2%. incidence of internet households. wired connection. fixed wireless. satellite. cellular data...

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Request for Proposal (RFP) for a Strategic Internet Network Consultant The Need/Goals: As Mapleton City continues to grow, we recognize that fiber internet is a big part of our community. Many within our community have limited high speed internet service available, are lacking in finding affordable internet, as well as poor customer service. Currently the local incumbent providers continue telling our City leaders that they do not have a plan of when are area will be upgraded and we continue to get passed over. More and more of our resident’s work from home and require access to the internet. A few of our residents have commented that they have drove to their office in Provo as it was faster than getting internet connection. New and old businesses suffer as they search for the best provider to accommodate their needs. At the direction of the Mayor and City Council we are considering a “Community Network” built, owned and operated by Mapleton City thus we are looking for a Consultant to provide us with a Comprehensive Final Plan and Recommendations. Work Process and Timeline: The Attached work plan documents the work process and deliverables for each project phase. The work shown in the Attachment must be performed over the course of ten (10) weeks. All work products will be owned by Mapleton City. The submitted RFP must describe three closely related areas: 1. Approximately how many hours per week will the Consultant need to complete the Attached Work Plan; 2. What will be the hourly rate and estimated total billing for the Proposal; and 3. As per the Attached Feasibility Study completed by Uptown Services what areas from the study does the Consultant agree or disagree with and what would be the Consultants plan moving forward to provide the best “Community Network” to Mapleton. Posted Date: 09/21/2020 Closing Date: 10/05/2020 at 5:00pm Proposals will be accepted by closing date at the City Office, by email at [email protected] or by mail to:

Mapleton City Attn: Camille Brown, City Recorder 125 West 400 North Mapleton, UT 84664

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Work Plan for Strategic Internet Network Consultant

1. Estimate construction cost a. Get competitive bids for installation

2. Enumerate capital expenditures Headend Electronics

a. Necessary vehicles and equipment i. Bucket Trucks, Directional Drilling Machines, Cable Trailer, etc.

b. Fiber splicing equipment 3. Outline staffing requirements and create job descriptions 4. Create a bond expenditure list for each year 5. Complete budgets for the first 5 years of the project 6. Complete a revised pro forma 7. Secure funding options 8. Prepare a Mapleton Fiber Project website 9. Complete a project management chart 10.Prepare press releases 11.Meet with resident’s committee and keep them as a resource 12.Meet with businesses, chamber of commerce, Rotary club? 13.Design the entire FTTH system

Calculate fiber footages and counts a. Map fiber paths b. Locations of both active and passive nodes

14.Calculate total cost of construction Feet of drilling per day

a. 200-300 feet per day per drill Feet aerial per day

a. 4000 feet per day strand b. 5280 feet fiber lashed

15.Give a comprehensive final plan presentation to the City Council

Broadband Feasibility Studyfor

Mapleton City

June 2020

Uptown Services, LLCDave Stockton & Neil Shaw, Principals

9/23/2020 2

OBJECTIVE: Identify and evaluate the financially feasibility of a range of options for the City tosignificantly enhance the availability, reliability, and capacity of broadband infrastructure toresidents and businesses

SCOPE:1. Market Analysis

Quantitative market research Demand estimation

2. Technology Strategy, Design, and Capital Budget Reference architecture Sample designs

3. Product Strategy Data and Voice services Current and near-term multi-Gig offerings

4. Potential Business Models & Funding Sources5. Pro Forma Financial Analysis

Revenue, Opex, and Capex detail Pro forma outcomes

Study conducted by Uptown Services, LLC

Residential Quantitative Survey

The quantitative research process utilized both subject matter and functional expertise across multiple contractors by specialty: Uptown Services: Subject expertise and study data needs SDR Consulting (Rick Hunter): Research expert overseeing design and execution (23 years experience

with 200k completed research projects) American Directions Research Group: Survey fielding and data collection (7 US-based call centers with

capacity to complete 85k person-hours of call interviews per month) Prairie Research Group (James Wolken): Online survey programming, crosstab analysis and production

of output banners (25 years experience)

9/23/2020 4Study conducted by Uptown Services, LLC

Survey Instrument

Design

Uptown, SDR & City Staff

Sample File

City Staff & SDR

Survey Programming

& Fielding

ADRG

Online Survey Programming,

Data File Processing &

Crosstabs

PRG

Client Report

Uptown

9/23/2020 5

Phone and online surveys

Total sample of 670 respondents (401 via phone and 269 online) of universe of 2,582 households

± 3.3% sample error at 95% confidence interval

List included wireline and wireless numbers

Age quotas used to ensure robust sample across all age groups. Results weighted to reflect actual age

distribution from 2010 Census data

Respondents screened to ensure

Decision-maker for telecommunications and entertainment services in the home

Reside within city limits

Respondents with immediate family members employed by any of the following were excluded:

Mapleton City Comcast CenturyLink CentraCom Rise Broadband Utah Broadband


Survey results are weighted to reflect the actual age distribution (by age decile) per the 2010 Census of Mapleton.

While unweighted, the income profile of the sample is not dissimilar to the universe of residents.


5%

12%

32%30%

11% 10%

1%

7%

26% 27%

15%13%

10%

Up to $25k $25k -$50k

$50k -$100k

$100k -$150k

$150k -$200k

> $200k Refused

Household Income

Census Sample

< 25 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75+

Head of Household Age(Unweighted Sample)

Census Raw Sample Weighted

High school or less

6%

Some college

29%4 year

degree or more63%

Refused3% Education Level

FTTP Residential Quantitative SurveyCurrent Broadband Services Usage

97% of Mapleton households subscribe to Internet service at home, with 78% via a wired connection

Comcast has 70% market share About 1 in 2 households use their home

Internet service to perform job tasks 5 or more days per week

9/23/2020 8

78%

16%3%

1% 0% 2%

Incidence of Internet Households

Wired Connection Fixed WirelessSatellite Cellular Data PlanFree WiFi Do Not Use

Comcast70%

CenturyLink9%

Fixed Wireless

17%

Satellite3% CentraCom

0%

Other1%

Internet Market Share(Households)


53%

12%11%

7% 16%

1%

Using Internet at Home for Work Tasks

5 days 3-4 days1-2 days Few times/monthRarely or Never Don't Know

Income has a slight impact on use of a wired Internet connection The youngest and oldest households are less likely to have a wireline connection

14% 0f 20-24 use their cellular data plan 17% of 75+ do not access the Internet

9/23/2020 9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Up to $50k $50k - $100k $100k - $150k >$150k

Internet Access Method by Income

Do Not Use Free WiFi Cellular Data Plan

Satellite Fixed Wireless Wired Connection

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75+

Internet Access Method by Age

Do Not Use Free WiFi Cellular Data PlanSatellite Fixed Wireless Wired Connection


33% of households do not know what speed they subscribe to

About 1 in 2 Mapleton households state they subscribe to 100M or less

Monthly spending averages $62

9/23/2020 10

9%

15%

26%

12%

5%

33%

0%

5%

10%

15%

20%

25%

30%

35%

Up to 15M Up to 25M Up to100M

Up to500M

Up to 1G Don'tKnow

Stated Download Speed(Wired Internet Connection Only)


1%

14%

29%

17%12%

4%

19%

3%

0%

10%

20%

30%

40%

<$25 $25-$50 $50-$75 $75-$100 $100-$150 >$150 Bundled Don't Know

Monthly Internet Spending

Wireless substitution is slightly higher than the national average at 61% of HHs.

This substitution is strongly correlated to age, with older households more likely to retain wireline phone service

Monthly spending averages $36 for those households with a wireline phone

9/23/2020 11

57%61%

24%

7% 5%1%

Home Phone Provider(*source: National Health Interview Survey, 2018)

NationalAverage*

Mapleton

20 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75+

71%80% 79%

57% 52% 52%

32%

Households Without Wireline Phone Service by Age


0%

10%

20%

30%24%

14% 13%

7% 7%

2%

24%

9%

Monthly Voice Spending

Across all of Mapleton households, only 19% have all 3 services from a ‘single’ provider. This is being driven by wireless substitution and cord cutting (dropping Traditional Pay TV). Ramifications to FTTP strategy include:

Limited and decreasing need to offer video service as households abandon cable TV 57% of Mapleton households have ‘cut the cord’ and do not use Traditional Pay TV Higher bandwidth demand to accommodate video streaming over the broadband connection (next

slide)

9/23/2020 12

19.4%

7.5%

73.1%

Incidence of Triple Play Bundle

Have All 3 From Single Provider

Have All 3 Services From Multiple Providers

Do Not Have All 3 Services


Cable TV31%

Online Only26%

Satellite TV17%

Off-Air & Online

12%

Off-Air Only8%

No Video6%

Video Market Share(Households)

September 20 13

Traditional Pay TV is losing subs to cord cutting – resulting in fewer bundled households. The households will not need bundle discount pricing but will need much more data capacity:

Tracking the impact to data usage prior to and then after cord cutting reveals households use 70% more than average within 3 months of dropping traditional Pay TV This matched usage data comparing video/Internet bundled households to ‘broadband-only’ households with the single service households using 85% more data each month (211 GB vs. 390 GB)

0

50

100

150

200

250

300

350

400

450

500

Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19

Mon

thly

Dat

a U

sage

(GBs

)

Monthly Household Data Usage Before and After Cord Cutting Event(OpenVault, August 2019))

Cord Cutters

Average Households

14% More Data Usage

70% More Data Usage

Cord Cutting Event

Source: OpenVault Q2 2019 OVBI Report

U.S. households are seeing both a significant increase in the number of Internet connected devices as well as significant growth in total IP traffic across these devices…


Across all Mapleton households, the number of connected devices is distributed as: 0 devices: 1% 1-4 devices: 20% 5-9 devices: 46% 10+ devices: 33%

The number of connected devices increases with household income

Middle-aged households (35-54) have more connected devices, likely due to the presence of children

9/23/2020 15

0%

20%

40%

60%

80%

100%

Up to $50k $50k - $100k $100k - $150k >$150k

Connected Devices by Income

0 1-4 5-9 10+


0%

20%

40%

60%

80%

100%

20 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75+

Connected Devices by Age

0 1-4 5-9 10+

FTTP Residential Quantitative SurveySatisfaction & Attribute Importance

9/23/2020 17

0

2

4

6

8

10

Internet Telephone Video Electric Water

6.6 6.26.9

8.57.7

Satisfaction Rating by Service/Service Provider(Mean Rating on a 1-10 Scale)

0%10%20%30%40%50%60%

Internet Telephone Video Electric Water

22%30% 31%

57%

45%

Satisfaction Rating by Service/Service Provider(Percent Rating a ‘9’ or ’10’)


The chart below compares the results of this study with over 30 other markets where Uptown has completed similar quantitative research:

Ohio (3) Washington North Carolina Oregon (2)Iowa Wisconsin Kansas (2) AlabamaGeorgia Oklahoma (2) New York ArkansasTennessee (4) Michigan Kentucky Colorado (7)

Utah

9/23/2020 18

5

6

7

8

9

Video Internet Telephone Utility

Satisfaction Rating by Service/Service Provider(Mean Rating on a 1 to 10 Scale)

While reliability and price are always important, Internet speed is perceived as very important in Mapleton. Bundling and Brand are secondary in importance to other attributes…

9/23/2020 19

0

1

2

3

4

5

Brand Service Bundle CustomerService

Price Internet Speed Reliability

1.9

2.6

4.24.5 4.5

4.8

Importance Rating of Select Broadband Service Attributes(Mean Rating on a 1-5 Scale)


9/23/2020 20

2

4

6

8

Price Service Reliability Speed

5.25.9

6.8 6.7

4.65.3

6.3 6.1

Satisfaction Rating by Internet Attribute(Mean Rating on a 1-10 Scale)

Total Sample Definitely Subscribe


Mapleton residents see increased Internet speed and lower prices as the most important dimension for improving their broadband…

9/23/2020 21

Nothing

Service Availability

Customer Service

Improved Reliability

Increased Internet Speed

Lower Prices

4%

5%

3%

13%

37%

37%

6%

3%

3%

13%

26%

47%

Q29: “What would you like to see most improved from your current broadband services?”

Total Sample

Definitely Subscribe


FTTP Residential Quantitative SurveyFiber Broadband Market Potential

47% of respondents, when given the choice, would prefer to receive high speed Internet from the City, but 1 in 3 households are undecided…

9/23/2020 23

CenturyLink Comcast CentraCom RiseBroadband

The City A NewProvider

Don't Know

2.5%

13.9%

1.1% 2.1%

47.1%

1.6%

31.7%

Q27: “Among the following list of potential providers, who would you prefer to receive high-speed Internet service from?”


71% of respondents indicated they would definitely or probably switch their Internet service to a fiber system installed by the City…

9/23/2020 24

3% 5%5%

39%

7%

22%

15%

16%

28%

14%

43%

6%

0%

25%

50%

75%

100%

Internet Phone

Q24/Q27: Stated purchase intent for:- Internet at $70/mo. for 1Gbps- Voice at 10% Less than CenturyLink

'Definitely Would'

'Probably Would'

'Might/Might Not'

'Probably Would Not'

'Definitely Would Not'

Don't Know


More Capacity,

47%

Lower Price, 27%

Prefer the City, 12%

Other, 14%

Don't Know, 1%

Primary reason to switch(pie chart)

Uptown uses a ‘Likert Scale’ with Overstatement Adjustment Conservative research techniques from the Packaged Goods sector Clearly specify purchase intent vs. “interest” and removes overstatement bias

Example: “How likely would you be to subscribe?” Definitely Would 21.5% x 70% = 15.0% Probably Would 35.6% x 30% = 10.7% Might/Might Not 20.0% x 10% = 2.0% Probably Would Not 10.4% 27.7% = Penetration Estimate Definitely Would Not 4.4% Don't Know 8.1%

9/23/2020 25

Residential Research(Terminal / Year 5 Eroded)

Small Business(Terminal)

Internet 40% @ $70 40%

Telephone 10% / 8% @ 10% Less 35%


9/23/2020 Study conducted by Uptown Services, LLC 26

The survey results indicate strong interest in multi-Gig tiers. The resulting Average Revenue Per User (ARPU) is $80 per month.…

74%

21%

5%

Most Likely Subscribed Tier at Stated Price Points

1G @ $70

2G @ $100

4G @ $150

9/23/2020 27

0%

10%

20%

30%

40%

50%

60%

Mar

ket A

Mar

ket B

Mar

ket C

Mar

ket D

Mar

ket E

Mar

ket F

Mar

ket G

Mar

ket H

Mar

ket I

Mar

ket J

Mar

ket K

Mar

ket L

Mar

ket M

Mar

ket N

Mar

ket O

Mar

ket P

Mar

ket Q

Mar

ket R

Mar

ket S

Mar

ket T

Mar

ket U

Mar

ket V

Long

mon

tM

arke

t XM

arke

t YM

arke

t ZFt

Col

lins

Mar

ket A

BM

arke

t AC

Mar

ket A

DM

arke

t AE

Mar

ket A

FM

arke

t AG

Mar

ket A

HSa

lem

Map

leto

n

Terminal Penetration by Service(Across all Tested Price Points)

Video Internet Phone


2005 2010 2015

Actual vs Research

Tested @ $70

Tested @ 10% Less

2020

Six out of ten Mapleton households support the issuance of a revenue bond to help fund the new fiber network…

Q30: “Without raising taxes, would you support the City of Mapleton issuing a Revenue Bond to fund the construction of the fiber network, if the service subscription revenues were used to pay off the bond?”

9/23/2020 28

Don't Know

I would not support

I am neutral

I would support

9%

14%

16%

61%

September 20 29

Overall, 97% of households use Internet at home with Comcast as the dominant provider

Internet and phone service satisfaction levels benchmark below average

Improved Internet speed and lower prices are the predominant need for improvement with

current Internet service

Forecasted residential take rates of 40% (Internet) and 10% (voice) with Gig Internet at $70

Strong interest in multi-Gig tiers at higher price points resulting in ARPU of $80

The City is the preferred provider versus over the current incumbent providers

Nearly 2 out of 3 households support the issuance of a revenue bond to fund construction

Technology Analysis and Capital BudgetingEvaluation of Current Network Capabilities

31

City of Mapleton lacks applicable outside plant infrastructure Outside plant = aerial and underground pathway systems City does not operate a municipal electric system Rocky Mountain Power owns all utility poles in the City

No existing fiber infrastructure City does not own or operate a fiber network currently There are limited fiber-based carrier options in the area

Proximity to Spanish Fork is greatest asset City can easily connect via fiber to Spanish Fork Interconnecting facilities would be part of any last mile FTTP build

9/23/2020 Study conducted by Uptown Services, LLC

Technology Analysis and Capital BudgetingReference Architecture

33

Provider Owned Premises Equipment Media Converter – indoor wall mount or desktop versions Add On Wi-Fi routers available

Customer Owned Premises Equipment Router – may not be GigE capable All end user computing devices Standard telephones for telephone service Streaming video appliances – AppleTV, FireStick, Roku, etc.

Inside Wire Phone services use the existing phone wiring Digital streaming services use new CAT6 wiring or Wi-Fi Data services delivered over new CAT6 cable or Wi-Fi


34

Drop Terminal Drop terminals connect service drops to the distribution network One terminal serves between two and twelve passings Terminals allow for plug and play at the serving pedestal / pole Terminals attach directly to distribution fiber cable

Service Drop and Test Access Point Drops only installed after subscriber orders service One fiber drop cable installed from terminal to each premises Fiber drop pushed or pulled in shallow drop conduit in underground Aerial drops are flat self support cable Drop fiber terminated in test access point (TAP) mounted on dwelling TAP provides demarcation between outside and inside fiber (bulkhead)



ActiveEquipment

NodeT

T T

T

T

T

T

TDistribution Fiber CableDrop Terminal

Drop Fiber Cable

MC

Wired EthernetWiFiPhone Wiring

TV

PC

Phone

• Service drops installed after subscriber orders first service• Drops plug into terminal with hardened connector (no splicing required)• Connectorized drop terminates on Test Access Point (TAP)• Media Converter (MC) placed in dwelling• WiFi access points/routers can be connected to the MC• Streaming video supported using SmartTV or other appliance

TAP

Indoor Fiber Jumper

36

Distribution network Distribution fiber connects drop terminals to an active node One fiber per home and business passed by the distribution cable

Neighborhood active equipment node Aggregates traffic for up to 200 homes and businesses Contains fiber termination panels for distribution and feeder fiber Houses Ethernet switches that are fed from primary network switch

Feeder / backbone network Neighborhood nodes are fed by a new feeder network Feeder network is sized to feed each node with at least 12 fibers

Network operations center (NOC) Mapleton would have a primary switching location in the City (NOC) One large switch in the NOC would aggregate all subtending node traffic NOC would then connect via dark fiber to SFCN


37

Core Network – Layer 3 Core network safely routes traffic to and from the outside world Border Gateway Protocol (BGP) routers connect to the Internet BGP routers deployed in pairs Typically installed on backbone network in physically diverse locations Each router connects to at least two Internet backbone providers

Outside World – Content Two physically diverse Internet backbone connections desired Video content would come in over one or both Internet connections Phone would also route over one or both Internet connections

Spanish Fork Community Network Mapleton will rely on SFCN for all Core Network functions Mapleton will connect to SFCN over high capacity Layer 2 links


Mapleton Network Operations Center


SpanishFork

Community Network

AggregationSwitch

NeighborhoodNode C

NeighborhoodNode A

NeighborhoodNode B

* Preliminary design calls for (16) Nodes within the City limits of Mapleton

Technology AnalysisSample Designs

40

100% Active Ethernet standards based Based on SFCN network architecture Delivers 40Gig capacity to every neighborhood node Delivers up to 10Gig capacity from each neighborhood node to any

premises Distribution fiber network allocation (from each node)

One fiber per home and business from each node for FTTP At least 10% spare fibers in each distribution cable

Feeder fiber network allocation (to each node) At least 12 fibers per node to feed FTTP equipment At least 10% spare fibers in each feeder cable

Design assumes the use of standard cable technology Single jacket, light armor cable for aerial (com zone) Single jacket all dielectric for underground



New underground path creation $15.10 per foot composite for conduit placement (primarily boring) $1.13 per foot for conduit materials Per structure adder for all vaults, pedestals and handholes

Fiber placement $1.25 per foot labor to install fiber cable in new conduit system $0.75 per foot average fiber material cost

Aerial construction costs $1.75 per foot composite rate to install new messenger in com zone $1.25 per foot to lash each cable to strand in com zone

Technical services $30 per fusion splice $250 - $450 closure prep for terminals, splice points and feeder taps

Material pricing assumptions Fiber, terminal and structure pricing based on recent client bids Pricing subject to change over time

10% contingency added for all materials and labor estimates

43

Design Metric ValueNew Aerial Plant Miles 23.4Underground Plant Miles 42.1Total Poles 625% Aerial 36%% UG 64%Passings 3,292Nodes 16

Passings per Mile of Plant 50Materials Cost per Passing $325Labor Cost per Passing $1,499Total Cost per Passing $1,824Total Materials (no drops) $1.1M Total Labor (no drops) $4.9MTotal Cost $6.0M

* - Does not include engineering, fixed equipment, subscriber capital and installation costs.



SFCN crews may be less than 3rd party contractors All work assumed to be completed by contractors SFCN is willing to do certain technical services tasks node by node Fiber placement (aerial and underground) Closure prep, splicing and testing

Apples to apples cost comparison was not achievable for this study Soil conditions may drive higher construction costs

Boring assumed for 75% of all underground path creation Cobble adder ($18/foot) applied to drilling rate for 15% of footage Trenching assumed for 10% of footage

Aerial construction Rocky Mountain Power pole attachment process looks to be okay Pole attachment process introduces significant cost and schedule risk Additional expenses for survey, administration, design and construction Schedule risk introduced by 3rd party review and approval of attachments

Incumbent and Proposed FTTP Service Offerings

Internet and Data Services

9/23/2020 46

Download Upload Price Technology

CenturyLink 60M100M 5M $55.00

$65.00 DSL

Comcast

25M100M200M300M

2M5M

10M25M

1st Year / Month-Month$19.99 / $29.99$34.99 / $55.00$49.99 / $70.00$64.99 / $80.00

Cable Modem(DOCSIS 3.0)

600M*1G*2G*

-

1st Year / Month-Month$74.99 / $90.00

$84.99 / $100.00$299.95 (monthly only)

Cable Modem(DOCSIS 3.1)

Prices reflect subscription to Internet service at non-promotional rates. CenturyLink pricing per centurylink.com as of March 2020. Comcast pricing from xfinity.com as of March 2020.

*DOCSIS3.1 is not available in all areas that Comcast currently serves.


9/23/2020 47

Download Upload Price Technology

Utah Broadband

10M15M20M35M60M

-

$49.95$59.95$69.95$79.95$89.95

Fixed WirelessRise Broadband

25M ($3.50/10GB)25M (unlimited data) - $34.95 + $10.99 equipment rental

$54.95 + $10.99 equipment rental

CentraCom

20M40M60M

100M

-

$35.95 + $2.95 equipment rental$55.95+ $2.95 equipment rental$69.95+ $2.95 equipment rental$99.95+ $2.95 equipment rental

Prices reflect subscription to Internet service at non-promotional rates. UBB pricing from utahbroadband.com as of March 2020. Rise Broadband pricing from risebroadband.com as of March 2020. CentraCom pricing from centracom.com as of March 2020.


9/23/2020 48

Internet Tier Download / Upload Monthly PriceMedia ConverterModel(s) / Cost

1G / 1G $70 $35 for Media Converter

2G / 2G $100

$345 for Media Converter

4G / 4G $150

Wireless Gateway UpgradeResell Plume managed WiFi

($2/sub/mo.)*Add $10 Adds $160 for Plume

wireless device


* Requires $2,000 monthly minimum but can be pooled with SFCN.


$1.20

$0.55 $0.35 $0.27 $0.15 $0.10 $0.15

$0.92 $0.65

$1.00

$0.07 $0.05 $0.04 $0.00

$5.00

0

500

1000

1500

2000

2500

3000

3500

4000

Comcast25M

Comcast100M

Comcast200M

Comcast300M

Comcast600M

Comcast1G

Comcast2G

CL 60M CL 100M FTTP50M

FTTP 1G FTTP 2G FTTP 4G

Mon

thly

Pric

e pe

r Mbp

s Dow

nloa

d

Dow

nstr

eam

Thr

ough

put (

Mbp

s)

Internet Downstream Throughput and Price per Mbps(Wireline Incumbents and Proposed FTTP Tiers)

Throughput $/Meg

9/23/2020 50

Internet Tier Download / Upload Monthly PriceMedia ConverterModel(s) / Cost

1G / 1G $80 $35 for Media Converter

2G / 2G $130

$345 for Media Converter

4G / 4G $250

Wireless Gateway UpgradeResell Plume managed WiFi

($2/sub/mo.)*Add $10 Adds $160 for Plume

wireless device


9/23/2020 51

Function Operational Responsibility FTTP System CLEC

Capital Local Loop and Premises NIU

Fiber MUX, Transport, and Switch

Interconnect LNP, Operator Services, PSAP, IC Agreements

Marketing & Sales Advertising, Sales

Brand, Pricing

Provisioning Work Order Creation

Bell Processes

Switch Provisioning

Customer Install

Billing Bill Fulfillment

Call Detail Record (LD), Taxes & Fees

Internet Backbone Interconnection


52

Segment Service With Internet Rates Without Internet Rates

Residential Access Line, Features, & Unlimited LD • Monthly: $35 Not Offered

Commercial

Access Line, Features, & Unlimited LD

• Monthly: $30• 2 Year: $26• 3 Year: $24

• Monthly: $40• 2 Year: $36• 3 Year: $34

Digital SIP Trunk(per channel)

• 2 Year: $25• 3 Year: $23

• 2 Year: $30• 3 Year: $28

Hosted PBX(per seat)

Requires Internet and minimum 3 year term:• 1-5 Seats: $25• 6-24 Seats: $23• 25-49 Seats: $22• 50+ Seats: $21

With the below retail voice pricing, net revenue per line (retail less wholesale voice fees) will be the following at current CLEC wholesale market rates:

• Residential: $28 per month• Commercial: $16 per month


Potential Business Models & Funding Sources

9/23/2020 54

OPTION 1: City as stand-alone Operator

All customer and network operation functions performed with incremental staff

positions (Total of 8 FTEs in Year 5)

Voice service provided by CLEC partner

OPTION 2: Operating partnership with Spanish Fork Community Network (SFCN)

SFCN performs customer operations and Internet Service Provider tasks

City staff positions reduced from 8 FTE → 2 FTE

System GM

Account Rep/Customer Service Coordinator

RECOMMENDATION: SFCN Partnership Model

Utilize SFCN expertise to construct and operate a broadband system

Efficient use of existing SFCN personnel and equipment

Significantly lower total funding requirement


9/23/2020 55

Ownership Role of the City

• City funds capex for fiber build (FTTP), working capital, and all operating expenses

• City is 100% owner of the FTTP system.

Operating Role of the City

• City is the service provider and performs some administrative functions (e.g. billing), general management, and on-site account support.

Operating Role of SFCN

• Customer Operations: SFCN provides customer care, customer installs and provisioning, service truck rolls, and network maintenance.

• Data Network Services: Network configuration/administration, hardware/software platform, bandwidth , system monitoring.

Services Offered • Internet and Voice (SFCN video would not be offered)

Services Revenue • All revenue retained by the City• Partner compensated with monthly fee per connected end-user.

Partnership Terms

• Initial term commitment of 5 or 10 years• Monthly fee per connected premises (household or business) of $15 (years 1-5)

and $25 (years 6-10)• Transport circuit fixed fee of $200/month• Bandwidth fee at current SFCN cost of $.57/Mbps starting at 10Gbps


Exploratory discussions with SFCN leadership have generated a preliminary framework for how the operating partnership could be structured…

56

Position Title Salary(unloaded) Year1 Year2 Year3 Year4 Year5

System GM $125,000 1.0 1.0 1.0 1.0 1.0

Comm./MDU Account Manager $65,000 1.0 1.0 1.0 1.0 1.0

Network Engineer $75,000 0.5 1.0 1.0 1.0 1.0

CSRs $50,000 - 1.0 1.0 1.0 1.0

TSRs $55,000 - 1.0 1.0 1.0 1.0

Install Techs $55,000 - - - 1.0 1.0

Maintenance Techs $65,000 - 1.0 1.0 1.0 1.0

Service Techs $55,000 - 1.0 1.0 1.0 1.0

Total Headcount: Stand-Alone Model 2.5 7.0 7.0 8.0 8.0

Total Headcount: Operating Partner Model 2.0 2.0 2.0 2.0 2.0


The total FTE requirement levels at 8 in Year 4. Under the Operating Partner model, this is reduced to 2 FTE by moving the shaded functions to the operating partner…

9/23/2020 57

Revenue• Monthly fee per connected premises (household or business) of $15 (Years 1-5)

and then $25 (Years 6-10) as contra-revenue• Years 11-20: Insource all operations (baseline) or continue at reduced fee

Operating Expense

• Staffing requirement reduced to 2 full-time employees• Transport circuit fixed fee of $200/month• Bandwidth fee at current SFCN cost of $.57/Mbps starting at 10Gbps• Billing system integration to Caselle previously developed by SFCN

Capital Expense

• Generator/UPS is not required• Core switch/router of $200k is not required• Internet service back-office platform of $100k is not required• Testing equipment of $50k is not required• Splicing trailer of $25k is not required• Field technician tools of $23k is not required• Service van ($45k) and bucket truck ($90k) is not required• Customer installs of $500 each is not required (avoided contractor fee)


In exchange for the ongoing monthly fee to be paid to SFCN, the following impacts to the financial analysis are incorporated into the pro forma…

Pro Forma Financial Analysis

SFCN Operating Partner Model

Revenue Forecast

Pro forma take-rate projections were evaluated via quantitative market research and reflect ongoing wireless (voice) substitution within the residential segment…

9/23/2020 60

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Year1

Year2

Year3

Year4

Year5

Year6

Year7

Year8

Year9

Year10

Year11

Year12

Year13

Year14

Year15

Year16

Year17

Year18

Year19

Year20

Year

Service Penetration(By Year Since Launch)

Residential Voice Residential Internet Commercial Voice Commercial DataStudy conducted by Uptown Services, LLC

9/23/2020 61

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10

Year11

Year12

Year13

Year14

Year15

Year16

Year17

Year18

Year19

Year20

Subscribers by Service(End of Period)

Residential Internet Residential Voice Commercial Data Commercial Voice High Cap Accounts


62

($0.6)

($0.1)

$0.4

$0.9

$1.4

$1.9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Baseline Revenue(in millions)

Middle Mile/Other Revenue

High Capacity Services

Commercial Video

Residential Video

Commercial Internet

Residential Internet

Commercial Phone

Residential Phone

SFCN Fees

KEY INPUTS• Year 1 Premises

• Residential: 2,800• Commercial: 60• Household Growth: 4.3% Yrs. 2-5, then 2.2%• Commercial Growth: 2% Yrs. 2-5, then 1%

• Year 5 Penetration• Internet: 39.8% Res / 40% Com• Voice (eroded): 6.1% / 35% Com

• Residential Internet• 3 Tiers (1G/2G/4G): $70-$150• Wireless Gateway: $10 ($8 net)

• Commercial Internet• 3 Tiers (1G/2G/4G): $80-$250• Wireless Gateway: $10 ($8 net)

• Voice• Residential: $28 net wholesale• Commercial: $16 net per line

• Inter-Departmental Lease Fee• 21% of annual debt service ($56k in Yr. 2

increasing to $165k in Yr. 7)• Install Fees

• Residential: $100 • Commercial: $100

• SFCN Fees• Treated as Contra-Revenue• Annual fees per detail slide


Operating Budget

64

Mapleton City New FTTP Positions (full-time) Years 1-20: System General Manager (1), Commercial/MDU Account Rep (1) Years 11-20: Network Engineer (1), CSRs (2), Field Techs (2) Position salaries based on SFCN wages 52% benefits loading and 2.5% annual salary increase

SFCN Functions (Years 1-10) Customer Care (help desk, sales, billing support, work orders) Customer Installs and service calls (truck rolls) Network administration (inside plant) Network maintenance (outside plant)

Study conducted by Uptown Services, LLC9/23/2020

9/23/2020 65

Cost Requirement Sourcing Details Monthly

Recurring Cost

Transport

Dedicated fiber route to SFCN headend at $200/month• Existing fiber: SFCN network to edge of Mapleton City limits• New fiber: SFCN will construct to 125 W 400 North (10’ x 10’

equipment room)

$200

Access Bandwidth via SFC starting at $0.57/Mbps/month and declining every 3 years to reflect market conditions $5,700 in Year 2

Other Fees IP Addresses: $.50 each/month Varies with subscriber growth

Bandwidth Usage Per Subscriber

Residential: 3M in Year 1 growing at 25%/year reducing to 10% by Year 10Commercial: 1.5M in Year 1 growing at flat 10%/yearHigh Capacity: 1M in Year 1 growing at flat 10%/year


9/23/2020 66

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

0

20,000

40,000

60,000

80,000

100,000

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12 Yr 13 Yr 14 Yr 15 Yr 16 Yr 17 Yr 18 Yr 19 Yr 20

Band

wid

th $

/Sub

scrib

er

Tota

l Ban

dwid

th (M

bps)

Bandwidth Required

Bandwidth $/Sub


67

0%

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20%

30%

40%

50%

60%

70%

80%

90%

100%

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

Year

1Ye

ar 2

Year

3Ye

ar 4

Year

5Ye

ar 6

Year

7Ye

ar 8

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9Ye

ar 1

0Ye

ar 1

1Ye

ar 1

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ar 1

3Ye

ar 1

4Ye

ar 1

5

Internet Revenue & COGS(in millions)

COGS Gross Margin $ Gross Margin %

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0.00

$0.01

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08

$0.09

$0.10

Year

1Ye

ar 2

Year

3Ye

ar 4

Year

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ar 6

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7Ye

ar 8

Year

9Ye

ar 1

0Ye

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1Ye

ar 1

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ar 1

3Ye

ar 1

4Ye

ar 1

5

Voice Revenue & COGS(in millions)

COGS Gross Margin $ Gross Margin %


68

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

Year1

Year2

Year3

Year4

Year5

Year6

Year7

Year8

Year9

Year10

Year11

Year12

Year13

Year14

Year15

Baseline Opex(in millions)

Internet Backbone/IPAddresses Professional ServicesStaffing Expenses Vendor MaintenanceLocates & Right of Way Fees

KEY INPUTS• Transport/Bandwidth/IP Addresses

• Fees and usage per detail slide • Staffing

• Headcount per detail slide • 2.5% annual wage increase• 52% benefits loading

• Vendor Maintenance• $25k/year for FTTP electronics

(starts Yr. 1)• Professional Services

• Implementation Support: $180k• Legal/Acct: $30k (Yr. 1) → $5k/year

• Locates & ROW Fees• Year 5 total attachments: 616• Annual cost per attachment: $5.76• Annual fee increase: 5%• Application fee of $56/pole

included in OSP construction capex


69

$0

$20

$40

$60

$80

$100

$120

Year1

Year2

Year3

Year4

Year5

Year6

Year7

Year8

Year9

Year10

Year11

Year12

Year13

Year14

Year15

Baseline SG&A(in 000’s)

Marketing Expenses Administrative Overhead

KEY INPUTS• Marketing

• Year 1: $0k• Year 2: $40k• Year 3: $20k• Years 4-5: $10k• Year 6+: 1% of revenues

• Billing• No incremental cost given

broadband services fees added to electric billing statement

• Overhead• Broadband imputes an allocation

of administrative overhead costs as an enterprise fund

• $57k in Year 1• Increases 3% annually

• Facilities & Workspace• No incremental budget required


Capital Budget

9/23/2020 71

Network Construction OSP Construction: $1,824 composite cost per premise passed Subsequent plant extensions: $300/meter passed Neighborhood Node cost: $210/meter passed Make ready cost: $700/pole (may be lower depending on state of RMP poles) Pole attachment application fee: $55.64/pole Year 10 Network electronics upgrade: $75/premise passed

Software Fiber Management & Network Management: $50k

Media Converters (MCs) Media Converter for 1G tier: $35 each Media Converter for 10G tier: $345 each Plume Wireless Device: $160 each Year 7 MC upgrade: $45k ($35/ea.)


9/23/2020 72

Fiber Drop & Customer Equipment Fiber drop and connectors: $125 each Power cord and UPS: $52 each ($12 for non-voice install without UPS)

Engineering and Integration GPS Walkout and Survey of RMP Poles: $500 per mile Make ready engineering: $500 per mile FTTP design: $1,500 per mile Construction Management Services: $5,000 per mile As-built drawings: $250 per mile


9/23/2020 73

Fixed Equipment Generator (Year 11): $25,000 Core HE switch/router: $200k Internet systems back office: $100k Field Tech Equipment/Tools: $98k

Software OSS/BSS: $250k

Vehicles Service Vans Per Install Technician: 1.0 Heavy Service Trucks Per Maintenance Technician: 1.0 Service vans: 1 at $45k each Heavy Service Trucks (non-insulated): 1 at $90k each Install Rigs: 1 per Install Technician at $20k each Vehicles replaced at 6 year intervals


74

$7,091,007

$501,186$50,000

$255,086$213,242 $224,448

Five Year Capex = $8.3M

Outside Plant Construction

Other Capital Costs

Back Office Systems

Media Converters

Fiber Drop and Powering

Engineering & Inspection Services


75

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Year 11Year 12Year 13Year 14Year 15$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

Outside Plant Construction Backup PowerOther Capital Costs Back Office SystemsFTTP MCs Fiber Drop and PoweringEngineering & Inspection Services Vehicles


Network Construction

Electronics UpgradeMC Upgrade

Start-Up Tasks

Insource Operations

Pro Forma Outcomes

9/23/2020 77

1. Equity City provides $1,000,000 contribution in Year 1 As equity, no imputed interest rate

2. Long Term Bond Single round of financing (Year 1) via 20-year tax exempt bond Backed by taxing authority of the City (sales tax & energy sales tax) Interest rate of 2.75% and five years of capitalized interest Principal payments starting in Year 6 2.0% issuance cost, $0 reserve requirement

3. Working Capital Loan Provides for cash needs not covered by long term financing 15 year term with interest rate of 2.0% based upon current PTIF* rate Interest accumulates over first 5 years with Year 6 balloon payment Level payments begin in Year 6 and complete in Year 15


* Public Treasurers Investment Fund

78

($10.0)

($8.0)

($6.0)

($4.0)

($2.0)

$0.0

$2.0

$4.0

Line of Credit Operating Income Debt Service Net Cash Revenue

9/23/2020

Positive Oper. Income in Year 3

Additional Funding Required in Year 13

Net Cash is Negative in Year 20

Insource staffing in Year 11

79

Input/OutcomeBaseline View:

Insource in Year 11Scenario: Breakeven

PenetrationScenario: Breakeven

Cost/PassingScenario: 1G at $50

(Longmont Strategy)

Construction Cost / Passing $1,824 $1,824 $1,100 $1,824

Internet Penetration (residential) 39.8% 44.0% 39.8% 54%

Price for 1G Tier (residential) $70/month $70/month $70/month $50/month

SFCN Fee Per Sub/Month Years 1-5: $15Years 6-10: $25

Years 1-5: $15Years 6-10: $25

Years 1-5: $15Years 6-10: $25

Years 1-5: $15Years 6-10: $25

Equity $1.0M $1.0M $1.0M $1.0M

Long Term Bond $10.4M $10.4M $7.6M $10.5M

Working Capital Loan $0.3M $0.3M $0.3M $0.3M

Line of Credit $3.0M - - -

Total Funding $14.6M $11.7M $8.9M $11.8M

Net Cash – Year 20 ($3.0M) $0.1M $0.1M $0.3M

Project Break Even > 20 20 20 20

Financially Feasible? NO YES YES YES


80

To achieve financial self-sufficiency, the fiber system performance would need to exceed our ‘most likely’ take rate estimates Goal: Prior to the retirement of the debt in year 20, cash flow is sufficient to

cover debt service without any additional funding after Year 1 The residential Internet penetration rate needs to reach 44% versus our

research-based estimate of 39.8% However, the SFCN partnership presents a tremendous opportunity for

Mapleton City given their existing broadband operation and operating expertise

Key Next Steps Review with Citizen Committee Legal review of HB149 requirements Validate financing terms and pro forma review by Zions Public Finance Initial presentation to City Council prior to June 30th


2%. incidence of internet households. wired connection. fixed wireless. satellite. cellular data...

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