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Home My WebLink AboutStudy Session #1 - Broadband Strategic Plan - City of Huntin9/19/2016 Broadband Strategic Plan City of Huntington Beach, California September 2016 Project Background ctc techmp,n & energy The City of Huntington Beach retained CTC Technology Et Energy (CTC) to perform three tasks: 1. Conduct a broadband market analysis 2. Develop a strategic plan to maximize the economic development benefits of the City's broadband assets 3. Provide recommendations for long-term planning to 1 improve the economic development potential to attract, retain, and expand businesses. SUPPLEMENTAL 2 dc AgwWe n.m No.: S 7_4Z/ y & energy __ z...Ug 1 9/19/2016 City's Objectives r� 1/ ► Economic development ► Expand technology sector ► Diversify economy 1 ► Attract and retain new companies in different sectors j ► Promote tourism ► Incent private sector investment in key focus areas ► Expand broadband connectivity to city -owned ///1 buildings ' i ctc techngtogy & energy Target Economic Focus Areas ► Beach and Edinger Corridors ► Bella Terra ► Gothard Industrial Corridor ► Holly-Seachff underused parcels ► Main Street Et Pi re ► Northwest Industrial Area ► Southeast Opportunity Area .Y 4 ctc techn, a energy N 9/19/2016 Gaps in Broadband Service Availability ► Availability of business broadband services ► Location ► Speed ► Reliability ► Quality of mobile wireless coverage ► Availability of fiber -based residential services etc technoogy g energy 2 rarr, r.„,,,h,.a,,�::,n Broadband Deployment Objectives 8t Challenges ► Broadband deployment objectives ► Affordability ► Cash flow No. Competition in market ► Consumer choice ► Ownership and control of assets (business I development) ► Performance ► Risk aversion ► Ubiquity i / i 6 [tc technPlM & energy % royiarrrhg B nuve,i nnvinq 3 9/19/2016 Common Goal Alignment Ubiquity Choice Competition Ownership Performance Affordability RiskAversipn Cash Flow Ubiquity NA A A A NI C C C Choice A NA A A A A C NI Competition A A NA A A A C NI Ownership A A A NA A A A C '€ Performance NI A A A NA NI A A Affordability C A A A NI NA C C Risk Aversion C C C A A C NA A Cash Flow C NI NI C A C A NA A align C conflict Huntington Beach Priorities (for businesses) / NA not applicable Ubiquity NI no impact • Competition I • Choice ctc technology & energy Interactions Between Objectives 1 i Affordability i Corn etition _ Ubiquity Choice i Perforninc-e- ` Ownership Cash Flow isk- Huntington Beach Priorities (for businesses Aversion • Ubiquity • Competition • Choice 8 ctc techn & energy 4 9/19/2016 Broadband Deployment Objectives Et Challenges ► Markets with existing FTTP ► Rate of return (return on investment, or R01) challenges ► Sale to Frontier has created dissatisfaction, but FTTP deployment still makes it more difficult for a new entrant ► Business gaps do exist - the FTTP build concentrated on residences I Recommendations 1. Develop a "Dig Once" ordinance 2. Build network extensions to City -owned properties and high -value facilities, and interconnect with outside networks 3. Pursue discussions with private partners 4. Develop and distribute a request for information (RFI) or request for proposal (RFP) 10 do 9 energy 6i J 9/19/2016 1) Develop a Dig -Once Ordinance ► Encouraging or requiring simultaneous construction and co -location of facilities in the public right-of-way (ROW) will reduce the long- term cost to build communications facilities ► Coordinate fiber construction with road construction and other disruptive activities in the public ROW ► Construct spare conduit capacity where multiple service providers or entities may require infrastructure ► Prioritize projects ► Create standards 2) Extending connectivity to City -owned buildin rr� ctctechnplogy $ energy ► Phase 1: Infrastructure Audit 1 ► Phase 2: Address Critical Needs through Interim �1 Strategies j ► Phase 3: Infrastructure Remediation ► Phase 4: Construct Additional Distribution Fiber 'x ► Phase 5: Construct Laterals to City Facilities ► Phase 6: Construct Additional Fiber Routes to Provide Redundancy 12 de 9/19/2016 Middle -Mile Network in the Focus Areas i 1 ► Estimates for each area with the route down the t main road in each area 1 ► 144-count fiber ► High-level cost estimates: $5.4 Million ► Does not include ► Last mile fiber ► Permitting ► Pole attachment licensing ► Network electronics 13 ctc Middle -Mile Fiber: High -Level Cost Estimates �1 ; �1 I 14 ctc technptaay 9 enemy g C.0 ,, e b q e� Ineerrig Economic Focus Areas Cost Estimate Bella Terra $448,000 Gothard Industrial Corridor 1,200,000 Holly-Seacliff 352,900 Main Street and Pier 305,400 Northwest Industrial Area 2,842,600 Southeast Opportunity Area 211,400 Total $5,360,300 7 9/19/2016 3) Pursue Discussions with Private Partners ► Engage carriers ► Crown Castle ► TelePacific ► ATFtT ► Monetize current and future fiber and infrastructure assets, examples: ► Lease the City's fiber/conduit network ► Sample rates in California vary between $1,000 to $30,000 per strand mile per year, depending on location ► Populate the City's conduit with new fiber as the partner deploys its own fiber ► Consider economic development incentives 4) Develop and Distribute an RFI / RFP ► Use a standard template to allow comparative review ► Outline goals and objectives ► Outline the City's role - permitting to assets ► Encourage a variety of business models I do tschngtogy & energy 16 do techn gy g neerhy b twig 9/19/2016 Business Model A ► Public Private -Partnership Approach ► Model 1 - Private Investment with Private Partners ► Model 2 - Public Sector Incenting Private Investment ► Model 3 - Shared Investment and Risk ► Potential City Initiatives ► Extend connectivity to City -owned buildings ► Create a middle -mile network in the focus areas ($5.4 million for dark fiber) ► Create an FTTP network for business areas ($16 to $22 million for dark fiber) ► Create an FTTP network for residential and business ai ($116 million for dark fiber) 17 do technology & energy Business Model B (not recommended) ► City Ownership Option - Retail Services i ► City-wide FTTP network to every home and business ► High-level cost estimate: $198 Million ` 11. ► 50 percent take rate (for cost estimate only) h it► Maintenance costs of up to $4 Million per year 8 de tech & energy 9/19/2016 ctc technology & energy ', r engineering & business consulting i Questions Contact Information h' �i Tom Asp 1' Principal Analyst, CTC Technology Et Energy TAsp@ctcnet.us V i / 20 G[C ilchn 8 jrrehg 6 bra 10 • • llff �Iw♦ , - • • r • •rr •! '" U- 4 - � • • is � . - �� • • t • • CTC Report I City of Huntington Beach I August 2016 Contents 1 Executive Summary................................................................................................................. 6 1.1 Huntington Beach's Economic Development Objectives..............................................................6 1.2 Project Objective: Identify Ways that Broadband Can Help the City Meet Its Economic DevelopmentGoals...................................................................................................................................6 1.3 Project Tasks..................................................................................................................................7 1.4 Recommendations for Meeting the City's Broadband -Related Economic Development Goals ... 8 1.4.1 Develop a "Dig Once" Ordinance..........................................................................................8 1.4.2 Build Network Extensions to City -Owned Properties............................................................9 1.4.3 Pursue Discussions with Private Partners...........................................................................10 1.4.4 Develop and Distribute a Request for Information or Request for Proposals....................11 2 Inventory of Current and Planned Broadband Assets.......................................................... 12 2.1 Existing City Infrastructure..........................................................................................................12 2.2 Planned City Infrastructure.........................................................................................................15 3 Inventory of Local Enterprise Broadband Services............................................................... 18 3.1 Dark Fiber Services......................................................................................................................18 3.2 Lit Services...................................................................................................................................20 4 Assessment of Local Broadband Market.............................................................................. 26 4.1 Interviews with Business Groups................................................................................................26 4.2 Broadband Services for Large Businesses...................................................................................27 4.3 Mobile Wireless Services for Business and Hospitality Customers.............................................27 4.4 Survey of Businesses' Needs.............................................................................................................28 5 Broadband Deployment Objectives and Challenges............................................................ 30 5.1 Broadband Deployment Objectives............................................................................................30 5.2 Challenges of City -Deployed Fiber in a Market that Includes Verizon FiOS................................32 6 Cost Comparison: Middle -Mile Network Expansion vs. Fiber -to -the -Premises ................... 35 6.1 Cost Estimate for Middle -Mile Fiber to Serve Economic Focus Areas........................................35 6.1.1 Cost Estimates for Middle Mile Fiber Network Extensions.................................................35 6.1.2 Assumptions and Caveats Underlying These Cost Estimates..............................................37 6.2 Cost Estimate for FTTP to Serve All Businesses and Residents...................................................37 6.2.1 Passings...............................................................................................................................38 CTC Report I City of Huntington Beach I August 2016 6.2.2 Financial Analysis.................................................................................................................38 6.2.2.1 Potential Range of Costs.................................................................................................38 6.2.2.2 OSP..................................................................................................................................39 6.2.2.3 Central Network Electronics............................................................................................40 6.2.2.4 Customer Premises Equipment.......................................................................................40 6.2.2.5 Assumptions and Caveats Underlying These Cost Estimates..........................................40 7 Recommendations for Meeting the City's Broadband and Economic Development Goals 41 7.1 Develop a "Dig Once" Policy........................................................................................................41 7.1.1 The Case for Dig Once Policies............................................................................................41 7.1.2 Coordinating Conduit Construction with Other Utility Projects Reduces Costs .................43 7.1.3 Criteria for Prioritization.....................................................................................................43 7.1.4 Standard Specification.........................................................................................................43 7.2 Build Network Extensions to City -Owned Properties.................................................................46 7.2.1 Phase 1: Infrastructure Audit..............................................................................................47 7.2.2 Phase 2: Address Critical Needs through Interim Strategies...............................................47 7.2.3 Phase 3: Perform Infrastructure Remediation....................................................................48 7.2.4 Phase 4: Construct Additional Distribution Fiber................................................................48 7.2.5 Phase 5: Construct Laterals to City Facilities.......................................................................48 7.2.6 Phase 6: Construct Additional Fiber Routes to Provide Redundancy.................................49 7.2.7 Typical Costs Associated with Service Drops.......................................................................49 7.3 Pursue Discussions and Potential Pilot Projects with Private Partners.......................................49 7.3.1 Explore Potential Partnership with Crown Castle...............................................................50 7.3.2 Explore Potential Partnership with TelePacific...................................................................51 7.3.3 Explore Potential Partnership with AT&T............................................................................51 7.3.4 Consider Economic Development Incentives......................................................................52 7.4 Develop and Distribute a Request for Information or Request for Proposal..............................52 8 Potential Long -Term Revenue Opportunities....................................................................... 54 8.1 Monetize Assets by Leasing to Wholesale Dark Fiber Providers.................................................54 8.1.1 Paths to a New Metro Market.............................................................................................54 8.1.2 New Market Considerations................................................................................................55 8.1.3 Carrier Engagement.............................................................................:...............................56 8.1.4 Memorandum of Understanding........................................................................................57 3i CTC Report I City of Huntington Beach I August 2016 8.2 Monetize Assets by Leasing to Wireless Telecommunication Providers....................................58 Appendix A: Business Survey Results............................................................................................ 60 Appendix B: Residential and Small Business Services.................................................................. 63 Cable........................................................................................................................................................63 DSL........................................................................................................................................................... 64 Fiber.........................................................................................................................................................65 Satellite....................................................................................................................................................66 Wireless...................................................................................................................................................67 Appendix C: Responsibility Matrix................................................................................................ 69 Appendix D: Potential RFI/RFP Recipients.................................................................................... 70 Appendix E: Dig Once: Criteria for Prioritization.......................................................................... 71 Appendix F: Dark Fiber Pricing...................................................................................................... 72 PriceStructures.......................................................................................................................................72 SamplePrices..........................................................................................................................................73 Appendix G: Small Cell Market Rates........................................................................................... 81 CTC Report I City of Huntington Beach I August 2016 Figures Figure1: City -Owned Fiber........................................................................................................... 14 Figure 2: Streetlight Poles to Be Acquired from SCE.................................................................... 15 Figure 3: Traffic Signal Communication Fiber............................................................................... 17 Figure 4: Sunesys Network Map................................................................................................... 19 Figure 5: Edison Carrier Solutions Fiber Map............................................................................... 20 Figure 6: Atlantic Metro Service Locations................................................................................... 22 Figure 7: TelePacific Customer Locations..................................................................................... 23 Figure 8: Time Warner Cable Network......................................................................................... 24 Figure 9: Interactions Between Objectives................................................................................... 32 Figure 10: City Buildings and Economic Focus Areas in Proximity to City Fiber ........................... 46 Figure 11: Capacity of Data Circuits at Business Locations........................................................... 60 Figure 12: Monthly Recurring Charges for Business Internet Access ........................................... 61 Figure 13: Satisfaction with Attributes of Existing Data Services ................................................. 61 Figure 14: Importance of Different Data Service Attributes........................................................ 62 Figure 15: Constraints on Businesses' Ability to Use Higher -Speed Data Connections ............... 62 Tables Table 1: AT&T OPT-E-MAN service pricing to CALNET3............................................................... 21 Table 2: Ethernet Transport Pricing in Irvine (Monthly Recurring Cost) ...................................... 25 Table 3: DIA pricing in Irvine (Monthly Recurring Cost)............................................................... 25 Table 4: Common Goal Alignment................................................................................................ 31 Table 5: Middle Mile Construction Breakdown in Economic Focus Areas ................................... 36 Table 6: Middle Mile Cost Estimates in Economic Focus Areas .................................................... 36 Table 7: Breakdown of Estimated Total Cost................................................................................ 39 Table 8: Overview of Residential and Small Business Data Services in Huntington Beach.......... 63 Table 9: Time Warner Residential Internet —Internet Only ......................................................... 64 Table 10: Time Warner Small Business Internet........................................................................... 64 Table 11: Verizon DSL Small Business Internet............................................................................. 65 Table 12: Verizon FiOS Residential Internet................................................................................. 65 Table 13: Verizon FiOS Small Business Internet........................................................................... 66 Table 14: Dark Fiber IRU Pricing................................................................................................... 79 Table 15: Dark Fiber per Annum or per Month Pricing................................................................ 79 Table 16: Small Cell Pole Attachment Pricing Examples............................................................... 81 5 CTC Report ( City of Huntington Beach ( August 2016 1 Executive Summary 1.1 Huntington Beach's Economic Development Objectives The City of Huntington Beach's economic development strategy aims to enhance the City's existing sectors while identifying opportunities to diversify the economy —such as by expanding into the manufacturing, medical, tourism, and technology services sectors —and potentially creating a secondary employment increase in professional services. The City also seeks to market itself on its technological advantages —developing recognition of the City as a manufacturing and technology hub, and supporting early -stage growth in the film and advertising industries. One of the City's strategies for achieving its economic development goals is working to attract companies that can support and supply the City's top employers (such as Boeing). The City has identified economic "focus areas" —a mix of industrial, retail, and business park areas —that are ideally suited to accommodate this anticipated economic growth; these "focus areas" will be priorities for the City's planning and capital investments —specifically, in terms of improving broadband connectivity. The seven economic focus areas identified by the City for this purpose are: • Beach and Edinger Corridors • Bella Terra • Gothard Industrial Corridor • Holly-Seacliff underutilized parcels • Main Street and Pier • Northwest Industrial Area • Southeast Opportunity Area 1.2 Project Objective: Identify Ways that Broadband Can Help the City Meet Its Economic Development Goals To be more attractive to companies that are considering relocating or expanding, the City's economic development focus areas may require the expansion of high-speed (particularly fiber - based) broadband service options. The City aims to ensure that cutting -edge telecommunications services are available to boost new business growth. At the same time, the City recognizes the need to connect City -owned properties and new facilities such as the Senior Center that would benefit from being connected with fiber, as well as to connect facilities where the business case may exist for extending fiber. CTC Report I City of Huntington Beach I August 2016 The City aims to comprehensively assess its options for achieving its fiber optic goals, evaluate the advantages and drawbacks of potential business models (to be assumed by a combination of public and/or private entities), and lay the groundwork for executing a broadband development plan that would accurately reflect the City's unique needs and constraints. 1.3 Project Tasks In light of its objectives, the City retained CTC Technology & Energy (CTC) to perform three interrelated tasks:' 1) Conduct a broadband market analysis, 2) Develop a strategic plan for maximizing the economic development benefits of the City's broadband assets, and 3) Provide recommendations for long-term planning to improve the economic development potential to attract, retain, and expand businesses. As directed, we focused on how the City could incent private sector investment in fiber infrastructure in the key economic development focus areas. In particular, this included exploring ways in which the City could make modest and strategic investments to attract larger private investments over time. As a foundational element of our strategic planning, we assessed the competitive environment for broadband services in Huntington Beach. Focusing on the business/commercial sectors, with an emphasis on the City's key economic development areas, we reviewed the City's maps and data, interviewed potential business customers, and researched currently available broadband services in the City. We found during our meetings with stakeholder groups that there are gaps in broadband service availability citywide. City stakeholders also identified mobile wireless limitation in pockets of the City, as well as the potential for enhanced residential service development. Fostering local competition in the telecommunications industry would potentially improve access to competitively priced, reliable, and well -managed broadband service options offered throughout the City. We understand that the City has reviewed reports we have written for other California cities as part of conducting its own planning. We consider it a best practice and a good idea for communities to work collaboratively and share ideas. That said, we note that our scopes of work for engagements with other cities in California, including Vallejo and Culver City, were quite different than the scope of work for our engagement with Huntington Beach. The reports we completed for those cities represent those cities' unique goals and objectives. 7' CTC Report I City of Huntington Beach I August 2016 Building on the market and customer insight we developed in the competitive assessment tasks —and our nationwide experience in this field —we then developed strategies for enabling the deployment of next -generation infrastructure in the City. As part of our analysis, we developed high-level cost estimates for both middle mile fiber expansion to serve economic development focus areas, and fiber -to -the -premises (FTTP)3 to serve all businesses and residents. Our work culminated in the development of recommendations that we believe will align the City's next steps with its stated broadband and economic development goals. 1.4 Recommendations for Meeting the City's Broadband -Related Economic Development Goals Based on our analysis and the City's goals, we make the following recommendations for maximizing the economic development benefits of the City's existing broadband infrastructure, integrating potential future broadband projects with the City's broader economic development planning, and meeting the broadband connectivity needs of businesses in the City of Huntington Beach. These recommendations reflect both best practices and our nationwide experience. There are many options available to the City; in sum, we recommend that the City pursue low -risk, best - practice strategies to build middle -mile fiber to connect government facilities and support internal government needs —and to route and engineer the middle mile infrastructure to cost- effectively support future expansion in the focus areas. We also recommend that the City identify potential private sector partners, and explore options for win —win partnerships. 1.4.1 Develop a "Dig Once" Ordinance We recommend that in the coming months, the City consider modifying its right-of-way ordinance to provide the City with the option of obtaining conduit on routes where utilities are performing excavation. In this sort of "Dig Once" environment, the City can reduce the cost of the conduit by 25 percent to 75 percent relative to the cost of a standalone construction project if it installs or has conduit installed in coordination with other excavation. A Dig Once approach can also reduce the impact on rights -of -way and inconvenience to the public. We recommend that the ordinance include all excavators, though we have found that transit projects are usually the most successful because transit projects are long and continuous and 2 The middle mile is the portion of the fiber network that extends access from the core access location(s) to neighborhood nodes in the City. The last -mile network extends the connection (wireless, FTTP, other) from the neighborhood node to the customer premises. 3 Fiber -to -the -premises is a network architecture in which fiber optics are used to provide broadband services all the way to each subscriber's premises P CTC Report I City of Huntington Beach I August2016 there are many ways to place the conduit with minimal incremental cost to the project. While other nearby cities may have implemented similar ordinances, the City would have to conduct an analysis to determine what would be practical in its case. Typically, routes along freeways or continuous long routes, or routes across freeways or waterways, are of high value to telecommunications providers. See Section 7.1 for more details. 1.4.2 Build Network Extensions to City -Owned Properties Many City -owned buildings are not connected to City fiber. If construction is justified by a business case, we recommend connecting to strategically located sites by simply scaling the current City fiber network. The City could consider a phased approach that builds incrementally on the existing City conduit and fiber, and scales according to the needs of potential new City sites and community anchor institutions. (See Section 7.2 for more details.) In addition, pursuing connectivity to data centers and Internet Points of Presence (POPs) will allow the City to reduce service costs and potentially increase the value of the network to other providers and partners. The costs savings from avoided leased services could potentially be used to fund further fiber construction. A few of the focus areas, such as the Holly-Seacliff area and the Gothard Industrial Park, are in proximity to existing City fiber (including traffic signal fiber). A number of City -owned properties are in proximity to the City fiber, as well. The recurring costs associated with leased Internet and transport services can be reduced through the use of the City fiber. We recommend initially connecting to City -owned properties close to these focus areas and potentially to anchor institutions that can provide funding to connect their locations to City infrastructure. Targeted sections in the business parks that are close to the City's fiber may also be considered. The City can potentially maintain and operate a small-scale network providing either dark fiber or lit services to locations close to existing fiber. As it may be challenging to staff up a small-scale network, the City could contract out network monitoring and repair to a network manager. A complementary approach would be to provide middle mile dark fiber in the focus areas to a private partner, which in turn would provide services in the focus areas. The middle mile fiber expansion may also help incent partners to expand services within the City. We developed a high-level estimate of the total cost to extend middle mile fiber through six of the selected focus areas (excluding the Beach and Edinger Corridors). The total estimated cost for labor and materials to all six areas as detailed in Section 6.1 is approximately $5.4 million. 4 Dark fiber is not connected with any electronics to "light" the fiber. 0 CTC Report I City of Huntington Beach I August 2016 Our high-level estimate for costs associated with this middle mile expansion in the Gothard Industrial Corridor is $1.2 million. In the Northwest Industrial Area, we expect costs to be around $2.8 million. The cost estimates in the Holly-Seacliff and Main Street and Pier areas are around $650,000 in total. In Bella Terra, we estimate the costs to be approximately $450,000. The middle mile expansion in the Southeast Opportunity Area would be least expensive, at around $200,000. These estimates do not include any last miles costs. The last mile cost is the biggest variable in the total cost of connecting a building. The typical cost for fiber cable and other materials can range between $4 per foot to $25 per foot in addition to the commercial building entry costs averaging around $10,000. The costs we have seen associated with connecting a given building that is up to 10 blocks away from existing fiber back to a hub location or splice enclosure have ranged from $5,000 to $200,000. 1.4.3 Pursue Discussions with Private Partners The City could pursue public —private partnerships with local or national companies. As we describe in Section 7.3, we recommend continuing discussions with commercial providers to determine the cost and feasibility of connections within and outside of the City, and determining options for partnership and monetization of the fiber and conduit resources. Examples of potential partners in a shared investment market for fiber services are Google Fiber and Ting Internet. Potential partners that may be interested in expanding their present fiber services in the City include AT&T and TelePacific. While streetlight poles may not be suitable for fiber expansion ,6 their value to providers in the mobile wireless communications sector may be high. Potential partners in this space are distributed antennas system (DAS) and small cell operators such as Verizon Wireless, AT&T Wireless, and Crown Castle. These systems also typically require fiber infrastructure to the poles —which presents another opportunity that can be served by an expansion of the City's fiber network. The City could also leverage relationships with utilities in specific instances, such as obtaining crossings of the Pacific Coast Highway, which appear to be challenging for telecom expansion. The City could also focus on removing barriers (that are within the City's influence) to delivering service into business communities that are lacking it, such as working with the Municipal Water District of Orange County (MWDOC), Southern California Edison (SCE), and others when they are upgrading their infrastructure in order for carriers to build out their service. 5 The fiber in a network that goes from the neighborhood fiber distribution cabinet locations to the taps that are located outside of homes and businesses in the rights -of -way. 6 Due to structural limitations and clearance requirements for telecommunications attachments. 10 CTC Report I City of Huntington Beach I August2016 In addition, the City could develop economic development incentives that would encourage private providers to expand their fiber -based services (as discussed in Section 7.3.4). Network deployment tends to be capital intensive, and the return on investment often takes much longer than the private sector can sustain without other incentives for building fiber. For a general overview of opportunities for the City to leverage its infrastructure and processes to enable the expansion of private sector fiber and wireless infrastructure, see CTC's report, "Gigabit Communities."7 1.4.4 Develop and Distribute a Request for Information or Request for Proposals One potential key step toward exploring the interest of the private sector in developing viable partnerships is to develop a framework and documentation for an RFI/RFP process. This will help the City clearly articulate its goals and inform the private sector of the City's existing assets and its desire to encourage fiber construction to the targeted areas. As described in Section 7.3.4, we recommend that the City consider undertaking this process to clearly state the City's needs and desires, and to invite private companies to respond and outline their unique approaches to solving the City's connectivity needs. The documents will also lay the foundation for the contractual relationship between the City and its partner(s), including expectations for the City itself and a potential partner. An RFI/RFP can help the City evaluate potential vendors or partners with which the City may want to develop a relationship. An RFI would also enable the City to gather information to inform an eventual contract negotiation process. The City may also explore the option of collaborating with neighboring cities to develop a combined RFI/RFP that has greater buying power and leverages the economies of scale. It is important to be realistic about what a partnership may entail on behalf of both parties. The City must develop and clearly identify its own desires, goals, and requirements for a network expansion. Once it has defined what it hopes to achieve, it can summarize this in the RFI/RFP to allow potential private partners to respond based on their own abilities and willingness to help meet the City's needs. "Gigabit Communities: Technical Strategies for Facilitating Public or Private Broadband Construction in Your Community," CTC, 2014, http_1/www.ctcnet.us/wp-content/uploads/2014/01/GigabitCommunities.pdf. 11 CTC Report I City of Huntington Beach I August 2016 2 Inventory of Current and Planned Broadband Assets As a foundational element of our assessment, we developed a representative inventory of Huntington Beach's current broadband assets. We also documented already -proposed future plans for constructing fiber and conduit in the City. Our longstanding guidance to municipal clients is to take advantage of public or private sector construction that creates an opportunity to cost-effectively install City -owned conduit or fiber. 2.1 Existing City Infrastructure As an initial step, CTC reviewed relevant maps, studies, documents, and data that the City was able to share with us. The City's documentation comprised an overview of the City's existing conduit, fiber, and streetlight poles. A CTC outside plant engineer conducted a desk survey using the City's GIS maps, Google Earth imagery, and other relevant sources, and aggregated all collected data to develop a database of City -owned infrastructure. The City has approximately one mile of fiber connecting some City -owned properties (Figure 1). A 0.75-mile section of fiber that connects City Hall to another City -owned property, the Public Works building, is located close to the Holly-Seacliff area.$ The other section of fiber is adjacent to the Pacific City area and along the Huntington Beach pier. The City owns approximately 2,000 streetlight poles within its footprint. The City is in the process of acquiring more than 11,000 additional streetlight poles from Southern California Edison (SCE). The streetlight poles are depicted in Figure 2 (the poles to be acquired from SCE are depicted in green, while City -owned poles are in purple). Fiber construction is typically carried out either aerially (using suitable infrastructure such as power and telephone poles) or underground through a conduit system such as one used for traffic signals, streetlights, or refurbished water main installations. Because the City seeks to identify innovative solutions for deploying new infrastructure, we analyzed the City's streetlight poles (including those to be acquired from SCE) to determine whether they would be suitable for attachment. We make the following observations: 8 19001 Huntington St. 12 CTC Report I City of Huntington Beach I August 2016 • The poles do not appear to be approved for attaching fiber or other telecommunications cable. Cables produce a lateral strain, which the poles are not designed to handle. • The light fixtures on the poles produce what is called a vertical or downward strain. In order to attach a cable to the poles, the City may need to install down guys on each pole. • The poles may not be tall enough for an attachment because minimum vertical clearances that must be maintained over driveways, sidewalks, and road crossings. Given these issues, which likely preclude the use of the streetlight poles for attaching fiber infrastructure, the City would have to pursue underground fiber construction or leverage partnerships (or obtain attachment agreements) with utilities that would allow the use of power or telephone poles for aerial fiber construction. Detailed network engineering would need to be performed to determine exactly how fiber should be constructed, and what work would need to be performed to prepare existing telephone poles to support new attachments (a process called "make ready").9 9 Detailed network engineering is outside the scope of this project. 13 4 i• t j �' �` may, r t s:eY e` V•A. r 4 ��I�t ,�4i .: ter► .,.' '`` —" "4F. ♦ �y►" `- 1 �'''� •?,0� ••7 i�-`•�ik: }ts 5-4WA Jm �+2'.. IP If 46. ok • Ste. 4n4d��:y �_ :: a _ y�l ,,+f��., iloW(A .f untin t 'H' ea'ch'.;. _ I�rData�l•1SGS1� �'� �� '_ x��' ' �; CTC Report I City of Huntington Beach I August 2016 Figure 2: Streetlight Poles to Be Acquired from SCE 2.2 Planned City Infrastructure Some projects that might enable cost-effective expansion of broadband infrastructure include: • Planned public works projects (e.g., traffic signal synchronization, street rehabilitation, sidewalk repair or expansion, traffic signal upgrades) • Projects for which there are current and planned permits issued for underground construction by utilities, telecommunications service providers, and private contractors These type of projects should be evaluated for dig -once and joint -trench opportunities for the City's fiber network. We were informed that the City is in the process of conducting traffic signal communication upgrades on Warner Avenue from Algonquin Street to Newland Street, and on Goldenwest Street from Warner Avenue to Yorktown Avenue, as depicted in Figure 3 This 96-strand fiber 15 CTC Report I City of Huntington Beach I August 2016 route passes through the Gothard Industrial Corridor. In addition, the route along Goldenwest Street is alongside a number of City -owned properties. Some additional planned routes extend to the Southeast Opportunity Area and are very near City -owned buildings along Magnolia. The City could leverage this upgrade to connect these City facilities. We understand that initially half of the fibers in the system have been reserved for traffic signal communication. However, this reserve recommendation was not based on a detailed review of the ultimate, overall communication needs for the signal system. It is an initial, conservative assumption to reduce the risk of "under reserving." We understand that in most cases, that still leaves 18 to 24 pairs of excess fiber capacity (36 to 48 strands), depending on which part of the system is being considered. We have typically seen at least 48 strands being reserved for future leasing purposes, Projects of this nature also create an opportunity to increase the cable count in places with previously installed smaller cables. In preparation for the potential lease of excess fiber strands, fiber strand management is critical and essential. Failing to keep accurate and current records of each strand's use is a common mistake among network operators that do not grasp the significance of strand management. It is easy to overlook the upkeep of records as just another element of paperwork or documentation that is not necessarily critical for the everyday functionality of the network. However, it is crucial for the City to know at any given moment exactly which fiber strands are in use on which route, and where each strand is connected. This includes any splicing documentation, which can and usually does change frequently. While strand management is important for day-to-day operations, it can be critical during network outages and to maintain service level agreements (SLAB) —when not being able to quickly identify which strand goes where may result in delayed network repair, and could cause the City to incur penalties or even violate the terms of a lease agreement, or the loss of connectivity to the core sites and applications served for internal needs. The information on the strand availability is also essential for the purposes of issuing an RFI or RFP. 16 CTC Report I City of Huntington Beach I August 2016 Figure 3: Traffic Signal Communication Fiber CTC Report I City of Huntington Beach I August 2016 3 Inventory of Local Enterprise Broadband Services This section provides an overview of competitive providers for dark fiber10 and lit services" with respect to enterprise customers in the City of Huntington Beach. These services would typically serve medium to large business customers. During the course of our research, we identified 11 service providers in the Huntington Beach region that offer a range of services, from dark fiber connectivity to data transport services, with speeds that range from 1 Mbps to 100 Gbps. (We expect to see continued consolidation of competitors through mergers and acquisitions.) The maps below are publicly available depictions of the providers' infrastructure in and around Huntington Beach; private sector carriers typically do not publish detailed maps or data that could be used to create detailed or aggregated maps of existing fiber. While many providers do not own infrastructure in the City, they are able to offer lit services through agreements with other local providers. Individual providers tailor these services to customers' requirements (speed, class of service, etc.). Greater proximity to the provider's existing network infrastructure results in lower service pricing. They prefer to offer transport services between locations on their networks (on -net) and provision Multiprotocol Label Switching (MPLS) based services for connecting locations that are off -net, such as by obtaining last -mile connectivity from Verizon. 3.1 Dark Fiber Services The service providers in the City that offer dark fiber connectivity are Sunesys (acquired by Crown Castle) and Edison Carrier Solutions (a division of Southern California Edison). Dark fiber pricing varies individually, based on distance from the provider's fiber ring. A difference in a few tenths of a mile can lead to significant differences in the price of dark fiber connectivity, due to additional construction costs. Providers usually offer multiple financing options, including leases and Indefeasible Rights of Use (IRU) agreements. Pricing varies significantly depending on whether the building is on -net or not; if the location is off -net, construction and splicing costs would apply. Sunesys provides dark fiber connectivity over its network of metro and intercity fiber. The dark fiber routes are depicted in Figure 4.12 Edison Carrier Solutions has 5,000 miles of fiber in 10 Dark fiber is not connected with any electronics to "light" the fiber. 11 See Section 3.2. 12 htp://sunesys.com/network-maps/interactive/, accessed December 2015. ill: CTC Report I City of Huntington Beach I August2016 southern California and offers dark fiber connectivity solutions in the City13 (Figure 5). Edison Carrier Solutions and other carriers do not release customer or subscriber information. Figure 4: Sunesys Network Map - 22 'LEISURE WORLD iBtCl{l, Tal"Ibons Westminster Se I Beach `� Pal Beach Sea! Beach n T _ Narrona! weldrfe o; Vdadde a Refuge - Edm .r Ave T; ;NSETeEA, ned Ave ty Warnet Ave r C ''jjam� _-. , W� o CL Fouf�tail0 Valley- _ r . Talbe.l A. _..._ z s � O Q rl, OC Fair &Ev Huntington Beach Hyatt Regency if c Iona st Huntington Beach._ amdtt HtoAvc r: I " http://www.edisoncarriersolutions.com/darkfiber.asp, accessed December 2015. 19 CTC Report I City of Huntington Beach I August 2016 Figure 5: Edison Carrier Solutions Fiber MaP14 3.2 Lit Services Almost all existing service providers in the City offer enterprise -grade, Ethernet -based services. Bandwidths range from 1 Mbps to 100 Gbps. Ethernet service can be classified into three types: Ethernet Private Line (EPL or E-Line), Ethernet Virtual Private Line (EVPL), and ELAN. These may be known by different names among providers. EPL is a dedicated, point-to-point, high - bandwidth Layer 2 private line between two customer locations. EVPL service is similar to EPL but is not dedicated between two locations. Instead, it provides the ability to multiplex multiple services from different customer locations from one point on the provider's network (multiple virtual connections) to another point on the network. ELAN is a multipoint-to-multipoint connectivity service that enables customers to connect physically distributed locations across a Metropolitan Area Network (MAN) as if they are on the same Local Area Network (LAN). Internet services over Ethernet are typically classified in two categories: Dedicated Internet Access (DIA) and MPLS IP Virtual Private Networks (IP-VPN). Providers prefer to offer MPLS based IP-VPN services when the service locations are off -net, thus avoiding construction and installation costs. MPLS-based networks provide high performance for real-time applications such as voice and video, and are typically priced higher. The carriers that provide these services in the Huntington Beach area are AT&T, Atlantic Metro, Level 3, MegaPath, Sunesys, TelePacific, Time Warner Cable, Verizon, Windstream, XO Communications, and Zayo. Prices depend on the bandwidth, location, and network 14 http://www.edisoncarriersolutions.com/network.asp, accessed December 2015. 20 k CTC Report I City of Huntington Beach I August 2016 configuration; whether the service is protected or unprotected; and whether the service has a switched or mesh structure. AT&T has four different types of Ethernet products —Gigs MAN, DecaMAN, Opt-E-MAN, and Metro Ethernet. GigaMAN provides a native -rate interconnection of 1 Gbps between customer end points. It is a dedicated point-to-point, fiber optic -based service between customer locations, which includes the supply of the GigE Network Terminating Equipment (NTE) at the customer premises. DecaMAN connects the end points at 10 Gbps and is transmitted in native Ethernet format similar to GigaMAN, only 10 times faster. Opt-E-MAN service provides a switched Ethernet service within a metropolitan area. It supports bandwidths ranging from 1 Mbps to 1,000 Mbps, and configurations such as point-to-point, point-to-multipoint, and multipoint-to-multipoint. Metro Ethernet service provides various transport capabilities ranging from 2 Mbps through 1 Gbps while meeting IEEE 802.3 standard s.ls In California, AT&T offers its OPT-E-MAN service to the state's CALNET 3. Since 2014, the rates for the silver level of service are as follows: Table 1: AT&T OPT-E-MAN service pricing to CALNET3 Bandwidth Monthly Fee 10 Mbps $358.44 100 Mbps $696.64 1 Gbps $879.50 Service is only available where facilities exist. In areas where such facilities are not available, customers must purchase repeater service at a rate of $257.85 per month. (The repeaters add latency in performance along with the increased costs.) Atlantic Metro offers Ethernet transport services over fiber from 50 Mbps up to orders of 10 Gbps in the City.1617 Some of the current locations where services are available are depicted in Figure 6. Customers might be able to obtain services in additional locations if a business case exists for Atlantic Metro to extend its footprint. 15 httr)://www.business.att.com/service overview. is0repoid=Product&reooitem =w ethernet&serv=w ethernet&se ry port=w data&sery fam=w local data&state=California&segment=whole, accessed December 2015. 16 https://www.atlanticmetro.net/solutions/network-connectivity/ethernet-transport/, accessed December 2015. 17 https://batchgeo.com/map/0014c67516bebc44bfdf479ffaO762b5, accessed December 2015. 21 CTC Report I City of Huntington Beach I August 2016 Figure 6: Atlantic Metro Service Locations18 ® a7 Ga de Wo.x+d Garden Grove TT Fwh. way - Wes:mtnster Are Weftm.••eMr ArR IT.R S taiLAw`4r fA1oRF � �' Navel Weapons Westminster ¢ Station Seat Beacn t>s t r z a - wtast Santa Ana stin Seal Beach Sea; Beach �. Narlolla „ tJciadden Are S waw. sl V/�idii(P w y j�tldrn Arr FW'.ddrn Ave p, Fd+ycr Avr K F,angr Ave W Edi^gel Are E Edvge. Ave �r (D g 3 War-.erA- X ~- WV& —A. T �•� �`Y d Fountain Valley wsagers4� A� a X — soe,r�coasr TWOFI Ave 5 Lr.COASr Lf a tE rqO t tllis Ave SS i , t :•hE 4h °R t'Ma S n , i OC Fair 6 Event Center it Huntington Beach Hyatt Regency vcm-w st Santa Ana Hare r A+e v Heights . - Unive+situ Huntington Beach 'a o(Calirornia Irvine xunrulgron :F Costa Mesa m Be acn ^ r $ rate pwk (SS a f,_ „� Map data I2tlta Gwgla Level 3's Metro Ethernet dedicated service is available in bandwidth options of 3 Mbps to 1 Gbps and its Ethernet Virtual Private Line (VPL) offers speeds ranging from 3 Mbps to 10 Gbps.19 It is an end -to -end, Layer 2, switched Ethernet service delivered via a Multi -protocol Label Switched (MPLS) backbone. Internet services are available in a range of 14 speeds up to 10 Gbps.20 MegaPath offers business Ethernet services in the Huntington Beach area with advertised symmetric speeds up to 1 Gbps. Higher speeds are available on a case -by -case basiS.21 Verizon offers Ethernet services under three different product categories —Ethernet Local Area Network (LAN), EPL, and EVPL. The Ethernet LAN is a multipoint-to-multipoint bridging service at native LAN speeds. It is configured by connecting customer User -to -Network Interfaces (UNIs) to one multipoint-to-multipoint Ethernet Virtual Connection or Virtual LAN (VLAN), and provides two Class of Service options —standard and real time. The Ethernet Private Line is a managed, point-to-point transport service for Ethernet frames. It is provisioned as Ethernet over SONET (EoS) and speeds of 10 Mbps to 10 Gbps are available. The EVPL is an all -fiber optic — https://www.atlanticmetro.net/solutions/network-connectivity/network-maps/, accessed February 2016. 19 http://www.IeveI3.com/en/products-and-services/data-and-internet/vpn-virtual-private-network/evpl/, accessed December 2015. 20 http://www.level3.com/—/media/files/factsheets/en ethernet fs ethernet matrix.pdf, accessed December 2015. 21 http://www.megapath.com/data/ethernet/, accessed December 2015. 22 CTC Report I City of Huntington Beach I August 2016 network service that connects subscriber locations at native LAN speeds; EVPL uses point-to- point Ethernet virtual connections (EVCs) to define site -to -site connections. It can be configured to support multiple EVCs to enable a hub -and -spoke configuration and supports bandwidths from 1 Mbps to 10 Gbps.22 Sunesys provides Ethernet solutions that scale from 100 Mbps to 100 Gbps under various network design topologies .23 TelePacific offers Ethernet solutions including EPL and EVPL as well as DIA with speeds up to 10 Gbps to 90 percent of locations in California including the City.24 Figure 7 depicts the customer locations within the City and surrounding areas. Figure 7: TelePacific Customer LocationS25 0 14WO AC Off -Oft WV V-ftt*Q Time Warner Cable offers Ethernet over fiber and over DOCSIS. The Ethernet services offered include EPL, EVPL and ELAN with speeds ranging from 5 Mbps up to 10 Gbps.2s Their DIA service 22 http://www.verizonenterprise.com/products/networking/ethernet/, accessed December 2015. 23 http://sunesys.com/switched-ethernet/, accessed December 2015. 24 http://www.telepacific.com/offer/data-networking/internet-access/ethernet-broad band. asp/, accessed December 2015. 25 http://www.telepacific.com/about/map-orange-county.asp, accessed February 2016. 26 https://business.timewarnercable.com/services/network-services/ethernet/ethernet-private-line/overview.html, accessed December 2015. 23 1 CTC Report I City of Huntington Beach I August2016 runs on their wholly owned, redundant and private end -to -end fiber network with speeds up to 10 Gbps.Z' The Time Warner Cable network in southern California is depicted in Figure 8. Figure 8: Time Warner Cable Network28 Windstream has a nationwide presence serving major metropolitan areas, including the City. In the City, they offer DIA services with speeds up to 1 Gbps.29, 30 XO Communications offers carrier Ethernet and DIA services at multiple bandwidth options, from 3 Mbps to 100 Gbps, over their Tier 1 IP network.31 32 A 1 Gbps DIA service in the City has a monthly recurring charge of $2,500 for a three-year term. There were no non -recurring charges for this particular location on Main Street. Zayo delivers Ethernet in three service types, with bandwidth ranging from 100 Mbps to 10 Gbps and options like quality of service (QoS) guarantees and route protection based on customer needs. The different types of services offered are: Ethernet -Line, which provides point-to-point and point-to-multipoint configurations with reserved bandwidth availability; 27 https://business.timewarnercable.com/services/internet/dedicated-internet-access/overview.html, accessed December 2015. 28 https://business.timewarnercable.com/solutions/carrier-services.html, accessed February 2016. 29 http://carrier.windstreambusiness.com/wordpress/wp-content/uploads/2014/10/Carrier-Ethernet-Ordering- Guide-10.8.14.pdf, accessed December 2015. 30 http://www.windstreambusiness.com/shop/products/ca/`huntington-beach, accessed December 2015. 31 http://www.xo.com/carrier/transport/ethernet/, accessed December 2015. 32 http://www.xo.com/network-services/internet-access/ip-transit/100G/, accessed December 2015. 24 1 CTC Report I City of Huntington Beach I August2016 Ethernet -LAN, with multipoint configurations having a guaranteed service level; and Ethernet Private Dedicated Network (E-PDN) with a completely private, managed network operated by Zayo, with dedicated fiber and equipment.33 Pricing for a 10 Gbps and 1 Gbps point-to-point Ethernet line between two On -Net locations in Irvine is provided in the tables below. Zayo does not have fiber routes through Huntington Beach but would be able to leverage partner agreements to offer services. We would see non -recurring charges depending on the proximity of a site to the existing Zayo network. Table 2: Ethernet Transport Pricing in Irvine (Monthly Recurring Cost) Service 60 Month 12 Month 1 Gbps $2,050 $2,850 10 Gbps $4,901 $6,711 As another example of pricing, Zayo charges a monthly recurring cost of $1,613 to $2,090 (depending on the contract term) for 1 Gbps point-to-point Ethernet service between on -net sites in the Los Angeles region that are three miles apart. Pricing for a 10 Gbps and 1 Gbps DIA service at an on -net location in Irvine is provided in the table below. Table 3: DIA pricing in Irvine (Monthly Recurring Cost) Service 60 Month 12 Month 1 Gbps $3,213 $5,355 10 Gbps $15,284 $25,474 33 http://www.zayo.com/ethernet, accessed December 2015. 25 CTC Report I City of Huntington Beach I August2016 4 Assessment of Local Broadband Market CTC staff conducted an assessment of the current state of the market for enterprise broadband services in the City. This assessment included stakeholder engagement meetings, interviews, an online survey, and a tour of the City. This section provides a summary of survey responses and interviews with business groups in the City, as well as an overview of competitive providers offering dark fiber and lit services to enterprise customers within the City. (A complementary assessment of residential/small business services is attached as Appendix B.) 4.1 Interviews with Business Groups CTC held discussions to garner insight from stakeholder groups in the City. We met with groups representing small and large businesses within the hospitality, manufacturing, industrial and retail segments to determine their perspectives on the broadband services available in the City. One key metric was consistent among all groups: gaps in service availability. Regardless of the service provider, and even more than issues like price or customer service, the availability of reliable services at desired locations was a very important factor for the stakeholder groups. This is an especially big concern for smaller businesses, whose livelihoods are often contingent on access to functional and cost-effective Internet services. Price is often assumed to be an important factor for small businesses —there is an expectation that lower prices will encourage consumers to switch providers. However, our discussions show that, price alone is not a driving factor in compelling small businesses to switch providers. For this group, three factors are critical in choosing an ISP: availability, performance, and customer service. As we noted, Internet at sufficient speeds is crucial for all types of consumers. Small businesses expressed needs for at least 10 Mbps symmetrical service (for non -cable -based services), with 50 Mbps download speeds being more preferred. The groups we engaged were also explicit about their expectations that service be reliable. This applies to the service uptime as well as consistent service speed and performance. Consumers expect that their Internet service will consistently function at the speeds for which they pay. Yet in our discussions, we heard that service providers were not delivering a positive, satisfying customer service experience when customers experienced service problems. We noticed that small and medium-sized businesses had experienced difficulty in obtaining services in new locations. Verizon ROS services are limited to certain areas and the company may not always expand services to newly requested locations. Verizon also reportedly does not plan to upgrade its DSL-served locations to fiber -based FiOS service. The lack of higher speeds and consistent performance was a problem area identified by some restaurants and hotels. 26 CTC Report I City of Huntington Beach I August 2016 The incumbent providers such as Verizon and Time Warner Cable will likely not expand their networks if they believe there is a lack of sufficient new customers in a given area. 4.2 Broadband Services for Large Businesses As with small businesses, price alone is not a driving factor for large commercial businesses —in fact, price may be less of a consideration for large businesses. They are essentially willing to pay whatever price is necessary for service if it is essential to the operation of their businesses. In the case of a large business, reliability reigns and business owners will pay a premium for dedicated, reliable service that comes with a service -level agreement (SLA). A common thread that we noticed among the stakeholder groups we interviewed was the need for more reliable services with better upstream speeds. The prevalence of cloud -based services (for example, data storage or point -of -sale services) drives the need for higher upstream speeds. Also, more businesses are allowing employees to telecommute from their homes. Some of the major technology manufacturing companies such as Boeing have their own national contracts that are sufficient for their connectivity purposes. However, many smaller businesses are interested in relocating to the region as suppliers or subcontractors for the larger companies. The City has also recently become a Recycling Market Development Zone (RMDZ) with the intention of attracting other manufacturing firms. These suppliers and new firms are the key segment lacking adequate broadband service. The hospitality segment also depends on excellent Internet connectivity, including both cellular wireless and broadband Internet, to provide Wi-Fi services to their guests. It is very important for their customers to have access to seamless access within resorts and also in public spaces. The business model in this sector usually includes charging guests for Internet services, such as in meeting spaces and convention rooms. Some of the larger hotels have nationwide contracts with service providers that give them superior Internet services. However, the local hotels do not have this and are dependent on local services. Larger businesses have also expressed difficulties in configurations and network management — the customer service and appropriate responses to outages have not been available. 4.3 Mobile Wireless Services for Business and Hospitality Customers Another recurring theme that was addressed during our meetings was the lack of reliable mobile wireless coverage across the City. There are increased seasonal demands on wireless networks due to the tourism sector and large-scale special events; the temporary fixes that the wireless carriers put into place (such as temporary cellular towers) do not provide a satisfactory solution. 27 CTC Report I City of Huntington Beach I August 2016 The City's beach is the number one destination for visitors. It consists of 10 miles out of the total 41 miles of Orange County beaches. Much of the tourism is seasonal. For instance, the City receives 300,000 visitors during the U.S. Open of surfing. The 10-mile stretch of the beach area along the City's shoreline lacks the wireless coverage desired and typically expected by visitors. A significant number of business travelers also visit the City. Based on feedback during the business interviews, the 100 percent wireless connectivity demanded by this customer segment is not present within the City. Participants in the interviews indicated that coverage can be spotty and that during events, they have seen capacity shortages. 4.4 Survey of Businesses' Needs The Office of the City Manager conducted an online business survey through Survey Monkey. We received approximately 40 responses to that survey. The margin of error is high with such few responses, making accurate analysis difficult. However, though there are limitations, we were able to gather anecdotal insight from the business survey and compare trends to those obtained during the interviews. (Appendix A includes charts depicting results from the business survey.) Consistent with the interviews response, the majority of respondents to the business survey have concerns about obtaining reliable, affordable Internet service for their business locations. The majority of respondents represented single -location businesses with one to 19 employees —small businesses. Four key responses from the business surveys support our conclusions from the interviews: • The reliability of obtaining a connection was the most important factor for business survey respondents, with the speed and price of service close behind. • Half of the business respondents pay $100 or less for their current connections, while the other half pay $101 to $500—indicating that price was not the only factor affecting their purchase of services • Price and lack of availability were the main constraints that business encountered when obtaining services • Less than a quarter of respondents to the business survey feel that their Internet connection speed is fast enough for their business needs. Some respondents seem dissatisfied with the reliability of their connection but a larger sample size would be necessary to understand the true extent of satisfaction with services. CTC Report I City of Huntington Beach I August 2016 We recommend that the City focus its efforts on small and medium-sized business customers; based on the information gathered, there is a reasonable demand for services within these business sectors. We outline strategies related to this recommendation in Sections 6 and 7. 29 CTC Report I City of Huntington Beach I August 2016 5 Broadband Deployment Objectives and Challenges As part of our analysis of business models the City might want to pursue, we evaluated certain common broadband objectives that many communities prioritize, and how these may affect the City's decision -making process. At the project kickoff meeting, and in our conversations with City staff throughout this project, it was clear that the City's stakeholders have a range of objectives within the framework of enabling economic development. Given that, we sought to provide the City with information to empower decisions about its connectivity needs that will have ongoing positive outcomes. 5.1 Broadband Deployment Objectives Competition and consumer choice are only two of several objectives that may drive a community's pursuit of a publicly owned fiber optic network. Many public entities share certain objectives when it comes to considering investment in a community broadband network: • Affordability • Cash flow • Competition in market • Consumer choice • Ownership and control of assets (business development) • Performance • Risk aversion • Ubiquity Each of these is understandable in the context of what is best for a community, though they do not necessarily all align with one another. In fact, some common objectives that communities prioritize when planning their networks actually conflict with one another. In light of this, communities benefit from careful consideration of which objectives they deem most important to adequately meet their needs. As an example, risk aversion is top priority for some communities —it may be politically challenging to build a network, and the only way to complete it is to assure key stakeholders and the public that there is minimal risk involved. As we explain below, risk aversion is in direct conflict with building the network throughout an entire community, and ubiquity may be the most important objective for another community. Each community must find the balance that is most appropriate to its needs so that it can achieve its goals without sacrificing important objectives. 30 CTC Report I City of Huntington Beach I August 2016 Our analysis does not advise the City on which objective(s) it should prioritize; rather, we describe common objectives and their role in communities, how they interact with each other, and potential advantages and disadvantages of each. We illustrate in Table 4 the intersection of common objectives. As the key at the top of the following table shows, objectives may have no impact, they may be in alignment, they might conflict, or they may be inapplicable. Figure 9 below shows a visualization of Table 4 to illustrate the relationship between objectives. Table 4: Common Goal Alignment A: Alien C: Conflict NI: No Impact NA: Not Applicable Ubiquity Choice Competition Ownership Performance Affordability Risk Aversion Cash Flow Ubiquity NA A A A NI C C C Choice A NA A A A A C NI Competition A A NA A A A C NI Ownership A A A NA A A A C Performance NI A A A NA NI A A Affordability C A A A NI NA C C Risk Aversion C C C A A C NA A Cash Flow C I NI NI C A C A NA 31 CTC Report I City of Huntington Beach I August 2016 Figure 9: Interactions Between Objectives There are numerous possible outcomes associated with different objectives, and the City has to determine what it believes will best serve its unique needs and have the greatest impact on its community. This analysis does not seek to urge the City in any particular direction, but we do make recommendations about some of the objectives that may well serve any public network. From our meetings it does appear that City's priorities include ubiquity, competition, and choice for area businesses. For example, performance is an objective that either interacts favorably or not at all with other objectives, and prioritizing performance can have a significant positive impact on the network's viability by setting it apart from incumbent providers. Thus, there are no real disadvantages to making performance a top priority for the network because doing so does not have to be at the exclusion of any other objectives. Further, some objectives can and should be pursued in parallel. 5.2 Challenges of City -Deployed Fiber in a Market that Includes Verizon FiOS For several decades, fiber optic networks have consistently outpaced and outperformed other commercially available telecommunications technologies, including variants of copper cabling and wireless technologies. The specifications and performance metrics for fiber -to -the - premises (FTTP) networks continue to improve and outperform competing access technologies. 32 CTC Report I City of Huntington Beach I August 2016 In fact, from the access layer up through other segments of a network (the distribution layer and the core, packet-, and circuit -switched transports, and even into the data center), and for almost all wireless "backhaul" communications, optical networking is the standard wireline technology. The City of Huntington Beach was one of the first cities that had access to an FTTP service through the Verizon FiOS deployment (though we note that it has not been implemented City- wide).34 While that service (which Verizon recently sold to Frontier Communications) has benefited customers that have access, its presence in the market creates challenges for the City as it considers how best to expand the availability of fiber -based services for commercial and enterprise users; the City will need to promote the "overbuild" of the market —deploying a network in a market where incumbent providers already serve customers. (To a lesser extent, competition for a City network also exists with other local broadband service providers, including those operating over cable and DSL technologies.) On the other hand, the network transition experience due to the recent sale of the Verizon NOS service in the City to Frontier Communications appears to have created greater dissatisfaction among the customer base.3s The sale has also further exposed the uncertainty of relying on the incumbent providers. Generally, fiber overbuilds do not offer a high rate of return, which is why there are not many private sector providers clamoring to build fiber networks in markets where customers are already fully or partially served. Instead, private and public sector entities that opt to overbuild usually consider benefits other than a traditional return on investment (ROI) metric for deploying a new network. These entities focus on other value and drivers that support a business case for overbuilding. For example, a municipality may choose to enter the market as an over -builder for economic development purposes, like serving anchor tenant businesses, school districts, and industrial, technology, and research parks. Alternatively, a private entity may opt to overbuild and offer services to supplement other parts of its business. Google Fiber is an example of this: By disrupting the market and incenting other ISPs to step up their data offerings, Google's other business branches (e.g., search, AdWords, Chrome, Gmail, Maps, YouTube, and mobile application development) can potentially thrive. That is, consumers in an environment with greater choice and access to high-speed offerings are more likely to take advantage of Google's various other services and products that rely on a robust data connection. 34 It appears that Verizon deployed ROS only in select neighborhoods. Businesses near these neighborhoods are able to obtain service, while businesses in office parks and other locations are unable to obtain FiOS service. 35 Andrew Burton, "Where's my Verizon FiOS? Outages reported in SoCal as customers switch to Frontier service," The Orange County Register, April 6, 2016, http://www.ocregister.com/articles/frontier-711142-verizon customers.html (accessed July 2016). 33 CTC Report I City of Huntington Beach I August 2016 (We note, however, that when Google Fiber invests in FTTP infrastructure, its primary market is the residential customer, not small to medium-sized businesses; a Google Fiber build would likely not address the City's economic development goals for closing service gaps in the business market. Google Fiber has typically not over -built in areas where other FTTP networks, such as Verizon FiOS, exist. That said, Google recently announced it would lease dark fiber from the municipal electric utility in Huntsville, Alabama. In this model the extent of the network passings is determined by the municipal utility.) An alternative to traditional overbuilding is to "cherry pick," or build only to areas in a community where the provider is most likely to obtain a high number of subscribers willing to pay for service (and thus where the provider can expect a high return on capital investment). However, this approach would not address all of the City's gaps in service availability. 34 CTC Report I City of Huntington Beach I August 2016 6 Cost Comparison: Middle -Mile Network Expansion vs. Fiber -to -the - Premises To illustrate the potential costs of expanding fiber in the focus areas (in order to incentivize the private sector) as compared to constructing a network to businesses and residents citywide, we developed cost estimates for both middle -mile fiber ($5.4 million) and a fiber -to - the -premises (FTTP) network deployment ($198 million). Another option is consideration of an FTTP deployment to selected business parks or to all businesses in the City. We would expect the per passing costs of an FTTP business deployment to range from $2,500 to $3,500, not including the middle -mile fiber. Given this range, an FTTP deployment for the City's businesses would cost an estimated $15.8 million to $22.1 million, not including operational costs. In addition to the fiber infrastructure it will be important to make a connection to a carrier hotel for peering and interconnection with other networks. The cost of these connections will vary if transport (e.g., wavelength, provisioned circuit, or dark fiber) is required, what peering is available, and other factors. The cost of interconnection to the Internet (Direct Internet Access or DIA) in the region is estimated at $.75 per Mbps per month to $1.50 per Mbps per month. The selected business model would ultimately drive the DIA requirements. 6.1 Cost Estimate for Middle -Mile Fiber to Serve Economic Focus Areas In this model, the City would invest in expanding fiber infrastructure in the economic focus areas, in order to incentivize private partners to leverage the infrastructure (ideally through dark fiber leasing) and provide services to businesses in the focus areas. This model requires the City to fund and build -out a middle -mile network that would be of value to a network operator interested in building out the last mile and providing services to businesses. It would also be beneficial to other providers desiring to lease capacity through the region. At the same time, the costs and the risk to the City remain low. This expansion can be implemented in a phased manner, by targeting the most critical areas first. 6.1.1 Cost Estimates for Middle Mile Fiber Network Extensions We have presented a high-level cost estimate to construct middle mile fiber routes through the economic focus areas. We made the assumption that the middle mile fiber routes would be built out from a carrier backbone ring and pass through each focus area. The estimates were developed separately for each area and only take into account the route down the main road in each area, using 144- count fiber. The routes were designed in a manner that would minimize the access costs to connect to passings in each of the focus areas. 35 ). CTC Report I City of Huntington Beach I August 2016 We designed the middle mile route with a central splice point where the last mile fiber would be able to join the middle mile fiber in order to continue to each building served. The last mile sections would be spliced from the centralized splicing locations. We have not included the last mile routes in our cost estimation. The deployment would be a mix of aerial and underground depending on the availability of utility poles. In Table 5, we provided a breakdown of the estimated aerial and underground mileage for each of the focus areas based on our high-level design. We have used best practices to calculate the estimated number of pole attachments and handholes required in each area. Table 5: Middle Mile Construction Breakdown in Economic Focus Areas Economic Focus Area Aerial Mileage Pole Attachments Underground Mileage Handholes Bella Terra 0.00 0 1.92 14 Gothard Industrial Corridor 3.32 129 5.62 28 Holly-Seacliff 0.91 36 1.25 8 Main Street and Pier 0.00 0 1.20 8 Northwest Industrial Area 5.96 232 12.46 62 Southeast Opportunity Area 0.87 34 0.56 6 The high-level cost estimate for the middle mile in each focus area is provided in Table 6. These estimates are only for the labor and material for the construction of the middle mile routes. It does not include permitting, pole attachment licensing or network electronics. It also does not include last mile costs. Table 6: Middle Mile Cost Estimates in Economic Focus Areas Economic Focus Areas Cost Estimate Bella Terra $448,000 Gothard Industrial Corridor 1,200,000 Holly-Seacliff 352,900 Main Street and Pier 305,400 Northwest Industrial Area 2,842,600 Southeast Opportunity Area 211,400 Total $5,360,300 Our high-level estimate of the total cost to extend the middle mile fiber through six of the selected focus areas (excluding the Beach and Edinger Corridors) would be approximately $5.4 million. The City could choose to build in a subset of the focus areas taking into account its own connectivity needs to City buildings. A phased approach involving expansion to the most critical 36 CTC Report I City of Huntington Beach I August 2016 areas first would reduce risk and also provide an opportunity to evaluate each expansion phase to make adjustments moving forward. 6.1.2 Assumptions and Caveats Underlying These Cost Estimates As with any deployment, the design and associated costs for construction will vary with the unique physical layout of the service area; no two streets are likely to have the same configuration of fiber optic cables, communications conduit, underground vaults, and utility pole attachments. Costs will further vary due to soil conditions, such as the prevalence of subsurface hard rock; the condition of utility poles and feasibility of "aerial" construction involving the attachment of fiber infrastructure to utility poles; and crossings of bridges, railways, and highways. Our estimation methodology for the network involves the extrapolation of estimated costs on the basis of street mileage for strategically selected sample designs. Generally, newer subdivisions and developments tend to be entirely underground whereas older neighborhoods have aerial construction. Suburban areas also tend to have more rear easements for utilities, which can increase the cost of construction. 6.2 Cost Estimate for FTTP to Serve All Businesses and Residents In this model, the City would build, own, and operate a fiber network, and offer exclusive data services over that network as an Internet service provider. The City would thus become a competitive provider of data services to the business and anchor institution markets. (This is often referred to as an "over -build" model because the new provider builds new communications infrastructure "over" the wires and cables in areas where there are existing broadband systems.) Compared to other technologies, fiber -based optical networks will continue to provide the greatest overall capacity, speed, reliability, and resiliency. If an Internet service provider (ISP) were to build a new network with no constraints based on existing infrastructure, it would likely begin with an FTTP access model for delivery of all current services; compared to other infrastructure, an FTTP investment provides the highest level of risk protection against unforeseen future capacity demands. In cases where a provider does not deploy fiber for a new route, the decision is often due to the provider's long-term investment in copper outside plant (OSP) infrastructure, which is expensive to replace and may be needed to support legacy technologies. We anticipate deployments in new markets to be based on FTTP technology. This model requires the City to finance or fund the build -out of the network —and potentially to cover the cost of operations in the event that network revenues do not cover expenses. It also requires the City to define and update services on an ongoing basis, establish consumer -level sales and marketing efforts, and establish a consumer -level help desk and other support 37 CTC Report I City of Huntington Beach I August 2016 mechanisms. Among likely business models, this approach requires the broadest range of staff additions, training, marketing, and other activities to run and maintain the business venture. 6.2.1 Passings We analyzed Census data and estimate there are 69,729 residential passings, or households to physically pass with fiber, in the City of Huntington Beach. Of these, 38,883 are single-family residential homes. There are 10,243 residential households in structures with two to four units,36 known as multi -dwelling units (MDUs). There are 8,485 households in residential buildings that contain five to 19 units. And there are 2,963 residential mobile homes. We did not include in the assumed residential passings the 8,433 households that are in buildings with 20 or more units. Typically, large MDUs with 20 or more units are served by existing long-term contracts between building owners and incumbent ISPs. Each of these buildings must be considered on a case -by -case basis. We analyzed Census data and determined that there are 7,087 businesses, and 765 of these are in a large office complex. Therefore, we assume a total of 6,322 potential business passings excluding the large office complexes. The estimated 69,729 residential passings and 6,322 business passings results in 76,051 total residential and business passings. 6.2.2 Financial Analysis We have presented a draft of a high-level estimate of the cost to deploy the outside plant (OSP) infrastructure for an FTTP network in the City. 6.2.2.1 Potential Range of Costs Assuming a 50 percent take rate, this citywide FTTP network deployment will cost approximately $198 million, inclusive of anticipated OSP construction labor, network electronics, materials, engineering, permitting, pole attachment licensing, drop installation, customer premises equipment (CPE), and testing. That estimated citywide cost reflects an OSP and central electronics per -passing cost of $1, 784.37 36 We assume that each unit in a building holds a unique household. 37 The passing count includes individual single -unit buildings and units in small multi -dwelling and multi -business buildings as single passings. It treats larger buildings as single passings. al CTC Report I City of Huntington Beach I August 2016 Table 7: Breakdown of Estimated Total Cost Total Cost Component Estimated Cost OSP $ 116,434,080 Central Network Electronics 13,461,030 Variable Costs (CPE, Drops and Incremental 67,837,S00 Electronics) Total Estimated Cost: $197,732,610 Actual costs will vary due to unknown factors, including: 1) costs of private easements, 2) utility pole replacement and make ready costs, 3) variations in labor and material costs, 4) subsurface hard rock, and 5) the City's operational and business model (including the percentage of residents and businesses who subscribe to the service, otherwise known as the penetration rate or the "take rate"). We have incorporated high-level assumptions to address these items based on our experiences in California and elsewhere. A targeted deployment aimed at selected business areas could reduce the overall cost, especially the outside plant costs. Completing a cost estimate for a targeted deployment would require a walkout of the business area to better understand densities, required construction types, and other factors. 6.2.2.2 OSP In terms of OSP, the estimated cost to construct a FTTP network is $116 million, or $1,531 per passing. Our model assumes a mix of aerial and underground fiber construction. Costs for aerial and underground placement were estimated using available unit cost data for materials and estimates on the labor costs for placing, pulling, and boring fiber based on construction in comparable markets. The material costs were generally known with the exception of unknown economies of scale and inflation rates, and barring any sort of phenomenon restricting material availability and costs. The labor costs associated with the placement of fiber were estimated based on similar construction projects. 39 CTC Report I City of Huntington Beach I August 2016 In addition to these construction costs, the City would need to augment its current fiber staff or contractors with the necessary expertise and equipment available to maintain the fiber optic cable in a citywide FTTP network. Typical maintenance costs are 1 percent of the total construction cost per year —or roughly $1 million annually. 6.2.2.3 Central Network Electronics Central network electronics will cost an estimated $13 million, or $177 per passing. The central network electronics consist of the electronics to connect subscribers to the FTTP network at the core, hubs, and cabinets. Electronics costs were based on our work on similar projects. These costs include core electronics and network configuration and integration. 6.2.2.4 Customer Premises Equipment We also estimated the costs of installing customer premises equipment (CPE) at each subscriber. We estimated an average CPE electronics and installation cost for residential and business customers to be $485 per subscriber. The biggest variable in the cost of adding a subscriber is the drop installation. A short aerial drop can cost as little as $250 to install, whereas a long underground drop installation can cost upwards of $2,000. We have estimated a drop cost of $942 per subscriber. The other per subscriber costs include the cost of the optical network terminal (ONT) at the premises, a portion of the optical line termination (OLT) costs at the hub, the labor to install and configure the electronics, and the incidental materials needed to perform the installation. Incremental electronics costs are estimated to be $357 per subscriber. 6.2.2.5 Assumptions and Caveats Underlying These Cost Estimates As with any deployment, the design and associated costs for construction will vary with the unique physical layout of the service area; no two streets are likely to have the same configuration of fiber optic cables, communications conduit, underground vaults, and utility pole attachments. Costs will further vary due to soil conditions, such as the prevalence of subsurface hard rock; the condition of utility poles and feasibility of "aerial" construction involving the attachment of fiber infrastructure to utility poles; and crossings of bridges, railways, and highways. Generally, newer subdivisions and developments tend to be entirely underground whereas older neighborhoods have aerial construction. Suburban areas also tend to have more rear easements for utilities, which can increase the cost of construction. 40 CTC Report I City of Huntington Beach I August 2016 7 Recommendations for Meeting the City's Broadband and Economic Development Goals Building on the market and customer insight described in Sections 3 and 4, we developed the following recommendations to inform the City's next steps. 7.1 Develop a "Dig Once" Policy We recommend that the City consider a "Dig Once" policy to require any excavation plans fitting specified criteria to include municipal use conduit or fiber, unless the City opts out of the excavation project. This would require the installation of City communications infrastructure in excavation projects where the City determines that it is both financially feasible and consistent with the municipality's long-term goals to develop the communications infrastructure. 7.1.1 The Case for Dig Once Policies The construction of fiber optic communications cables is a costly, complex, and time-consuming process. The high cost of construction is a barrier to entry for potential broadband communications providers. In addition, available space is diminishing in the public rights -of -way (ROW). Moreover, cutting roads and sidewalks substantially reduces the lifetime and performance of those surfaces. Accordingly, encouraging or requiring simultaneous construction and co -location of facilities in the public ROW will reduce the long-term cost of building communications facilities. This is because there are significant economies of scale through: 1. Coordination of construction with road construction and other disruptive activities in the public ROW. 2. Construction of spare conduit capacity where multiple service providers or entities may require infrastructure. The reason that these economies are available is primarily because fiber optic cables and installation materials alone are relatively inexpensive, often contributing to less than one - quarter of the total cost of new construction. While material costs typically fall well below $40,000 per mile (even for large cables containing hundreds of fiber strands), labor, permitting, and engineering costs commonly drive the total price toward $200,000 per mile if conducted as a stand-alone project. Moreover, as the ROW becomes more crowded with communications infrastructure and other utilities, the cost of new construction can grow rapidly. In general, however, it is in the best interests of both public and private entities for the public sector to identify construction 41? CTC Report I City of Huntington Beach I August 2016 collaboration opportunities that share the burden of expensive and duplicative labor -related costs and efficiently utilize physical space in the ROW. If fiber construction is coordinated with a major road or utility project that is already disrupting the ROW in a rural area, the cost of constructing the fiber, communications conduit, and other materials can range from $10,000 per mile up. However, if fiber construction is completed as part of a separate stand-alone project, the cost of constructing fiber and communications conduit can range from $95,000 to $200,000 per mile and even higher in complex urban environments. There are numerous methods for constructing fiber optic infrastructure. In particular, underground construction using protective conduits generally provides the most scalable, flexible, and durable method for developing long-term communications infrastructure, but is also typically more expensive than aerial construction methods requiring attachments to utility poles. Underground construction can be preferable despite the cost because of the limit in the quantity of cables and attachments that can be placed on existing utility poles in more crowded areas, and because aerial construction is more exposed and vulnerable to outside conditions. Banks of conduits constructed simultaneously or large conduits segmented with inner duct, provide multiple pathways for the installation of multiple fiber optic cables located in close proximity, with the ability to remove, add, or replace fiber optic cables without disturbing neighboring cables. Conversely, multiple conduits installed at different times must be physically spaced, often by several feet, to prevent damage to one while installing the next. Once the ROW becomes crowded, often the choices of construction methods are reduced, leaving only less desirable methods and more costly locations for construction of additional infrastructure. Some of the key savings achieved through coordinated construction efforts include: • Incremental labor and material costs, through reduced crew mobilization expenses and larger bulk material purchases • Trenching or boring costs, particularly when coordination enables lower -cost methods (e.g., trenching as opposed to boring) or allows multiple entities to share a common trench or bore for their independent purposes • Traffic control and safety personnel costs, particularly when constructing along roadways requiring lane closures 42 CTC Report I City of Huntington Beach I August2016 • Engineering and survey costs associated with locating existing utilities and specifying the placement of new facilities • Engineering and survey costs associated with environmental impact studies and approvals • Lease fees for access to private easements, such as those owned by electric utilities • Railroad crossing permit fees and engineering • Restoration to the ROW or roadway, particularly in conjunction with roadway improvements • Bridge crossing permit fees and engineering 7.1.2 Coordinating Conduit Construction with Other Utility Projects Reduces Costs Where other types of construction are occurring within or along the ROW, such as road construction or resurfacing, roadway widening, sidewalk repairs, bridge construction, and water or gas main installation, there is an opportunity to place telecommunications infrastructure at an overall reduced cost and with reduced disruption to public ROW. 7.1.3 Criteria for Prioritization The cost of installing conduit is drastically reduced when a trench is already dug. However, the cost is still significant, and the City will need to prioritize projects that achieve the most value for the money spent and maximize the likelihood of the conduit being used. To ensure that Dig Once projects are both financially feasible and consistent with the City's long-term goals, we have proposed prioritization based on a range of factors in Appendix E. As opportunities emerge, or as existing opportunities are reviewed, we recommend they be evaluated based on the prioritization listed. We recommend scoring and ranking each potential project based on the prioritization criteria. 7.1.4 Standard Specification The challenge in developing a standard specification for a Dig Once project is to incorporate the requirements of known and unknown users, and to provide sufficient capacity and capability without excessive costs. We considered the following factors in developing a conduit specification: 1. Capacity —sufficient conduit needs to be installed, and that conduit needs to have sufficient internal diameter, to accommodate future users' cables and to be segmented to enable conduit to be shared or cables added at a future date Clc3 CTC Report I City of Huntington Beach I August 2016 2. Segmentation —users need to have the appropriate level of separation from each other for commercial, security, or operational reasons 3. Access —vaults and handholes need to be placed to provide access to conduit and the ability to pull fiber. Vaults need to be spaced to minimize the cost of extending conduit to buildings and other facilities that may be served by fiber 4. Costs —materials beyond those that are likely to be needed will add cost, as will the incremental labor to construct them. Beyond a certain point, trenches need to be widened or deepened to accommodate conduit 5. Robustness —the materials, construction standards, and placement need to reasonably protect the users' fiber, and not unduly complicate maintenance and repairs 6. Architecture —sweeps, bend radius, and vault sizes need to be appropriate for all potential sizes of fiber We recommend further discussions with private carriers to better develop a specification. It may be appropriate to have a different specification for different projects. Based on our knowledge of similar efforts in other cities, and our analysis, we believe the following standardized approach is suitable for major corridors and can be modified as discussions continue with excavators in the rights -of -way: • Four two-inch conduit, minimum SDR 11 HDPE, each of a separate color or unique striping to simplify identification of conduits within vaults and between vaults, in the event conduit must be accessed or repaired at intermediate points. Conduit count can be reduced if the corridor is assessed not to justify the capacity. • Composite vaults having dimensions of 30" x 48" x 36" (W x L x D), placed in the sidewalk or available green space within the city or municipality right-of-way, as close to the curb or gutter as possible • Vaults spaced at intervals of 600 feet or less, typically at the intersection of a city or municipality block • Sweeping conduit bends with a minimum radius of 36 inches to allow cable to be pulled without exceeding pull -tension thresholds when placing high -count fiber cables (e.g., 864-count) • Conduit placed in the same trench directly above the excavator's infrastructure or, where this is not possible, placed with minimum horizontal offset, to minimize cost 44 CTC Report I City of Huntington Beach I August 2016 It is important to note that the proposed approach is designed to create consistency and predictability in costs and deployment and, of necessity, is a compromise among the potential users. If an excavation project has a long time horizon and sufficient budget, it is possible to customize the Dig Once build, potentially adding conduit or adding vaults at particular locations. This plan provides a baseline approach. The approach is a compromise among different types of users of conduit constructed under dig once. Some users might prefer larger conduit for consistency with earlier builds. Others sought a larger count of smaller conduit, to provide more flexibility and the capability for more providers to participate with smaller cable counts. Two-inch conduit has become a standard size for a wide range of construction projects, and can support the widest range of use cases. A single two-inch conduit can accommodate a range of multi -cable configurations, while retaining recommended fill ratios, allowing a single user to serve its backbone and "lateral"/access cable requirements with a single, dedicated conduit. A few example cable configurations supported by a single two-inch conduit, which are not supported by smaller conduit, include: • Two medium backbone cables (e.g., 144-strand to 288-strand cables) and one smaller "feeder" cable (e.g., 24-strand cable); • Large backbone cable (e.g., 864-strand) and two or more smaller feeder cables; or • Three medium backbone cables. Compared to placing fewer, larger conduits segmented with innerduct, this approach provides greater opportunity for individual conduit to be intercepted and routed for future vault installation by a particular user. Additionally, two-inch conduit is substantially cheaper to install and physically more flexible than larger varieties, offering more options to route around existing utilities and other obstructions. Placing four conduit will provide a standard allotment of one or two conduit for State or municipality use and provide capacity for other use and for spares. We recommend SDR 11 HDPE in all cases except where conduit is exposed to the elements (for example, as a riser to building entry), or under extreme levels of pressure (such as under a train or trolley track). SDR 11 HDPE designs will generally support standard highway and railway loads with less than 1 percent deflection when buried with two feet of cover. i 45 s CTC Report I City of Huntington Beach I August 2016 7.2 Build Network Extensions to City -Owned Properties Expanding the City's network to connect to additional City -owned buildings would serve the dual purpose of serving the City's needs as well as providing spare fiber available for leasing. In order to connect to City -owned properties, we recommend a fiber buildout completed in a phased approach leveraging existing and planned City fiber (including traffic signal fiber). We also recommend that the City explore the possibilities of joint builds and swaps with carriers. Coordinating with existing service providers, and providers that are expanding their services, will reduce costs and project risk and accelerate the schedule. It will also enable more efficient use of increasingly crowded utility poles and rights -of -way. As we identified in Section 2, the City's fiber is located in proximity to the Holly-Seacliff area and the Gothard Industrial Corridor. A number of City -owned properties that are along Goldenwest Street and Warner Avenue are also in proximity to City fiber, as depicted in Figure 10. Figure 10: City Buildings and Economic Focus Areas in Proximity to City Fiber38 A well -planned approach will allow the City to deploy the network as funding and resources are available. In our experience, the typical phases for fiber construction to a City -owned property include the following: 38 City fiber routes (includes relevant planned traffic signal routes) are depicted in red. City buildings are depicted in pink. Economic focus areas are depicted in white. 46 CTC Report I City of Huntington Beach I August 2016 7.2.1 Phase 1: Infrastructure Audit The first phase of a fiber construction strategy is to conduct an audit to document the City's existing communications infrastructure. As discussed in Section 2, the City has communications assets including: • Conduit • Fiber optic cable • Streetlight poles An audit will determine where existing assets are available and what deficiencies need to be resolved to most cost-effectively expand the fiber optic communications network. The infrastructure audit should include a review of existing documentation and field surveys to document the assets. The steps of the audit should include: 1. Review all existing documentation 2. Incorporate all existing documentation into a central repository 3. Develop a field survey plan that covers all known infrastructure assets 4. Conduct field surveys that document: a. Conduit and handhole locations b. Utility pole attachments and strand locations c. Building entrances and inside wiring d. Conduit and strand availability e. Fiber and copper cabling routing f. Fiber and copper cabling size g. Fiber demarcation points h. Splice locations i. Splicing configuration 5. Compile a central repository of assets Once the infrastructure audit has been completed, the City would create preliminary fiber optic routing that uses the existing infrastructure —thereby decreasing the cost of construction and potentially increasing the speed at which the City can deploy the network. Also, the infrastructure audit will be a valuable tool for the City to use to collaborate with other potential network partners. The central repository will allow the City to determine what resources are potentially available to negotiate with the other entities. 7.2.2 Phase 2: Address Critical Needs through Interim Strategies There may be critical links that require faster and more reliable service. The City should identify critical links now and determine whether and how they can be included in the first part of the 47 CTC Report I City of Huntington Beach I August 2016 build schedule. Then, the City would identify conduit, fiber, and other City resources in proximity and use those to reduce the cost of or accelerate the build. In the event that a link is needed before the City can build it, the City would identify fiber and resources from private sector service providers, including service provider maps and contacts made through this planning process, and obtain cost estimates for use of that infrastructure. The City would prioritize the infrastructure that can eventually be part of the City's permanent network (e.g., traded conduit or fiber, large -count IRU fiber) and minimize expense that cannot be directed toward the City buildout (e.g., lease fees, fiber that cannot be used to connect other sites). 7.2.3 Phase 3: Perform Infrastructure Remediation Based on the infrastructure audit, the City would determine what remediation is required to use its existing assets in a fiber optic network. Typically, remediation would consist of a variety of tasks, including: • Fiber splicing • Grounding • Relashing cables to strand • Repairing conduit and strand • Installing innerduct • Overlashing existing cabling or pulling through existing conduit 7.2.4 Phase 4: Construct Additional Distribution Fiber Constructing additional distribution fiber will allow the City to connect City facilities to the network. The distribution fiber consists mainly of laterals that travel along major traffic corridors. With the construction of the distribution fiber there is the opportunity for a City to connect additional traffic signals to its existing fiber network. Once fiber connectivity has been established at traffic signal enclosures, wireless capabilities can easily be added to support connectivity to additional City devices. Wireless connectivity can support potential initiatives such as LED street lighting, electronic parking meters, APD surveillance cameras, and smart trash receptacles. 7.2.5 Phase 5: Construct Laterals to City Facilities The construction of the laterals to connect the City's facilities provides an opportunity to eliminate recurring monthly fees for telecommunications circuits. A fiber network to these facilities would reduce both the City's data and voice fees. CTC Report I City of Huntington Beach I August2016 The City facilities would be connected back to aggregation and core network electronics using Layer 2 transport services. 7.2.6 Phase 6: Construct Additional Fiber Routes to Provide Redundancy The fiber design would use distribution fiber along major City roadways to connect City facilities and other assets such as traffic signals, but the design may not provide redundancy in the event of a fiber outage along the distribution fiber. Hence, additional construction of laterals to the City facilities provides an opportunity for a City to provide redundancy in the network. 7.2.7 Typical Costs Associated with Service Drops In order to connect additional City -owned properties, we recommend constructing conduit from the locations to the nearest existing City manhole or handhole; placing inner duct in the existing City conduit from that point to the nearest City hub location; and interconnecting the service drop to the City fiber in a splice enclosure in that cabinet. The typical cost for fiber cable and other materials can range between $4 per foot to $25 per foot in addition to building entry costs averaging around $10,000. The costs we have seen associated with connecting a given building that is up to 10 blocks away from existing fiber back to a hub location or splice enclosure have ranged from $5,000 to $200,000. As with any deployment, the associated costs for construction will vary with the unique physical layout of the service area. We recommend a field survey to determine the costs with greater precision. 7.3 Pursue Discussions and Potential Pilot Projects with Private Partners CTC held initial discussions with representatives of five potential private partners: Crown Castle, AT&T, Zayo, Sonic, and TelePacific. Crown Castle, AT&T, and TelePacific have expressed interest in further discussions. Another potential partner is Edison Carrier Solutions. The City's priorities in modeling a partnership with carriers such as Crown Castle and AT&T could include: • Monetizing its current and future fiber and infrastructure assets, in part by finding a partner that would: o Lease the City's fiber/conduit network, o Populate the City's conduit with new fiber as the partner deploys its own fiber, leaving the City with upgraded fiber, o Lease space on the streetlight poles or other City -owned buildings for small cell wireless attachments • Using this new capital for expansion of the network to interconnect various segments within the focus areas, which in turn would incentivize private sector 49 CTC Report I City of Huntington Beach I August 2016 investment in the focus areas. High-level cost estimates for a middle mile dark fiber expansion in the focus areas are discussed in Section 6.1. In the following sections, we discuss potential partnerships with providers (the parameters of which would also guide partnerships with other qualified entities). 7.3.1 Explore Potential Partnership with Crown Castle In 2015, Crown Castle completed its acquisition of Sunesys. Sunesys has a substantial amount of fiber in the City. The City could potentially decrease the cost of fiber construction or ease into the fiber optic marketplace by leveraging fiber resources such as the Sunesys network. This approach might also decrease the total cost of the middle mile network by using the Sunesys fiber where available. This assumes, of course, that the City and Crown Castle are able to come to a reasonable agreement regarding fiber counts, service level agreements, cost, and other parameters. Other next steps in pursuing a potential partnership with Crown Castle include the following: • Exploring locations where a carrier distribution and aggregation Pop could be established • Discussing Crown Castle's regional plans with neighboring cities • Reviewing maps of City sites, identifying synergies, and conducting deep -dive network follow-up Additionally, Sunesys will continue to operate as a division of Crown Castle, focused primarily on fiber and bandwidth infrastructure projects for the K-12, healthcare and enterprise markets. By coordinating efforts for middle/last mile construction in conjunction with the potential E- Rate funding, the City may find Sunesys to be well positioned to be the commercial partner that is able to leverage those as an existing E-Rate provider. The City is broken up into three E-Rate districts, which currently are operating on different funding years. A breakdown of the districts and the funding years when they will be having submissions for new contracts is as follows:39 • High School District: 2016-2017 • City Elementary District: 2018-2019 • Ocean View District: 2019-2020 Next steps in pursuing a potential partnership with Crown Castle/Sunesys focused on fiber expansion anchored by E-Rate funding include the following: 39 Based on current Form 471 data filed with the Universal Service Administrative Company (USAC). 50 CTC Report I City of Huntington Beach I August 2016 • Meeting with school officials to discuss network planning • Incorporating school sites with City sites and identifying potential common routes based on Crown Castle's existing footprint, or logical builds that would accommodate both school and government sites • Coordinating grant opportunities with CENIC for a potential cross -constituent demonstration project. 7.3.2 Explore Potential Partnership with TelePacific TelePacific is a small to large business connectivity services provider that leases dark fiber from Edison Carrier Solutions and potentially other providers in the region. A middle mile network expansion in the focus areas could be of interest to the company, which is a potential customer for dark fiber leasing. In addition, TelePacific is a good fit to provide service to the business communities within the economic focus areas. 7.3.3 Explore Potential Partnership with AT&T AT&T would be interested in providing Internet or transport services over any fiber that may be built out or provided to them by the City. The company does not seem keen to invest in additional fiber construction within the City. It has expressed interest in responding to an RFI/RFP that the City may release. 51 R CTC Report I City of Huntington Beach I August2016 7.3.4 Consider Economic Development Incentives State and local governments across the country have employed a variety of economic development incentives to encourage local investments in broadband infrastructure and service. The current regulatory landscape in California may limit the City's ability to utilize some of these options or may require related actions such as designating the targeted economic focus areas where the incentives can be made available, but the City could explore one or more of the following: • Tax credits or exemptions — Allowing providers to claim credits for the costs of investing in fiber or related communications infrastructure, or exempting certain types of infrastructure from any applicable property taxes could lower costs for providers considering new deployments. • Tax increment financing (TIF) — TIF could allow the City to subsidize a new buildout. For example, several small cities in Indiana have worked with Metronet, a local broadband provider, to establish TIF districts and issue revenue bonds to help finance FTTP deployments. Metronet purchases the bonds from the cities and the cities use property tax revenue generated from the project to pay off the bondS.40 • Economic Development Tax Grants — Some localities have authority to levy and use proceeds from economic development income taxes to provide funding for local economic development projects. Economic development grants may serve as seed money to help attract providers or other funding sources for local broadband deployments. 7.4 Develop and Distribute a Request for Information or Request for Proposal Implementing policies that are friendly to the private sector is a good way to indicate that the City wants to incent private investment there; a more direct way to engage the private sector is to issue a request for information (RFI) or request for proposal (RFP).41 Such a document would clearly articulate the City's needs and desires and invite private companies to respond and outline their unique approach to solving the City's connectivity needs. In conjunction with the RFI/RFP process, we recommend that the City facilitate discussions with neighboring municipalities about the regional plans of carriers that have expressed interest in expansion. A combined effort across the region may provide greater buying power and generate stronger interest amongst carriers. It may provide opportunities for carriers to create 40 http://cros.bsu.edu/- /media/WWW/DepartmentalCo ntent/DPI/PDFs/Indiana%20Report%202015%20FINAL%2012215%20PDF21.pdf, accessed April 2016. 41 Issuing and analyzing the results of an RFI would cost an estimated $15,000. 52 1 CTC Report I City of Huntington Beach I August 2016 redundant routes in the region. This would be a more attractive proposition than just expanding their routes with the City. An RFI process can be a great way for localities to garner information from the private sector about companies that may be interested in partnering with the City to some degree. An RFI does not have to stringently outline all of the City's goals or create strict parameters about how its objectives will best be met. Rather, an RFI can express a City's desires and lay out any non- negotiable items but leave room for a private partner to respond creatively. Indeed, we encourage any locality that considers issuing an RFI to exercise caution in the degree to which it specifies its requirements of a public partner. An overly detailed RFI may scare off potential respondents who do not believe they possess all the staff or qualifications to meet a strict list of demands outlined by the locality. One final consideration for an RFI process is that not all potential partner companies will directly respond (i.e., unlike with an RFP, some potential partners may not submit a response). This should not discourage the City from issuing an RFI—such a document is extremely valuable not only for getting a sense of who responds, but also for outlining the City's goals. For example, if the time period to respond to the RFI ends and no viable partner has emerged, or if for some reason negotiations with a chosen partner do not pan out, the City will likely find that the RFI remains useful for attracting and communicating with private companies. Finally, it is important to be realistic about what a broadband partnership may entail on behalf of both partieS.42 Again, the City must develop its own understanding of its desires, goals, and requirements for a fiber network. Once it has clearly defined what it hopes to achieve through pursuing fiber deployment, it can summarize this in an RFI/RFP to allow potential private partners to respond based on their own ability and willingness to help meet the City's needs. It is also critical to require RFI/RFP respondents to answer specific questions, complete standard forms, and follow other detailed instructions. If a "loose" response format is allowed, it is difficult to sift through the volumes of marketing material that will be provided. An example of a detailed matrix is provided in Appendix C; a list of potential RFI/RFP recipients is included in Appendix D. 42 Jon Brodkin, "Skeptics Say LA's Free Fiber Plan As Plausible As Finding a Unicorn," Ars Technico, November 8, 2013, http://arstechnica.comlinformation-technologv/2013/11/skeptics-sav-las-free-fiber-plan-as-plausible-as- finding-a-unicorn/. 53 1 CTC Report I City of Huntington Beach I August 2016 8 Potential Long -Term Revenue Opportunities Over the long term, CTC recommends that the City consider pursuing strategies such as leasing dark fiber and conduit space to monetize the City's assets. We have included pricing examples in Appendix F that can be used to create pricing structures. Additionally, the City could pursue leasing transport services such as Wavelength and Ethernet to enterprise -grade customers and carriers. 8.1 Monetize Assets by Leasing to Wholesale Dark Fiber Providers Of the carriers that have dark fiber assets in the City (see Section 3.1), the best potential partners for the City are those that offer metro dark fiber services within the City, and that offers interconnection or breakout of their networks in locations close enough to the focus areas to enable the carrier to provide business services in those areas. In the sections that follow, we describe some key considerations for attracting carrier investment. 8.1.1 Paths to a New Metro Market When carriers are looking to enter a new market, there are three paths that they generally take: 1. Inorganic — Carriers can enter a new metro market by acquiring fiber assets as a part of their standard Merger and Acquisition (M&A) methods. 2. Organic — Carriers can enter a market by building out new fiber. This approach is not usually driven solely by a general decision to expand, but rather as "success -based expansion" needed to meet the demands of a build -out for a specific customer. 3. Right to Use — There are times that carriers are able to secure a right to use. Usually, this is part of a fiber swap or "fiber bank" agreement. In a fiber swap, carriers will often swap fiber as part of a cashless transaction, or an "in -lieu of payment": • ETL Offset — Carriers will do this to offset a disconnect that has an Early Termination Liability (ETL) associated with it. Smaller carriers, resellers, or systems integrators will often lease DWDM transport services from another carrier in support of a large deal for a customer where they do not have the infrastructure to support it themselves and it would not be profitable to build themselves. To increase the profit margins of the deal, they will lease the assets or buy the services for a longer timeframe then the underlying customer agreement. 54 CTC Report I City of Huntington Beach I August 2016 For example, they may be able to secure an additional 10 percent discount by buying the transport for five or seven years, in hopes of securing renewals with their customers that are buying on a three-year term. They hedge their bets that they will be able to secure the renewal. • Asset Swap — The fiber swap may be a pure cashless transaction of leveraging excessive fiber that the carrier built or acquired, as a means of gaining fiber in another area that they are not currently built into. • Future Use Option — Larger carriers, such as Zayo, have tapped into a model used by professional sports teams for "trades to be named at a later date." They look at the metro markets of their competitors and identify places that may be of interest to them, but they are not prepared to spend cash to enter into the market and have unused fiber assets that are not generating revenue. Rather, by securing a Right to Use, they incorporate these into their sales arsenal as they are targeting a specific project, such as a large anchor customer in that market. They may take a similar approach to sites identified as part of a larger anchor project for a national customer such as fiber -to -the -tower (FTTT) for national wireless customers. 8.1.2 New Market Considerations When evaluating a new market, carriers make the following considerations. Generally, a city's economic development and public works departments will have much of this information. If Huntington Beach gathers this information and packages it to attract a carrier, the City will make the process faster and easier to engage: • Market scope • Competition • Opportunity scope: Identify your commercial clients, number of locations, headquarter cities, interest in broadband • Decision -making authority. (If a carrier has a large data center located in a city in California, but all of the decisions are made through a New York office, it will be hard for the local sales team to leverage the fact that it has fiber in that California market.) • Geographic clustering of commercial targets: Heat maps, business lists (including employee counts) • Fiber -to -the -tower (FTTT) density and demand o Existing cell tower locations 55 CTC Report I City of Huntington Beach I August 2016 o Fiber availability to the towers o Small cell targets • Construction factors o Favorable access to right-of-way o Streamlined bureaucracy: If a carrier were to choose Huntington Beach for major expansion, does the City have the resources to expedite the permitting? 8.1.3 Carrier Engagement Prior to entering into negotiations with a carrier, a fair market valuation of the City's assets should be determined. Considerations include: Conduit • Proofed vs un-proofed: Has the asset been fully proofed? • Ducted: Is there available inner duct in the conduit? • Repurposed: Municipalities often can repurpose municipal assets into fiber infrastructure. Can the old infrastructure, such as old steam, traffic control or street lighting conduit, be repurposed and old lines be used to pull through new conduit or fiber? Fiber • Map of the City's available fiber • Fiber details: Count, type, age • Splice enclosures: Details of how a carrier would access the fiber is more important than the fiber itself • Utilization: Of the fiber deployed, how much is in use and what is the efficiency of the current span -to -splice ratio? Right -of -Way— What ROW is available for build -out? Other Enabling Factors — What other assets and services can the City make available to attract carriers? 56 CTC Report I City of Huntington Beach I August 2016 • Point of Presence (POP): Generally for a carrier to make entry into a city it needs to also establish a new POP. Are there municipal facilities that have adequate AC/DC power options that could serve as a POP? These can be leased or bartered for services. • Existing services: What are the details of the existing telecommunications services that can be competitively bid or bartered for in exchange for the carrier's market entry. • Community anchors: What are the services needed by other community anchors in Huntington Beach, such as K-12 schools, hospitals, or higher education institutions? • Hub breakout: In order for a carrier to break out of long haul routes, it needs to establish new ingress/egress. This will mean deployment of new optical equipment that will require a one-time investment of $100,000 to $200,000. Additionally, the but facilities are not set up to be POP facilities. The City should investigate what facilities it owns in proximity to these sites that could be used to house the facilities, or the feasibility of placing a but at these locations. 8.1.4 Memorandum of Understanding Once the above enabling factors are evaluated, the City could consider entering into a memorandum of understanding (MOU) with a carrier. This will grant the carrier a "Right of Use" for the City -owned fiber/conduit assets as discussed above. The City should expect the MOU to contain some of the following key points: ■ Presell: Carrier pays an escrow amount that gives it 12 to 18 months to pre -sell the market, giving the carrier's sales teams time to incorporate these assets. The carrier may ask for an exclusive arrangement —this should be weighed against the potential value to the City and the benefit of competition within the conduit. ■ Asset validation and remediation: The carriers may share the expense of proofing the conduit network for the City and identifying areas that require remediation. Note that if the carrier is sharing this expense, then the City should expect to receive a lower valuation of the conduit from a carrier. ■ Inclusion in carrier marketing materials: The carrier will expect to be able to market the City's assets as its own. ■ Attract a last -mile company: The carriers that are in a position to serve the role as back- bone/wholesale operators do not generally provide small enterprise or residential broadband services. Those types of ISPs, WISPS, and FTTH providers will generally buy from a carrier as part of a national contract as opposed to buying from a city directly. 57 CTC Report I City of Huntington Beach I August 2016 8.2 Monetize Assets by Leasing to Wireless Telecommunication Providers Mobile wireless coverage and connectivity has typically been provided through macro cellular sites or towers that provide reception to users within a radius of several miles. The increasing demands of wireless data traffic capacity has in turn led to the need to expand the number of cellular radio sites. In densely populated areas, especially where the feasibility of installing a cellular tower is limited, it is difficult to provide adequate service through just macro cellular sites. Tall buildings in dense urban environments create barriers to wireless coverage and reception from a macro cellular site. Small cells or distributed antenna system (DAS) networks that are designed to provide localized coverage and capacity to smaller areas can supplement the data capacity of macro cellular towers. A small cell consists of a low -power radio installed at a much lower height than a macro cellular tower. It has a coverage range from about 30 feet to a few thousand feet. A small cell deployment may provide licensed cellular service or unlicensed Wi-Fi service and is usually restricted to one carrier. Small cells are different from DAS, which comprise spatially separated antenna nodes connected by fiber, and are typically designed to facilitate wireless communications services for multiple carriers. Small cells are a newer technology and are easier and more cost-effective to install than a DAS. Because of this —and because it is relatively simple to use small cells to improve the performance of a wireless network (e.g., in areas where cellular towers are infeasible or where obtaining additional wireless spectrum is expensive) — we expect a proliferation of small cells in cities nationwide in the next few years. Mobile wireless carriers or their partners deploy DAS or small cell infrastructure primarily in the business and downtown areas of cities for capacity reasons. Existing structures in the public right-of-way (ROW), such as utility poles and street lights, provide a cost-effective way to deploy a small cell, just as existing buildings are often used to support traditional cellular antennas. The carrier usually develops a lease agreement and obtains permitting through the City. When street lights are structurally insufficient, the provider will pay to replace the existing pole, or add a new matching pole with no light in the ROW. Where new poles are installed, several arrangements are feasible, and the City can own the pole regardless. These solutions require backbone connectivity (mainly fiber -based) from the poles. Wireless backbone connectivity is also available. The installation is carried out between 25 and 35 feet above ground with an equipment cabinet mounted so that its bottom edge is at 10 feet above ground (just on the edge of the communications space). 4:1 CTC Report I City of Huntington Beach I August 2016 Small cell operators are usually wireless carriers such as AT&T, Sprint, T-Mobile, and Verizon Wireless, as well as specialty providers (such as Crown Castle, Mobilitie, and ExteNet) that lease access to the wireless carriers. Multi -tenant small cell cabinets are being developed due to the increased demand for pole space .43 Some cities are developing strategies to provide small cell access to multiple tenants in the ROW by alternating the leased poles between providers. Leasing street light pole space to operators is a way to develop new sources of revenue while also building a state-of-the-art communications infrastructure to support continued growth and economic development. Small cell and DAS attachment pricing is much like real estate pricing, in that the value of a small cell attachment is location and market -specific. It is not like real estate, however, in the sense that there is limited publicly available transaction data on which to base local pricing decisions. We have seen many examples where small cell and DAS attachment pricing are essentially the same (i.e., being offered at the same rates). Lease pricing frameworks for small cell/DAS pole attachments in the public ROW typically include a price per pole per year (i.e., a flat annual attachment fee). We have also seen examples with a franchise fee (i.e., a percentage of the small cell/DAS owner's annual gross revenues from the attachment). The provider will pay attachment fees to the City, or will attach for free and cover maintenance (including the electric bill for the City's lights). Sometimes cities enter into a revenue sharing on city -owned light poles. We have provided some examples of small cell attachment rates in Appendix G. The pricing ranges from $1,500 to $4,000 per pole per year. 43 http://www.rcrwireIess.com/20151201/network-infrastructure/new-vork-prepares-for-surge-in-small-cell- deployments-tag4, accessed April 2016. 59 1 CTC Report I City of Huntington Beach I August 2016 Appendix A: Business Survey Results The following results obtained from the business survey conducted by the City provide some insights into the broadband services available to businesses. For each question on a one -to -five scale, one is "very unimportant" and five is "very important." Figure 11: Capacity of Data Circuits at Business Locations 10 Mbps 20 Mbps M 50 Mbps 100 Mbps " 250 Mbps 500 Mbps 1 Gbps . CTC Report I City of Huntington Beach I August 2016 Figure 12: Monthly Recurring Charges for Business Internet Access Loss than S100 $101 to S250 $251 to S500 S501 to S750 $751 to $1.000 $1.001 to 1.250 $1.251 to $1.500 Ilona than $1.500 0% 10120% 30% 40 50% 60% 70% 80% 90% 100% Figure 13: Satisfaction with Attributes of Existing Data Services Availability Affordability Reliability ,pea ww customer Service 3 5 fi 7 B 9 10 61 1 CTC Report I City of Huntington Beach I August2016 Figure 14: Importance of Different Data Service Attributes Availability Affordability Reliability Customer Service 0 2 3 4 5 6 1 8 9 10 Figure 15: Constraints on Businesses' Ability to Use Higher -Speed Data Connections Lack of availability Cost of service Budget or finance... Reliability of avastable... No nerd for high-speed d... None C,:. '0 -_ n 40°s 50% 60',1 708k 80% 9CrQ 100% 62 1 CTC Report I City of Huntington Beach I August 2016 Appendix B: Residential and Small Business Services Residential and small business customers in the Huntington Beach area have access to varied services, though individual service options are dependent on location. Table 8 lists the service providers and minimum price for each type of service that is available in at least part of the City. Table 8: Overview of Residential and Small Business Data Services in Huntington Beach Service Type Provider Minimum Price (per Month) Cable Time Warner $14.99 DSL Verizon $24.99 Earthl-ink $80 Mega Path $45 Fiber Verizon $49.99 Satellite HughesNet $49.99 3G/4G/Wireless Internet Service Provider Verizon $30 T-Mobile $20 Sprint $10 AT&T $14.99 Vectus Priced individually Cable Time Warner offers Internet service with advertised download speeds of 3 Mbps to 300 Mbps starting at $14.99 per month in some locations in the City, as illustrated in Table 9. Promotional rates are available for the first year, after which the rates increase. Discounted prices are 63 CTC Report I City of Huntington Beach I August 2016 available if bundled with another service like voice or TV.44 On the small business side, multiple options are available with download speeds of 10 Mbps to 300 Mbps, as illustrated in Table 10.a5 Table 9: Time Warner Residential Internet —Internet Only Package Internet Speed Regular Price Promo Rate Everyday Low Price Up to 3 Mbps download TBD $14.99/mo Basic Up to 10 Mbps download TBD $29.99/mo Extreme Up to 50 Mbps download $57.99/mo $34.99/mo Ultimate 100 Up to 100 Mbps download $67.99/mo $44.99/mo Ultimate 200 Up to 200 Mbps download $77.99/mo $54.99/mo Ultimate 300 Up to 300 Mbps download $107.99/mo $64.99/mo Table 10: Time Warner Small Business Internet Internet Speed Price 10 Mbps download/3 Mbps upload $69.95/mo 25 Mbps download/10 Mbps upload $109.95/mo 300 Mbps download/20 Mbps upload $499.99/mo DSL Verizon offers DSL-based residential services starting at $24.99 per month for 1 Mbps download and 384 kbps upload speeds. Download speeds up to 15 Mbps are available.a6 44 https://www.timewarnercable.com/en/plans-packages/internet/internet-service-plans.htmi, accessed December 2015. 65 https://business.timewarnercable.com/services/internet/business-internet/overview.html, accessed December 2015. 64 1 CTC Report I City of Huntington Beach I August 2016 Verizon offers DSL service for small business customers in Huntington Beach where NOS is unavailable, starting at as $39.99 per month for standalone DSL service at 1 Mbps with a two- year commitment. Additional options up to 15 Mbps are available as indicated in Table 11. Table 11: Verizon DSL Small Business Internet Internet Speed Price Up to 1 Mbps download $39.99/mo Up to 5 Mbps download $64.99/mo Up to 7 Mbps download $84.99/mo Up to 15 Mbps download $94.99/mo Earthl-ink provides DSL-based business services in the region starting at $80 per month and offering speeds up to 6 Mbps with a claimed 99.9 percent network availability.47 MegaPath is an Internet service provider that offers speeds of up to 20 Mbps download and 1 Mbps upload for business customers in certain parts of Huntington Beach .48 The lowest plan offered is for 1.5 Mbps download speeds at $45 per month. Fiber Verizon offers fiber -based residential services in certain areas in the City starting at $49.99 per month for symmetrical 50 Mbps speeds with a two-year contract. The speeds available are depicted in Table 12. 49 Table 12: Verizon FiOS Residential Internet Internet Speed Year 2 Price Promo Rate (symmetrical) 50 Mbps $59.99/mo $49.99/mo 46 http://www.verizon.com/home/hiphspeedinternet?promotion code=JUNCT/W04&CMP=AFC-CON 2014-Q2 CJ- NA-CJConsHSIStandalone 0012&AID=4198912&PID=8018628&SID=S863838226368, accessed December 2015. 47 http://www.earthlinkbusiness.com/DSL/, accessed December 2015. 48 http://www.mepaapath.com/services/, accessed December 2015. 49 http://www.verizon.com/home/fios-fastest-internet/?promotion code=JUNCT/W04&CMP=AFC- CJCON 002PZ2 005 014&AID=11172148&PID=8018628&SID=5863838226368, accessed December 2015. 65 CTC Report I City of Huntington Beach I August2016 Internet Speed (symmetrical) Year 2 Price Promo Rate 100 Mbps $69.99/mo $59.99/mo 150 Mbps $79.99/mo $69.99/mo 300 Mbps $179.99/mo $169.99/mo 500 Mbps $279.99/mo $269.99/mo Verizon offers fiber -based small business services in certain areas in the City starting at $74.99 per month for symmetrical 25 Mbps speeds. The speeds available are depicted in Table 13.50 Table 13: Verizon FiOS Small Business Internet Internet Speed (Symmetrical) Price 25 Mbps $74.99/mo 50 Mbps $94.99/mo 75 Mbps $124.99/mo 150 Mbps $194.99/mo 300 Mbps $264.99/mo 500 Mbps $369.99/mo Satellite Satellite Internet access is available in the area as well. HughesNet has four packages available, of which two packages are for Internet services to small businesses. The Business 50 package provides speeds of up to 5 Mbps download and 1 Mbps upload for $69.99 per month, with a 5 GB per month anytime allowance and 10 GB "bonus bytes" from 2 a.m. to 10 a.m., for a total monthly data allowance of 15 GB. This package requires a two-year agreement and only so http://www.verizon.com/smaIIbusiness/products/business-FiOS- Internet/packages/?promotion code=JUNCT/W04&CMP=AFC-SMB 2015-Q2 CJ-NA- 2Q2015FiOSDPTextCJ 0002&AID=12373640&PID=8018628&SID=5863838226368, accessed December 2015. CTC Report I City of Huntington Beach I August 2016 supports up to five users. The Business 100 package provides the same download and upload speeds of the Business 50 package, but offers a higher data allowance threshold of 10 GB per month anytime and 15 GB "bonus bytes" from 2 a.m. to 10 a.m., for a monthly data allowance of 25 GB. This package also requires a two-year agreement and is for five to 10 users. Wireless Verizon offers two 4G LTE data packages with multiple choices for data allowances and pricing, depending on the desired mobility and equipment chosen. The HomeFusion Broadband Package (LTE-Installed) is a data -only 4G LTE service with Wi-Fi connectivity and wired Ethernet for up to four devices. Available download speeds are 5 Mbps to 12 Mbps and upload speeds are 2 Mbps to 5 Mbps. Monthly prices range from $60 for a 10 GB data allowance to $120 for a 30 GB data cap. Overages are charged at $10 per additional GB. A two-year contract is required, with a $350 early termination fee. The Ellipsis JetPack provides a mobile solution, with download speeds of 5 Mbps to 12 Mbps and upload speeds of 2 Mbps to 5 Mbps. Prices for the 12 options of data allowances range from $30 per month for a 4 GB data allowance to $335 per month for 50 GB of data, in addition to a monthly line access charge of $20.The device is $0.99 with a two-year contract. There is a $35 activation fee.sl Sprint offers 4G LTE wireless data in the City. The two data packages offered for tablets are 100 MB per month data allowance for $10 per month and 1 GB per month data allowance for $15 per month. Beyond the data limit, the plan switches to low -speed data. A two-year contract is required, as well as an activation fee of $20 and equipment charges for different types of devices. AT&T also provides 4G LTE wireless data service in the area, and offers three packages: a 250 MB per month download allowance for $14.99 per month, a 3 GB per month download allowance for $30 per month, and a 5 GB per month download allowance for $50 per month. There is an overage fee of $10 per 1 GB over the limit. There are also equipment charges, with or without a contract, and an activation fee up to $45.52 T-Mobile also offers 4G services for $20 per month with a limit of 2 GB per month. T-Mobile offers additional capabilities and increasing data limits at incremental costs in a total of five packages, up to $80 per month for up to 18 GB of data. Depending on current promotions, the $35 activation fee is sometimes waived. 53 51 http://www.verizonwireless.com/support/wireless-internet-data-only/, accessed January 2016. 52 https://www.att.com/shop/wireless/plans/planconfigurator.html, accessed January 2016. 53 http://www.t-mobile.com/cell-phone-plans/mobile-internet.html, accessed January 2016. 67 CTC Report I City of Huntington Beach I August 2016 Vectus is a wireless Internet service provider (WISP) that provides business Internet services in Huntington Beach. The range of standard Internet speeds with full duplex bandwidth is 6 to 100 Mbps. Vectus also offers customized wireless point-to-point transport links at higher speeds.54 54 http://www.vectus.com/Service.aspx?catld=c02 , accessed December 2015. CTC Report I City of Huntington Beach I August2016 Appendix C: Responsibility Matrix This appendix is provided in Excel format. �:] CTC Report I City of Huntington Beach I August 2016 Appendix D: Potential RFI/RFP Recipients This appendix is provided in Excel format. 70 CTC Report I City of Huntington Beach I August 2016 Appendix E: Dig Once: Criteria for Prioritization • Ability to place conduit over long, continuous corridors across the City • Proximity of the project to City facilities requiring service • Lack of existing City communications infrastructure in the vicinity • Potential interest in conduit from partners or customers (e.g., City departments, service providers, or developers) • Lack of cost-effective alternatives due to physical constraints in the vicinity (e.g., targets of opportunity such as bridges or freeway underpasses) • Lack of capacity on utility poles along the route • Risk to Dig Once communications infrastructure (e.g., water, gas, and sewer need to be placed deep underground and Dig Once infrastructure placed far above that infrastructure to reduce likelihood of damage to the Dig Once conduit during an emergency utility repair; this is less true of electrical and communications excavation that is in closer proximity to the Dig Once conduit, making the Dig Once conduit easier to avoid) • Delays to critical infrastructure (i.e., the incremental days for Dig Once coordination must not create a public safety risk) • Project cost (i.e., prioritizing projects with lower -than -average costs) • Synergies with opportunistic major projects, such as highway mass transit, or bridge replacement • Major right-of-way crossings, such as railroad, water, highway, interstate etc. Often times these are difficult for private carriers to facilitate or justify • Conduit placement for building laterals into key sites, data centers, or facilities deemed potential targets for redevelopment • In addition to Dig Once, we recommend that where pedestrian sky bridges or tunnels are being installed as part of the downtown redevelopment efforts, conduit be placed along these access corridors where appropriate 71 A CTC Report I City of Huntington Beach I August 2016 Appendix F: Dark Fiber Pricing Most commonly, dark fiber is priced on a per strand per mile basis for a set term. Usually, the lease price is for fibers on the existing fiber network, and the customer is responsible for the incremental cost to connect their facility to the closest access point on the existing fiber route. Colocation, splicing, make-ready, and rack space costs are generally assessed on top of the fiber pricing. Some entities will also charge an up -front fee to cover administrative costs. Price Structures The following are a range of pricing structures found in both the private and public sectors. 1. Incremental or proportional cost (either of construction or maintenance). In this model, dark fiber is priced at the incremental or proportional cost of building the leased fibers or maintaining them. These structures will result in the lowest pricing possible. In our experience, this model is used only where the provider is under some kind of duress or legal requirement.ss 2. Up -front payment plus maintenance. Most commonly, dark fiber is leased as a 10- to 20- year (most often 20) Indefeasible Right of Use (IRU). The customer pays up front for the IRU and annually for maintenance.56 The maintenance cost is calculated on route miles, not strand miles. The annual maintenance charge is the same per mile regardless of whether the lease is for one or 10 or 100 strands on the same route. The upfront payment covers the entire term of the fiber lease, while the maintenance and co -location portion of the contract are often renewable, typically on five-year or shorter terms, which allow for cost adjustments based on experience and inflation. The benefit of this model is the substantial inflow of funds early in the lease term, funds that can help bridge any potential early year cash shortfall while an entity is beginning operations and developing new services. On the other hand, the model will not result in recurring annual revenues over the long-term beyond some of the cost of maintenance. 3. Per annum or per month pricing. This structure has the benefit of delivering to the fiber owner a steady annual income stream over time, but does not deliver a large up -front payment that could serve to bridge a difficult budget year or finance new investment. On the other hand, this model is more achievable if the dark fiber lessee is not able to make a 55 For example, Minnesota Power was instructed to offer a dark fiber at a rate of $13.65 per mile per strand per month under a ruling from the Minnesota Public Utilities Commission on a transaction agreement between Minnesota Power and Enventis Telecom Inc. (a non -regulated subsidiary of Minnesota Power). The ruling bases the lease price of Minnesota Power's unused fiber assets using an incremental cost basis. 56 One of the benefits of this model for the customer is the possibility that the IRU could be recognized as a financial lease that may allow the IRU to be treated as a capital expenditure. 72 CTC Report I City of Huntington Beach I August 2016 large up -front payment —but can pay for the fiber on a recurring annual or monthly basis. As a result, this model potentially increases the number of potential dark fiber customers. Net pricing over the term of the lease tends to be higher than in the up -front payment model over the same total period of time. This model is often used for short-term leases, and can deliver very high revenues for a short time —a nice bonus, but not necessarily the basis for sustainability of a network. Sample Prices The following are a range of prices, using a range of pricing structures, we have seen recently in the public and non-profit sectors. While some of these examples date back a few years, we note that dark fiber pricing tends to remain fairly static over time. These and other examples are analyzed in Table 1 and Table 2 below. 1. Up -front payment plus maintenance —Indefeasible Right of Use (IRU): a. Illinois Century Network, a statewide backbone network in the Midwest, leases dark fiber between Points -of -Presence (POPS) at $1,000 per mile per strand on a one-time basis plus a maintenance set at $300 per mile annually for a 20-year term mAdditional charges apply for shorter segments and within the Chicago Metropolitan area. b. MCNC, the education and research network in North Carolina offers an up -front dark fiber IRU price starting at $750 per fiber per mile, based on a 20-year term, plus the proportional cost of maintenance (set at $250 per strand mile). The fee drops as the number of strands leased increases. For example the price is $325 per strand per mile when 12 or more strands over an entire ring are included in the IRU. These numbers have transformed the dark fiber market in North Carolina.58 c. The Mid -Atlantic Broadband Cooperative serving Eastern Virginia offers IRUs in the range of $1,500 to $2,000 per strand per mile for 20-year term. The area served includes a mix of small urban, suburban, and rural areas. d. A County in South Carolina charged a one-time fee of $800 per fiber mile plus a $250 per year per route mile maintenance fee for a 20-year IRU. e. A West Coast joint rural/outer-suburban area is offering dark fiber pricing on 20-year IRUs for a one-time upfront charge of $1,500 per fiber per mile and an annual recurring maintenance charge of at least $250 per month per route mile. This pricing is consistent 57 https://www.illinois.gov/icn/services/providers/Pages/darkfiber.aspx, accessed May 2015. 58 Source: MCNC Dark Fiber Rate Card, accessed April 2013. 73 CTC Report I City of Huntington Beach I August 2016 with (and based on) the pricing charged by the state's toll way authority in the state for fiber along its toll roads. f. A private competitive bandwidth infrastructure provider in the Dallas, Texas area has provided an IRU for a regional network consortium for a one-time upfront charge of $215,000 that represents 45 miles, completing half of a DFW metro ring spanning about 90 miles. There are two end point and three drop -add locations. The recurring maintenance charge is $1,245 annually and is subject to a 1.5 percent annual increase in lieu of CPI price increases. g. A private competitive bandwidth infrastructure provider in the Minneapolis area has provided an IRU for a regional network consortium for a 17-mile ring connecting three University locations and a carrier hotel. This has a one-time charge of $280,000 and a monthly recurring fee of $800 for maintenance. The term of the agreement was for 20 years. This was exempted from any CPI increase. 2. Per annum or per month lease pricing: a. Axia MassBroadband 123 in rural Massachusetts leases dark fiber at a rate of $60 per strand per month per mile.S9 b. The City of Arlington leases dark fiber at rates ranging from $400, $500 and $600 per fiber strand mile per month for ten, five and one year terms respectively. c. The City of Bellevue, Washington leases dark fiber to a not -for -profit corporation at a monthly recurring fee of $47.50 per fiber strand per mile for a seven-year term, plus the maintenance COStS.60 d. Bonneville Power Administration (BPA) in Vancouver, WA leases dark fiber at a rate ranging from $30 to $45 per fiber per mile per month to commercial entities. In addition they charge an annual maintenance of $350 to $500 per fiber route mile for commercial use fiber .61 For public agencies the monthly lease is $21 per fiber per mile per month plus an annual maintenance fee of $24 per fiber route mile. e. The Boulder Valley School District leases dark fiber at a discounted rate of $36 per fiber per mile for a five-year term to the Boulder Regional Emergency Telephone Service Authority (BRETSA) in consideration of its "unique services and contributions.i62 The 59 www.axiamassbroadband123.com/Portals/16/MB123%20Pricing.xis, accessed May 2015. 60 http://mrsc.org/getmedia/98201AO6-E936-4D6D-AC9A-A828AE69F4CC/b44darkfiber.aspx ,accessed May 2015. 61 Source: 2015 Bonneville Power Administration Fiber Lease Rates. 62 http://agendapublic.bvsd.org/AttachmentViewer.ashx?AttachmentlD=4464&ItemID=3693, accessed Nov 2013. 74 1 CTC Report I City of Huntington Beach I August2016 regular monthly lease rate per fiber per mile is $72. BRETSA is only responsible for the maintenance costs associated with any lateral connections that they construct. f. Burbank Water and Power charges based on miles and length of contract, all contracts carry a one -mile minimum. The base price is $200 per mile per month63 of which discounts are offered for the number of strands and term of contract. For example, for one to six fibers, the cost is $175 per fiber per month for a five-year term. The price decreases proportionally to $135 per fiber per month for a 15-year term. g. In an urban market in California ,64 a large municipal electric utility uses a declining scale of lease prices. The cost is $100 per month for each location, plus a per mile per month charge of: i. $300 per month per fiber strand for 1 to 10 miles ii. $180 per month per fiber strand for 11 to 20 miles iii. $120 per month per fiber strand for 21 to 30 miles iv. For miles beyond 31, the rate is negotiated h. In an urban market in California,6s a national carrier offers on -net dark fiber rates per the following table: Term (Years) Measure 1 3 5 10 20 MRC for 2 strands for 3 $15,000 $9,500 $7,900 $6,900 $6,000 miles MRC per strand $2,S00 $1,583 $1,317 $1,150 $1,000 per milebb Cost per year per $30,000 $19,000 $15,800 $13,800 $12,000 strand per mile67 i. Carroll County in northern Maryland leases dark fiber at a rate of $30 per strand per month per mile.68 63 https://www.burbankwaterandpower.com/fiber-optics/dark-fiber-services, accessed May 2015. 64 Entity requested that its name not be listed, information from spring of 2009. 65 Entity requested that its name not be listed, information from summer of 2015. 66 Calculated. 67 Calculated. 68 Information provided by staff during a meeting in October 2014. 75 CTC Report I City of Huntington Beach I August 2016 The Frankfort Plant Board, Frankford, KY charges $500 per month per fiber strand for the first mile and decreases to $100 per month per strand thereafter.69 Charges are on 1/10'h of mile increments. Discounts based on the term of the contract are given to the initial connection charges, not monthly fees. For month -to -month contracts the customer pays 100 percent of the connection fee, 50 percent for a two-year agreement, and 25 percent for a three-year agreement. k. Franklin Municipal FiberNET in Franklin, KY leases dark fiber at a rate of $225 per strand per mile per month for the first mile. Each additional mile is charged at $55 per strand per mile per month. 70 Maryland Broadband Cooperative, a rural cooperative prices its dark fiber for members at $75 per fiber per mile per month for a 60-month lease. Maintenance charges are $10 per fiber per mile. m. Menasha Utilities (MU), Menasha, WI leases its fiber optic infrastructure for Menasha businesses within the immediate area of the network .7'The fiber optic cable will be terminated at the customer's site(s). MU provides cable termination only. The customer needs to provide their equipment to light the fiber. Rates are $410 per fiber pair per month per mile ($205 per month per strand per mile) for a contract up to three years. The rate drops to $370 per fiber pair per month per mile ($185 per month per strand per mile) for a contract from four to six years. n. The Nelson County Broadband Authority in Virginia leases dark fiber at a rate of $104.60 per strand per mile per -month for leases longer than a five-year term. A lease shorter than a five-year term is priced at an annual rate of $129.16 per strand per mile. o. The City of Pasadena leases fiber at a rate of $3,000 per strand per mile annually for a one-year term. Discounts are offered for longer -term leases on a case -by -case basis. They typically offer leases up to five years. Their customers are primarily CAls. p. Palo Alto Utilities offers dark fiber at per month per mile rates ranging from $213 to $425 for the first fiber, with additional fibers priced at $142 to $166. The effective rate for a pair is $355 to $591 per mile per month and $177 to $295 per fiber per month per 69http://staticl.squarespace.com/static/509acSd5e4bO1lec8327ecea/t/5ld47ld9e4bO143ad3d3f9de/137287727 3585/Dark Fiber 2009.pdf accessed May 2015. 70 http://www.franklinky.org/municipal-fibernet, accessed May 2015. 71 htto://www.menashautilities.com/business customers/default.aso?CateRorvNumber=8&SubcategorvNumber=1 accessed May 2015 76 1 CTC Report I City of Huntington Beach I August2016 mile (based on purchase of a pair). The lower prices within this range are offered based upon quantity, buffer tubes used, route length, topology, and length of term.'Z q. The Sacramento Regional Transit District leases dark fiber at different rates in three zones: i. $125 per month per fiber strand per mile in an urban zone ii. $75 per month per fiber strand per mile in a suburban zone iii. $60 per month per fiber strand per mile in an exurban zone Transverse crossing of up to 100' are priced with a different model based on the fiber cable size within each zone. For instance, a 216-strand cable is priced at $1,400 per year- per cable in an urban zone and $920 per year- per cable in a suburban zone. The rate for a 432-strand cable is $2,400 per year- per cable in an urban zone and $1,600 per year- per cable in a suburban zone. An additional 7.5 cents per strand is charged for strands above 216 up to 431 in all zones. 73 r. The City of Santa Clarita CA proposed to lease dark fiber to Freedom Telecom at an annual value of $960 per strand per mile.74 s. The City of Staunton in Virginia lease dark fiber for a monthly rental fee that equates to $83.65 per strand mile to a private telecommunications provider (MGW Networks) for a three- year term. t. A number of public utilities in small towns in rural areas of the Tennessee Valley use a schedule that requires payment of an upfront $5,000 license activation fee, plus $1,000 to $2,000 per fiber pair per mile annually. Discounts of 20 percent are offered for longer route lengths and for higher quantities leased (more than four pairs). u. A national bandwidth infrastructure provider in Minneapolis, MN offers a metro dark fiber between two tiered locations (the first being a carrier hotel and the second being a large medical center). The pricing for two fiber strands on a five year lease agreement was $1,758 per mile annually with a one-time splicing and installation charge of $5,000. v. A national bandwidth infrastructure provider leases dark fiber for an approximately twenty-one mile stretch between two on -net locations in the cities of Anoka and 72 http://www.cityofpaloalto.org/civicax/filebank/documents/8108, accessed May 2015. 73 http://www.sacrt.com/realestate/Real°/o20Estate%2ODocs/`PermitFeeStructure.pdf, accessed Nov. 2013. 74 http://apps.santa-clarita.com/agendas/Council Item Print.aspx?ID=6393 77 1 CTC Report I City of Huntington Beach I August 2016 Minneapolis in MN at a monthly rate of $198 per strand mile for a one year term. The pricing for three, five, ten and twenty year terms are $132, $115, $107 and $99 per strand mile respectively. w. The City of Burnsville, MN has an agreement with Frontier Communications to manage and lease their fiber network. The monthly rates at which Frontier leases the City's dark fiber range from $57.87 to $60.87 per mile per fiber strand. The rates increase by 5 percent each calendar year. x. The City of Minneapolis does not usually lease dark fiber. However, they have leased dark fiber in certain circumstances. One example is that of a lease with Minneapolis Ventures LLC for a half -mile link between two parking garages in the City. The lease agreement is for a payment of $1,000 per month for two strands of fiber for a five-year term.75 y. Hennepin County in MN leases dark fiber capacity to cities and government agencies only. They typically do this as part of an exchange/trade and do not charge a monetary rate as part of the lease agreement. z. The Northeast Service Cooperative in Mountain Iron, MN leases their dark fiber at different rates based on the mileage and the term requested as indicated in the table below. Term (Years) Measure 5 10 20 MRC per strand $150 $127.50 $112.50 for 1-10 miles MRC per strand $145 $123.25 $108.75 for 11-30 miles The units of pricing and structures clearly vary greatly based on region, population density, volume, alternative providers and other factors. Usually, the more rural the location, the lower the prices. Also, as more strands are leased (volume), the lower the prices. Table 14 summarizes the different examples with the up -front pricing (IRU) model. Table 15 summarizes the prices on the per month or annum lease. 75 http://www.minneapolismn.gov/www/groups/public/ council/documents/webcontent/convert 267139.pdf, accessed October 2015. CTC Report I City of Huntington Beach I August2016 Table 14: Dark Fiber IRU Pricing Term (years) Up -front payment per strand mile Maintenance cost per route mile per year Long -Haul Routes Midwest rural (IL) (1.a above) 20 $1,000 $300 Midwest rural/ suburban (1.a above) 20 $1,500 $250 MCNC (1.b above) 20 $325 to $750 $250 Mid -Atlantic Broadband Cooperative (1.c above) 20 $1,500 to $2,000 tbd South Carolina County (1.d above) 20 $800 $250 West coast rural/ suburban (1.e above) 20 $1,500 $250 Suburban and Metro Routes MCNC (l.b above) 20 $325 to $750 $250 Dallas (1.f above) 20 $2,388 $1,245 Minneapolis region (1.g above) 20 $8,235 $800 Table 15: Dark Fiber per Annum or per Month Pricing Price per month per strand Term (years) Price per year per strand mile mile Rural Routes Mid -Atlantic rural (Carroll County MD) $30 (2.i above) Northeast rural (MA) (2.a above) - $60 Northeast rural (MD) (2.1 above) 5 $75 5 $145 to $150 Midwest rural (MN)(2.z above) 10 $123.25 to $127.50 20 $108.75 to $112.50 Metro -Area Routes 1 $600 $7,200 Arlington, VA (2.b above) 5 $500 $6,000 10 $400 $4,800 $30 to $45 plus maintenance fee based on $360 to $540 plus annual maintenance BPA in WA (2.d above) - Commercial - route mile of $29 to $42 fee based on route mile of $350 to per month per route mile $500 per year per route mile (calculated on annual rate) BPA in WA (2.d above) — Public Agencies - $21 $252 plus annual maintenance fee (based on route mile) Bellevue, WA (2.c above) 7 $47.50 $570 79 CTC Report I City of Huntington Beach I August 2016 Term (years) Price per month per strand Price per year per strand mile mile Boulder, CO (2.e above) - $72 $864 Burnsville, MN (2.w above) - $57.87 to $60.87 Frankfort, KY (2.j above) - $100 $1,200 Franklin, KY (2.k above) - $55 $660 3 $185 $2,220 Menasha, WI (2.m above) 4 $205 $2,460 Minneapolis region, MN (2.0 above) 5 $73.25 $879 Minneapolis, MN (2.x above) 5 $1,000 1 $198 3 $132 Minneapolis to Anoka, MN (2.v above) 5 $115 10 $107 20 $99 Above 5 $104.60 $1,255 Nelson County, VA (see 2.n) Below 5 $129.16 $1,550 Staunton, VA (see 2.$) 3 $83.65 $1,004 Sacramento, CA (2.q above) - $60 to $125 $500 to $1,500 TN small town (2.t above) - $500 TN small town (2.t above) - $1,000 3 $58 $696 Northern Virginia 5 $45.80 $550 Large Urban Routes 1 $200 $2,400 Burbank, CA (2.f above) 5 $175 $2,100 15 $135 $1,620 Pasadena, CA (2.o above) $250 $3,000 Palo Alto, CA (2.p above) - $177 to $295 Santa Clarita, CA (2.r above) $80 $960 West Coast (CA) large urban municipal - $120 to $300 utility (see 2.g) 1 ,500 $5 300 00 , $ West Coast (CA) large urban by national $2,500 $30,00 provider (see 2.h) 10 $1,000 $12,000 -3 CTC Report I City of Huntington Beach I August 2016 Appendix G: Small Cell Market Rates Table 16: Small Cell Pole Attachment Pricing Examples City/Town/County Price per Year (per Pole) Dallas, TX $2,500 Fort Walton Beach, FL $2,000 Georgia Municipal Association $1,500 Houston, TX $2,500 San Antonio, TX $1,500 San Francisco, CA $3,600 — $4,000 San Jose, CA $2,625 — $3,500 St. Charles, IL $3,000 811 Appendix C Operational & Funding Responsibility Matrix Huntington Beach, CA Respondent: TBD Do you propose to act as a RETAIL Internet service provider (ISP)? (Choose from drop -down menu at right) Do you propose to allow multiple RETAIL Internet service providers (ISP)? (Choose from drop -down menu at right) Instructions 1. For each task, please indicate with an "X" which party will have the primary responsibility. 2. Add any clarifications in the "Comments/Exceptions" section. Please keep response to fewer than 50 words. 3. See definitions in sheet "Definitions" Operational Responsibil Retail ISP Functional Area Tasks/ Responsibilities City Responsibility Respondent Responsibility (if not Responsibility respondent) FTTP Network (fiber) FTTP Electronics Debt Service Payments Customer Drop & NID Entry from NID & In -Premises Wiring CPE (ONT) FTTP Network (fiber) FTTP Electronics Provide Security for Financing Customer Drop & NID Entry from NID & In -Premises Wiring CPE FTTP Network (fiber) FTTP Electronics Ownership Customer Drop & NID Entry from NID & In -Premises Wiring CPE (ONT) Customer Ownership Outside Plant (OSP) Drop and the NID Network Electronics Entry Cable, CPE & In -Premises Wiring CPEs (ONTs) Replenishments OLTs & Other Subscriber Electronics Core Electronics USF & other federal tariffs and fees Taxes Sales (state, county, municipal) PILOT Pole attachments ROW fees (backbone, middle -mile, and last -mile) ROW fees (drops) Locates Trouble ticket processing Fiber maintenance — material Fiber maintenance — labor Strand Management Maintain Inventory Outside Plant Real estate for active network equipment in field Facilities (warehouse, crew, etc.) NOC for OSP (lease) Design Construction Oversite Network engineering - fiber (last mile) Network engineering - fiber (backbone & middle mile) Fiber drop installation (network demarcation to building entry) Maintain inventory (optical network elements) Network operations center — facilities Network operations center— staffing 247 Facilities (staff) Facilities (warehouse & staging) Provide DIA Network engineering -electronics (last mile) Network Operations Network engineering -electronics (backbone & middle mile) In -building wiring Customer installation (on -premises) Customer activation and provisioning Maintain inventory (active network elements) Hardware and support maintenance fees (vendor charges) Contract Management (retail ISPs) Contract Management (customer) Billing and invoicing Bad debt (customer) Customer Service Collections Tier 1 support 24x7 (basic customer issues) Tier 2 support 240 (basic technical support) Tier 3 support 247 (advanced technical support) Prepare and manage SLAB Branding Marketing Sales Customer acquisition (sales) and retention Sales &Marketing Service performance objectives Service catalog Monitor pricing Set pricing (based on contract conditions) Develop and manage customer contracts Execute customer contracts Provide City subscription records Provide City invoice and payment status (payments) Provide partner network status information (for tier 1 support) Reporting Provide partner network status information (for tier 2 support) Provide partner network status information (for tier 3 support) Provide partner with network status (uptime, outages, etc.) Provide monthly sales and leads reports Use drop -down menu Use drop -down menu Appendix C Operational & Funding Responsibility Matrix Huntington Beach, CA Respondent: TBD Acronyms & Definitions Customer Premises Equipment: Generic term for electrionic and other electronics located at the CPE consumer premises. Direct Internet Access: Commodity Internet bandwidth purchased by the ISP, used by consmers to DIA access the Internet FTTP Fiber -to -the -Premises ISP Internet Service Provider Network Interface Device: A junction box typically mounted on the outside of the customer premises, the NID is a non -powered box used to connect the fiber drop cable (cable from the fiber NID tap to the premises) to the fiber cable extending from the NID to the Optical Network Terminal (ONT) located in the customer premises. NOC Network Operations Center Optical Line Terminal: Device that serves as the ISP endpoint on a Passive Optical Network 0LT (converts electronic signals to optical signals). Optical Network Terminal: Media converter used to convert the FTTP optical signal to an ethernet ONT port, coaxial output, or telephone output. Outside Plant: Physical cable and infrastructure (fiber cable, conduit, cabinets, poles, etc) deployed OSP to deliver connectivity services from an opertions center to the customer premises. PILOT Payment In -Lieu of Taxes ROW Right-of-way SLA Service Level Agreement First level customer support, generally a call center with representatives who can perform basic Tier 1 Support troubleshooting and record incidents. Tier 2 Support Second level support, detailed investigation with expert technnicians. Tier 3 Support Third level support, service troubleshooting and software support from the engineering team. USF Universal Service Fund Company/Organization Contact Name Tide Email Address Website A-D Technologies Thomas Stewart Sales Manager tom.stewart@duraline.com www.duraline.com AFL Network Services Paul Thomas Sales Director PauI.Thomas@AFLglobal.com www.AFLglobal.com AiNet Corporation Deepak Jain President deepak@ai.net www.ai.net Arcadis Eric Cowan Project Manager Eric.Cowan(oarcadis-us.com www,arcadis-us.com AT&T Jim Tackett Executive Director, External Affairs iames.tackett@att.com www.att.com Axia NetMedia Mike Stelck Director of Business Development mstelck@axia.com www.axia.com Baller, Herbst, Stokes & Lide Ashley Stelfox Associate Attorney astelfox@baller.com www.baller.com Calix David Russell Solutions Marketing Director david.russell@calix.com www.calix.com Centuryl-ink John McCormick Government Affairs lohn.r.mccormick@centurylink.com www.CenturyLink.com Charter Mike Brown Major Account Executive Mike.Brown@charter.com www.charter.com Comcast Matt Kelley Manager - Government & Regulatory Affairs Matthew Kellev cable.comcast.com www.comcast.com Consolidated Communications Bill Dietz General Sales Manager bdietz@viamediatv.com www.consolidated.com Conterra Joel Weinbach Senior VP, Business Development ieinbach@conterra.com www.conterra.com Direct Line Communications Bob White VP, Operations and Construction bwhite@dlci.net www.dici.net ECC Technologies Joe Stark President istarks@ecctec.com www.ecctec.com Engineering Associates Tracey Brewer President tbrewer@engineeringassociates.com www.engineeringassociates.com eX2 Technology, LLC Misty Stine Executive VP, Business Development mstine@ex2technology.com www.ex2technology.com Frontier Communications John Lass Executive VP, Field Operations John. Lass@ftr.com www.frontier.com Fujitsu Benjamin Portman Business Development Manager govsales@fnc.fuiitsu.com www.fumitsu.com Google Fiber YiawayYeh Strategic Initiatives Lead avveh@google.com www.google.com Henkels & McCoy Barry Webb Area Manager bwebb@henkels.com www.henkels.com Hoch Associates Chris Meier Project Manager chrism@hochassoc.com www.hochassoc.com Institute for Local Self Reliance Chris Mitchell Director, Community Broadband Networks Initiative Christopher@newrules.org www.muninetworks.org LCS Dell Hanley dell.hanlev@lambertcable.com www.lambertcable.com Level 3 Communications Lisa Marmora Account Director lisa.marmora@level3.com www.level3.com Macquarie Nicholas Hann Senior Managing Director Nick.Hann@macguarie.com www.macquarie.com MetroNet John Campbell General Counsel John.Campbell@gservicesco.com www.metronetinc.com/ Michels Corporation Holly Luehring Marketing Manager hluehring@michels.us www.michels.us NetBoss Technologies Ashley Fieeman Account Director rfp@netboss.com www.netboss.com OFS Geoff Thumma Business Development Manager gthumma@ofsoptics.com www.ofsoptics.com Project Performance Partners Joseph Jaskulski President iiaskulski@ppp-global.com www.ppp-global.com SiFi Ben Bawtree-Jobson CEO ben@sifinetworks.com www.sifinetworks.com/ Siklu Boris Maysel Director of Business Development boris.m@siklu.com http://www.siklu.com/ Smithville Fiber Liz Irwin Sonic Dane Jasper Sunstone Business Finance Dann Wheeler Symmetrical Networks Dann Wheeler Telamon Rob Sterrenberg Tele-Media Roger Stemler Time Warner Cable Nestor Martin TING Adam Eisner Wave Arah Peck Walker & Associates Tom Kane WideOpen Networks David Sobotta World Fiber Tom Crowson Zayo Brent Fontana Business Development Manager liz.irwin@smithville.com CEO Bane@corp.sonic. net President info@sunstonebusinessfinance.com President, Co -Founder dwheeler@svmmetricalnet.com VP/GM Network Solutions rob. sterrenberg@telamon.com President bstemler@tele-media.com Senior Director Construction Nestor. Martin@twcable.com Director of TING Networks aeisner@tucows.com EVP, Stategic Development apeck@wavebroadband.com VP, Commercial Sales tom.kane@walkerfirst.com VP, Marketing dsobotta@wideopennetworks.us VP, Telecommunications/Broadband Networks tcrowson@worldfiber.com Director, Construction Services Producet Management Brent. Fontana@zavo.com www.smithville.com www.sonic.net www.sunstonebusinessfinance.com www.symmetricalnet.com www.telamon.com www.tele-media.com www.twcable.com www.ting•com www.wavebroadband.com www.walkerfirst.com www.wideopennetworks.us www.worldfiber.net www.zavo.com Estanislau, Robin From: Graham, Antonia Sent: Tuesday, September 13, 2016 7:49 AM To: Estanislau, Robin Subject: Revised Study Session Blurb Presentation on the findings and recommendations from the Broadband Strategic Plan study by CTC Technology and Energy. Antonia Graham, CSM, Env Sp Assistant to the City Manager/Energy & Sustainability Projects Manager Office of the City Manager City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (714) 536-5537 antonia.eraham@surfcity-hb.or� "The end of all education, should surely be service to others."