows
large enough to attract other providers.
Urbana-Champaign Big Broadband has
a similar plan.
Certain states, such as Utah and
Washington, prohibit municipalities
from providing retail services. This can
pose a problem for municipal fiber deployers at start-up, when third-party
providers may not find it worth their
while to join the network. The difficulty
of attracting reliable service providers
was a major reason Provo, Utah, sold its
municipal system; UTOPIA took many
37
Census of Municipal FTTH Providers
Network Deployer
American Samoa
Telecom
Community
State
American Samoa
Date
Project
Started
Vendors
(FTTH
Electronics)
Technology
2008
Calix
GPON
Services
Markets Served by
Fiber (all premises
unless otherwise
noted)
Triple Play
Fiber connections
mainly for businesses,
HFC for residential
Ashland Fiber Network
Ashland
OR
2000
Auburn Essential
Services
Auburn
IN
2006
Enablence
EPON
Voice, Data, Smart
Grid
Barbourville Utility
Commission
Barbourville
KY
2010
Calix
GPON
Data, Video
Barnesville Municipal
Utilities
Barnesville
MN
2009
Calix
GPON
Triple Play
Bellevue
IA
2006
Enablence
EPON
Triple Play
Kennewick, Prosser
and Benton City
WA
Carroll & Grayson
counties, city of
Galax
VA
New Albany
Bellevue Municipal
Utilities
Benton County Public
Utility District
Business Services,
Data
Businesses only
2009
Data
Fiber connections
mainly for businesses,
wireless for residential
OH
2010
Business Services,
Data
Businesses only
Bowling Green and
Warren County
KY
2007
EPON
Voice, Data
Businesses only
Braintree
MA
2008
Active Ethernet
Data
Businesses only
Bristol
TN
2005
Alcatel-Lucent
GPON
Triple Play, Smart
Grid
Burbank
CA
2010
MRV
Burlington
VT
2006
Calix
GPON
Triple Play, Business
Services
BVU Optinet
Bristol
VA
2003
Calix, AlcatelLucent
GPON
Services, Smart Grid
Cass County
Cass County
MO
2010
Churchill County
NV
2004
Enablence
EPON, Active
Ethernet
Triple Play
CDE Lightband
Clarksville
TN
2007
Ciena
Active Ethernet
Triple Play, Smart
Grid
Cedar Falls Utilities
Cedar Falls
IA
2006
Motorola
Active Ethernet,
GPON
Data
Chelan County Public
Utility District
Chelan County
WA
2004
Alcatel-Lucent
BPON
Triple Play
Chicopee Electric Light
Chicopee
MA
City of Ammon
Ammon
ID
City of LaGrange
LaGrange
GA
City of Leesburg
Leesburg
FL
2001
Powell
WY
2007
Blue Ridge Crossroads
Authority (Wired Road)
BlueAlbany
Bowling Green
Municipal Utility
Braintree Electric Light
Department
Bristol Tennessee
Essential Services
Burbank Water and
Power (One Burbank)
Burlington Telecom
CC Communications
City of Powell
38
CTDI
Data, Business
Services
Operator (if
not network
owner)
Service
Provider (if
not network
owner)
Multiple
Multiple
Bluemile
Bluemile
Businesses only
Data, Voice
Data
2011
Multiple
Businesses only
Data
Calix
Calix
GPON
GPON
Multiple
Data, Voice, Business
Services
Businesses only
Data
Businesses only
Triple Play
Tri County
Telephone,
open to others
Network Deployer
Community
State
Date
Project
Started
City of Williamstown
Corinth and parts
of Grant and Owen
Counties
KY
2010
Wilson
NC
2008
City Utilities of
Springfield (SpringNet)
Springfield
MO
2000
Clallam County Public
Utility District
Clallam County
WA
2002
Coldwater Board of
Public Utilities
Coldwater
MI
2010
Community Telecom
Services
Monticello-Wayne
County
KY
2009
Crawfordsville
Electric Light & Power
(Accelplus)
Crawfordsville
IN
2006
Enablence
EPON
Video, Data
Crosslake Telephone
Crosslake
MN
2005
Calix
GPON, Active
Ethernet
Triple Play
Dalton
GA
2003
Alcatel-Lucent
GPON
Triple Play
Douglas County
WA
1999
Telco Systems
Active Ethernet
Triple Play
Dover
OH
2004
Hitachi
Consortium of 23
Vermont towns
VT
2010
Chattanooga
TN
2007
NH Community
Development
Finance Authority,
Monadnock
Economic
Development
Corporation, 42
towns
NH
2011
FiberNet Monticello
Monticello
MN
2008
Calix
Fibrant
Communications
Salisbury
NC
2008
Zhone
Technologies
Fort Pierce
Utilities (FPUAnet
Communications)
Fort Pierce
FL
City of Wilson
(Greenlight)
Dalton Utilities
Douglas County Public
Utility District
Dover Technology
ECFiber
EPB Telecom
FastRoads
Alcatel-Lucent
Cisco
Frankfort
KY
Franklin County Public
Utility District
Franklin County
WA
2009
Gahanna Net
Gahanna
OH
2010
Gainesville Regional
Utilities
Gainesville
FL
2001
Glenwood Springs
CO
2002
Technology
Services
Markets Served by
Fiber (all premises
unless otherwise
noted)
Triple Play
Fiber in network
extension area only;
Williamstown served
by HFC
GPON
Triple Play
Active Ethernet
Business Services,
Data
Active Ethernet
Data
EPON
Data
Operator (if
not network
owner)
Service
Provider (if
not network
owner)
Businesses only
Multiple
Businesses only
Triple Play
Triple Play
Multiple
Businesses only
GPON
Alcatel-Lucent
EPON, GPON
Multiple
Triple Play, Smart
Grid
Multiple
Cisco
Frankfort Plant Board
Glenwood Springs
Community Broadband
Network
Vendors
(FTTH
Electronics)
CommScope
Cisco
GPON
Triple Play
Hiawatha
Broadband
Communications
Triple Play
Active Ethernet
Data
RFoG
Triple Play
Active Ethernet
Data, Business
Services
Businesses only
Data
Businesses only
Active Ethernet
Data
Businesses,
MDUs, greenfield
developments
Data, Voice
Multiple
Bluemile
Bluemile
Multiple (for
residential
services)
39
Network Deployer
Community
State
Date
Project
Started
Goshen Fiber Network
Goshen (city and
school district)
IN
2008
Grant County Public
Utility District
Grant County
WA
2000
Grays Harbor County
Public Utility District
Grays Harbor
County
WA
1998
Greenlight
Communications
Dunnellon
FL
2010
Zhone
Technologies
GPON
Triple Play
Harlan Municipal
Utilities
Harlan
IA
2010
Calix
GPON
Data
Highland
Communication
Services
Highland
IL
2010
Calix
GPON
Triple Play
Holland Board of Public
Works
Holland
MI
Holyoke Gas & Electric
Department
Holyoke
MA
1997
Hometown Utilicom
Kutztown
PA
2002
Idaho Falls Power
(Circa)
Idaho Falls
ID
2007
Jackson Energy
Authority (EPlus
Broadband)
Jackson and part of
Madison County
TN
2004
Kitsap County Public
Utility District
Kitsap County
WA
2000
KPU
Telecommunications
Ketchikan
AK
2007
Lake County
Lake County, part
of Saint Louis
County
MN
2010
LENOWISCO Planning
District Commission
Lee, Wise and Scott
Counties, city of
Norton
VA,
KY
2004
Ciena
Active Ethernet
Data
Lenox
IA
2008
Calix
GPON
Triple Play
North Kansas City
MO
2007
Ciena
Active Ethernet
Data
Loma Linda
CA
2005
Allied Telesis
Active Ethernet
Triple Play
LUS Fiber
Lafayette
LA
2007
Alcatel-Lucent
GPON
Triple Play, Smart
Grid
Marshall Municipal
Utilities
Marshall
MO
2005
Lenox Municipal
Utilities
liNKCity
Loma Linda Connected
Communities Program
40
Vendors
(FTTH
Electronics)
Cisco, others
Calix
Enablence
Technology
Active Ethernet
Services
Markets Served by
Fiber (all premises
unless otherwise
noted)
Operator (if
not network
owner)
Service
Provider (if
not network
owner)
Triple Play
Businesses only
New Paris
Telephone
Multiple
Triple Play
Multiple
Data
Multiple
Fiber connections
available for
businesses, HFC for
residential
Walnut
Comm.
Data
Businesses only
Multiple
Data,
Videoconferencing,
Voice
Businesses, some
MDUs
BPON, GPON
Triple Play, Smart
Grid
Active Ethernet
Voice, Data
EPON
Triple Play, Smart
Grid
Active Ethernet
Enablence,
Zhone
Technologies
Active Ethernet,
GPON
D&E Comm.
(voice)
Businesses only
Multiple
Businesses only
Multiple
Triple Play
Triple Play
Sunset Digital
Clariti Media
Farmers
Mutual
Telephone
(voice and
Internet)
Greenfield and
major renovations
(developers required to
install FTTH and turn
network over to city)
Data, Smart Grid
Multiple
Network Deployer
Community
State
Date
Project
Started
Vendors
(FTTH
Electronics)
Technology
Services
Mason County Public
Utility District
Mason County
WA
2000
Telco Systems,
Ciena
Active Ethernet
Voice, Data
MI-Connection
Mooresville,
Davidson and
Cornelius
NC
2009
Calix
GPON
Triple Play
Monmouth and
Independence
OR
2007
Alcatel-Lucent
BPON
Triple Play
Morristown Utility
Systems (MUS Fibernet)
Morristown
TN
2006
Alcatel-Lucent
GPON
Triple Play, Smart
Grid
Murray Electric System
Murray
KY
2000
Active Ethernet
Triple Play
Fiber connections
available for
businesses, HFC for
residential
nDanville
Danville
VA
2007
PacketFront
Active Ethernet
Services, Security
Businesses first, then
residential
NetQuincy
Quincy and
surrounding areas
FL
2003
Alcatel-Lucent
BPON
Triple Play
Norwood
MA
MINET
Norwood Light
Broadband
Ocala Utility Services
Okanogan County
FL
Active Ethernet
Markets Served by
Fiber (all premises
unless otherwise
noted)
Operator (if
not network
owner)
Service
Provider (if
not network
owner)
Multiple
Voice, Data
Fiber connections
available for
businesses, HFC for
residential
Business Services,
Data
Businesses only
Okanogan County
WA
2002
Opelika Light and
Power
Opelika
AL
2010
Orangeburg County
Nine communities
in Orangeburg
County
SC
2010
Data, Voice
Pacific County Public
Utility District
Pacific County
WA
2000
Data
Paducah,
McCracken County
KY
2004
Alcatel-Lucent,
Allied Telesis
BPON, Active
Ethernet
Triple Play, Security
Businesses only
Multiple
Palm Coast FiberNET
Palm Coast
FL
2009
Cisco
Active Ethernet
Data, Voice, Business
Services
Businesses only
Multiple
Pend Oreille County
Pend Oreille County
WA
2001
Cisco
Active Ethernet
Services
Philippi
Communications
System
Philippi
WV
2005
Motorola
BPON
Data, Video
Pulaski Electric System
Pulaski
TN
2007
Enablence
EPON
Triple Play, Smart
Grid
Reedsburg Utility
Commission
Reedsburg
WI
2003
Calix
BPON, GPON
Triple Play
Rochelle Municipal
Utilities
Rochelle
IL
Zhone
Technologies
Active Ethernet
Business Services,
Data
Russelville
KY
Calix
GPON
Triple Play, Smart
Grid
Paducah Power System
(PPS FiberNet)
Russelville Electric Plant
Board
2010
Active Ethernet
Multiple
Alcatel-Lucent
GPON
Multiple
Triple Play, Smart
Grid
Multiple
Fiber connections
available for
businesses, wireless
for residential
41
Network Deployer
Community
State
Date
Project
Started
Vendors
(FTTH
Electronics)
Technology
Services
Sallisaw Municipal
Authority
Sallisaw
OK
2004
Enablence
EPON
Triple Play
Santa Monica
CA
2004
MRV
Active Ethernet
Data
Businesses only
Scottsboro Electric
Power Board
Scottsboro,
Alabama
AL
Active Ethernet
Data, Smart Grid
Fiber connections
available for
businesses, HFC for
residential
Shawano Municipal
Utilities
Shawano
WI
2008
GPON
Triple Play
Sherwood, Oregon
OR
2004
Spencer
IA
2007
St. Joe Valley Metronet
(Zing)
South Bend
IN
2005
Sun Prairie Water &
Light Telecom
Sun Prairie
WI
1999
Ciena
Swiftel
Communications
(Brookings Municipal
Utilities)
Brookings
SD
2006
Sylacauga Utilities
Board
Sylacauga
AL
Taunton Municipal
Lighting Plant
Taunton
Thames Valley
Communications
Tifton CityNet
Santa Monica City Net
Sherwood Broadband
Tellabs
Operator (if
not network
owner)
Service
Provider (if
not network
owner)
Newroads
Telecom
(voice)
Multiple
Businesses only
Multiple
Data, Business
Services,
Voice, Security,
Videoconferencing
Businesses, MDUs,
institutions
Multiple
Active Ethernet
Data, Smart Grid
Businesses only
Calix
GPON
Triple Play
1997
Alcatel-Lucent
Active Ethernet
Data
MA
2003
Enablence
EPON
Data
Groton
CT
2002
Tifton
GA
2007
CTDI
RFoG
Triple Play
Tullahoma
TN
2007
Enablence
GPON
Triple Play
UC2B (UrbanaChampaign Big
Broadband)
Urbana,
Champaign and
University of
Illinois
IL
2010
Active Ethernet
Triple Play
Champaign
Telephone
Company
UTOPIA
Consortium of 16
cities
UT
2004
Active Ethernet
Triple Play
Multiple
Vernon City Utilities
Vernon
CA
1999
Windom
Telecommunications
Windom, 8 new
cities being added
MN
2004
Spencer Municipal
Utilities
Tullahoma Utilities
Board
years to attract a diverse and reliable
group of providers.
Other Partnerships
At least six municipal fiber systems currently have agreements with third parties –
either local exchange carriers or man-
42
Data
Markets Served by
Fiber (all premises
unless otherwise
noted)
Calix
GPON
Triple Play, Smart
Grid
Data
Allied Telesis,
Alcatel-Lucent
Data
Calix
GPON
INOC (network
operator)
Fiber connections
available for
businesses, HFC for
residential
Businesses only
Triple Play
aged-service providers – to operate their
networks. Such partnerships (which also
exist in the private sector; Sprint’s cell
service is managed by Ericsson) can be
extremely helpful for municipalities with
no experience operating telecommunications networks. On the other hand, like
any critical outsourcing contracts, they
must be intensively managed. Not all
such arrangements have ended happily.
Some municipalities formed agreements with developers either to allow the
municipal providers to build fiber in new
buildings or developments or to provide
fiber backbone and services if developers
build the local access infrastructure.
Finally, some networks, including St.
Joe Valley Metronet and Urbana-Champaign Big Broadband, were developed in
partnership with multiple anchor institutions, such as educational, health care
and community service organizations.
Vendors and Technologies
Because of open-access requirements
and the importance of business customers, active Ethernet networks are
somewhat more prevalent among municipalities than among private network
builders. (Supporting open access is
easier on point-to-point than on PON
systems.) At least one-third of municipal
deployers use active Ethernet technology, compared with a quarter of small
telcos and none of the large telcos.
Several electronics vendors have sizable shares of this market, with no single
vendor taking a leading position. AlcatelLucent, Calix, Enablence and Ciena
each have several deployments and at
least one sizable system, and a number
of other vendors have also had significant customer wins.
Geographic Distribution
Laws governing municipalities’ ability to
compete as telecommunications providers vary from state to state. Some states
give municipalities a free hand, while
others do not. (The National Broadband
Plan calls for greater encouragement of
public broadband deployers.) Municipal electric utilities are more common
in some areas than others, and some
regions are better served by private providers than others are. Considering all
these factors, the chances for municipal
broadband are wildly uneven in different parts of the United States.
We identified municipal fiber systems in only 34 of the 50 states and in
American Samoa. Seven states account
for nearly half of municipal deployments: Washington (12), Kentucky (9),
Florida (7), Tennessee (7), Iowa (5),
Minnesota (5) and Massachusetts (5).
Triple Play and Beyond
Though some municipalities offer only
broadband Internet access over their fiber
networks, most whose planned or actual
Map of Municipal FTTP Systems in the United States
services we could determine offer the triple play of voice, video and data. Specialized business services are common, as are
smart-grid applications. Stimulus funding, along with encouragement by the
Tennessee Valley Authority, have made
smart-grid applications more prevalent
in the last year or two, and we expect
these applications to become still more
important in the future.
Finally, a few open-access networks
are actively recruiting many different
kinds of services – for example, on St.
Joe Valley Metronet, 30 providers deliver 20 different types of services, including such offerings as conferencing,
disaster recovery and video surveillance.
Enabling a wide variety of broadband
services could become a way to make
more community networks financially
viable. If this strategy succeeds, we can
expect to see more municipal networks –
at least larger networks – following suit.
We could also see more municipalities
trying to expand or partner with other
municipal networks, as has happened in
Europe, to achieve the necessary scale to
attract providers of innovative services.
Is Municipal
Broadband Viable?
Municipal broadband is not for the faint
of heart. Political opposition is only one
of many challenges municipal deployers
face. Developing a competitive broadband offering is not simple, and neither
is operating, maintaining and upgrading a network. Attracting third-party
retail service providers can be difficult.
The time required to see any return on
investment may be discouragingly long.
Many municipalities embark on
broadband projects to boost economic
development, but the mere existence of
fiber infrastructure does not create jobs.
A fiber optic network is only one aspect
of a well-thought-out economic development program; it cannot compensate
for other drawbacks that make a city unattractive to business.
Furthermore, network services must
be marketed, and economic development agencies must work closely with
agencies responsible for building and
operating networks.
Municipalities that have launched
broadband projects without adequate
planning or financing have been disappointed; some have lost money for
taxpayers. The good news is that many
municipalities have created successful
networks that bring significant benefits
to their communities. Several of them
are profiled in this issue of Broadband
Communities. There are plenty of good
role models for other communities that
are considering following in their footsteps. v
43
Santa Monica City Net:
How to Grow a Network
The telecommunications master plan that the city of Santa Monica began in
1996 laid the groundwork for an award-winning fiber network that supports
the city’s business community today.
A
n old joke asks, “How do you
eat an elephant?” The answer, of
course, is “One bite at a time.”
Many daunting projects become feasible once they are broken into bite-size
pieces. The trick is to make sure that
each step along the way produces tangible benefits and that those benefits are
applied to the next step in the process.
This is how the city of Santa Monica,
Calif., built City Net, its 10 Gbps fiber
optic network. Bite by bite, over more
than a decade, Santa Monica developed
an asset that now provides cost savings
and revenue for the city and other public
agencies, offers cost savings and competitive advantages to local businesses, and
serves as a powerful economic development tool.
Step 1: Planning
City Net had its origins in the Telecommunications Act of 1996, which
held out the promise of telecom competition. Jory Wolf, who was then Santa
Monica’s information systems manager
and is now the CIO, looked forward to
the prospect of reducing the city’s data
access costs. After the act became law,
he began a series of discussions with Internet service providers about offering
competitive broadband services.
When these companies proved unable to offer affordable data services, the
city quickly set up a task force to address
the use of public assets for telecommunications, the coordination of city
telecom systems and universal access
to broadband. The plan was unusually
44
and prepared financial models for several
different approaches. In 1998, it issued a
telecommunications master plan, which
called for an institutional fiber network.
Jory Wolf, Santa Monica’s
chief information officer
ambitious, encompassing video, data,
voice, cable, wireless and other services,
including two-way video communications. The needs of public-safety agencies, of such municipal facilities as parks
and libraries, and of the Unified Santa
Monica–Malibu School District and
Santa Monica College were all taken
into consideration.
With help from a consultant and a
community advisory group, Santa Monica’s City Telecommunications Working
Group assessed existing infrastructure
and needs, evaluated possible solutions
Step 2: Leasing an
Institutional Network
When Santa Monica next renewed the
franchise of the local cable TV operator, it also agreed to lease from that
operator an institutional fiber network
that connected 43 city buildings, along
with school and college facilities. The
city funded the $530,000 in construction costs and shared the operations and
maintenance costs with the school district and college.
The leased institutional network
went live in 2002 and immediately
yielded operational cost savings. By operating the network instead of purchasing bandwidth, the city, school district
and college reduced their combined
telecom costs to $700,000 from $1.1
million. Within a few years, the annual
savings grew to $500,000.
Step 3: Building an
Institutional Network
The city used these savings to build its
own 10 Gbps municipal fiber optic network, using Metro Ethernet equipment
from MRV. The network made pos-
About the Author
[email protected].
sible a variety of new, high-bandwidth
municipal applications, including traffic surveillance, traffic signal synchronization, real-time parking advisories,
real-time mass transit signs and security
cameras.
In addition, the city upgraded its
own Internet connection to 1 Gbps and
installed a 10 Gbps connection to an
offsite data center.
Although the original leased network
was reserved for municipal use, the cityowned network had no such restrictions.
The city was now free to lease excess fiber
to private organizations.
By this time, the residential sector
was reasonably well served by the incumbent cable operator, and, as a result of the
city’s encouragement, Verizon was also
building out its FiOS network in Santa
Monica. (Today, FiOS service is available to about two-thirds of residences.)
However, the city’s business community still had no affordable ultra-highspeed access. Bandwidth of 100 Mbps
cost about $3,500 per month, and the
city was concerned about making business broadband more affordable. Wolf
says, “We wanted to create the concept
of a ‘tech coast,’ so we had to do something to address the cost of broadband.”
With 100 Mbps service priced at $3,500 per
month, Santa Monica decided it had to help
businesses find more affordable broadband.
Step 4: Leasing Dark Fiber
to Businesses
In 2006, the city began leasing its excess
dark fiber to local businesses. Because
the monthly fees were low, businesses
that needed the dark fiber were willing
to fund the cost of building fiber from
the backbone to their buildings, thus
extending the network at no cost to the
city.
The city was able to attract a dozen
customers to its dark-fiber offering
through word of mouth alone. These
customers – mainly businesses with
2,000 or more employees – needed
point-to-point connections between
multiple offices in Santa Monica. To
connect outside the city, they partnered
with third-party providers to get them
to the nearest Internet point of presence.
However, the dark-fiber offering was
less attractive to smaller and mid-sized
businesses. At the end of 2008, the city
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Disclaimer:
This map of the City of Santa Monica has been provided
for illustration purposes only. Every reasonable effort has
been made to ensure the accuracy of the maps provided,
however, some information may not be accurate. The City
of Santa Monica ("City") provides this map on an "AS IS"
basis. The City assumes no liability for damages arising from
errors or omissions. THE MAPS ARE PROVIDED WITHOUT
WARRANTY OF ANY KIND, either expressed or implied,
including but not limited to, the implied warranties of
merchantability and fitness for a particular purpose. Do not
make any business decisions based on this map before
validating your decision with the appropriate City office.
© City of Santa Monica. All Rights Reserved.
Santa Monica started building City Net in the downtown area and is expanding into other commercial areas.
surveyed more than 3,000 businesses located within 200 feet of the backbone to
find out whether they could also benefit
from access to city fiber. The responses
indicated that Santa Monica’s businesses
were not well served by private telecom
companies. The great majority of survey respondents either could not afford
or did not have access to the amount of
bandwidth they required. Of the few
that had adequate bandwidth, most
were unhappy with the quality of service
they received.
Despite their unmet needs, these
businesses did not avail themselves of
the city’s dark fiber offer both because
10 Gbps service was more than they
needed and because connecting to the
local Internet point of presence on their
own was expensive. Most of them were
looking for ready-made Internet connectivity at speeds between 100 Mbps
to 1 Gbps, and they requested that the
city provide such service.
Step 5: Providing
Internet Bandwidth
In 2009, the city decided to make an
additional investment to accommodate
these businesses. “We looked at lit services to provide an affordable way to
multiplex broadband into the community, hook up with ISPs and get wholesale rates,” Wolf explains.
To be able to provide Internet access
to businesses, the city leased a fiber connection from City Net to One Wilshire, a
major colocation center in Los Angeles in
which about 270 Internet providers interconnect their networks. Obtaining Internet access at a major carrier hotel such as
One Wilshire is much less expensive than
connecting at a local point of presence.
However, leasing the 15-mile line to
Los Angeles proved to be a challenge.
Service providers were initially reluctant
to provide transport, knowing that the
city planned to make services available
45
Today, the 100 Mbps business connection that
once cost $3,500 per month is available in Santa
Monica for about $500 per month.
to local businesses – they believed they
would effectively cannibalize their own
commercial offerings in Santa Monica.
After extensive negotiations, one company agreed to provide transport.
Step 6: Marketing
Internet Services
With all these pieces in place, the city
was able to begin offering Internet access to local businesses. Rather than
continuing to rely only on word of
mouth, it began advertising on the sides
of buses, getting the word out through
the Chamber of Commerce, talking
with real estate brokerage companies
and property management companies,
and even using social networking sites
such as Twitter and Facebook.
To make broadband more affordable,
the city decided to keep its offerings
simple – 100 Mbps, 1 Gbps or 10 Gbps,
with standardized contract terms –
and it dispensed with service-level agreements, counting on the inherent reliability of fiber to provide sufficient uptime.
At first, the city advised customers to secure separate, secondary paths, but City
Net now has enough redundant connections of its own that this is no longer
necessary. (In the last several years, a
number of other fiber network operators
have also begun to sell business services
without service-level agreements, on the
grounds that a well-designed and wellrun fiber network provides enough reliability for most businesses.)
Today, most large commercial parks
and multitenant commercial buildings
in Santa Monica are connected to the
network. Thanks to low Internet connection costs and simple contracts, business
customers of City Net typically obtain
10 times the broadband speed for about
the same price they once paid for nonfiber services. The 100 Mbps connection
that once cost $3,500 per month now
costs about $500 per month. A measure
of City Net’s success is that it has had
100 percent customer retention.
Though the city provides Internet access directly, it also makes the network
available to third-party providers on
an open-access basis. “The incumbents
have chosen not to use our assets,” Wolf
says, explaining that larger providers are
often reluctant to operate over networks
where they cannot control the user experience and that their marketing and
support organizations are not geared to
using other companies’ networks.
However, other ISPs have shown interest in the network now that it is becoming successful. Currently, two ISPs
offer services generally over the network,
Santa Monica Residents Use
Smartphones to Report Problems
Help for potholes that need filling, trees that need maintenance, and graffiti that need removing is only an iPhone tap away in Santa Monica.
IPhone users simply download the GORequest applet from the iPhone
App Store, select an issue, take a picture and tap “Submit.” The applet finds
the user’s location and sends the issue to the staff member who can fix it.
The iPhone’s GPS and camera features make it simple for residents to
alert city officials about many issues around the clock. Residents know their
photos, locations and requests go to the right people, and they receive
status updates on their requests. This saves the city time and money and
improves service at the same time.
46
and other ISPs serve the Santa Monica
offices of businesses that they deal with
in other locations. Wolf says, “We have
the opportunity to handle the business
any way they prefer. … We’re not an
obstacle; we’re an enabler. We don’t see
ourselves as competitors, but as filling
a void.”
City Net’s revenue from current business customers totals about $300,000
per year, enough to fund network operations and maintenance and to support
an extensive system of free Wi-Fi hot
spots throughout the city. Wi-Fi is now
available at parks, beaches, libraries,
public buildings and other open-space
areas. On any given day, about 2,000 of
Santa Monica’s 87,000 residents use the
27 Wi-Fi hot spots.
The city also has $190,000 of its capital funds remaining, which it uses as a
revolving capital improvement project
account. This account funds construction for network expansion, which is
repaid by customers as the network is
extended to their premises.
An indirect benefit of City Net is
that it has forced competing networks
to lower their prices. Wolf’s office estimates that nonparticipating providers
have lowered their bandwidth prices by
20 percent or more, making bandwidth
generally more affordable throughout
the city. “If that’s all we had accomplished, we’d feel that we’d done what
we intended,” Wolf says.
Step 7: Expanding
the Network
City Net’s footprint today is still only
about 60 percent of its planned total.
Wolf says, “We’re continually expanding, running fiber all through the downtown area, and lighting up the major
transit corridors and commercial corridors – every commercial corridor will
have fiber. We’ll have Phase 5 completed
in about 10 months.”
Not only do businesses pay for the
fiber network to be extended and connected to their premises – which is unusual enough in the United States – but
they also return these network additions
to the city. Typically, a business can recoup the up-front fee in the form of
lower monthly telecom costs within two
to three years.
Potential business customers aren’t
the only entities that request City Net connections; property
managers and brokers also pay to connect their buildings to
the network because these connections help them market their
properties. Once a commercial building is on the network,
whoever paid for the connection – whether tenant or owner –
can negotiate with other potential customers in the building to
share the access.
Wolf explains, “I believe strongly that businesses want to
know what it’s going to cost them. This way they know, and
they understand the differentiation between total and ongoing
bandwidth costs. … It makes it more cost-effective to continue
to expand to other customers.”
The downside of requiring customers to pay for their own
connections is that some potential customers cannot afford the
up-front fee. The network would certainly grow more quickly
if the city paid for the connections. In addition, some residential neighborhoods that do not have fiber access would like to
connect to City Net – but again, most residents cannot pay for
their own connections. Santa Monica applied for a broadband
stimulus grant to enable it to pay for network expansions but
did not receive it, so the policy of expanding the network based
on demand will remain for the foreseeable future.
Making broadband access affordable is beginning to pay off
in terms of economic development, as the city had hoped. As
an upscale beach city, Santa Monica is an inherently desirable
location, but high rents deter some businesses from operating
there. By offsetting the high rents, low broadband costs make
it possible for more businesses to locate in the city.
In addition, existing businesses have found ways to compete more effectively. For example, the Fairmont Hotel Santa
Monica, a historic luxury hotel on the ocean, now offers 100
Mbps broadband to guests and has repositioned itself as a techfriendly hotel suitable for technology conventions and media
production. Directors of films that are shooting in Los Angeles
can stay at the Fairmont, receive daily footage via the Internet
at the end of each day, review the footage and then forward approved sequences to studios and postproduction companies –
a far more efficient procedure than the standard method of
copying dailies to hard drives and sending the hard drives by
courier to studios and by leased private jet to postproduction
facilities.
A similar service is provided by Sohonet, an international
private network operator that offers connectivity to film producers on an as-needed, project basis. Sohonet uses dark fiber
on Santa Monica City Net to connect postproduction facilities
in Santa Monica with studios and film locations worldwide.
The UCLA Santa Monica Medical Center has implemented
a telemedicine initiative that involved hiring 180 software developers in Santa Monica. The medical center not only connects its main site to its data facility and satellite clinics, but
also works with U.S. military services to offer telemedicine
and virtual surgical procedures to troops stationed abroad. The
medical center has also become 100-percent paperless for employee records, billing information and medical imaging, and
it provides high-speed access to patients and their families in
hospital rooms.
How Many Santa Monicas?
Santa Monica’s City Net has received recognition in the local
and national press and garnered prestigious awards from the
Public Technology Institute and Harvard’s Kennedy School of
Government. Its success inspired the nearby cities of Burbank
and Long Beach to launch similar projects, and the three cities
are now considering developing a regional network to enable
high-speed data exchange throughout the West Los Angeles region. The regional network would be used first by the city governments for collaborative IT projects and public-safety communications. Later, it would be made available to businesses
to facilitate regional communications among their offices and
with their customers and suppliers.
Santa Monica has also consulted with other cities that are
interested in learning from its experiences. Wolf believes the
model is replicable in many other cities but not everywhere.
Santa Monica’s business model is most likely to succeed in cities whose municipal buildings are located reasonably close to
one another and that are within about 50 miles of global data
centers with access to competitive broadband options.
In places where the model works, Wolf says, city governments should study it as an economic development strategy.
“Businesses are community stakeholders,” he points out. With
a system such as City Net, “the community wins, residents win
and businesses win.” v
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47
Municipal FTTH Deployment Snapshot
Palm Coast FiberNET
Palm Coast FiberNET provides fiber connections to businesses in the city of Palm Coast, Fla. An open-access network, it
currently has two active service providers and welcomes additional providers. After only a year of operation, the network has
already been responsible for retaining a major business in the city and driving down telecom costs for businesses generally. Our
thanks to Andrew Cohill of Design Nine for providing the information for this profile.
– BBC Editors
Background
Network operator: Palm Coast FiberNET
Owner: City of Palm Coast, Fla.
FTTP service offered to: Businesses throughout the city
Number of businesses in planned FTTP service area:
Approximately 1,600 businesses operate in the city, and
Palm Coast FiberNET’s fiber will be available to about 90
percent of their premises.
Current number of subscribers: 22
Prior history: The city owns and continues to operate a
citywide fiber network exclusively for city government
use.
Competitive landscape: Typical DSL and cable service
offerings are available throughout the city, along with
very limited and expensive incumbent fiber services.
Network Profile
Deployment started: 2009
Services began: May 2010
Plan for completion: Three of four redundant fiber rings
are completed, and the final fiber ring is 50 percent
complete. All fiber backbone construction will be completed in 2012.
Network architecture: Active Ethernet with an MPLS core
and 100 Mbps, 1 Gbps and 10 Gbps service options.
Other strategic technology choices: Palm Coast has provisioned a modest colocation facility with both shared
48
rack space and private cages for service providers. This
facility has carrier-grade Halon fire suppression and
a heavy-duty backup generator, as well as a battery
backup UPS for core routers and switches.
Business model: All services to businesses are provided by
private-sector service providers. Palm Coast FiberNET is
an open-access network. Any provider that meets minimum financial and technical qualifications may provide
services.
Current retail service providers:
Palm Coast Internet – Internet
Lux Communications – Internet, voice
Services: Voice, Internet, VPNs and computer backup services are currently provided.
Internet access: 2 Mbps ($99) to 300 Mbps are offered
through ISPs.
Economic Development Impact
• Palm Coast was able to retain the city’s largest employer
because the availability of the city network reduced
costs for broadband services.
• Palm Coast FiberNET helped reduce telecom costs for
the local hospital as well as dramatically lower (by 60
percent) telecom costs for the Flagler County School
Board with the introduction of a competitive marketplace for data services.
Service providers place routers in the city’s colocation center and purchase bandwidth from the city at the fees shown here. They can set the
rates that they charge customers.
Municipal FTTH Deployment Snapshot
core network fiber is in duct. Service drops are in duct
or are direct-buried.
Operating Equipment
MPLS core network: Cisco
Customer-premises equipment: Cisco and media converters from various suppliers
Biggest Challenge
Once the budget was approved by the city, the network
needed to be brought online in just nine months. Equipment procurement and colocation facility provisioning had
to be completed very quickly.
Biggest Success Story
FiberNET added a new option for telecom services that offers local businesses and other local government entities
much higher bandwidth at lower cost. The mere presence of
FiberNET dramatically reduced the school board’s costs for
telecom services in 2010. v
Contact Masha Zager at [email protected] if you
would like Broadband Communities to feature your
municipal fiber deployment.
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Palm Coast’s fiber network will be accessible to most of the businesses
in the town.
Deployment Details
Design/Engineering: Design Nine Inc.
Construction: Danella Construction
Installation: Danella Construction
Integration: Design Nine Inc.
Aerial or underground: 100 percent underground, using
direct burial and directional boring. All underground
C
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Palm Coast FiberNET’s colocation center provides both shared rack space
and private cages for service providers.
WWW.GLDS.COM
800-882-7950
[email protected]
49
Next-Generation
Internet Entrepreneurs
“Next-generation Internet” usually describes technology that’s just around
the corner. In Chattanooga, the “City with a Gig,” city leaders really are
reaching out to the next generation to develop the Next Big Thing.
F
or two months next summer,
bright undergraduates from
around the country will gather
in Chattanooga to answer the question,
“What do you do with the fastest Internet connection in the world?”
In their quest to develop the killer
app for ultra-broadband, they will be
able to take advantage of the citywide
fiber network that the municipal electric
EPB has bandwidth to spare and is challenging
students to come up with ideas for using it.
utility, EPB, just finished building –
the only network in which 1 Gbps service is available to every home and business in the service area.
The Leading Conference on Broadband Technologies and Services
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Broadband Communities
Magazine
the newest sponsors and exhibitors joining the
2012 Broadband Communities Summit.
Advanced Media Technologies
Calix
DIRECTV
Multicom
Multilink
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TAKE ACTION today and secure your participation!
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[email protected], or call 505-867-2668.
For other inquiries, call 877-588-1649, or visit www.bbcmag.com.
50
The Lamp Post Group, a venture
fund and incubator program in Chattanooga, is sponsoring the program, which
is called the Lamp Post Lab. Cosponsors
include EPB, two local nonprofits (the
Lyndhurst Foundation and the Chattanooga Renaissance Fund) and two other
business-services companies (Co.Lab
and Delegator). The Lamp Post Group
is currently nurturing companies in
a variety of industries, ranging from a
four-person start-up that is commercializing a college research project to a 200person transportation logistics firm.
During the summer program, business leaders, venture capitalists and the
Lamp Post Group’s Web development
team will mentor and guide participants. By the end of the program, students should understand the realities of
starting a business, from marketing to
raising capital, and have a specific vision
for a high-bandwidth application.
Weekly competitions will offer prizes
that range from laptops to time on the
local SIMCenter computational supercomputer. The grand prize of $50,000,
along with ongoing mentorship, will
help the winner launch the vision he or
she created during the program. It won’t be all work and no play for
these students. On the weekends, they’ll
have access to all the outdoor activities Chattanooga is renowned for, from
hang gliding to whitewater rafting. v
Forging Successful
Public-Private Partnerships
Clear definitions of roles and responsibilities, along with open lines of
communication, are critical to making partnerships work.
By Craig Settles ■ Industry Analyst, Speaker, Author
G
oogle’s announcement in March
that it was building a gigabit
network in Kansas City, Kan.,
considerably changed the way municipalities think about public-private partnerships (PPPs). Obviously, Google is
not your average broadband partner.
For the time being, however, most
PPPs will continue to be partnerships
between cities or counties and local or
regional telecom carriers that combine
municipally owned broadband infrastructure with service delivery by private
companies.
In another model of PPP that is receiving increased attention, a community
may form an independent cooperative
or nonprofit to build a network. Such a
cooperative, which may comprise local
government organizations and various
constituent groups, including local businesses, may in turn partner with local telcos, ISPs or utilities to offer services over
its network or to operate the network.
Monticello and HBC
Monticello, Minn., is a recent addition to the growing list of community
broadband success stories. City officials
attribute much of their current success
to the city’s decision early on to form a
PPP with Hiawatha Broadband Communications (HBC), a nonprofit-owned
provider that operates competitive cable
and FTTH networks in a number of
Minnesota cities.
Monticello analyzed business models during its feasibility study for the
network. “Early on, we debated about
whether we should hire a general manager and have that person run every-
52
Like any organization that considers a business
partnership, a municipality must ask two
major questions: First, is forming a partnership
a good idea, and second, is this potential
partner the right one for the deal?
thing or look for a partner,” recalls Jeff
O’Neill, Monticello’s city administrator. “The size of our community [under
13,000] and the fact we had no experience running a network made it a nobrainer … to find an organization to
provide the backbone infrastructure as
well as the expertise to get the job done.”
Monticello considered partnering
with several service providers capable
of knowledge-sharing and running network operations and customer service
during evening and weekend hours. In
the end, HBC’s proximity – its headquarters are a two-hour drive from
Monticello – allowed it to provide Monticello with the support it needed at an
affordable cost. City officials decided
to use bond financing to construct the
network and then contract with HBC to
operate it.
Two Big Questions
Like any organization that considers
a business partnership, a municipality
must ask two major questions: First, is
forming a partnership a good idea, and
second, is this potential partner the
right one for the deal? O’Neill believes
that communities need to determine
whether they can develop the expertise
and manpower to tackle all aspects of
providing service.
Many communities have conducted
this self-examination and determined
that they were up to the challenge. In
most cases, they have been proven correct. For example, Reedsburg, Wisc.,
and Jackson, Tenn., were profiled in the
last issue of this magazine for their marketing prowess. Chattanooga, Tenn.,
has become a national poster child for
municipal broadband because of its can-
About the Author
Craig Settles is an industry analyst, a broadband strategy consultant delivering onsite training to private- and public-sector organizations and a cofounder of Communities United for Broadband. Follow him on Twitter (@cjsettles) and his blog,
Fighting the Next Good Fight.
do spirit and masterful execution of its
broadband network.
However, a number of other communities have concluded, like Monticello,
that operating a broadband network is
not a core municipal function and that
a public-private partnership offers a better mix of local control and professional
expertise.
To determine its potential partner’s
strength and appropriateness, a community must thoroughly investigate the
management team’s ability to provide
adequate support and direction to both
organizations. Someone in the partner
organization must be responsible for
running both the daily operations of the
local government staff assigned to the
network and the company’s own operations. “This person must have the capacity to manage personnel issues down to a
granular level without micromanaging,
and do so within two organizations that
operate distinctly differently from each
other,” says O’Neill.
He adds, “The company also has
to understand how to effectively apply
and manage the technology necessary
to meet the community’s needs. This includes competency in customer installations, marketing, accounting, customer
service and billing, establishing contracts with content providers and keeping up to date with the telecom regulatory and legal environment.”
A community must address early on
whether it and its potential provider are
driven by the same or similar philosophy, an intangible factor that is hard to
quantify. Is the company committed
just to making money, or is its goal to
make money while also ensuring the
community’s success?
If shareholders’ short-term interests
come first, a provider may take actions
such as limiting upload speeds in order
to limit bandwidth expense. By contrast,
a provider that shares a community-first
goal of wanting to boost economic development will invest more in providing
services than what is needed to maximize
short-term returns, because it believes
that in the long term it actually will
make more money from those services.
O’Neill observes that some providers
lure subscribers with great pricing and
Is the private-sector partner committed just
to making money, or is it also committed
to ensuring the community’s success?
promises of fast speed, then milk them
for as long as they can “until competition comes in or customers abandon the
service.” He comments, “These kinds of
providers won’t change. We went with
Hiawatha because they believe in being
successful while promoting the success
of others.”
Singing From the Same
Choir Book
To ensure that everyone is on the same
page from the outset, O’Neill believes
a partnership agreement should clearly
define each partner’s work responsibilities. Many communities are new to the
broadband business and not versed on
how the execution of certain tasks facilitates or hinders achieving the goals
they set. Ensuring that all parties are
clear about their responsibilities makes
it easier for communities, in particular,
to stay on track.
Under Monticello’s agreement, HBC
is responsible for managing network operations, training the city staff members
assigned to the project and providing
24/7 customer support. City staffers
provide customer support during regular business hours and also perform customer installations. HBC provides and
pays contract installers by the hour if
they are needed for overload work. HBC
establishes contracts with content providers, and the city owns the relationships with those providers.
Financial arrangements also demand
consensus early on. According to Robert
Bell, cofounder of the Intelligent Community Forum, “It is important for the
private and public sides of a partnership
to enter the deal with their eyes wide
open. Private companies want to gain
access to markets; governments want to
gain access to expertise and the assets
of the provider. Where a partnership
creates shared assets, things get more
complicated, and you need to work out
a wide range of issues well in advance.”
“The partnership agreement needs
to define compensation,” says O’Neill.
“Will the community receive a flat fee
from the partner for Internet access services provided constituents? Will there
be added compensation based on total
number of subscriptions or on reaching
specific benchmarks? Which operations
support [services] provided to a city or
county are compensated based on flat
fees, and which are billed at hourly rates?
For example, HBC provides services
such as content development, regulatory
and legal compliance and billing for a
flat fee. Marketing, technical support
and troubleshooting services are billed
at hourly rates.”
Another layer of complexity in the
fee compensation structure is added
when partners make their physical network infrastructure available to other
providers that deliver services directly to
consumers. Communities such as Ontario County, N.Y., have implemented
some variation of this arrangement.
Michael Johnston, vice president of
IT and broadband for Jackson Energy
Authority in Tennessee, points out one
potential flaw in the open-access model.
“The plan may calculate that if a provider adds 100 customers per month,
the total amount of fees from the provider to the PPP for those 100 subscribers pays off the city’s monthly bond debt
and the private partner’s fees. But what
if the provider doesn’t add that many
customers? The PPP is at a disadvantage
because providers want the least number
of customers to ensure the most profit.
Acquiring more customers costs money
[for marketing, installation, ongoing
support and so forth] that cuts into profits, so the provider might do better to
close just 90 subs.”
If the city or its partner insists on getting the fee for 100 customers anyway,
53
the provider could leave. Obviously,
raising fees could be counterproductive
and could incur legal costs. The PPP
must therefore pay careful attention to
how it structures fees for providers, to
the fluid financial conditions providers
face, to the community’s own strategy
in cases where providers fail their obligations, and to how each party in the PPP
is compensated. In small markets, this
calculation becomes even trickier.
Defining Roles and
Responsibilities
Gary Evans, president and CEO of Hiawatha Broadband Communications,
adds some suggestions to fortify the
working relationships between partners.
“Besides a clear definition of work
responsibilities, partnership agreements
need a clear definition of authorities
upon growth expectations. In the article
Community Fiber Networks Succeed
Through Marketing in the March/April
issue of this magazine, I pointed out
that some networks can be too successful, generating more subscribers than
their operations teams can handle. Controlling growth may be one of the harder
guidelines for partners to enforce, given
the great political and financial pressure
to drive up subscription rates.
The drive to meet constituent and
political objectives can divert attention
from more pressing operational needs
and reduce the efficiency of network operations. One partner or the other must
have the will power to step in, should
the need arise.
In this regard, Evans says, “Include
agreed-upon key indicators by which
you will measure the project’s progress.
“Include agreed-upon key indicators by which
you will measure the project’s progress. I believe
If we’re clear in these areas, the network will
become a sustainable business.”
that each side will have,” says Evans. “It
is very easy for a municipality to usurp a
partner’s authority, because it will likely
hear every little complaint from constituents as the network is built out and
become overly concerned. Partners need
to be clear on how to deal with these
issues.
“Each partner needs to provide a
strong definition of what those within
the respective organizations expect of
themselves. Any consultant can come
in and design a great plan, but the partners have to get inside all of that and
ask, ‘What do we clearly believe we can
accomplish?’” When community broadband projects encounter challenges, it
is hard for either party to believe in its
partner if that partner’s people doubt
their own organization’s capabilities.
Reflecting on Johnston’s comment,
Evans also notes that partnership agreements need to include mutually agreed-
54
I believe if we’re clear in these areas,
the network will become a sustainable
business.”
Take rates, homes passed, average
revenue per user, ratio of business to residential subscribers, number of institutional customers, cost per customer support call and response time to customer
calls are all good indicators of financial
and operational success.
The community may be the best
partner to take the lead in this exercise.
“What I have seen is that a governmentinitiated project has a much better
chance of success than a totally private
venture because of the amount of discussion that goes into a broadband effort
before it starts,” says Evans. “There is an
ownership factor that builds as the project is discussed, debated and ultimately
decided upon. This gives the project
team a step up on the success ladder.”
Dos and Don’ts
O’Neill and Evans offer the following
practical guidelines for keeping PPPs
on track and successful for everyone
involved:
• Establish from the start the basis
for open communication between
partners. Nip problems in the bud
by dealing with them early and
forcefully to avoid any major issues
downstream.
• Conduct periodic high-level meetings to discuss the project and any
need for course corrections. Define
problems clearly and fairly, and preempt problems when you can.
• Don’t be afraid to negotiate if a
problem or an opportunity falls in a
gray area. Many such situations will
arise.
• Your business plan is your primary
guide for measuring progress. Use it.
Refer to it often.
• The project manager of the privatesector partner must understand that
he or she also reports to the community, even though that person manages private-sector employees. If this
person is also responsible for managing public-sector staff, be sure he or
she gets in-depth training on city or
county employee policies.
• Municipal accounting is very different from business accounting. It’s
helpful for private partners to understand the basics of municipal accounting and for public partners to
have a working knowledge of business monthly financials.
• Make sure you know your potential
partner’s financial history, and put
controls and auditing systems in place
to ensure that the community gets accurate data on revenue and expenses.
• Understand in detail the state tax
laws relevant to public-private
partnerships.
• Never think of a trusted supplier as
a vendor. Vendors are essential, but
partners are irreplaceable. Partnerships such as the one Monticello has
with equipment supplier Calix breed
success. For communities as well as
private providers, this is how business should be done.
As mentioned at the beginning of
this article, the structures of PPPs and
the types of participants involved are
changing as new challenges and opportunities arise and as new deals are struck.
For example, the city of Powell, Wyo.,
structured its PPP using a strategy that
leveraged the operational strength of
its private-sector partner to strengthen
the community’s financial and political
position.
Observing that other municipalities
faced resistance generated by claims that
their networks put taxpayers’ dollars at
risk, Powell attacked the challenge from
two directions. First, the city spent
considerable time building a financial
model based on issuing bonds that
were not taxpayer-backed. Typically, a
municipality can incur debt as long as
revenue from the funded project, rather
than tax revenue, pays off the debt. By
complying with the complex rules governing municipal bonds, the Northwest
Joint Powers Board (the local agency au-
Powell, Wyo., leveraged the operational strength
of its private-sector partner, TCT West, to
strengthen its financial and political position.
thorized to issue debt for telecommunications systems) put the city into a riskfree financial position and also allowed
it to buy back its own debt. The breakeven point for the financing came just
18 months after the network launched.
Powell also conducted extensive
market, financial and engineering analysis; performed cost analyses based on
data from Verizon and other major telcos’ business practices, and sourced network components to find favorable pricing for these components. These efforts
allowed the city to convince its private
partner that it could deliver a profitable
service in this city of fewer than 6,000
people. Powell tapped independent telco
TCT West to be its anchor service provider and to carry a significant portion
of the debt.
Thanks to the many consultants and
lawyers who helped Powell make sure
every t was crossed and every i dotted,
the project survived opponents’ scrutiny
and attacks without facing a single lawsuit. As community interest in broadband skyrockets, and as pressures from
incumbents increase significantly, PPPs
will require even more creative and careful planning.
In the next issue of Broadband
Communities, I will explore some new
forms of PPPs and new approaches used
to bring more partners to the table. v
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55
Sibley County Spreads
The Word About FTTH
A countywide fiber initiative in Minnesota is using the FTTH Council’s
fiber-to-the-home primer to educate residents about the benefits of fiber.
This 32-page primer helps enlist communitywide support for fiber.
R
ural residents in the area southwest of Minneapolis have
talked for several years about improving broadband in
their communities. Some of them need faster, more reliable broadband; others have no broadband at all. Last year, a
group of localities in the region received a grant from the Blandin Foundation, a Grand Rapids organization dedicated to
strengthening rural Minnesota, to perform a feasibility study
for an FTTH network.
Now the localities are considering building fiber throughout an area that includes all of Sibley County and a small part
of Renville County. The proposed RS Fiber project, which
would likely be financed by revenue bonds or a capital lease,
would connect every home, farm and business in the area – a
total of about 8,000 premises.
To determine whether the network can be self-sustaining,
the group asked residents about their interest in subscribing to
fiber-based services. Residents weren’t required to preregister
for services, but they were invited to complete a form indicating which services they might subscribe to.
In May, the RS Fiber Marketing Committee mailed the
form, along with a reply envelope, to more than 7,300 households. To help residents understand the proposal, and to generate excitement about it, the mailing also included a brochure
about potential services, a schedule of 26 public meetings
planned for June, a Q&A about the project, and the fiber-tothe-home primer, “Advantages of Optical Access,” which appeared as a supplement to the March/April 2011 issue of this
magazine. The primer was sponsored by the Fiber-to-the-Home
Council and written by Broadband Communities’ editors.
Mark Erickson, the city administrator and economic development director of Winthrop, one of the cities represented
in the RS Fiber project, says, “We launched the marketing
campaign for our countywide FTTH project last week with a
mailer to every household and business in the project area. The
Boy Scouts, Girl Scouts and 4-H Club members helped stuff envelopes
for the RS Fiber project mailing.
central piece in that mailer was the 2011 FTTH Primer published by Broadband Communities. The primer is an excellent
way to not only educate people about the basics of FTTH but
also inform them of its many benefits.”
To stuff the 7,300 envelopes, the committee recruited about
50 volunteers – 20 adults and 30 children, including Boy
Scouts, Girl Scouts and 4-H Club members. The volunteers
worked as long as eight hours to get the job done. Erickson
comments, “By the seventh hour, the whole process was getting a little stale, but spirits remained high until the end. There
is something about working together with people on a project
whose goal is to bring benefit to everyone.”
The committee is aiming for a 55 percent response rate to
the mailing, and the initial response has been positive, Erickson
says. To continue educating residents about the benefits of fiber,
RS Fiber Marketing Committee members will distribute the
primer and other materials at the scheduled public meetings and
at city celebrations and county fairs throughout the summer. v
Learn more about the RS Fiber project at www.rsfiber.com
56
Printed FTTH primers are helping thousands in communities
get on the same page about the benefits of fiber networks.
FTTH marketing campaigns use volunteers, both adults and children, to
reach every household and business
in a project area.
Besides the primer, mailing packets include brochures, questionnaires and
schedules of public meetings about
fiber networks.
Community leaders and fiber champions are launching mailing
campaigns to send FTTH primers to every household and business.
“The primer is an exCellenT way
to not only eduCaTe people about the
basics of FTTH but also inForm them
of its many beneFiTs.”
—mark erickson
City administrator and economic development director - winthrop, minn.
Get more information or place your request for a bulk shipment
of printed primers for your community at:
www.FTTHPrimer.com
Barriers To
Municipal Networks
Eighteen states have enacted some form of barrier to municipal networks,
and more stringent restrictions are pending in several state governments.
By Christopher Mitchell ■ New Rules Project, Institute for Local Self-Reliance
E
ach community that now owns
its own broadband network has a
story to tell about the struggles it
had to undergo to succeed. Challenging
big, corporate incumbents is never easy.
And as municipal initiatives have succeeded, the telecommunications giants
have thrown their political clout behind
efforts to persuade state legislatures to
change the rules to bar or significantly
inhibit local efforts.
Nineteen U.S. states have enacted
barriers that make building publicly
owned networks difficult or impossible
for communities. The map at the right
shows states with outright bans, de facto
bans or various other barriers, based on
analysis by the New Rules Project.
These bans are in addition to laws
in several states that revoke local authority over cable franchises in favor of
reduced regulation and state oversight.
The predictable result has been higher
bills, poorer customer service and – unsurprisingly – no change in the level
of competition for most communities.
Some states have even reversed the long
tradition of requiring universal coverage
in franchise agreements, allowing providers to determine who gets service.
Some states with barriers to community networks – Tennessee and Washington, for instance – actually have large
numbers of networks, while some states
without barriers have no community
networks. There are a variety of explanations for this, just as there are a variety
of motivations for building community
networks.
58
Source: New Rules Project
“Strict ban” states ban local governments from providing “telecommunications services” or, in
some cases, “exchange” services. These prohibitions make building triple-play municipal networks
impossible. “De Facto Ban” states effectively outlaw community networks but leave some communities with the potential authority to build municipal networks, however unlikely that is. “Various
Barriers” range from strong barriers to relatively weak ones. New Rules Project did not classify a
requirement for a simple-majority referendum as a barrier for the purposes of this map.
Visit the interactive map at http://bit.ly/bb-map.
[Editor’s note: North Carolina enacted a de facto ban after this map was prepared.]
Washington and Tennessee have
public utilities that gained the trust of
citizens over their long histories. Other
states created their barriers to community
networks only after one or more community networks were built and incumbents
began to lobby for a “level playing field.”
(Public-sector providers have argued that
the playing field is already tilted against
them because of open-meetings laws,
higher prices for content and gear compared with volume discounts for major
corporations, and the general difficulty
of challenging an established incumbent
that can freely cross-subsidize from noncompetitive territories.)
About the Author
Christopher Mitchell, researcher for the Institute for Local Self-Reliance, writes regularly at www.muninetworks.org and can be reached at [email protected]
or christopher@communitynets. “Publicly Owned Broadband Networks,” the report
from which this article is excerpted, is available at http://www.muninetworks.org/reports/publicly-owned-broadband-networks-averting-looming-broadband-monopoly.
New Legislation
For years, Time Warner Cable supported
legislation in North Carolina that would
either kill community networks outright
or restrict them sufficiently to make creating or maintaining one all but impossible. This legislation failed every year
until, in 2011, the state legislature passed
(and the governor declined to veto) what
the city of Wilson, N.C., described as “a
bill drafted and supported by the cable
industry that will essentially ensure no
municipal broadband systems will be
built in North Carolina in the future.”
Other states are also dealing with cable
and phone companies that want more
regulation for competitors while fighting
to be deregulated themselves.
Until recently, incumbents challenged only publicly owned last-mile
networks that offered retail services.
However, after the broadband stimulus
programs began awarding funding to
projects in 2009, major private providers
began challenging projects that merely
Incumbent opposition to public networks now
includes public-private partnerships, middle-mile
projects and institutional networks.
have a public partner. These include not
only last-mile projects but also middlemile projects that offer data transport to
third parties on an equal basis.
For example, in Maine, a stimulusfunded project to build a middle-mile,
open-access fiber network that would
encourage the building of privately
owned access networks throughout the
state was challenged in the legislature
by incumbent telco FairPoint. FairPoint
said the project was unfair competition because it included a single publicsector partner, the University of Maine
System.
Lawmakers in Wisconsin have even
challenged communities’ right to use
stimulus funds to build fiber optic net-
works that would serve only government
institutions and schools because these
would supplant high-priced services offered by AT&T. Similarly, legislation
pending in South Carolina would derail
a large middle-mile project by Oconee
County that would serve public facilities, including schools, libraries, health
care facilities and emergency shelters.
However, communities continue to
succeed despite the many disadvantages
they have when they overbuild incumbent operators. In recent years, communities have created some of the best and
most reliable fiber optic networks available in the United States, often in the
face of powerful incumbents and debilitating state laws. v
59
Kutztown’s Unique
Digital Video Solution
Kutztown, Pa., has swum against the tide for more than a century. With help
from Blonder Tongue, the town has now found a way to deliver digital video
services without set-top boxes.
By Wes Waite ■ Blonder Tongue Laboratories Inc.
A
century ago, the founding fathers of Kutztown, Pa., set out to
build a self-reliant community.
They succeeded. This small, rural town,
nestled among the hills 56 miles northwest of Philadelphia, has always been a
leader in providing municipal services,
even though it covers only 1.5 square
miles and has only about 5,000 residents
in 2,200 households (plus 10,000 Kutztown University students when school is
in session).
The borough government installed
electricity generation and distribution
plant in the 1910s, and in the 1920s it
built the first in-town sewer system in
the United States. Importing an eggshaped digester from Germany – the
first in the state – gave Kutztown one
of the most advanced sewer treatment
plants in the country. Fast forward to
1996, when the borough’s Public Works
Committee commissioned a study to
identify new services that would fit the
community and make use of its existing
infrastructure and assets. Fiber optic cabling was named as a potential option.
The borough’s first step toward this
new, technology-driven world was to install a supervisory control and data acquisition (SCADA) system to monitor,
record and report on its electric and water systems. This allowed load monitoring and control for wells, electric substations and sewer plant. Fiber optic cable
was installed to link the SCADA system
to Borough Hall. The SCADA system
was soon followed by an automatic meter
reading system for water and electric me-
60
Kutztown’s old train station, built by the Reading Railroad in 1870
ters. Meter readings are transmitted over
electric lines to the substations and then
travel over fiber back to Borough Hall.
Once these fiber optic systems were
up and running, the next leap was to explore fiber to the home – which is exactly
what Kutztown began doing in 2000.
Hometown Utilicom Is Born
In May 2001, Atlantic Engineering
Group began designing the town’s
FTTH system, and construction began
in August that same year. Though the
town had sent RFPs to local providers
asking them to deliver services over the
network, no video or voice providers answered, and Kutztown felt that the providers did not want to give up control of
the last mile. So in 2002, the borough
authorized and began building its own
video headend.
On August 12, 2002, Hometown
Utilicom was born with a pilot launch
to 15 customers. By December 2002,
almost 300 customers subscribed to its
new, 78-channel analog offering. By July
About the Author
Wes Waite is a system engineer at Blonder Tongue Inc., which provides solutions
for distributing and delivering video to homes and businesses. You can reach him at
[email protected].
2003, just one year after deployment,
489 households were being served, or
almost 25 percent of the market.
The headend facility sits on a hill
overlooking the town, near one of its water towers. The building is large enough
for future service expansion, and its
main source of signals is a multisatellite
C-band dish. Local broadcast signals are
received via off-air antennas.
Five racks of processors, satellite
receivers and Blonder Tongue CAMSseries stereo modulators generate the
program lineup that made up the original video service offering. This lineup is
sent via single-mode fiber to Borough
Hall, where the network operating center (NOC) is located. Using coarse wavedivision multiplexing technology, the
voice and data services are multiplexed
onto the same fiber, and the signals are
amplified and sent out from Borough
Hall to all households and businesses.
Six main fiber trunks, ranging from
36-count to 96-count fiber, handle the
transport of signals to customers over a
passive optical network.
This system served the community
well for several years. Customers enjoyed
a cost saving on services over what they
could get from the incumbent providers, and the borough government saved
money by not having to lease lines for its
Equipment inside the video headend building
“Our goal was to improve our choice of content
and to deliver more services to our customers at a
reasonable cost. We needed a solution that could
be launched quickly with minimal downtime.”
telecom services. The borough also enjoyed the recurring revenue from retail
services – this little town has not had a
property tax increase since 1934.
Getting Ready
for the digital Transition
When the digital transition was looming, Kutztown officials turned to
Blonder Tongue Technical Solutions for
their digital needs. Because the headend
facility and fiber optic infrastructure
were already in place, adding digital and
high-definition content to the lineup
was a smooth transition.
The borough of Kutztown gave
Blonder Tongue these requirements for
its new digital system:
• Provide additional channels without
the need for costly outside-plant upgrades (the system had already been
upgraded to accommodate bandwidth of 860 MHz)
• Integrate digital and high-definition
services into existing analog services
without the necessity of adding settop boxes at the customer premises
• Develop a future-proof design to
allow seamless migration to an alldigital service in the future
• Ensure that the network is robust
enough to allow for additional revenue sources such as voice over IP
services
• Execute a turnkey implementation
with minimal disruption to existing
services.
Frank P. Caruso, director of information technology for the borough, says,
“We turned to Blonder Tongue to take
us into the next generation of television
services without having to deploy set-top
boxes at our subscribers’ premises. Our
overall goal was to improve our choice
of content and to deliver more services
to our customers at a reasonable cost.
With this in mind, we needed a solution
that could be launched quickly and with
minimal downtime of our existing analog service.”
Adding Digital Channels
Kutztown’s digital transition started in
2008 with the addition of a few off-air
digital channels via digital high-definition processors. This provided the available off-air channels in native 8VSB
format. However, because most tuners
cannot recognize an 8VSB signal on a
CATV channel assignment, the off-air
8VSB signals were placed temporarily on
UHF channel assignments above the existing analog tier. Although this scheme
allowed subscribers to receive both the
analog tier and the off-air digital channels, it required them to change their
TV tuners from cable to off-air settings.
Today, off-air channels from two different markets are picked up by trans-
61
The headend facility is located on a hill
outside the town, along with a satellite
dish and off-air antenna.
coders that receive the incoming 8VSB
signals and convert them to quadrature
amplitude modulation (QAM, the format in which digital cable channels are
encoded and transmitted). This allows
the system to put the off-air signals on a
CATV channel assignment in the digital format that all television tuners recognize. The majority of the analog tier is
untouched, and analog signals are still
delivered by the CAMS-60S stereo analog modulators.
The remainder of the digital tier is
delivered by a variety of commercial
satellite receivers (Motorola, Scientific
Atlanta, Wegener) that feed asynchronous serial interface (ASI, a streaming
data format) signals to digital QAM
multiplexers. The multiplexer (Blonder
Tongue’s DQMx) interleaves multiple
ASI streams or 8VSB/QAM signals onto
a single QAM carrier.
62
Optical network terminal used at customer
premises
Kutztown was one of the first customers of the DQMx product in 2009,
and it was willing to be a real-world test
site for the emerging new technology.
Some small growing pains were experienced, as with all new products – for
example, the DQMx signals didn’t work
correctly with TiVo set-top recorders.
Firmware upgrades solved that issue, and
the system now operates at its full potential. All criteria set forth by the borough
were met or exceeded by the new system,
including the ability to deliver advanced
services without set-top boxes.
The borough does offer home gateways, in the form of TiVo set-top boxes,
to customers who want DVR functions.
But no set-top boxes are required to decode even HD and premium channels.
In addition to the 860 MHz cable
video system – which offers two tiers of
services, each with several premier channels – broadband Internet and lifeline
telephone services are delivered over the
fiber-to-the-home network. The broadband service is being upgraded to gigabit equipment in the NOC so 100 Mbps
speeds can be offered to customers.
Other services delivered over the fiber network include SCADA, AMR,
law-enforcement video surveillance, WiFi hotspots at participating businesses
and in public areas, and the WAN for
the borough government facilities. Future services under consideration include VoIP, all-digital CATV and expanded Wi-Fi coverage.
Today, 911 single-family residences
and 182 MDU properties – 48 percent
of the 2,200 premises that the network
passes – enjoy services from Hometown
Utilicom. Including MDU subscribers,
1,551 paying customers take advantage
of the discounted prices and enhanced
services of Kutztown’s triple-play offerings. Improvements now planned will
keep the system at the leading edge of
the digital revolution wave. The Hometown Utilicom story shows that municipally owned systems can rival national
systems. v
Digital signals are converted to QAM, the format
that all television tuners recognize, so they can be
accessed as if they were analog cable channels.
Back-office Technology
Billing Subscribers
In a Changing Market
To monetize new services, service providers need billing systems that think
the same way they do.
B
ehind every successful service
provider is a great billing system.
Responding to market changes
with timely new offerings and then marketing these new offerings effectively
requires a flexible, customizable billing
system that lets service providers implement changes quickly and easily.
When Tullahoma Utilities Board
(TUB), a municipal utility in Tennessee, added a telecommunications branch
in 2007, a new billing system was a clear
necessity. Dwight Miller, TUB’s administrative manager, says that although the
utility already had billing software for its
electricity, water and wastewater services,
billing for triple-play communications
services over fiber was far more complex.
After reviewing a number of solutions, TUB chose WinCable from Great
Lakes Data Systems (GLDS) for its
features, flexibility, ability to integrate
with other systems and, of course, price.
GLDS began as a private cable operator
in search of an affordable billing system,
ended up developing its own billing
system and eventually sold its cable operations to focus on the billing software.
Today the company, headquartered in
Carlsbad, Calif., serves more than 300
operators in 43 countries and has moved
beyond the cable niche to fiber-to-thehome and other kinds of operators.
TUB put WinCable through its
paces, Miller says. Because TUB outsources its telephone service to a thirdparty vendor, it has to integrate that vendor’s usage data with its own video and
Internet usage data to produce consolidated bills – something GLDS was able
to accommodate. GLDS also integrated
WinCable with IPTV middleware from
Minerva Networks and was able to easily produce all the receipts and reports
that TUB needed.
Brian Langham, TUB’s network
operations supervisor, says GLDS’s
flow-through provisioning makes life
easier for technicians. Setting up a subscription in WinCable automatically
assigns services to customer devices –
time, manpower and resources,” Langham says.
The one thing TUB hasn’t consolidated into its FTTH billing is electricity
charges, because most customers would
find a combined electricity and telecom
bill unpleasantly large. “We were afraid
of sticker shock,” Miller says. “Almost
no one says they want a consolidated
utilities bill. They don’t even have the
same due date.”
Flow-through provisioning can automatically
assign services to customer devices, saving time
for installation technicians and ensuring that
billing records reflect the services that
customers actually receive.
a telephone subscription configures a
phone port and assigns a phone number,
a video subscription assigns an IPTV
package and enables specific channels
and an Internet subscription assigns a
data package with specific bandwidth.
Though technicians are still needed
for in-depth diagnostics, adding and removing account features and even firsttier support can all be accomplished
through WinCable. “It saves a lot of
Today TUB has about 2,600 FTTH
customers and is adding more every
month. Even though the company
strives to maintain stable, long-term
relationships with its customers – it
doesn’t offer promotional pricing and, in
fact, almost never changes prices at all
– Miller envisions adding new types of
services somewhere down the line, possibly an over-the-top video (OTT) offering. He’s sure WinCable will be able to
About the Author
[email protected].
63
EngageIP allows operators to easily build complex rating structures.
accommodate them as easily as it did the
services that are already supported.
The Netflix Challenge
TUB isn’t the only service provider
thinking about OTT. According to
The Diffusion Group, a research firm,
106 million households worldwide used
OTT services in 2010, and the number
will grow to 250 million by 2016. For
some providers, online video presents
a bandwidth challenge, either today or
in the future, when the content being
viewed is more likely to be in high definition and 3-D.
Providers with robust fiber infrastructures can withstand the bandwidth
challenge, but OTT still presents a revenue challenge. Revenues can’t be collected directly from content providers,
and subscriber revenues for premium
services are increasingly endangered.
(Out-and-out “cord cutting” seems to
be limited or nonexistent at present, although that’s also a future threat.)
There are a variety of approaches to
dealing with the OTT threat, and they
all require help from billing software
vendors. Garrick Russell, president of
GLDS, advocates the “If you can’t beat
’em, join ’em” approach.
Russell notes, “Right now, our customers and their subscribers are jumping on board like crazy with IP-based
delivery – bringing Neflix, Hulu and
additional or alternative content to the
TV set – rather than relying exclusively
on cable. Instead of treating OTT as a
threat, we encourage them to embrace it.
… You’ve got to capture the additional
revenue or lose the customer to Netflix.”
64
Operators find subscribers willing to
choose their OTT offerings over (or in
addition to) services such as Netflix as
long as they can provide user-friendly
interfaces and wide selections of video
content.
GLDS recently implemented OTT
billing for a cable operator that uses
Clearleap’s Stream On Demand, which
enables delivery of IP video to connected
set-top boxes, TVs and other devices.
Generally, Clearleap provides media
server boxes that carry a cable operator’s
branding, and the operator dedicates a
cable channel to Stream On Demand.
Eventually, the solution may be embedded into existing cable set-top boxes to
provide a better integrated experience
and to reduce living-room clutter.
Capturing over-the-top revenue isn’t
the only advantage of offering IP video;
IP-based solutions are also much less expensive to implement than traditional
VoD models. This makes them more attractive for smaller operators that can’t
afford the up-front infrastructure costs
and ongoing maintenance of traditional
VoD. Solutions such as Clearleap’s are
centrally hosted and can be delivered
over existing, underutilized bandwidth.
Most need between 1.5 Mbps and 2.5
Mbps to function well; operators who
can offer 10 Mbps pipes can reserve this
bandwidth for video without impacting
customers’ other Internet experiences.
Yet another benefit is that branded
OTT video offerings create customer
“stickiness.” Some operators require customers to extend their contracts an extra
year or two when they sign up for OTT.
Others simply count on the attractiveness of the offer to keep customers from
defecting to competitors.
Russell compares today’s IP-based
video market with the early days of VoIP,
saying, “Vonage came in with an offering
and did quite well; then they opened up
a cable operator branch so cable companies could brand their product and sell it
to customers. Now everyone offers it. So
cable operators have an opportunity to
jump in there and grab [OTT video] or
let it happen on the side.”
Working with Clearleap, GLDS extended its billing system to allow realtime intelligent event authorization for
over-the-top video. Russell hopes to add
a self-service capability as well, which
would allow customers to purchase
their own media extender boxes, plug
them in and register them to their cable
accounts.
Usage-Based Billing
For LogiSense, an Ontario-based billing
and OSS software provider, a better approach to the OTT challenge is usagebased billing. Flavio Gomes, LogiSense’s founder and president, says that
with usage-based billing, B/OSS software such as LogiSense’s EngageIP can
become a strategic marketing tool rather
than simply an operational tool.
Gomes admits that operators have
had difficulty communicating to customers the need to implement usagebased billing. Nevertheless, he says,
many operators will need to use this
approach to counter the impact of
With usage-based billing, B/OSS software
can become a strategic marketing tool rather
than simply an operational tool.
Web-based video. To avoid pushback
from their customers, operators must
devise billing structures that both appear reasonable and actually save money
for moderate users.
Using LogiSense, Gomes says, operators can now build very complex rating
structures “without heavy lifting.” This
will enable them to fine-tune their billing policies and devise systems that both
maintain their profits and are acceptable
to subscribers. “We can’t predict exactly
how they will do it or where the market
is going,” Gomes says, “but now they
have the tools and technology to make
it efficient.”
He adds, “Our customers have been
telling us that by having a very seamless, powerful, feature-rich rating and
charging platform … with personalized
and granular control, they can develop
sophisticated and easy-to-understand
pricing and service plans and carve out
additional revenue rather than be limited to generic tiered pricing models.”
MDU owners also can benefit from
usage-based billing. Gomes says that
whether MDUs manage their own
broadband infrastructures or outsource
them to service providers, and whether
they provide services over cable, Wi-Fi or
fiber, “central to their success is a B/OSS
system that understands a shared broadband connection, manages it effectively,
and is seamlessly connected to payment
gateways or tied to management systems
for collecting fees.” Just like cable and
telephone companies, MDU owners are
starting to meter bandwidth so a single
heavy peer-to-peer downloader or video
consumer doesn’t use up all the bandwidth allotted to the property.
Another frequent requirement for
MDUs is burstable consumption –
the ability for a subscriber to increase
bandwidth at a moment’s notice, using
a credit card. Gomes explains, “If you
have friends coming over and there’s a
video you want to see, you can activate
additional services in real time for a
limited period, based on time or bandwidth. We can even notify you that the
time is up and give you a five-minute
grace period to renew the connection.”
This feature is popular in the studenthousing vertical and in hotels, which of-
Cable operators are adding wireless plays so
they can monetize their customers’ mobile video
watching. Adding mobile services will allow
them to sell more content to more users.
ten allow free access to a limited number
of websites but require credit-card upgrades to exit the walled garden. More
surprisingly, burstable consumption has
also gained traction in senior housing.
“We’re finding that more seniors are getting involved with broadband services,”
Gomes says. “That’s an interesting development we didn’t expect – they’re becoming more net-aware and sophisticated.”
Because LogiSense has a flexible platform, the company can work collaboratively with its customers to develop individualized billing plans that meet their
needs. Gomes says, “They know the customers better than we do, but we have a
lot of exposure to a variety of different
models, and we know which ones have
been more successful. We can tell them
how to get to where they want to go.”
The Multiscreen Solution
Another way for providers to meet the
OTT challenge is to repurpose their
own pay-TV content as video on demand for PCs, smartphones and tablets
– an approach often called TV Everywhere. Openet, an Irish company whose
U.S. headquarters are in Reston, Va.,
has been a leader in developing billing
and authorization solutions for TV Everywhere and helping operators measure
audiences for specific content on specific
devices.
Mike Manzo, chief marketing officer
at Openet, points out that a major reason cable operators such as Cox are adding wireless phone service is to monetize
their customers’ mobile video watching.
Adding mobile services will eventually
allow them to sell more content to more
users, Manzo says.
Although multiscreen video solutions will produce incremental revenues,
they pose great challenges for billing
systems because they vastly increase the
complexity of authorization, billing and
resource management rules.
Manzo asks, “When a consumer has
multiple devices in the household – not
just three televisions but also three PCs
and an iPad – what happens when the
system is overloaded? And what happens when the user takes the iPad to
Starbucks?”
Because of device proliferation, operators are now grappling with the complexities of delivering content to individual users, Manzo says. They may want
to advertise different products to different household members or implement
different content controls for different
users. Fraud issues arise as well – what
is an operator to do if the same user ID
appears on three devices at once?
Operators and even individual subscribers should be able to set up personalized rules (I don’t want my child
to watch more than two hours of video
per day, and at least one of those hours
must be educational), and then operators must be able to charge their customers based on those rules. Of course, this
extremely complex set of rules must be
presented to subscribers in a simple and
user-friendly manner.
The rules govern not only who is
allowed to see what content but what
network resources users may consume.
Operators must allocate the resources
that users need to get the results they expect. “The sad reality is that bandwidth
is finite,” Manzo says. “The percentage
of time that the network is congested
will increase to as much as six to eight
hours … but only 15 percent of users are
clogging it up at any one time. Instead
of having a bad experience for everyone,
let’s take the resources those 15 percent
need and allocate it to them, then deliver email and Web surfing on a bestefforts basis.” v
65
Technology
Outside-Plant Design: Fusion
Splicing vs. Connectorization
Comparing all the costs and benefits of conventional outside-plant design
with plug-and-play designs suggests that in most cases, the conventional
design remains more economical.
By David Stallworth ■ OFS
U
sing plug-and-play technology
in the outside plant has been
hailed as a labor-saving, costeffective approach to deploying fiber to
the home. The advantages of this approach, which involves connectorizing
fiber drops at the factory and plugging
them into terminals in the field, are often promoted with little discussion of
the implications for network design or
operation. As usual, however, the devil
is in the details.
Drops that are connectorized on both
ends may help technicians turn up service faster. A technician simply plugs
one end of a drop into a connectorized
Figure 1: The study area used as the basis for calculations in this article
minal includes a fiber stub cable that
is used to splice it into the network;
the length of this stub cable must
Connectorized drops may help technicians turn
up service faster, but they entail additional costs
for engineering, operations and administration.
port on a factory-made terminal and
the other end into customer-premises
equipment. However, this faster turn-up
must be weighed against additional administrative, stocking, engineering and
operational costs. Plug-and-play also
eliminates some design choices for locating splitters, which may require higher
capital investment.
Plug-and-play solutions require
factory-hardened terminals with external ports that accept connectors from
factory-connectorized drops. Each ter-
66
be specified when the terminal is ordered. Plug-and-play does not reduce
splicing but rather moves the splicing
from the drop to the end of the stub,
which must be spliced back into the network somewhere.
Two alternatives to full plug-andplay solutions are available: fusion-splicing both ends (splicing each drop into
a cable at the drop closure and splicing
each pigtail into an optical network terminal, or ONT, at the customer end)
and fusion-splicing the cable end of each
drop while plugging a factory-installed
connector into an ONT at the customer
end. This article examines the differences
in design, operation and administration
between fusion-splicing drops and using
fully connectorized drops. Single-ended
connectorized drops are not discussed in
this article; the main issue with this alternative is inventory management.
Design Options
Figure 1 shows a single-family subdivi-
About the Author
David Stallworth is the design and product manager at OFS, a manufacturer of optical ﬁber and connectivity solutions. To apply the cost model discussed in this article to
your company’s data, contact him at 770-798-2423 or [email protected].
Technology
is assigned in the drop closure, and a
technician cuts the assigned fiber and
splices it to the drop. The only splicing
performed prior to the drop is for the cable that leads out from the splitter. This
splice is also needed when plug-and-play
terminals are used.
For plug-and-play, a designer must
determine where to splice the fiber stub
from each terminal into the network
cable. This splicing cannot be deferred
until service orders are received; the
hardened terminals must be spliced initially. The designer must also produce
terminal construction documents that
define what is to be spliced and incorporate these into cable records.
Serving 32 homes with eight-port terminals requires four terminals, each of
which must be spliced into a fiber cable.
There are a number of ways to do this.
Figure 2: Conventional four-port design (above) and eight-port design (below)
sion consisting of 32 lots, each with a
100-foot frontage along the road. The
central-office feed is at the right of the
diagram. The road right-of-way is typically 50 feet. In most cases, whether
fiber is placed underground or aerially
does not substantially affect the design.
If fusion splicing is used, the conventional design calls for four-port or
eight-port drop closures. A fiber cable is
usually placed on one side of the street,
and the drop closures serve houses on
both street sides. Figure 2 shows these
two designs.
The eight-port design is more common for FTTH because it reduces the
number of drop closures needed, which,
given typical urban lot sizes, outweighs
the additional cost of longer drops. In
this analysis, we assume the eight-port
design is used. As shown in Figure 2,
this design requires 1,400 feet of cable
from the leftmost drop closure to the
right-of-way.
In the conventional design, cable is
looped through the drop closures, but
no splicing need occur until a service
order is received. At that point, a fiber
1. Take all four fiber stubs from the terminals back to a point where the 32home area begins, and splice them
into a cable at that point. Figure 3
shows this direct-feed design. Note
placing the splicing point close to
the starting point results in placing
multiple, parallel stubs in the same
sections. This increases costs, as contractors charge for placing additional
cables in the same infrastructure.
2. Move the splice point to the middle
of the 32-home area. Figure 4 shows
this design, which we call direct-feed
quad.
Figure 3: With the direct-feed design, all terminals are spliced where the cable enters the area.
Figure 4: Direct-feed quad design: All terminals are spliced in the center of the study area.
67
Technology
Figure 5: Spliced-feed design: Each terminal is spliced at its placement point.
Figure 6: Double spliced-feed design: Two splice points are placed inside the study area.
3. Splice the stub into the feed cable
at each point where a terminal is
placed. Figure 5 shows this splicedfeed design option.
4. Place two splice points in the 32home area and feed two terminals
from each splice point. Figure 6
shows this double spliced-feed design.
Placing costs. The direct-feed design
increases the amount of cable placed to
3,200 feet from 1,400 feet. Placing costs
can easily double, and the supporting
structure may have to be increased close
to the splicing point to support the four
cables required. Materials costs may be
higher as well – 3,200 feet of 12-fiber
cable may cost more than 1,400 feet of
36-fiber cable. Last, the drop cables cost
more because they have factory-spliced
connectors and because their fixed
length requires slack to be stored in a
special closure arrangement. The combination of all these added costs makes
this one of the highest-cost alternatives.
The direct-feed quad design requires
placement of an additional 1,600 feet of
stub cable, along with 800 feet of feed
cable. In addition, a new splice is required in the area, and support structure
may be needed for that location. All 32
fibers of the four stubs need to be spliced
at this location. (As mentioned earlier,
the plug-and-play system does not reduce splicing because the stubs have to
68
be spliced into the network. In effect,
the drop splice has been moved to the
stub splice). The placing and materials
costs for this alternative are much higher
than for the conventional method.
The spliced-feed design requires that
every terminal be spliced at its location
in the field. This adds four additional
splice locations in each 32-home area
and may require an additional support
structure or perhaps a larger structure
than the conventional design. Each terminal must also be spliced into the feed
cable, which is the same length as the
conventional design cable (1,400 feet).
This alternative reduces cable and stub
placement costs but increases materials cost, as four additional closures are
needed to house the splice.
The double spliced-feed design has
two terminals fed by a single splice point
inside the study area. It has a higher
placement cost because the stubs must
be routed to the two terminals from a
single location. The location of the splice
closure relative to the two terminals is
not critical, as the costs are similar. This
alternative has two additional splice
cases and requires placement of 800 feet
of stub cable and 1,000 feet of feed cable, compared with a total of 1,400 feet
of cable in the conventional plan.
Capital expenditures. The plugand-play system requires more cable and
splice closures than the conventional
design method. (As explained earlier,
terminal stubs must be spliced into the
network.) In addition, because plugand-play terminals are factory-made,
optical splitters cannot be placed inside
them. In areas with high take rates,
placing splitters inside drop closures is
often economical because it allows the
use of smaller cable sizes – at least 256
homes can be served from a single 24-fiber cable. However, because plug-andplay eliminates this alternative, splitters
must usually be placed in cabinets that
serve several hundred homes. Although
this alternative may be viable for lowtake-rate areas, it may add as much as
$100 per home passed.
Last, plug-and-play may require
more time to engineer because the engineer must determine where to splice
the fiber stubs of the terminals into the
network. The more network elements
in a fiber design, the more engineering
is needed to properly design those elements. Adding more support structure
to handle the cables may also require
more engineering. Additional engineering records must be produced to show
which fibers to splice into each terminal,
and these records must also be entered
into fiber assignment records.
Administration. Plug-and-play requires maintaining inventories of many
different lengths of factory-connectorized drops. Managing this inventory
requires keeping a daily tally of drop
lengths used, monitoring the supply
of cables in each drop length and constantly forecasting installations to insure that enough drops are available
in the correct lengths. Inventory levels
must be kept high enough to allow time
for new material orders to be processed,
shipped, received and placed into inventory. Some deployers have had to presurvey installations to determine drop
lengths; this added truck roll for each
installation increases installation costs
by $100 to $200, making plug-and-play
uneconomical at any labor rate.
In most areas of the U.S., operators
maintain emergency stock for disaster
recovery. The more network elements
there are, the higher the cost of main-
Technology
A connectorized OSP solution requires keeping drop cables in many lengths available at all times.
taining this disaster inventory. Because
plug-and-play systems require more
network elements than conventional
designs, emergency inventory costs are
higher, though these additional costs are
not always easy to determine.
Last, because factory-made drops
have fixed lengths, there is a substantial
amount of excess drop cable. This slack
can be stored either at the terminal or at
the home. Because storing slack for up
to eight drops at a terminal may present
space problems, in most cases slack is
stored at the ONTs at customer homes.
However, requiring ONTs to accommodate up to 50 feet of excess drop increases the cost of the ONTs.
Network Performance. By introducing additional connectors into the
network, plug-and-play increases both
the risk of network failure and the total optical loss. Even though fiber is less
sensitive to environmental conditions
than copper, and fiber networks are
therefore more reliable, they are not immune to failure. Connectors and jumpers are the main sources of network failure because they are the points at which
technicians have access to the network.
Human error, carelessness and the need
to be productive can drive technicians
to cut corners, especially when cleaning
connectors.
Connectors require cleaning before
they are installed and whenever they are
unplugged. They may even be ineffective in weather conditions such as rain,
snow and dust storms.
Plug-and-play connectors are more
difficult to clean and require special
fiber cleaning kits. The advertisement
by JDSU (see below) says it all: Most
troubles are caused by connectors’ introducing dirt into networks. Why design
more of them into a network when there
is a viable alternative?
Plug-and-play systems have higher
optical loss than conventionally designed systems because they have more
connectors and just as many splices.
Even though the loss from each connector is small, the increase may cause
a problem if the loss budget is close to
maximum. Losses have a tendency to
increase over time and may become significant over a network’s 30- to 40-year
life.
Some argue that connectorized drops
give technicians test points for analyzing
networks. This is a very weak argument.
The end of the fiber is only a few hundred feet away, at the customer’s home;
testing from that point, using a standard
connector, makes much more sense and
is better for detecting problems with the
hardened terminal and connectors. Testing at a plug-and-play terminal requires
a special connector to fit into the slot of
the terminal. After testing, a technician
must thoroughly clean the drop connector before re-inserting it. Therefore, the
plug-and-play system does not offer any
better test methods or test points and
may contribute to a higher trouble rate
as it ages.
Equipment requirements. One
advantage of plug-and-play over the
conventional design is that it does not
require a fusion-splicing machine to
establish service. Although plug-andplay does not reduce the overall splicing required, it does move the splicing
from installation to initial construction.
Today’s fusion splicers are small and capable of making thousands of splices.
However, they can cost $6,000 or more,
adding $5 to $10 per home passed. (This
cost may be avoided by reorganizing the
workforce as described below.)
Organizational considerations.
Some operators organize outside technicians into two groups, one responsible
for installations and the other for maintenance and repair. Deploying FTTH
technology inspires companies to take
another look at their organization, and
some are changing the two-group arrangement to what could be described
as multitask technicians (MTTs). An
MTT has responsibility for all installation and maintenance in a geographic
area. Such a technician has complete
training about the network and is generally more valuable to the company.
69
Technology
(Small operators have been using MTTs
for years, as they cannot afford to do
otherwise.)
Using MTTs may reduce the total
required workforce for several reasons.
First, windshield time can be reduced as
technicians are assigned smaller service
areas. Second, companies may find that
technicians who take ownership of their
areas do a better job all around. For example, technicians may be more careful
with installations to avoid being embarrassed with trouble calls about their previous installation work. Finally, MTTs
who encounter signal problems while
installing drops are more likely to have
the knowledge, skills and equipment to
fix these problems themselves and avoid
maintenance calls later. The impact on
customer satisfaction is obvious.
In a workforce of MTTs, fusion
splicers take on a new light. Maintenance technicians must be equipped
with fusion splicers, so MTTs carry
splicers on their trucks and can use
them to fusion-splice drops. The cost of
each fusion splicer can be split between
maintenance and installation – which,
along with the possibility of reduced
workforce size, better work quality, improvement in meeting customer service
dates and more versatile technicians,
may make fusion splicing a more attractive choice.
Developing a Cost Model
Addressing all these issues in a single
cost model requires establishing a level
playing field for all alternatives.
Determining the materials costs for
the various alternatives is relatively easy,
with one exception: the extra cost of the
slack storage mechanism for the connectorized drops. As that cost must be
taken into consideration, the model allows it to be inserted at the discretion of
the user. Other materials prices can be
changed by users for purposes of sensitivity analysis.
The cost of placing feed cable is the
same for all alternatives because the feed
cable must traverse the entire 32-home
study area to feed other areas. However,
for comparison purposes, the amount of
feed cable for the study area is included
in the study.
70
Contract placement labor is also
needed to route plug-and-play stub
cables from the terminals to the locations where they are spliced. This cost
is different for each alternative, and the
model reflects this.
We can safely assume that the cost
of placing conventional drop closures is
equivalent to the cost of placing plugand-play terminals. However, some plugand-play alternatives may require extra
supporting structure to house a splice
case. The model accounts for this cost in
the “additional structure cost” cell.
The model also assumes that the cost
of placing drops is the same regardless
of which alternative is selected. This
assumption may favor plug-and-play
slightly as placing plug-and-play drops
may require extra time to protect the
connectors and to determine the right
length of drop to use. If plug-and-play
drop costs prove to be higher, connectorized drop costs can be adjusted upward in the model to account for this.
Materials costs for drops are calculated based on lot width and can be adjusted by changing the lot width.
The items labeled “additional maintenance cost per home passed,” “additional engineering cost per home
passed,” “additional fusion-splicer cost
per home passed” and “administrative
cost” are highly variable and difficult to
calculate. However, these are clearly real
costs that should be accounted for.
Additional maintenance cost per
home passed. Because plug-and-play
alternatives use more connectors, they
contribute to higher maintenance and
repair costs over the life of a network.
This cell allows a user to input an additional cost per home passed, which may
vary depending on whether the facilities
are aerial or underground. A minimum
of a few dollars per home passed seems
reasonable, perhaps more if the conditions warrant.
Additional engineering cost per
home passed. Because more network
elements and documents are used in
plug-and-play alternatives, a higher
engineering cost is reasonable. The engineer must determine splice closure
locations and design more lengths of
cable. More field work may be necessary
to develop proper measurements for the
longer lengths of cable and stubs. More
material must be accounted for in bills
of material and verified. Because plugand-play terminals must be spliced into
the network, the engineer must designate which fibers are assigned to which
terminals at the time of construction
and generate another document with assignments for each terminal. This is not
necessary in the conventional model,
because all the fibers are available in
each drop closure and can be assigned
on a next-available basis. Adding at least
a few dollars per home passed for this
extra effort is reasonable.
Additional fusion-splicer cost per
home passed. The conventional design requires a fusion splicer that is not
needed for the plug-and-play alternatives. This is accounted for by adding the
splicer cost on a per-home-passed basis.
A few dollars in this cell seems appropriate; the amount depends on how much
the splicer is used for installation versus maintenance and new construction.
Some companies prefer to lease fusion
splicers or to use a combination of lease
and purchase.
Administrative cost per home.
Plug-and-play requires carefully managing and storing an inventory of connectorized drops of various lengths. Failure
to manage inventory properly results
in missing service order appointments
or incurring extra time and expense to
handle additional slack. Administrative
cost includes employee time and building cost and is a recurring cost for the
life of the network. The “administrative
cost per home” cell allows a user to input an amount to cover this cost.
Conventional drop splice time.
One of the most important inputs into
this model is the labor rate used for installation and splicing. This rate is pitted
against the higher capital cost of plugand-play alternatives and all associated
secondary costs. If the labor rate were
$0, the capital cost of plug-and-play
would provide no benefit, as no time or
cost would be saved. Above some labor
rate, plug-and-play costs are more than
Technology
Figure 7: Cost model for evaluating splicing-versus-connectorization decisions in the outside plant
offset by the time savings, and plug-andplay should begin to be the economical
choice. (Of course, all the costs discussed must be considered to find the
crossover point.)
At what labor rate does the crossover
occur? The cost model allows users to
vary the labor rate to determine how it
affects overall network cost. There is also
a cell for the amount of time required to
splice a drop into a closure. This amount
should be the difference between plugand-play time and fusion-splicing time
(how much longer it would take to fusion-splice versus plug in the drop after
the technician sets up at the closure and
is ready to make the connection). The
combination of the labor rate and time
required can be compared with the added
capital investment of plug-and-play.
Determining how long splicing fibers
in a cable takes is important. Remem-
ber that all alternatives require splicing
plug-and-play terminals’ fiber stubs into
the network at some point. (Though
some vendors provide factory splice
points into which terminal stubs can be
plugged, this does not diminish the need
to splice the stub into the network but
only changes how the splicing is done.
This factory splicing cost should be used
to input this cost into the model.)
Though the time to fusion-splice the
terminal stub is often ignored, it offsets
some of the splicing time for the drop.
Whether splicing is done in a factory or
in the field is of little consequence.
In summary, the cost study pits
the conventional design’s smaller capital outlay and longer installation time
against plug-and-play’s higher capital
cost, higher labor costs and higher associated costs. The model allows an indepth study of these relationships.
USING The Model
The model, shown in Figure 7, has three
parts. The top part lists all the options
to study and has cells available to add
extra contract cost for placing the terminal stub. Costs can be turned on or off,
but for this study, all costs are activated.
The middle section is the heart of the
model. Users can change the numbers in
red to study all the variables and their
relationships, including materials cost,
labor rates, splicing time for drops and
cables, and associated costs for administration, maintenance, fusion splicers
and so forth. On the right are notes to
help users operate the model.
The third section adds the costs and
divides by homes passed to arrive at
dollars per home passed. A scratch-pad
sheet gives users other tools to study alternatives. Generic prices and costs are
listed initially but should be tuned to
users’ actual numbers.
71
Technology
The bar charts in Figures 8 through 11 show the results of an initial study, color-coded to display the following alternatives:
Conventional
Design
Direct-Feed
Design
Direct-Feed
Quad Design
Spliced-Feed
Design
Figure 8: Labor and materials costs per home passed (labor at $40 per hour)
Double Spliced-Feed
Design
foot lot widths. Varying the lot width
affects the outcome. Figure 10 uses the
same input but varies the lot width from
50 feet to 100 feet, 200 feet and 400
feet. (Generally, lot sizes smaller than
50 feet indicate multifamily housing,
which warrants an altogether different
design pattern.)
As lot width increases, so does the
cost difference between the conventional design and plug-and-play alternatives. This relationship, shown in Figure
10, is due to the increase in terminal
stub length required as lot size increases.
The pro-plug-and-play bias discussed above can be removed by assigning costs to the “subjective” categories.
In Figure 11, which assumes a labor rate
of $40 and a lot width of 100 feet, with
all other inputs remaining constant, the
following costs per home passed were
added to the model input:
Slack storage: $5
Additional structure: $200
Administration: $2
Maintenance: $2
Engineering: $2
Figure 9: Labor and materials costs per home passed (labor at $75 per hour)
Figure 8 shows labor and materials costs of the five alternatives without
added costs such as slack storage, maintenance, extra engineering and administration. This analysis assumes 30 minutes for splicing a drop at $40 per hour
and one hour for splicing the 32 fibers of
the plug-and-play stub into the network.
This model input is biased toward plugand-play alternatives because it shows the
effects of capital cost differences without
the extra, more “subjective” inputs. Even
with this bias, the conventional design
is about 20 percent more economical
than the best plug-and-play alternative
(spliced-feed design, shown in green).
For any plug-and-play alternative to
begin to be economical, the labor rate
72
would have to be about $75 per hour, as
shown in Figure 9. This is much higher
than most telephone and cable companies’ labor rates, but it may be applicable
for large ILECs.
The initial model was based on 100-
Assigning these costs results in a cost
difference of more than 50 percent between the conventional design and the
best plug-and-play alternative. These
components increase the cost by about
30 percent over the initial 20 percent
difference. Adding in all the costs associated with plug-and-play makes clear
that this alternative is not economical
except for extremely high labor rates.
The model indicates that plug-and-play in the
outside plant is economical only at very
high labor rates – generally much higher
rates than small telephone and cable
companies are likely to pay.
Technology
Trade-offs
Between
Conventional
Design and
Plug-and-Play
Figure 10: Relationship between lot size and relative advantage of conventional design
Advantages of
Conventional Design:
• More economical when labor
rates are under $75 per hour or
perhaps even higher when all
costs are considered
• Simpler design requiring fewer
elements to manage and stock
• Lower overall optical loss
• More reliable and therefore less
expensive to maintain
• More design options for splitter
placement
• Lower engineering cost
• Less warehouse space required
• Less vulnerable to impact of
lower take rates
• Better capital utilization enabling more revenue
Disadvantages of
Conventional Design:
• Requires a fusion splicer
• Slightly longer installation time
• Not economical for labor rates
over about $75 per hour
Figure 11: Total costs per home passed
Take Rates
Examining how the take rate, or total
number of customers divided by homes
passed, affects the cost analysis is im-
portant. Eighteen to 24 months after
deployment, the take rate starts to level
off. This final rate is the take rate that
needs to be studied.
Figure 12: Relationship between take rate and relative advantage of conventional design
Advantages of Plug-and-Play:
• Slightly faster installation time
• No fusion splicer needed
• Economical for labor rates over
about $75 per hour
Disadvantages of Plug-and-Play:
• Higher capital cost
• Higher total operational cost
• Less reliable
• Requires more administration
• Requires more engineering
• Requires additional warehouse
space
• Higher overall optical loss
• Eliminates some economical
design options
• Vulnerable to impact of low
take rates
• Fewer homes passed and less
revenue per capital dollar
invested
73
Technology
The cost difference between the conventional
method and plug-and-play grows wider as the
take rate declines. At take rates of 60 percent and
below, plug-and-play costs about twice as much.
Figure 12 shows the effect of varying the take rate from 100 percent down
to 20 percent. (Any take rate below 20
percent probably does not justify a business case.)
The figure clearly shows that the cost
difference between the conventional
method and plug-and-play grows wider
as the take rate declines. This may be the
final nail in the coffin of plug-and-play.
At take rates of 60 percent and below,
plug-and-play is about twice the cost
of the conventional design. The difference grows exponentially as the take rate
is reduced.
A competitive provider, municipal-
ity, or any company that is second or
third into a market typically experiences take rates below 60 percent. Even
incumbent telephone companies that
opt to retain their copper networks for
voice services, deploying FTTH only
for video and data, may experience take
rates in the 60 percent and below category. Because the costs of deploying
plug-and-play are so high at this take
rate, these companies pass fewer homes
with the same investment, compared
with the conventional design. In other
words, the conventional design yields
more homes passed for the same budget
amount. When more homes are passed,
more revenue can be generated, and the
business case may be more successful.
Summary
For most companies, conventional outside-plant design is more economical for
FTTH deployment, especially after taking into account the effects on network
operations. Even deployers that build
FTTH networks for sale rather than for
operation must consider the fact that
their networks’ high operational costs
may make them harder to sell.
The conventional design allows
FTTH deployers to “button up” the
plant, leave it alone and enjoy the benefits of reliable performance year after
year. This design allows more homes to
be passed, especially if a lower take rate
is expected, yielding a better business
case outcome. Minimizing the number
of network elements makes networks
simpler to install, manage, and maintain
and results in very economical networks
that can produce more revenue. v
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T h e L aw
No Online Cable Systems –
For Now
The court ruling was unequivocal: Online video isn’t protected by cable
regulations. Of course, satellite service was once in the same situation.
By Carl E. Kandutsch ■ Attorney
T
he Internet has always had the
potential to disrupt the broadcast
model on which traditional cable
television is built. The broadcast model
uses a one-to-many paradigm of content
distribution, but the Internet’s distribution paradigm is characterized by manyto-many connectivity. At least for now,
anyone with a computer connected to
the Internet can create, distribute and
receive online content.
Not surprisingly, the content production and distribution industries, such as
broadcast networks and cable operators,
are searching for ways to head off the
threat posed by alternative distribution
models based on Internet connectivity
either by controlling innovative distribution systems or by squashing them
before they can reach the market. This
article examines some legal issues in a
recent skirmish of the ongoing struggle.
Introducing Ivi TV
Ivi Inc., a Seattle-based start-up online
video programming distributor created
in 2005, is one of a growing number
and variety of online video distributors (OVDs) recently recognized by the
Federal Communications Commission as potentially providing competition to traditional multichannel video
programming distributors (MVPDs in
FCC lingo), such as cable operators and
direct broadcast satellite (DBS) providers.1 Prominent OVDs as of this writing include Hulu, Netflix, Google TV,
Amazon.com and iTunes.
Although these companies use varying distribution methods and busi-
The FCC says online video distribution can
drive competition and innovation. It can also
disrupt standard video delivery models.
ness models, each relies primarily on
the Internet to deliver video programming content to users’ PCs and other
Internet-enabled devices, including
television sets. Because the FCC generally classifies Internet-based services as
information services rather than cable
or telecommunications services, OVDs
are for the most part not subject to the
regulations that govern MVPDs under
the Communications Act.
According to the FCC, the number
of Americans who watch video programming online is rapidly growing,
and there is every reason to believe that
this trend will continue and accelerate. Earlier this year, the FCC said that
OVDs could “provide and promote
more programming choices, viewing
flexibility, technological innovation
and lower prices,” and that preventing
OVDs from reaching the market would
“have a substantial anticompetitive effect on consumers and the market.”2
OVDs not only threaten traditional
content distribution models but also
pose a serious challenge to the intellectual property rights of programming
content owners. As proprietary video
and audio content migrates online, it becomes more vulnerable to unauthorized
reproduction, sometimes called pirating.
Thus, the issue of protecting proprietary
content becomes increasingly important
as more and more video content, including television shows, moves to the Web.
Tensions between the new OVDs and
established media production and distribution companies, including concerns
over the unauthorized reproduction and
distribution of copyrighted content, are
exacerbated by vertical integration in the
media industries, as illustrated by the
recent merger between NBC Universal,
About the Author
Carl Kandutsch holds a Ph.D. from Yale University and a J.D. from the University
of Washington. A former FCC lawyer, he currently has a private legal practice and
is a principal at ComGroup Associates LLC, a consulting firm that represents professionals in the multifamily real estate industry with regard to telecommunications
matters. You can reach Carl at [email protected] or 207-659-6247. Find out
more at www.kandutsch.com.
75
T h e L aw
a global content producer, and Comcast, a major content distributor. In its order approving the merger, the FCC remarked
that “OVDs pose a potential competitive threat to Comcast’s
MVPD service”3 and imposed several conditions on the merged
entity to ensure that unaffiliated OVDs will continue to have
nondiscriminatory access to Comcast-NBCU programming.
This rising tension between OVDs and established media interests forms the backdrop for the David and Goliath–like battle
between ivi and some of the largest content owners in the world.
Ivi captures and encrypts television stations’ signals and
distributes them via a downloaded conditional access system
for a $4.99 monthly fee. Just as cellphones and VoIP services
have severed the tie between phone numbers and physical addresses, ivi removes the need for attaching a cable subscription
to a street address. Any Internet-connected device, including a
mobile smartphone, can function as an ivi TV player anywhere
in the United States, at any time. Furthermore, just as iTunes
frees consumers from the need to purchase a package of songs
bundled together on a CD, ivi allows subscribers to purchase
individual television programs on an à la carte basis.
The ivi system offers benefits not only to consumers but
also, potentially, to advertisers, who can obtain precise information on the number and demographics of viewers. Television
stations can benefit as well because the ivi platform increases
the number of eyeballs viewing their programming.
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Regardless of ivi’s fate, these features point in a single direction: The future of television is on the Internet.
Ivi Sued by the Broadcast Industry
In September 2010, ivi TV launched an online video pay service
that featured signals from television stations in New York City
and Seattle, Wash. PBS, CBS, NBC Universal, WGBH and
20 other content owners immediately sued ivi in New York for
damages and for an order enjoining the company from distributing their video programming without the owners’ consent.
On February 21, 2011, a United States District Court in
New York issued a preliminary injunction against ivi, ruling
that its practice of retransmitting broadcast television programming without the copyright owners’ consent violates the
U.S. Copyright Act because ivi is not a cable system.4
To access and retransmit broadcast content owned by other
entities, a distributor must meet two conditions: First, it must
comply with federal copyright laws to the extent that the programming content is copyrighted. Second, apart from any
copyright interests in the content, it must comply with laws
applicable to retransmission of broadcast signals generally.
Section 111 of the Federal Copyright Act allows cable operators, in lieu of negotiating license agreements with copyright owners, to automatically obtain copyright licenses to
retransmit broadcast programming to their subscribers. Cable
operators submit statements of account and royalty fees to the
Licensing Division of the Copyright Office, and the fees are invested in U.S. Treasury securities until royalties are scheduled
for distribution. Copyright owners then file claims for royalties
and are paid for the use of their proprietary content.
Section 111(c)(1) of the Copyright Act provides, among
other things, that
Secondary transmissions to the public by a cable system of a performance or display of a work embodied
in a primary transmission made by a broadcast station
licensed by the Federal Communications Commission
… shall be subject to statutory licensing …5
By its terms, a statutory copyright license is available only
to a cable system, which the Copyright Act defines as
[A] facility … that in whole or in part receives signals
transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals by wires, cables, microwave or
other communications channels to subscribing members
of the public who pay for such service. For purposes of
determining the royalty fee under subsection (d)(1), two
or more cable systems in contiguous communities under
common ownership or control or operating from one
headend shall be considered as one system.6
In addition to their obligations under the Copyright Act,
MVPDs are required by the Communications Act to obtain
broadcasters’ consent to retransmit their broadcast signals.
(Why a copyright license should not itself constitute consent to
T h e L aw
retransmit is not entirely clear, but the
laws seem to require two separate processes.) The Communications Act states
that no “cable system or other multichannel video programming distributor
shall retransmit the signal of a broadcasting station … with[out] the express
authority of the originating station,” 7
defining a cable system as “a facility,
consisting of a set of closed transmission paths and associated signal generation, reception and control equipment
that is designed to provide cable service
which includes video programming and
which is provided to multiple subscribers within a community …”8
Ivi argued both that it has a right to
distribute proprietary content by way of
the automatic copyright license available
to cable operators under the Copyright
Act and also that, as an OVD providing
an unregulated Internet service, it can
retransmit broadcast signals without obtaining the broadcaster’s consent.
In other words, ivi’s position in the
lawsuit was that it is a cable system
under the Copyright Act, and thus entitled to take advantage of the statutory
license, but not a cable system under the
Communications Act, and therefore not
required to obtain the content owners’
consent to retransmit broadcast signals
to subscribers.
The District Court issued a preliminary injunction against ivi, based on
a ruling that ivi is not a cable system
under Section 111 of the Copyright
Act, and therefore that ivi’s secondary
transmission of proprietary programming content violates the broadcasters’
copyrights. Because its interpretation of
the Copyright Act disposed of the case,
the court did not rule on the question
of whether ivi is a cable system required
under the Communications Act to negotiate retransmission consent agreements
with broadcasters.
The Copyright Act and
Cable Systems
Section 111 of the Copyright Act was
enacted in 1976 in the wake of two Supreme Court decisions that held that
cable systems were not “performing”
broadcast programming merely by retransmitting broadcast signals.9 Conse-
Ivi argued that it is a cable system for copyright
purposes but that it is not a cable system for the
purpose of obtaining retransmission consent.
quently, the court held, cable operators
could retransmit broadcast television
programming without paying royalties
to copyright owners.
In response, Congress attempted to
balance competing interests and societal
benefits. On the one hand, by allowing
viewers out of the range of over-the-air
broadcast signals to enjoy broadcast
programming, the nascent cable television industry provided a clear benefit
to American society, so the nationwide
deployment of cable systems nationally
merited encouragement. On the other
hand, allowing cable operators to retransmit proprietary content without
compensating content owners would
remove the incentives needed for investment in content production.
The solution was Section 111, which,
by virtue of the automatic license, ensures compensation to copyright owners
and at the same time encourages investment in the building of cable systems
by removing the prohibitive transaction
costs associated with negotiation of individual license agreements for each
television program.
The situation of OVDs today is
somewhat analogous to that of the cable
companies in the 1970s. If extending
automatic copyright licensing to OVDs
can further the same social goals served
by extending automatic licensing to cable systems under Section 111 – namely,
facilitating remote viewers’ access to
broadcast television programming while
ensuring that copyright owners are fairly
compensated – then why not include ivi
in the class of providers to which the
statutory license is available?
The court’s answer to this question,
while perhaps legally correct, is disappointing. Essentially, the court’s answer
is that ivi cannot be a cable system because, first, the distribution system that
ivi uses – that is, the Internet – allows
it to retransmit programming nationally
rather than locally and second, ivi is not
regulated as a cable system by the FCC.
Neither of these rationales tells why ivi
should not be considered a cable system,
assuming that the statutory definition
does not clearly exclude ivi as a matter of law. The court’s ruling leaves this
public policy question to be resolved
by Congress.
Local Versus National
Ironically, the court’s ruling that ivi is
not a cable system relies on conclusions
reached by the Copyright Office (the
Federal agency charged with administering Section 111) in an extended rulemaking proceeding initiated in 1986. In
that rulemaking, the Copyright Office
decided that satellite television carriers
are not cable systems, and are therefore excluded from the statutory license
scheme, because satellite systems retransmit broadcast signals beyond the local
geographical areas in which the broadcasts initiate.
The ivi court’s reliance on this interpretation of Section 111 is ironic
because, during the course of the rulemaking proceeding, Congress enacted
a new law (Section 11910) that implicitly
rejected the Copyright Office’s reasoning and extended to satellite providers
the same right to statutory copyright licensing available to cable systems under
Section 111. The congressional action
was presumably based on a judgment
that the wide geographic reach of satellite transmissions ought not to limit the
scope of the automatic copyright license
as a matter of public policy. Why should
the virtually unlimited reach of ivi’s
Internet-based transmissions deny the
company the benefits of the statutory license available to cable and satellite providers under the Copyright Act?
In any event, the court relied on the
Copyright Office conclusion that Section 111’s somewhat peripheral references
77
T h e L aw
to “headends” and “contiguous areas”
meant that the statutory license is “clearly
directed at localized transmission services,”11 implying that satellite providers
were excluded by virtue of their national
reach. If satellite providers were excluded,
then ivi must be excluded as well.
Ultimately, the court simply deferred
to the Copyright Office’s interpretation
of Section 111, which in turn hinged on
the contingent fact that in making the
statutory license available to cable systems, Congress addressed the issue before it in 1976 – namely, how to encourage the deployment of a wide-reaching
but still geographically limited content
distribution system while guaranteeing
compensation for copyright owners. In
that sense, the court is surely correct
that Section 111 was not intended to
encompass Internet-based distribution
systems, which had not yet appeared on
planet Earth.
However, the court did not present
a compelling reason why a distribution
78
system without comparable geographic
limitations ought not to benefit from the
statutory license available to cable systems under Section 111 and to satellite
systems under Section 119. Perhaps that
refusal can be seen as an invitation for
Congress to address the issue.
Not Regulated by the FCC
This brings us to the second prong of the
analysis, wherein the court concluded,
following the Copyright Office’s view,
that ivi is not a cable system within the
meaning of Section 111 because ivi is not
regulated as a cable system by the FCC.
As mentioned earlier, ivi is an OVD and,
like other Internet services, online video
distribution is classified by the FCC as a
mostly unregulated information service
rather than a cable service.
One obvious objection to the court’s
reasoning is that if Congress had intended to limit the class of cable systems
to which the statutory license is available to those regulated by the FCC,
it could easily have made this limita-
tion explicit,12 but it did not. The court
steered around this potential pitfall by
citing the Copyright Office’s opinion
that “the legislative history and statutory text made clear that Congress intended the compulsory license and FCC
regulations to go hand-in-hand …”13
A second possible objection is that
Internet Protocol Television, or IPTV,
– for example, AT&T’s IPTV service,
U-verse – does qualify for an automatic
copyright license under Section 111 although AT&T insists that U-verse is not
a cable system for FCC purposes. The
FCC has not officially decided how to
classify U-verse for regulatory purposes.
If U-verse can be a cable system under
the Copyright Act without also being
a cable system under the Communications Act, why can’t ivi?
The court distinguished ivi from
U-verse on the grounds that the latter
is provided using facilities (wires and
routers) owned by AT&T, whereas ivi
merely hosts and distributes video pro-
T h e L aw
Not all rules and regulations burden new and
innovative services. Some are intended to liberate
enterprises from market-restricting limitations.
gramming through software, services
and computers connected to the Internet.14 However, Section 111 does not
define “facilities,” and the common use
of the word can encompass the kind of
equipment ivi uses in retransmitting
broadcast signals over the Internet.
Furthermore, although AT&T’s use
of its own wires and routers (rather than
the Internet) to deliver U-verse to customers minimizes concerns over piracy
and is comparable to traditional cable
delivery systems, why ownership of certain kind of facilities rather than others
ought to be dispositive from a legal perspective is not entirely clear.
Of more significance, perhaps, is the
fact that AT&T, while not conceding
that U-verse is a cable service according to the FCC’s definition, does in fact
negotiate retransmission consent agreements with broadcast stations in full
compliance with laws and regulations
applicable to cable operators. Ivi, on the
other hand, refuses to seek broadcasters’
consent for retransmission.15 Although
AT&T is seen as prudently reserving
its regulatory options while complying
with the law, ivi was viewed as wanting
to have its cake and eat it, too.
Market-Based Solutions
According to ivi’s website, the company
will appeal the District Court’s ruling
to the Second Circuit Court of Appeals
and explore congressional and administrative solutions. In the meantime, it
has suspended most operations. Absent
a judicial turnaround or congressional
intervention, how ivi can survive in its
current form is difficult to see.
However, congressional and administrative solutions may actually be on the
horizon. The Copyright Office recently
issued a Notice of Inquiry seeking comment on “marketplace solutions to replace the use of the statutory licenses
for the retransmission of over-the-air
broadcast signals, suggestions for ways
to implement market-based licensing
practices, and legislative and regulatory
actions that would be needed to bring
about these changes.”16
The Notice of Inquiry was mandated
as part of Congress’ reauthorization of
the statutory licenses in the Satellite
Television Extension and Localism Act
(STELA), which was passed in May
2010 and requires the Office to submit a
report to Congress within 18 months after enactment of STELA. The Copyright
Office plans to offer several alternative
options, including sublicensing, private
licensing and collective licensing.
With sublicensing, a broadcaster
would receive permission from a network
to sublicense all of its programming to
cable or satellite carriers. Private licensing would require carriers to negotiate
individually with each copyright owner.
Collective licensing would involve appointment of a third party to negotiate
on behalf of copyright owners collectively, similar to the way that ASCAP
or BMI negotiates on behalf of audio
copyright owners in the music business.
The Notice also seeks comments on possible licensing models for online video
content, based on the assumption that
because all broadcast content is becoming available online, statutory licenses
may no longer be needed. Ivi submitted
comments in response to this invitation.
Conclusion
The Commission’s reluctance to regulate Internet-based services, including
online video distributors, is based on
a considered judgment that by forcing
new and innovative online services into
regulatory pigeonholes constructed for
yesterday’s technology, the government
could inadvertently stifle investment in
those evolving services and nip creative
initiative in the bud.
However, not all rules and regulations burden new and innovative services. Some rules – such as the rule
allowing cable systems to obtain automatic copyright license to distribute
proprietary content across a wide geographical range – are intended not to
shackle, but to liberate commercial enterprises from market-restricting limitations. To deny entrepreneurs the ability
to leverage these rules is to force new
wine into old bottles via the back door.
The court’s decision in the ivi case –
which says, in effect, that ivi is not sufficiently similar to a traditional cable
operator to take advantage of the Copyright Act’s automatic license – demonstrates an alternative way in which government action can stifle innovation,
not by burdening industry with outmoded regulations, but by preventing
innovative enterprises from leveraging
forward-looking rules intended to facilitate the competitive access of new technologies to existing markets. v
Endnotes
1 In the Matter of Applications of Comcast
Corp. and General Electric Company and
NBC Universal for Consent to Transfer Licenses, MB Docket No. 10-56, Memorandum
Opinion and Order (rel. Jan. 20, 2011), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-11-4A1.pdf.
2 Id. at ¶ 78.
3 Id. at ¶ 86.
4 WPIX, Inc., et al. v. ivi, Inc., et al., 10-cv07415-NRB (S.D.N.Y. Feb. 22, 2011) (the
Memorandum and Order will be cited hereinafter as “WPIX,” followed by the relevant
page number in the slip opinion).
5 17 U.S.C. § 111(c)(1).
6 17 U.S.C. § 111(f).
7 47 U.S.C. § 325(b)(1)(A).
8 47 U.S.C. § 522(7).
9 Teleprompter Corp. v. Columbia Broad. Sys.,
Inc., 415 U.S. 394 (1974); Fortnightly Corp.
v. United Artists Television, 392 U.S. 390
(1968).
10 17 U.S.C. § 119 (1988).
11 57 Fed. Reg. 3284 (Jan. 29, 1992), quoted in
WPIX at 25.
12 The principle of statutory construction
known as “casus omissus pro omisso habendus est” states that a thing omitted from an
enumeration in a statute must be held to have
been intentionally omitted.
13 WPIX at 26.
14 Id. at 34, 39.
15 Id. at 39.
16 76 Fed. Reg. 11816 (Mar. 3, 2011).
79
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Broadband Communities Summit 2012 1, 50, 80
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21
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25
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Connexion Technologies
55
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Corning Cable Systems
Back Cover
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www.corning.com/cablesystems/
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www.fiberinstrumentsales.com/
rentals
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Spot On Networks
Inside Back Cover
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Taipei Trade Show
15
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Time Warner Cable
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ViewTEQ
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Walker & Associates
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