Fiber-To-The-Premises Feasibility Study
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Fiber-to-the-Premises Feasibility Study Prepared for Multnomah County, Oregon September 2020 Multnomah County Broadband Feasibility Study | September 2020 Contents 1 Executive Summary 1 1.1 Stakeholders Consistently Identify Equity and Affordability as Priorities 1 1.2 The Covid-19 Crisis Has Exacerbated the Affordability Challenge and Illustrated the Scale of the Equity Divide 2 1.3 Residential Market Research Confirms a Digital Divide Based on Income Level 3 1.4 Broadband Is Available in Most of the County but Some Remote Areas Are Unserved 7 1.5 Countywide Fiber-to-the-Premises Would Cost Approximately $1 Billion 8 1.6 Countywide Fiber-to-the-Premises Would Require a 36 Percent or Higher Take-Rate to Achieve Positive Cash Flow, Depending on Pricing 11 1.7 Targeted Wireless Solutions Could Deliver Broadband to Low-Income Households 16 1.7.1 Expansive Public Wi-Fi 16 1.7.2 Targeted Fixed Wireless 17 1.8 Where Affordability Prevents Residents From Using Broadband, the Partner Agencies Could Take Low-Cost Approaches to Maximizing Existing Services 18 1.9 Federal and State Funding Programs Can Address Unserved and Lower-Income Areas but Will Not Fund Countywide Fiber 19 1.9.1 Funding Programs for Unserved Rural Areas 20 1.9.2 Funding Programs for Lower-Income and Economic Development Areas 21 2 Approximately 1 Percent of Homes and Businesses Are Unserved 22 3 Most Households Are Highly Connected but Lower-Income Households Are Less So 28 3.1 Key Findings 28 3.2 Survey Process 33 3.3 Survey Results 35 3.3.1 Home Internet Connection and Use 35 3.3.2 Television and Telephone Service 67 3.3.3 Internet Use for Jobs/Careers 71 3.3.4 Internet Use for Healthcare 76 3.3.5 Internet Use for Education 79 3.3.6 High-Speed Broadband Market and the Role of the Government 84 3.3.7 Respondent Demographics 96 4 A Survey Found Businesses Are Highly Connected and Value Broadband 103 4.1 Survey Process 104 4.2 Survey Results 104 4.2.1 Business Information 104 4.2.2 Internet Services 112 ii Multnomah County Broadband Feasibility Study | September 2020 4.2.3 Respondent Opinions 130 5 A Countywide Fiber-to-the-Premises Network Would Cost $970 Million 138 5.1 Survey Methodology for Developing Design and Cost Estimates 139 5.2 Fiber-to-the-Premises Network Design 141 5.2.1 Network Design Principles and Assumptions 144 5.2.2 Network Core and Hub Site 146 5.2.3 Distribution and Access Network Design 147 5.3 Countywide Fiber-to-the-Premises Cost Estimate 151 5.3.1 Cost per Passing 151 5.3.2 Outside Plant Cost Estimation Methodology 152 5.3.3 Outside Plant Costs 154 5.3.4 Central Network Electronics Costs 156 5.3.5 Customer Premises Equipment and Service Drop Installation (Per Subscriber Costs) 158 5.4 Constructing Fiber-to-the-Premises Only to Unserved Areas of the County Would Cost $47 Million—or Six Times the Per-Passing Cost of a Countywide Network 159 6 Targeted Wireless Solutions Could Be an Effective Way to Deliver Broadband to Residents Who Cannot Afford Commercial Services 161 6.1 Tactical Deployments of Wi-Fi Hotspots Could Meet the Most Basic Connectivity Needs Leveraging Existing Infrastructure 161 6.2 Fixed Wireless Could Serve About 25 Percent of Residents in the County’s Low-Income Census Block Groups 164 6.2.1 Overview of Fixed Wireless Analysis 165 6.2.2 Introduction to Fixed Wireless Network Connectivity 166 6.2.3 Fixed Wireless Spectrum and Architecture 167 6.2.4 Fixed Wireless Network Deployment Costs 168 6.2.5 High-Level Coverage and Cost Estimate 169 7 Overview of Alternative Fiber Network Business Models 171 7.1 Dark Fiber Model Case Study: Westminster, Maryland 172 7.2 Dark Fiber Model Case Study: Huntsville, Alabama 174 7.3 Open Conduit Model Case Study: West Des Moines, Iowa 175 8 Fiber-to-the-Premises Business Structure and Financial Analysis 176 8.1 Retail Model Overview 176 8.1.1 Municipal Retail Model Base Case Financing 177 8.1.2 Municipal Retail Model Base Case Capital Additions 179 8.1.3 Municipal Retail Model Base Case Operating and Maintenance Expenses 180 8.2 Retail Model Sensitivity Scenarios 183 8.2.1 Retail Model Scenario 1: Base Case 184 iii Multnomah County Broadband Feasibility Study | September 2020 8.2.2 Retail Model Scenario 2: Bond Funding Rate Increased 2 points to 6.0 Percent 185 8.2.3 Retail Model Scenario 3: Bond Funding Rate Decreased 2 points to 2.0 Percent 185 8.2.4 Retail Model Scenario 4: Capital Costs Increased by 15 Percent 186 8.2.5 Retail Model Scenario 5: Capital Costs Decreased by 15 Percent 187 8.2.6 Retail Model Scenario 6: Residential Service Fee Reduced to $50 per month 188 Appendix A: Mailed Residential Survey Instrument 189 Appendix B: Online Business Survey Instrument 203 Appendix C: Municipal Broadband PDX Report on Community Engagement 215 Appendix D: Federal Funding Options 228 Department of Commerce 228 Economic Development Administration, Public Works and Economic Adjustment Assistance Program 228 Department of Agriculture 230 Rural Broadband Program (Through the Farm Bill) 230 ReConnect Program 231 Community-Oriented Connectivity Broadband Grant Program (“Community Connect”) 233 Distance Learning and Telemedicine (DLT) 235 Telecommunications Infrastructure Loans 237 Federal Emergency Management Agency (FEMA) 238 Homeland Security Grant Program (HSGP) 238 Emergency Management Performance Grants (EMPG) 240 Federal Communications Commission 242 Rural Digital Opportunity Fund (RDOF) 242 Connected Care Pilot Program 243 Rural Health Care Program 244 E-Rate Program – USF Schools and Libraries Program (“E-Rate”) 248 U.S. Treasury 250 New Markets Tax Credit 250 Department of Health and Human Services 252 Telehealth Network Grant Program 252 Appendix E: Project Scope of Work 254 iv Multnomah County Broadband Feasibility Study | September 2020 Figures Figure 1: Support of the County's Role in Broadband Internet – Countywide Respondents .................................... 6 Figure 2: Support of the County's Role in Broadband Internet – City-only Respondents ......................................... 7 Figure 3: Unserved Addresses in the County ........................................................................................................... 8 Figure 4: Willingness to Purchase from Another Provider (Mean Ratings) ............................................................ 12 Figure 5: Willingness to Purchase from Another Provider ..................................................................................... 12 Figure 6: Willingness to Purchase from Another Provider by Region .................................................................... 13 Figure 7: Willingness to Purchase from Another Provider by Household Income .................................................. 14 Figure 8: Median Household Income Map for Multnomah County ....................................................................... 18 Figure 9: Unserved Addresses in the County ......................................................................................................... 22 Figure 10: Uninhabited Portions of the County ..................................................................................................... 23 Figure 11: Areas with No Providers Offering 25/3 Service ..................................................................................... 24 Figure 12: Number of ISPs Reporting 25/3 Service ................................................................................................ 24 Figure 13: Areas with 100/10 Service..................................................................................................................... 25 Figure 14: Areas with No Providers Offering 10/1 Service ..................................................................................... 26 Figure 15: Number of ISPs Reporting 10/1 Service ................................................................................................ 26 Figure 16: Served Areas ......................................................................................................................................... 27 Figure 17: Unserved Addresses in the County........................................................................................................ 27 Figure 18: Support of the County's Role in Broadband Internet – Countywide Respondents ................................ 31 Figure 19: Support of the County's Role in Broadband Internet – City-only Respondents ..................................... 32 Figure 20: Age of Respondents and Adult Population............................................................................................ 34 Figure 21: Communication Services Purchased ...................................................................................................... 35 Figure 22: Services Purchased by Region ............................................................................................................... 36 Figure 23: Services Purchased by Household Income ............................................................................................ 36 Figure 24: Importance of Communication Service Aspects (Mean Ratings) ........................................................... 38 Figure 25: Importance of Communication Service Aspects .................................................................................... 38 Figure 26: Importance of Communication Services by Respondent Age ................................................................ 39 Figure 27: Importance of Communication Services by Household Income ...........................................................