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Broadband Feasibility Report Feasibility Report for a Community Network Farmington / Farmington Hills Michigan November 20, 2020 Finley Engineering CCG Consulting Farmington / Farmington Hills Broadband Feasibility Report Table of Contents Page Summary of Findings ............................................................................................................................... 3 Recommended Next Steps ...................................................................................................................... 10 I. Market Analysis .................................................................................................................................. 13 A. Providers, Products, and Price Research............................................................................. 13 B. Residential Survey .............................................................................................................. 19 C. Other Market Research ....................................................................................................... 26 D. Broadband GAP Analysis ................................................................................................... 34 II. Engineering Design and Cost ........................................................................................................... 61 A. The Technologies ................................................................................................................ 61 B. Network Design .................................................................................................................. 63 C. Competing Technologies .................................................................................................... 83 III. Financial Projections .................................................................................................................. 93 A. Operating Models................................................................................................................ 93 B. Services Considered .......................................................................................................... 100 C. Financial Model Assumptions .......................................................................................... 106 D. Network Capital Costs ...................................................................................................... 112 E. Financial Model Results ................................................................................................... 117 IV. Other Issues ............................................................................................................................... 135 A. Funding for Broadband Networks .................................................................................... 135 B. Choosing an Operating Model .......................................................................................... 151 C. Getting Local Buy-In ........................................................................................................ 165 D. Benefit / Risk Analysis ..................................................................................................... 168 C. Roadblocks to Serving MDUs .......................................................................................... 173 EXHIBIT I: Results of the Residential Survey .................................................................................. 178 Total Surveys - 380 ......................................................................................................................... 178 EXHIBIT II: Summary of Financial Results ..................................................................................... 183 Page 2 Farmington / Farmington Hills Broadband Feasibility Report SUMMARY OF FINDINGS The cities of Farmington and Farmington Hills jointly hired CCG Consulting (CCG) to undertake a feasibility study to analyze the current broadband market in the cities and to make recommendations regarding the viability of building a new broadband network that would address the current broadband gaps and provide capacity for future growth. Perhaps the most significant feedback we got from residents and businesses was that broadband is inconsistent. There are homes and businesses in the cities that can get great broadband, but other parts of the cities with poor broadband. We more normally see cities where the broadband options are more homogeneous throughout the market. Here, the quality of broadband seems to differ by neighborhood. Frustration with the broadband experience is likely the prime reason why as many as 61% of residents and many businesses would consider moving to a new broadband network. This Summary of Findings discusses the primary results of our analysis and references the portion of the study that describes each issue in more detail. Broadband is Not as Good as it Should Be There are broadband gaps in the community between the broadband that residents and businesses want compared to what is being delivered. Some Customers Have Robust Broadband. We found that some customers have robust broadband. This is mostly residential customers served by fiber on AT&T or by WOW!, as well as businesses served by fiber from a number of providers. Charter Download Speeds. Charter is the incumbent cable provider in the cities, having purchased a network that was formerly operated by Bright House Networks. The Charter network is often not delivering the speeds that customers are paying for. As part of the study, we asked the public to take a speed test and the results surprised us. 42% of Charter customers showed download speeds under 50 Mbps (megabits per second), with 10% of customers getting download speeds under 10 Mbps. These speeds are far below the speeds that Charter promises, which is at least 100 Mbps download. The results of the speed tests surprised us because we’ve studied other Charter markets where the majority of customers are receiving speeds close to subscribed speeds. We also heard from Charter customers that speeds are inconsistent throughout the day and that there are intermittent outages (Page29). There are a few possible explanations for the slow download speeds. We know that the Charter network has been updated to the newest DOCSIS 3.1 standard since we found some customers able to buy the gigabit product. The most likely reason for the slow speeds is that the Charter network configuration has not been modernized. For example, there might still be large neighborhood nodes where too many homes are sharing broadband. A more likely explanation is a configuration described as cascading. In the ideal network configuration Charter would bring fiber to small nodes of a hundred or so homes. In a network with cascading, fiber is brought one neighborhood node, but then additional neighborhoods are added off this one fiber. The customers in the first node get the best download speeds, with subsequent nodes seeing slower speeds. We can’t think of any other reason why so many homes are getting download speeds under 50 Mbps. Page 3 Farmington / Farmington Hills Broadband Feasibility Report There are always some homes in every market that get slow speeds due to issues such as bad wiring or outdated WiFi routers – but we generally don’t see this impacting more than 5% of customers in a market, so this can’t explain the universally slow speeds in the cities. AT&T DSL. AT&T is still operating DSL technology over copper wires. Most AT&T customers have download speeds between 10 Mbps and 30 Mbps, with a few even faster. There was breaking news as we completed this study and AT&T announced on October 1 that it will no longer install new DSL customers (Page 27). This effectively will make Charter a monopoly provider in most parts of the cities since it will be the only option for purchasing broadband. Upload Speed Gap. Much of the study was done after the start of the pandemic. The pandemic uncovered a new broadband gap where residences began caring about upload speeds. Upload speed measures how fast data can be sent from a user’s computer to the internet. Good upload speeds are needed for connecting to a school server, for working at home and connecting to a work server, and for connecting to online video meetings like Zoom. Additionally, just before the pandemic, many of the big gaming platforms moved their games online, creating a new demand for low latency uploading. Many residents who thought they had adequate broadband suddenly found that they were unable to conduct multiple simultaneous upload connections at the same time. This phenomenon appeared all over the country as residences began using significant upload activities for the first time. The upload speeds in cities are sluggish. On AT&T DSL the upload speeds are mostly under 10 Mbps. For Charter, one-third of customers reported upload speeds under 10 Mbps, 54% had speeds between 10 Mbps and 20 Mbps, and 13% had upload speeds between 20 Mbps and 30 Mbps (Page38). The Broadband Gap is Growing. The fact that many homes are experiencing slow broadband speeds is the most significant gap we identified. To add to the broadband gap problem, the demand for broadband is growing at an extraordinary rate. Perhaps the easiest way to understand this is through the average amount of bandwidth homes use each month. The following statistics are gathered and reported by OpenVault, a company that provides software for the large companies that operate the Internet backbone. In early 2018, the average home used 215 gigabytes per month
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