Preliminary Feasibility Study

World-Class Communications in Westminster: Preliminary Feasibility Study

Prepared for the City of Westminster, Maryland May 2013

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Table of Contents

1. Executive Summary ...... 1

1.1 Project Background and Goals ...... 1

1.2 The Current State of Broadband Competition in Westminster ...... 2

1.3 Fiber Promises Benefits for Westminster Residents, Businesses, Schools, and Healthcare ...... 6

1.3.1 Business Use: Large and Small ...... 6

1.3.2 Residential Use: Carroll Lutheran Village ...... 7

1.3.3 Healthcare ...... 7

1.3.4 Education ...... 8

1.4 Responses to the City’s Request for Information Present Valuable Data ...... 9

1.5 Recommendation: The City Should Move Forward with FTTP Pilot Projects ...... 9

2. An Increasing Focus on Fiber Optics in America: Where We Are Now and Potential Future Directions ...... 11

3. Why Fiber Matters in Westminster ...... 20

3.1 Fiber Is The Platform of Our Economy and Our Broadband Future ...... 20

3.2 The Economic Development Impact of High-Capacity Broadband Is Growing ...... 24

3.2.1 Kansas City ...... 26

3.2.2 Chattanooga ...... 27

3.2.3 Data from Asia and Europe Demonstrate Strong Correlation Between Ultra- Fast Broadband and Economic Development ...... 28

3.3 High Capacity Over Fiber Is Crucial for Community Anchor Institutions Such as Westminster’s Health Care Facilities ...... 31

3.3.1 The Current State of Telemedicine ...... 33

3.3.2 Benefits of Telemedicine ...... 34 i

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3.3.2.1 Ameliorating Staffing Shortages ...... 34

3.3.2.2 Reducing Costs and Other Economic Benefits ...... 36

3.3.2.3 Monitoring Chronic Conditions ...... 38

3.3.2.4 Enabling Electronic Medical Records ...... 40

3.3.3 Bandwidth Requirements of Telemedicine ...... 42

3.4 The Residential Market Increasingly Requires High Capacity ...... 47

4. Advantages of Fiber over Other Broadband Technologies...... 53

4.1 Wireline Architectures ...... 53

4.1.1 Fiber-to-the-Premises ...... 53

4.1.1.1 International FTTP ...... 55

4.1.1.2 FTTP in the United States ...... 56

4.1.2 Hybrid Fiber–Coaxial Cable ...... 57

4.1.3 Digital Subscriber Line ...... 60

4.2 Wireless Architectures ...... 61

4.2.1 “3G” and “4G” Technologies ...... 61

4.2.2 Limitations of Existing Wireless Technologies ...... 63

4.3 Other Technologies Are Not Capable of Speeds Enabled by Fiber ...... 64

4.3.1 Fiber Holds Advantage over Copper/Coaxial Technologies ...... 65

4.3.2 Fiber Holds Advantage over Wireless Technologies ...... 67

5. The Current State of Broadband Services in Westminster ...... 69

6. Residential Survey Results from Prior Market Research ...... 76

6.1 Survey Process ...... 78

6.2 Survey Results ...... 79

6.2.1 Internet Service ...... 79

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Computers and Internet Access ...... 79

Internet Connection ...... 81

Connection Speed ...... 83

Type of Internet User ...... 83

Uses of Internet ...... 85

Main Internet Provider ...... 87

Monthly Internet Cost ...... 88

Importance and Satisfaction with Internet Service Aspects ...... 89

Likelihood of Switching to Very Fast Internet Service ...... 92

6.2.2 Television Service ...... 94

Television Programming ...... 94

Television Service Cost ...... 95

Importance and Satisfaction with Television Service Aspects ...... 96

6.2.3 Telephone Service ...... 97

Type of Telephone Service ...... 98

6.2.4 Enhanced Communications Services ...... 98

Importance of Enhanced Service Features ...... 98

Home-Based Business Internet Service Needs ...... 99

6.2.5 Telecommuting ...... 100

Employment Status ...... 101

Method of Commuting ...... 101

Telecommuting ...... 102

Commuting ...... 104

6.2.6 Potential Commute Reductions via Increased Telecommuting ...... 105

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6.2.7 Role of the County ...... 106

Household Characteristics ...... 109

Children in Household ...... 109 Education ...... 111 Age ...... 112 7. Recommendations For Initial Pilot Projects ...... 113

7.1 Residential Pilot Project: Carroll Lutheran Village ...... 115

7.2 Business Pilot Project: Westminster Technology Park, Carroll County Air Business Center, and Vicinity...... 118

Appendix A: Request For Information ...... 120

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Table of Figures

Figure 1: Comparative Speeds of Various Technologies ...... 4

Figure 2: Fiber Capacity Compared to Other Broadband Technologies ...... 21

Figure 3: Telemedicine Adoption by Primary Care Physicians ...... 34

Figure 4: Physicians Believe Chronic Conditions Are Among their Biggest Health Challenges ...... 39

Figure 5: Percentage of Office-Based Physicians with Electronic Medical Records/ Electronic Health Records (2001–2012) ...... 41

Figure 6: Barriers to Telemedicine Perceived by Primary Care Physicians ...... 43

Figure 7: Sample FTTP Network ...... 55

Figure 8: Sample DOCSIS 3.0 Network ...... 58

Figure 9: National Broadband Map Data—Westminster Availability Compared to Nationwide Availability ...... 70

Figure 10: National Broadband Map Data—Broadband Speeds Available to City Residents ...... 71

Figure 11: National Broadband Map Data—Community Anchor Institutions Connected .... 72

Figure 12: National Broadband Map – Number of Providers Available ...... 73

Figure 13: Maryland Broadband Map –DSL Coverage in Westminster ...... 73

Figure 14: Maryland Broadband Map – Cable DOCSIS 3.0 Coverage in Westminster ...... 74

Figure 15: High-Level Overview of Fiber Pilot Project Construction ...... 114

Figure 16: Residential Fiber Pilot Area—Carroll Lutheran Village ...... 117

Figure 17: Business Fiber Pilot Area ...... 119

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Table of Tables

Table 1: Typical Applications and Their Performance over Various Download/Upload Broadband Speeds (Single User) ...... 22

Table 2: Bandwidth Required to Achieve Full Functionality of Health IT Applications ...... 42

Table 3: Estimated Bandwidth Needs for Telehealth Services ...... 45

Table 4: Typical Performance for Advertised 2G/3G/4G Services ...... 62

Table 5: National Broadband Map Data—Broadband Providers in Westminster ...... 71

Table 6: Wireline Broadband Service Summary—Westminster ...... 74

Table 7: Estimated Cost of Fiber Pilot Projects ...... 115

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1. EXECUTIVE SUMMARY

1.1 PROJECT BACKGROUND AND GOALS

This report presents the feasibility of the City of Westminster building a world-class communications infrastructure to enable private sector competition and the resulting economic benefits.

The Mayor and Common Council commissioned this study, with a focus on building a municipal fiber-to-the-premises (FTTP) network, because of the lack of adequate connectivity among businesses within the City. The City’s leaders seek to ensure that, despite not being situated on any major highways or rail lines, the City’s residents and businesses can take advantage of digital highways and rail lines so as to benefit from robust Internet access and strong connections to all information highways. The primary policy goal of the network is to enable economic development. The City’s leaders seek to make Westminster a more desirable place for firms and residents—who see the quality-of-life benefits of broadband both directly through home connections and through enhanced services provided by the business community.

The City is seeking private partners that will use the City’s proposed fiber infrastructure to provide ultra-high-speed network access.

This study was researched and prepared in early 2013 by CTC Technology & Energy (CTC). Over the course of the engagement, CTC performed the following general tasks:

1. Met with key public stakeholders, including representatives of many City agencies, Carroll County, neighboring communities, and the State of Maryland

2. Met or spoke with private stakeholders, including local businesses, local health care providers, the Chamber of Commerce, interested entrepreneurs, McDaniel College, and Carroll Lutheran Village

3. Met with City stakeholders to present data, solicit input, and answer questions

4. Met with, spoke with, or otherwise contacted a range of potential private sector partners from both the incumbent and competitive sides of the telecommunications/broadband industries

5. Evaluated the current demand for broadband communications products and services in the City through a range of efforts and methodologies, including

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conversations with broadband providers in the City regarding the demand for, and adoption of, their products

6. Researched and evaluated the current supply of broadband communications products and services in the City through a range of efforts and methodologies:

a. Evaluated the relevant portions of the Maryland Broadband Map and National Broadband Map

b. Conducted discussions with project stakeholders, including Westminster businesses who indicate that their broadband needs are currently unmet

7. Developed recommendations regarding how the City can use fiber optic infrastructure to enable world-class private sector services and competition in Westminster

8. Prepared a Request for Information (RFI) that the City distributed to the private sector to gauge private interest in using public infrastructure to provide services in Westminster, and evaluated the responses received

9. Developed a preliminary engineering and financial analysis of the potential to undertake pilot projects in partnership with the private sector as a means of testing the potential for fiber-to-the-premises (FTTP) throughout the City

10. Developed a feasibility analysis of engineering and business parameters for deploying public FTTP across the City

1.2 THE CURRENT STATE OF BROADBAND COMPETITION IN WESTMINSTER

Our research regarding broadband supply suggests that some level of current-generation broadband is universally available in the City, but that the residential and small business service offerings are not comparable to those deployed by Verizon in Washington and suburban Maryland, or by Google in Kansas City.1 In short, there is some level of broadband in Westminster, but it does not differentiate Westminster and it is not world-class on the scale of the emerging fiber-to-the-premises (FTTP) networks that will enable gigabit speeds, an order of magnitude higher than the speeds available in Westminster. (See Section 5)

1 Google has also recently announced plans to expand its Google Fiber offerings to Austin, Texas; Provo, Utah; and North Kansas City, Missouri.

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Ubiquitous fiber positions a community for future in which businesses and citizens are never limited by bandwidth. Among current communications technologies (including wireless, cable, and copper), only fiber has that capacity. The capacity needed for future applications (and many current applications, for that matter) should not be underestimated. Anyone tempted by the lower cost of less-capable infrastructure technologies would be wise to consider previous communications pioneers. America Online, for instance, did not imagine supporting Skype computer-to-computer calling when it rolled out dial-up Internet access across the country. Neither, for that matter, did the engineers at Apple imagine that their iPhone and similar devices would result in the creation of 500,000 applications (and counting). Consumers’ already great demand for broadband capacity will only grow in the future, as the range of bandwidth-intensive applications (e.g., streaming video, data backup, telemedicine) grows.

And fiber can enable applications that are inconceivable over other communications platforms, as is illustrated by Figure 1 below, which shows the importance of enabling new fiber to Westminster businesses. Figure 1 illustrates the comparative upload (sending data up, to the Internet) and download (pulling data down, from the Internet) speeds of various technologies. Note that the faster speeds all require fiber optics and cannot be enabled over legacy copper technologies that are the usual last-mile medium of the phone and cable companies.

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Figure 1: Comparative Speeds of Various Technologies

Comcast operates a hybrid fiber/coaxial (HFC) system in Westminster that can compete against other offerings in today’s marketplace. Its network, however, is limited by its lack of fiber to every home and business—even with advanced electronics and software, its system cannot keep pace with the potential speeds of fully fiber networks such as that in Kansas City and those operated by Verizon in the Baltimore and Washington suburbs as well as in Washington, D.C. Cable systems are limited by the inherent shortcomings of the coaxial cable that runs from their nodes into the home. An additional limitation arises from the shared nature of cable modem service—bandwidth within a neighborhood is shared rather than dedicated. As a result, speeds may be significantly decreased by one’s neighbors’ simultaneous use of their cable modems.

Verizon is the incumbent local exchange carrier in Westminster, where it offers digital subscriber line (DSL) services to most of the City and leases enhanced circuits to businesses and institutions at higher prices. Small and medium-sized businesses may have difficulty affording these enhanced circuits.

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DSL represents a relatively low-bandwidth form of broadband—a network of roads, not superhighways. DSL runs on telephone network copper wires, which simply cannot handle the same capacity as fiber or even as HFC networks. As capacity requirements increase, DSL is likely to fall further behind cable.2

Even with newer DSL investments, the limitations of the technology are likely quickly to be reached. From a technical standpoint, DSL is a short-term solution in a market where bandwidth needs are growing exponentially and high, symmetrical capacity is increasingly needed for small businesses and for popular applications like gaming, video downloads, and video-conferencing. Aging copper plant is not capable of meeting these needs in the medium or long-run.

Verizon has no plans to build FiOS, its FTTP infrastructure, in Carroll County, despite the fact that it has built in Montgomery, Prince George’s, Arlington, Fairfax, and Baltimore counties, as well as in Washington.

With respect to mobile wireless services, we find that Westminster is receiving comparable state-of-the-art services to other regions of the country, but that such services are a complement—not an alternative—to robust fixed services such as FTTP. AT&T, Sprint, and Verizon Wireless have deployed 4G LTE services in Westminster, while T-Mobile offers 3G service. According to the National Broadband Map, 100 percent of Westminster residents have access to broadband wireless service.

Importantly, however, mobile does not supplant or compete with wireline broadband; rather, these technologies inherently serve to enhance and complement each other. Fiber offers highly scalable bandwidth while wireless is limited by available spectrum. Relative to fiber, wireless also offers lower speeds that cannot support some of the ultra-high speed applications made possible by fiber in the areas of business, health care, and education. Wireless services are also typically more expensive on a monthly basis, and become even more costly if users have prepaid or non-contract usage, or if they exceed their monthly data allowances (i.e., data caps)—meaning that heavy users (especially home-based businesses) are essentially unable to use AT&T or Verizon Wireless mobile connections as their primary broadband connection. At the same time, however, fiber cannot mirror a wireless connection’s key advantage: Wireless offers mobility and enables users to stay connected virtually anywhere they go.

2 The limitations of DSL are illustrated Verizon’s investment, over the past decade, to supplement its old copper phone networks with new FTTP networks in limited metropolitan areas within its existing footprint.

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1.3 FIBER PROMISES BENEFITS FOR WESTMINSTER RESIDENTS, BUSINESSES, SCHOOLS, AND HEALTHCARE

In Westminster, we foresee a number of use case scenarios for high-end fiber broadband. The following examples demonstrate the potential impact of gigabit broadband on the fundamental quality of life and economic goals for the City and its residents.

1.3.1 BUSINESS USE: LARGE AND SMALL A world-class network would enable growth for a range of businesses. The most obvious impact is on the technical sector. Some business applications simply require multi-hundred Mbps or Gigabit connectivity to operate. A high end connection to Westminster’s business parks, a strategy recommended for the business pilot project in Section 7 of this report, would enable businesses that use these applications to locate in the City. Otherwise, many of these businesses would have to go to a more urban area for high-end enterprise bandwidth.

Westminster already has a high-tech sector business presence. The City is home to a manufacturing facility of Knorr Brake Corporation, a German rail parts maker, as well as Carleton Technologies Inc.—a unit of the British company Cobham—which produces aerospace and life support products. Additionally, General Dynamics Robotic Systems, which develops tactical battle robot technologies, is headquartered in Westminster.

Companies that perform intensive engineering, design, and manufacturing roles as complex as these require huge data sets, leading to high network bandwidth use. These companies, and others like them, will see their bandwidth needs continue to grow as their applications become more sophisticated. Furthermore, it is important for these companies that the high speeds extend outside of their internal networks to the public Internet. This is especially true for international companies with headquarters and clients overseas. Internet connectivity in the gigabit range would enable Westminster businesses to collaborate with companies around the world as if they were located in an urban center. Building FTTP to serve these companies’ locations would help ensure that these valuable corporate stakeholders stay in Westminster—and it would signal to other businesses considering coming to the area that the City is sensitive to their needs.

A state-of-the-art network akin to Kansas City’s would benefit businesses on a smaller scale as well. One of the most basic benefits of gigabit level broadband is that it can accommodate multiple users at once without seeing performance drop during peak use. This is a key feature for business such as coffee shops that offer WiFi service to customers. As a result, the network would create immediate benefits for businesses outside of the

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high-tech sector; this not only helps businesses to flourish, but also enhances the quality of life throughout the community.

1.3.2 RESIDENTIAL USE: CARROLL LUTHERAN VILLAGE Residential bandwidth needs are growing, with the proliferation of use cases like streaming video, telecommuting, and cloud computing. In Section 7, we propose that the City focus a residential pilot network on Carroll Lutheran Village. Bringing fiber to this retirement community presents an opportunity for the network to go beyond the basic functions of typical residential broadband use.

Carroll Lutheran Village comprises hundreds of apartments and single family homes, each equipped with considerable health monitoring resources. Each residential unit includes an emergency call system; motion sensors allow staff to identify residents showing signs of possible health emergencies; and the Village is looking to implement additional monitoring of residents’ behaviors, including sleep patterns, medication use, and vital signs. This monitoring requires significant bandwidth, and unlike many network activities, is constantly in use.

In addition to these important uses specific to a senior community, residents also want television, phone, and broadband availability. While the Village has activated WiFi hotspots in some strategic locations for residents to use, they are limited in the amount of bandwidth they can offer because they cannot risk crowding the emergency system. The Village also requires constant contact with Carroll Hospital Center, and could benefit from enabling some aspects of remote health care.

The Village currently relies on commercial carriers to bring service to its residential units, and uses a T-1 line as a service trunk. The City’s high-end fiber network would provide the bandwidth to serve the Village’s many needs, from basic residential triple play service and shared WiFi hotspots, to the highly specialized monitoring and health care services the residents require.

1.3.3 HEALTHCARE A high-end fiber network has the potential to greatly impact the healthcare resources available in Westminster. Some telehealth applications require multi-hundred to gigabit network speeds. The City network would enable Westminster’s healthcare facilities to remotely collaborate with hospitals anywhere. This can bring the resources of hospitals and expertise of doctors from around the world to benefit patients in Westminster without doctor or patient travel. The City’s fiber network would enable practices to send and receive high resolution radiological images, (requiring a connection of least 100 Mbps per

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image); radiologists in different locations could simultaneously view and discuss X-rays. Surgeons could videoconference to watch and advise colleagues during emergency surgery from distant locations. Multi-lingual translators could be available over remote videoconference to translate and interact with patients. All these applications are possible today but for the lack of connections and capacity at a manageable price. The proposed FTTP network could offer such connections—in a secure manner that ensures patient privacy and, in some cases, helps contain the increasing cost of health care.

1.3.4 EDUCATION The National Telecommunications and Information Administration (NTIA) has found that “based on studies by state education technology directors, most schools need a connection of 50 to 100 Mbps per 1,000 students.”3 However, the bandwidth needs do not end at the schoolhouse door. As classroom content migrates to digital formats, residential broadband needs will feel the impact, as students will be expected to complete more tasks using an Internet connection.

American schools are migrating to one-to-one computing models (also known as “ubiquitous computing”), whereby each student and teacher has one Internet-connected wireless computing device for use both in the classroom and at home. A 2006 survey found that 31 percent of superintendents are implementing ubiquitous computing in at least one grade, up from an historical average of 4 percent. Moreover, over 75 percent of superintendents recognized the potential benefits of one-to-one computing, agreeing with the statement that “ubiquitous technology can reduce the time, distance, and cost of delivering information directly to students and that teachers can spend substantially more one-on-one time with each student and personalize the education experience to each student’s needs.”4

To enable these goals, students will need high-speed Internet access in their homes, often sharing the connection with other members of the family simultaneously. The City-built fiber network would provide this capacity, giving Westminster’s students the resources they will need as educational practices continue to adapt.

3 Federal Communications Commission, Eighth Broadband Progress Report, In the Matter of Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, as Amended by the Broadband Data Improvement Act, August 14, 2012, GN Docket No. 11-121, at 133. 4 “America’s Digital Schools 2006: A Five-Year Forecast,” The Greaves Group and The Hayes Connection, at 15, 18. http://www.ads2006.net/ads2006/pdf/ADS2006KF.pdf.

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1.4 RESPONSES TO THE CITY’S REQUEST FOR INFORMATION PRESENT VALUABLE INSIGHT

The City released a Request for Information (RFI) on April 12, 2013. The RFI (attached as Appendix A) clearly stated the City’s goal: “The City is considering construction of a municipal fiber-to-the-premises (FTTP) network, and is seeking private partners interested in utilizing municipal dark fiber to provide network services to homes and businesses.” It was issued “to enable the City to identify one or more private partners who will provide network services to end-users within the City limits using City-built fiber infrastructure.”

The City received a range of responses from potential partners by the May 3rd deadline. The City and CTC are in the preliminary stages of evaluating the RFI responses, seeking additional information from some respondents, conducting follow-up conversations with the most promising respondents, and investigating similar projects in other parts of the country. Based on our findings to date, we believe there is legitimate private sector interest in a partnership with the City, and that private partners will be willing to share the project risk with the City.

An RFI is, by its nature, non-binding on both the City and the respondents. But it announced the City’s intentions, and invited good-faith responses by interested providers. Importantly, the RFI noted that “the City seeks input from potential partners regarding the terms and conditions under which partners would operate and manage Internet and other network services.” So the process enabled the City to gather important data—including not just the identities of potential partners, but also their thinking about how such a partnership would be structured. (We note, too, that releasing an RFI does not guarantee viable responses; if responses to the RFI were scant or nonexistent, that lack of private sector interest in the City’s vision would itself have been valuable.)

1.5 PRELIMINARY RECOMMENDATION: THE CITY SHOULD MOVE FORWARD WITH FTTP PILOT PROJECTS

We recommend that the City build two pilot fiber projects—one residential, one business— that would provide a full-scale test for planning and building a fiber network, and for identifying, and testing, a private partner to operate and provide retail services over the infrastructure. These pilot projects are a relatively low-risk opportunity to extend the City’s evaluation of a citywide network, and will provide important data that will enable the City to better evaluate a full citywide FTTP project. The RFI responses and our discussions with respondents indicate that there are multiple potential private partners interested in

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providing service or support. In addition, we have identified well-defined pilot locations with willing and interested participants.

We identified Carroll Lutheran Village as a potential location for building a residential pilot project. Covering about 90 acres, the Village presents well-defined boundaries and enough population density to allow a relatively small fiber build to reach a relatively large group of currently unserved citizens. The Village is located near Carroll County Public Network (CCPN) fiber, which will minimize the amount of fiber construction required to serve the residents. The Village also includes varied types of housing, which would provide insight for the City into potential construction issues around single- and multi-family dwellings. And because of the healthcare services provided to residents, a pilot fiber network connecting the Village would offer important insight into the benefits and impacts of telehealth. The total residential pilot project construction would cost approximately $430,000.

Our proposed business pilot project area encompasses the Westminster Technology Park and vicinity—chosen for the area’s size, density of businesses, proximity to CCPN fiber, and identification by the City and Carroll County as a prime economic development zone that would both benefit from fiber connectivity and help the City and County meet their broadband policy goals. Based on conservative assumptions, we estimate that building infrastructure to 110 business premises would require about 9,350 feet of outside plant fiber construction and cost, at an average of $19 per foot, approximately $180,000.

Together with projected first-year maintenance costs of $50,000, the total estimated pilot project costs would be about $650,000.

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2. AN INCREASING FOCUS ON FIBER OPTICS IN AMERICA: WHERE WE ARE NOW AND POTENTIAL FUTURE DIRECTIONS

This section of the report summarizes the recent history, current status, and potential future direction of broadband in the United States—with a particular focus on those projects with local government involvement.

2.1 MUNICIPAL FIBER NETWORKS

Local government has exercised significant leadership in broadband innovation in the United States. For more than 15 years, a significant minority of localities have chosen to build or purchase fiber for themselves. There have, broadly speaking, been two types of projects along these lines. The first are projects in which the locality negotiated, purchased, or constructed fiber optics to serve its own needs and those of its local community anchor institutions (CAIs)—connecting over fiber entities such as schools, libraries, public safety departments, and government buildings, and perhaps senior centers, public housing projects, or healthcare institutions. This is the model Westminster has used over the past decade in its partnership with Carroll County in deploying the Carroll County Public Network (CCPN) and the Inter-County Broadband Network (ICBN).

The second type of project is public–facing: networks built by public entities for the purpose of serving residential and business consumers where the private market has failed to deliver adequate service or has failed to deliver competition. In Maryland, both the City of Easton and Allegany County have used this model for many years, delivering services to their citizens with the partnership of the private sector.

2.1.1 FIBER FOR GOVERNMENT USE In the first area—fiber for government use—Westminster has built a significant fiber base within the City limits, both through the CCPN, which was funded by the County, and through the ICBN, which was funded by the County, State, and Federal government. The City is among many hundreds of communities that have used cautious fiber strategies, with a range of variations, including Albuquerque, San Antonio, New York City, Los Angeles, Seattle, San Francisco, Chicago, Washington, D.C., Boston, and hundreds of suburban and rural towns and counties. In Maryland, those communities include Baltimore, Baltimore County, Frederick County, Montgomery County, Annapolis, Anne Arundel County, Garrett County, Charles County, Prince George’s County, Bowie, Rockville, and Washington County.

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We anticipate that this trend, which has continued unabated over the past decade and a half, is likely to continue into the future. The Broadband Technology Opportunities (BTOP) grant program under the federal Recovery Act has, in some parts of the country, accelerated this trend by enabling localities and regional consortia to build more fiber to public sector and other anchor institutions; among these consortia is the ICBN, which includes Carroll County and its central Maryland neighbors, and the One Maryland Broadband Network (OMBN), which serves southern and western Maryland and the Eastern Shore. American communities are increasingly interested in this type of network to achieve self-reliance in communications.

2.1.2 FIBER FOR RESIDENTIAL AND BUSINESS USE The second major category of local government fiber network is networks that serve the public rather than only public institutions. More than 100 local communities have built hybrid fiber-coaxial (HFC) networks (the architecture used by the cable companies) or fiber to the premises (FTTP) networks to comprehensively serve the residential and business markets.5 Easton, Maryland is among those who built and operate a municipal HFC network.

Some of these networks date back almost two decades; the great majority were deployed in the first decade of the 21st century. In almost every case, these networks have been deployed in towns and largely rural areas, in some of the most conservative parts of the United States. Some, but not all, of these towns already had cable modem service, but many of them were unserved or close to unserved by broadband service at all. The majority of these municipal public-facing networks were deployed by municipal electric utilities, as is the case in Easton.

This correlation is not surprising for a number of reasons. First, it is in communities where the private sector did not have a business case for electrification, where local governments chose to build public power. Not surprisingly, those same communities did not see significant private sector investment in broadband, much as a century earlier they did not see private investment in power—and thus chose, in both cases, to make that investment themselves for the benefit of the broader community.

Secondly, the challenge of undertaking a public-facing communications project is reduced for a municipal electric utility relative to a local government that is not already a power provider. A range of elements of a communications network overlap those of a power network, including the poles on which the infrastructure is built, the facilities in which

5 Broadband Communities magazine, online database, http://www.bbpmag.com/search.php?s0=1&cols=-cost-an-se-ty-mu-su-pa&st=&ve=&gr=&te=&se=&ty=-mun-ppr&qco=&qme=&qan=&qus=0&qmu=&qsu=&qpa=

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hubs are located, the skills and equipment of field staff, and even in some cases the billing, operating, and customer service systems that support the service offerings.

A minority of the municipal public-facing networks were built by localities that were not power utilities. It is important to note, however, that even for a municipal electric utility it is challenging to build a self-sustaining FTTP network that generates enough revenue to cover all of its operating expense, including principal and interest payment.

Unlike other public utilities such as water and sewer, city communications networks do not operate in a monopoly environment, and a number of competitors, however inferior, do exist. These include far lower bandwidth options such as DSL, cable modem service, and mobile wireless service. (In contrast, some of the municipal FTTP networks were built a decade or more ago at a time when there may not have been much or any competition in those rural towns).

Public power utilities are frequently better positioned to build and operate self-sustaining FTTP networks than are cities without public power because of all the overlaps and efficiencies in both infrastructure and operations—shared use and benefits mean that some network costs can be shared between the power and communications enterprises to the extent approved by the relevant regulatory authority.

Tremendous successes have been achieved by such public FTTP networks as those in Lafayette, Louisiana; Chattanooga, Tennessee; and Bristol, Virginia—all of which are municipal electric utilities that achieved substantial efficiencies.6

In some cases, in addition, federal funding such as Recovery Act funding for Smart Grid has been awarded to the electric utility and has enabled additional construction of fiber optics for energy use that also support the communications utility.

The most dramatic successes of these networks may be in the benefits that do not show up on the financial statements—the enhanced productivity, education, health care, company recruitment, and related benefits that are the reason for the communications investment in the first place. Thus, even though those public entities that have found that making FTTP networks self-sustaining challenging, can claim significant success based on these other benefits—which some call positive externalities or ancillary benefits, but that are in our opinion more central to the purpose of the network than any other factor.

6 Kendrick, Julie, “The Broadband Challenge,” The Line, July 18, 2012. http://www.thelinemedia.com/features/broadband071812.aspx. See also: Mitchell, Christopher, “Broadband At the Speed of Light: How Three Communities Built Next-Generation Networks,” Institute for Local Self- Reliance, April 2012. http://www.ilsr.org/wp-content/uploads/2012/04/muni-bb-speed-light.pdf

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2.2 INCUMBENT NETWORKS

Verizon, of all the incumbent cable and phone companies, is the only one to have made a significant investment in FTTP; unfortunately, this investment has not extended to Westminster.

Verizon’s FTTP investment began in the early 2000s, and the company sought out cable franchises and then built FTTP quite aggressively in select suburban and urban areas within its existing footprint, primarily on the east coast, but with some investment in the Pacific Northwest and other regions.

Of the other big phone companies there has been almost no FTTP investment other than in occasional greenfield developments. With respect to existing homes and businesses, however, AT&T, Qwest, and CenturyLink have taken the approach of modest upgrades to enable DSL service, rather than a wholesale rebuilding effort.

While the cable companies, including Comcast, have upgraded their networks to support higher bandwidth services, those upgrades have been accomplished by changed in electronics (such as migration from DOCSIS 2.0 to DOCSIS 3.0 and future 3.1 cable standards, which increased the speed over existing hybrid fiber coaxial (HFC) plant and is now facilitating the migration from a primarily TV channel oriented network to an IP-based multimedia platform, albeit a less scalable one than FTTP).

A small number of local and regional entrepreneurs around the country have built FTTP, but these represent a modest footprint and, for the most part, have not demonstrated a new or transformative business model that would make FTTP more viable as a private investment. In addition, rural incumbent local exchange carriers and coops have taken advantage of Universal Service Fund subsidies to support in some cases both the capital and operating costs of FTTP networks. But this, too, is a relatively small footprint relative to rural areas that do not have this kind of infrastructure, and is limited to very rural areas only, and is not a replicable model given the fact that it requires federal subsidy from the Universal Service Fund.

2.3 COMPETITIVE FTTP NETWORKS

Three years ago, Google attempted to disrupt and shake up this rather static picture. This project attracted enormous attention when it was announced—and received more than 1,100 applications from American cities and counties seeking Google’s FTTP investment. Ultimately, in 2011 Google selected Kansas City, Kansas and Kansas City, Missouri as the first sites for its new network. In recent weeks, it has also announced an extension of that

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network to Olathe, Kansas; a new fiber project in Austin, Texas; and the long-term lease of existing fiber infrastructure in North Kansas City, Missouri. We anticipate additional future announcements from Google, perhaps in as many as eight to 10 metropolitan areas.

As Google activates its networks, attention will shift to what the network can do, and what it portends for the competitive landscape.7

In the time since Google first announced its fiber plans, there has been a significant impact on the broader environment. The astonishing response to Google’s announcements, in the form of the 1,100 applications by would-be Google communities, was noted in Washington by some policy makers—but also outside Washington by entrepreneurs thinking about the fiber market.

A number of initiatives have thus indirectly arisen from Google’s announcements and plans. This is not a coincidence; part of what Google was trying to accomplish was to spur the emergence of new models for big fiber construction. More bandwidth means more Internet use, and Google’s business model is premised on customers being able to use its services. Like many of us, Google was very concerned that there was no plan or path forward for construction of wireline communication networks in the United States. At the time of its initial announcement, Google’s aim appeared to be that it would demonstrate scalable new business models.

Google’s efforts appear not only to have increased investor interest in the FTTP market but also to force incumbent phone and cable operators to consider how to respond to the newly competitive environment, even though that competition extends only to three cities thus far. In Austin, AT&T has announced plans to build comparable fiber infrastructure, though it has also declined to specify a time-frame. And Time-Warner has announced that it is among the respondents to the RFP issued by four universities and six communities in the Raleigh-Durham area, the project known as North Carolina Next Generation Network (NC NGN).

In Kansas City, we have not noticed extensive new construction by Time-Warner in response to Google’s efforts, but we have noticed that Time-Warner has engaged in aggressive new efforts to sell long-term contracts; reduced pricing across all sectors; greatly improved customer service; and marketed a product for low-income consumers. In short, competition is working to the benefit of Kansas City consumers.

7 See, for example: Reardon, Marguerite, “Google shows ISPs how to build a superfast network,” CNET, July 26, 2012. http://news.cnet.com/8301-1023_3-57481108-93/google-shows-isps-how-to-build-a-superfast- network/

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2.3.1 GOOGLE’S BUSINESS MODEL One important aspect of the Google process is a relatively new business model that Google recently announced—and that, depending on Google’s level of success, may demonstrate a new direction for FTTP financing and construction. Specifically, Google has divided Kansas City into regions that it calls “fiberhoods.” It is prioritizing the build of FTTP facilities to those fiberhoods that reach critical mass with respect to pre-commitments to purchase service.8

With the additional benefit of significant cost saving measures that the two cities agreed to (including the provision of dedicated inspectors, expedited permitting, waiver of permitting and rights-of-way fees, and free access to real estate, power, and other facilities), Google is now planning to construct its network in the fiberhoods that are most financially viable, as demonstrated by its future customers’ advanced indications. In addition, Google, which has committed to building state-of-the-art facilities to community anchor institutions such as schools and libraries, will build to anchor institutions in a particular neighborhood only when it builds to that fiberhood, again based on residents’ pre-commitment levels.

Therein lies the most important shortcoming of this business model from the standpoint of local economic development and local community interest. Google is able to build only where it will have the most customers; only the anchor institutions in those neighborhoods, which will presumably be those that are best able to afford and are most interested in state-of-the-art services, will get their facilities in that timeframe. It is not clear whether Google will ever build to neighborhoods and anchor institutions where there is not substantial consumer interest.9 This model makes the investment far more profitable for Google, but potentially accentuates and underscores the digital divide rather than ameliorating it. And while all Kansas City taxpayers are supporting Google’s network (through free access to public property, power, and dedicated staff),10 only Kansas City taxpayers in certain fiberhoods will have access to Google’s services—whether at home, work, or at essential anchor institutions such as libraries.11

The shortcomings of the Google model can, however, potentially be addressed through certain mitigation strategies. For example, the Urbana–Champaign Big Broadband (UC2B)

8 “What is a fiberhood” and “How do I get Fiber service for my home?,” Google Fiber “Frequently Asked Questions” web page. https://fiber.google.com/help/. 9 “Google Fiber: Will It Bypass Those Who Need It Most?”, Schools, Health & Libraries Broadband Coalition. http://www.shlb.org/blog/index.cfm/2012/9/4/Google-Fiber-Good-newsBad-News-for-Community-Anchor 10 http://arstechnica.com/tech-policy/2012/09/how-kansas-city-taxpayers-support-google-fiber/ 11 See, for example: http://www.nytimes.com/2012/09/10/us/in-one-city-signing-up-for-internet-becomes- a-civic-cause.html?_r=1&pagewanted=all; and http://www.siliconbeat.com/2012/08/30/will-google-fiber- make-digital-and-racial-divide-in-kansas-city-worse/

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network, an intergovernmental initiative in Illinois, has been exploring using this model since long before Google announced its fiberhood plan. However, the cities of Urbana and Champaign started by applying for and receiving federal funding to build FTTP in the poorest parts of its planned network footprint—thus beginning with the least economically viable neighborhoods rather than the most.

The cities of Urbana and Champaign are in the process of negotiating with potential private providers to complete their network, and among their core requirements for that provider are two that are designed to avoid the risks of fiber exclusion: first, they require that the provider build to the entire community, with no redlining for economic or other reasons; and second, that the provider pay a percentage of its revenues into a digital inclusion fund. The digital inclusion fund will pay for community education efforts in low income and low digital literacy communities, with the goal of enhancing adoption in less viable neighborhoods (and thus improving the business prospects for the private partner in those neighborhoods).

Even should private investment not materialize, however, Urbana and Champaign do tentatively intend to expand the network beyond the federally financed, low income areas—and to do it on essentially the same model as Google, building first to neighborhoods with substantial pre-commitments that are therefore more financially viable.

This model has been discussed over the years, and has recently been tested by the Utah Telecommunication Open Infrastructure Agency (UTOPIA) network in Brigham City, Utah,12 but it has never been tested in the United States to the degree that it will be by Google. How it develops and the data that emerge from the Kansas City, Brigham City, and UC2B experiments will be extremely important to determining potential future FTTP models.

12 “Brigham City Develops Alternative Method to Finance Publicly Owned FTTH,” Community Broadband Networks website, Institute for Local Self Reliance. http://www.muninetworks.org/content/brigham-city- develops-alternative-method-finance-publicly-owned-ftth

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2.3.2 GIG.U AND ITS PARTNERS As the Google project emerged, policymakers and entrepreneurs noted the extent of the interest of potential Google communities, and the fact that many were offering to do everything they could to attract the company’s investment, from providing infrastructure to aggregating buying power to exercising any other potential leverage they might have. In part based on that remarkable outpouring of interest, a number of initiatives emerged.

The most significant of these initiatives is Gig.U (“the University Community Next Generation Innovation Project”),13 which is the creation of Blair Levin, a Washington-based communications policymaker. Levin was the architect of the Federal Communications Commission’s 2010 National Broadband Plan and previously served as FCC chief of staff during the first part of the Clinton administration. After he left the FCC in 2010, Levin founded Gig.U and developed a membership of 37 universities that demonstrated an interest in trying to help catalyze the development of FTTP in their communities. Then he solicited interest and ideas from private and public entities through a request for information (RFI) process to try to understand what might attract private providers to invest in local FTTP in and around university communities.

Levin believes that localities can potentially “change the math” and enhance the attractiveness of private investment, by lowering costs and by increasing potential revenues in a local community. Through guaranteed government and institutional revenues, changes to codes and fees, and access to public infrastructure, localities may be able to attract providers who are willing to make investments.

At least one provider who appears interested in such a model responded to this RFI and then partnered with Gig.U. Gigabit Squared, a start-up fiber development firm, released a request for proposals (RFP) to the Gig.U universities, soliciting bids from the universities in partnership with their surrounding communities to attract the $200 million in start-up funding Gigabit Squared reportedly has raised.

Gigabit Squared plans to invest some portion of that amount in a number of U.S. communities, perhaps as many as six, over the next few years.14 Gigabit Squared’s business model will depend on the development of local applications, extensive local engagement, and growing beyond the standard triple-play of voice, video, and data service to include enhanced services that would presumably increase Gigabit Squared’s revenues. The first round of bids from Gig.U communities were due in July 2012; as of this writing, Gigabit

13 Gig.U website, http://www.gig-u.org/. 14 http://gigabitsquared.com/ See also: “Gigabit Neighborhood Gateway Program,” Gigabit Squared website, May 23, 2012. http://gigabitsquared.com/new-website-launch/

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Squared has announced partnerships with consortia representing neighborhoods in Chicago and Seattle.

From our standpoint, the most significant factor that differentiates Gigabit Squared from other FTTP initiatives that we have seen arise from time to time over the past decade is that it does not appear to be asking for municipal funding or municipal guarantee of the private investment. While presumably Gigabit Squared is looking for municipal assistance in reducing costs, through such benefits as dedicated inspectors, waived rights-of-way fees, and so on, at least as of now it does not appear that Gigabit Squared expects the localities to fund, finance, or guarantee its investment—and in our experience, this is a first for a competitive FTTP provider other than Google.

If Gigabit Squared is successful in building sustainable, profitable FTTP networks, the outcome of the Gig.U/Gigabit Squared efforts will be to demonstrate a new business model for competitive builds of FTTP—a dramatic shift in the status quo and an important matter to watch.

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3. WHY FIBER MATTERS IN WESTMINSTER

3.1 FIBER IS THE PLATFORM OF OUR ECONOMY AND OUR BROADBAND FUTURE

Fiber represents an infrastructure asset with a lifetime of decades that is the most upgradeable of communications technologies and capable of flexibly supporting a wide range of public or private sector communications initiatives.15

The key advantage fiber holds over other technologies is that it is future-proof. It enables not just today’s high-bandwidth applications, but all applications in the foreseeable future, and can deliver a range of well-documented benefits to residents and businesses.

Ubiquitous fiber also positions a community for a “converged” future, when a single broadband pipe—capable of delivering not just data, but telephone and video applications, as well—replaces the “triple play” bundle and relieves consumers of the need to purchase multiple services.16 Among current communications technologies (including wireless, cable, and copper), only fiber has that capacity.

And fiber can enable applications that are inconceivable over other communications platforms, as illustrated by Figure 2 below and, in more detail, by Table 1 on the following page.

15 All broadband is not created equal, however. Fiber-to-the-premises (FTTP) is currently the most flexible and future-proof architecture of broadband—a fat pipe all the way into the home or business—but in the near future, the gigabit-speed version of FTTP will only be available for a privileged few located in the limited areas of private-sector or municipal deployment. (Our competitor cities in Europe and Asia are increasingly adopting FTTP as the inevitable, essential broadband medium.) 16 The evolution of the cable television and landline telephone industries indicates that such a shift is already beginning; in Europe, HBO recently announced the availability of its programming over an Internet connection rather than a cable subscription. See: Stelter, Brian, “HBO Will Offer Channel by Internet in Northern Europe,” New York Times, Sept. 2, 2012. http://mediadecoder.blogs.nytimes.com/2012/09/02/hbo-will-offer-channel-by-internet-in-northern- europe/?nl=technology&emc=edit_tu_20120904.

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Figure 2: Fiber Capacity Compared to Other Broadband Technologies

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Table 1: Typical Applications and Their Performance over Various Download/Upload Broadband Speeds (Single User)

768 10 1 Mbps/ 3 Mbps/ 56 Kbps/ Mbps/ 1 15 256 384 768 7 Mbps / 20 50 1 Kbps/ 384 Mbps Mbps/ 2 100 Kbps/ Kbps Kbps 768 Kbps Mbps/ 2 Mbps/ Gbps/ 56 Kbps Kbps (DSL; Mbps Mbps/ Applications 256 (DSL; (DSL; (DSL; Cable; Mbps 10 Mbps 100 (Dial-up, (DSL; Cable; (DSL; 10 Mbps Kbps Satellite Satellite; 4G LTE (Cable; (Cable; Mbps maximum Satellite; Fiber; Cable; (Fiber) (DSL) 3G/4G 4G LTE Wireless) Fiber) Fiber) (Fiber) speed) 3G 4G LTE Fiber) Wireless) Wireless) Wireless) Wireless) Simple text e-mail OK Good Good Good Good Good Good Good Good Good Good Good without attachments (8 sec.) (2 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (50 KB) Receive e-mail with OK Bad Good Good Good Good Good Good Good Good Good Good medium attachments (16 (72 sec.) (6 sec.) (4 sec.) (2 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) or graphics (500 KB) sec.) Download small files OK OK (e.g., a 50-page text Bad Good Good Good Good Good Good Good Good Good (32 (11 document with limited (3 min.) (8 sec.) (3 sec.) (2 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) (1 sec.) sec.) sec.) graphics) (1 MB) Web browsing Bad Bad OK OK Good Good Good Good Good Good Good Good

Interactive online applications (trading, online presentation Bad Bad Bad OK OK Good Good Good Good Good Good Good and document sharing, gaming) Videoconferencing streaming at 384 Kbps Bad Bad Bad Bad OK OK OK Good Good Good Good Good (desktop/single user) Download large files Bad Bad OK (e.g., new software or a Bad Bad OK Good Good Good Good Good Good (87 (67 (23 large program update) (20 hr.) (5 hr.) (10 min.) (7 min.) (5 min.) (4 sec.) (80 sec.) (40 sec.) (1 sec.) min.) min.) min.) (500 MB)

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Distance learning Bad Bad Bad Bad Bad Bad Bad OK OK Good Good Good Download high- Bad OK Good Good Bad Bad Bad Bad Bad Bad Bad Good definition (HD) video (45 (34 (14 (40 (9 days) (44 hr.) (15 hr.) (12 hr.) (4 hr.) (96 min.) (67 min.) (7 min.) (5 GB) min.) min.) min.) sec.) Telemedicine (e.g., Bad Bad Bad Bad Bad radiological images Bad Bad Bad Bad Good Good Good (84 (28 (22 (86 (64 such as mammograms) (7 hr.) (8 min.) (4 min.) (3 min.) (26 sec.) (13 sec.) (2 sec.) min.) min.) min.) sec.) sec.) (160 MB download) Multi-point videoconferencing Bad Bad Bad Bad Bad Bad Bad Bad Bad Good Good Good streaming at 768 Kbps for a group of 5 to 6 Bad Bad Bad Bad Bad Good Daily incremental Bad Bad Bad Bad OK OK (> 1 (> 1 (> 1 (> 1 (> 1 (27 backup, up to 20 GB (> 1 day) (> 1 day) (23 hr.) (23 hr.) (5 hr.) (5 hr.) day) day) day) day) day) min.)

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The table defines performance needs from today’s perspective.17 The demand for higher- capacity connections will continue to rise—as, for example, more small businesses explore public or private “cloud computing” services, which support and deliver hosted applications and storage over the Internet.

3.2 THE ECONOMIC DEVELOPMENT IMPACT OF HIGH-CAPACITY BROADBAND IS GROWING

The implementation of fiber-to-the-premises (FTTP) by Verizon and others has been a significant step in raising the bar for experiencing the potential of high-speed communications. However, those deployments are now being contrasted to a new generation of FTTP networks that offer gigabit-per-second (Gbps) capacity to end-users. As these broadband technologies continue to develop, and as their implementation focuses in select population centers, there exists the opportunity to see the differences in economic impacts across the country and elsewhere.

There is certainly a perception among many communities that gigabit speeds offer new opportunities for economic development:

• The State of Illinois has launched an “Illinois Gigabit Communities Challenge,” a contest that will award the winner funding to build or expand ultra-fast networks, with a clear emphasis on economic development incentives.18

• The same rhetoric is now being used on the national level, with outgoing FCC Chairman Julius Genachowski issuing the “Gigabit City Challenge” this past January. This challenge calls for at least one gigabit community in all 50 states.19

17 The table assumes: • A single user. • For downloading small files up to 1 MB, download time less than 10 seconds is good, 10 to 15 seconds is fair, and more than 15 seconds is not acceptable. • For uploading videos of 1 GB, upload time less than 30 minutes is good, 30 to 90 minutes is fair, and more than 90 minutes is not acceptable. • For downloading high-definition videos (2 GB), download time less than 10 minutes is good, 10 to 15 minutes is fair, and more than 15 minutes is not acceptable. • For applications such as videoconferencing and remote server access, no concurrent usage of the same application by the same user. • Server back-up will normally occur during off-peak times (10 p.m. to 6 a.m.). • For telemedicine files up to 160 MB, download time of less than 30 seconds is good, 30 to 60 seconds is fair, and more than 60 seconds is unacceptable. 18 Illinois Gigabit Communities Challenge, (http://www2.illinois.gov/gov/gigabit/Pages/default.aspx). 19 NEWS, Federal Communications Commission, January 18, 2013, (http://transition.fcc.gov/Daily_Releases/Daily_Business/2013/db0118/DOC-318489A1.pdf).

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• The City of Chattanooga, Tennessee’s community-owned network touts its gigabit speeds as a boon to new businesses.

• Kansas City boasts of being a new “silicon prairie” due to the draw of Google Fiber.

• Other communities are pursuing their own municipal gigabit networks, including Lafayette, Louisiana and Gainesville, Florida.

If gigabit FTTP networks make a difference when it comes to economic development, it is through the new applications they enable. To the extent these applications make a significant impact on economic activity in a community, then the potential exists for gigabit speeds to be an economic catalyst in a new way. Google, in particular, has made a significant investment in demonstrating that gigabit fiber will enable new, transformative uses and applications of broadband.

Indeed, the U.S. Ignite Partnership grew out of a White House Office of Science and Technology Policy roundtable discussion in January 2011 on how to develop applications that would maximize the benefit of fiber connectivity across the country. The public and private participants in U.S. Ignite are now working “to catalyze approximately 60 advanced, next-gen applications over the next five years in six areas of national priority: education and workforce development, advanced manufacturing, health, transportation, public safety, and clean energy.”20

The literature available on broadband and economic development suggests a causal relationship. From the standpoint of most businesses, broadband has ceased to be a luxury and has become crucial to business functionality.

According to a 2011 survey of building owners and property managers, broadband access is one of the most important decision factors for commercial real estate siting—after price, parking, and location. Similarly, a national survey found that 77 percent of economic development professionals believe that to attract a new business, a community must have broadband of at least 100 Mbps; in other words, they believe that economic development without broadband is essentially inconceivable.

The high speeds that fiber provides can facilitate economic development by:

1. Enabling small business creation and growth

20 “What is U.S. Ignite?,” U.S. Ignite website. http://us-ignite.org/what-is-us-ignite/. One fascinating fact about U.S. Ignite is that it seeks to enable private, commercial development of new, high-bandwidth applications, but most of the network infrastructure it makes available for that development is public—municipal fiber networks that connect many thousands of homes and provide a test-bed for advance application creation.

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2. Enabling job creation and the enhanced, multiplied economic activity that accompanies it

3. Supporting businesses with very high bandwidth needs, such as digital media and software development

4. Attracting and retaining businesses of all sizes

5. Enabling workforce education

6. Enabling telework and distributed work

7. Stimulating economic activity

8. Enhancing the City’s reputation for visionary and pioneering projects

9. Promoting major development initiatives such as revitalization zones

A number of studies show a significant positive effect on economic growth by the increase of broadband speeds.21 Whether these economic impacts are significantly enhanced by gigabit FTTP availability is a related but separate question. Importantly, evidence from research further supports the conclusion that connection speed is the most important factor in broadband adoption.22

That said, people who live or work in the few places where these networks exist or are being built (such as Kansas City and Chattanooga) can experience some of the fastest connection speeds available today—and their experiences can illustrate the economic benefit of their networks.

3.2.1 KANSAS CITY Despite industry warnings about lack of demand, a recent survey showed 60 percent23 of those qualifying for Google Fiber were very interested in adopting the service.24 Though

21 Press Release: “New study quantifies the impact of broadband speed on GDP,” Ericsson, September 27, 2011. (http://www.ericsson.com/news/1550083). Sharon E. Gillett, Dr. William H. Lehr, et al., “Measuring the Economic Impact of Broadband Deployment,” Final Report Prepared for the U.S. Department of Commerce, Economic Development Administration, National Technical Assistance, Training, Research, and Evaluation Project #99-07-13829, February, 2006, (http://cfp.mit.edu/publications/CFP_Papers/Measuring_bb_econ_impact-final.pdf). Jed Kolko and Davin Reed, “Does Broadband Boost Local Economic Development,” Public Policy Institute of California, January 2010, p. 28. (http://www.ppic.org/content/pubs/report/r_110jkr.PDF). 22 “Benefits of Broadband,” Broadband Communities, November/December 2012, p. 54. 23 A free 5 Mbps (down) / 1 Mbps (up) option is also available, so it cannot be assumed that all of these respondents would opt for gigabit service.

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the network is not yet fully activated, signs of increased economic activity in Kansas City have in fact emerged.

According to the Washington Post, “about a dozen start-ups have launched in the first neighborhood to get Google’s 1-gigabit-per-second service” as of January.25 Early evidence suggests that much of the significant use of the gigabit speeds are by technology companies. For example, the company EyeVerify, a security software developer, relocated its office to one of Google’s “fiberhoods”—designated neighborhoods that attained Google’s quota of interested customers; the company founder has stated that Google Fiber is allowing the business to operate far more efficiently. EyeVerify deals with very large data files—detailed scans of eyes for security identification—so it demonstrates how the gigabit network opens the door for better application use.26 It is, of course, a very specialized market that uses such applications, suggesting that the economic development created by gigabit capacity may be heavily focused on the technology sector.

Indeed, Kansas City is gaining the reputation as a magnet for startup businesses in the tech industry, and just the draw of the new “prairie” has created some interesting economic incentivizing. Grassroots initiatives include the Kansas City Startup Village and the unconventional “Homes for Hackers,” a temporary housing option for tech developers looking to start a business in Kansas City. Homeowners can volunteer their Google Fiber- connected properties to these aspiring entrepreneurs, who can live rent-free for three months while they work on their projects with gigabit speeds.27

It is easy to see that Google Fiber has become a point of pride in the local culture, which is important when competing with places more commonly thought of as magnets for startups, such as Palo Alto.28

3.2.2 CHATTANOOGA On the public networking side, Chattanooga has had an operational gigabit network since 2010. The network model, provided by the community-owned Electric Power Board (EPB),

24 Karl Bode, “Google Fiber Has No Problem With Customer Demand,” Broadband DSL Reports, January 11, 2013, (http://www.broadbandreports.com/shownews/Google-Fiber-Has-No-Problem-With-Customer- Demand-122709). 25 Cecilia Kang, Google Fiber provides faster Internet and, cities hope, business growth,” The Washington Post, January 25, 2013, (http://www.washingtonpost.com/business/technology/google-fiber-provides-faster- internet-and-cities-hope-business-growth/2013/01/25/08b466fc-6028-11e2-b05a- 605528f6b712_story.html). 26 Id. 27 Maria Sudekum, “Google’s Ultrafast Internet Draws Startups to KC,” Associated Press, January 13, 2013, (http://bigstory.ap.org/article/googles-ultrafast-internet-draws-startups-kc). 28 Id.

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is heavily application driven. The City itself has adopted the use of many new applications, including a 16 megabit-per-second (Mbps) WiFi service for government use, which uses the gigabit network as backhaul; uploading and sharing 3D scans of buildings and facilities among City public works personnel; and criminal investigations utilizing remote collaboration by the City police force.29

In the private sector, Chattanooga has, like Kansas City, shown encouraging signs of becoming a tech incubator; the gigabit hookup allows businesses that perform high-end simulations, like Chattanooga’s SimCenter Enterprises, to work among major corporate and research collaborators worldwide. The network “enables a small company in a mid-sized city to become the center of a world of supercomputers, international research teams and corporate giants.”30 Chattanooga is also openly vying to become a small computer gaming enclave, and gamers and game developers have taken notice.31

Beyond the tech industry, however, as in Kansas City, the results are less clear when it comes to adoption and returns. Officials at EPB have acknowledged that widespread demand for the service has not been immediately apparent.32 Nevertheless, the network began turning a profit in 2011, and EPB seems confident in its business model, believing that the applications will come if the capacity is there.33

3.2.3 DATA FROM ASIA AND EUROPE DEMONSTRATE STRONG CORRELATION BETWEEN ULTRA-FAST BROADBAND AND ECONOMIC DEVELOPMENT To get a sense of the economic impacts of ultra-fast networks over time, we need to look outside the United States because there has been so much fiber deployment in many of our competitor nations. Significantly, the debate about the economic impact of FTTP is largely a U.S. debate. The importance of FTTP to future economic development and competitiveness is taken as a given in much of Europe and the developed nations of Asia—most of which have made public investments in FTTP that, on average, are hundreds of times larger than

29 Craig Settles, “Why Chattanooga Represents Broadband’s Future,” GIGAOM, May 29, 2011, (http://gigaom.com/2011/05/29/take-the-chattanooga-choo-choo-to-the-internets-future/). 30 Craig Settles, “What a Gigabit Network Can Do? Find Out,” GIGAOM, May 30, 2011, (http://gigaom.com/2011/05/30/chattanooga-shows-what-a-gigabit-network-can-do/). 31 Craig Settles, “Why Chattanooga Represents Broadband’s Future,” GIGAOM, May 29, 2011, (http://gigaom.com/2011/05/29/take-the-chattanooga-choo-choo-to-the-internets-future/). 32 Nate Anderson, “How do you use 1Gbps Internet links? Chattanooga residents find out,” Ars Technica, April 27, 2011, (http://arstechnica.com/tech-policy/2011/04/how-chattanooga-uses-1gbps-internet- connections/). 33 Id.

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the public broadband investments made by the United States through the 2009 Recovery Act broadband programs.34

In Singapore, for example, the government has set its sights on a gigabit as the minimum speed for the entire country. The iN2015 Masterplan seeks to make Singapore number one in the world “in harnessing infocomm to add value to the economy and society.”35 They offer concrete goals, including the creation of 80,000 jobs and increases “in the value-add of the infocomm industry to $26 billion” and “in infocomm export revenue to $60 billion.”36 An ultra-fast network that provides near universal service across the country is a non- controversial goal, and the anticipated economic impacts are taken as a given.

International research shows that the economic benefits of broadband are particularly high for FTTP investment. A study sponsored in part by the Swedish government shows that FTTP spending yields about a 50 percent return on investment (ROI).37 Increased market competition and efficiency among local governments appeared to account for a significant portion of the savings, but there was also an observed positive effect on employment and population. The study concluded that if Sweden built out FTTP to the entire country at a cost of $5.9 billion, the ROI would be $8.6 billion.38

In 2011, a broader study conducted by Ericsson, Arthur D. Little, and Chalmers University of Technology among 33 countries quantified the impact of connection speed on GDP.39 The findings of this study are highly significant to gigabit FTTP networks, because they show a significant positive impact on GDP as a function of broadband speed. Previously, some of the same researchers had found that GDP increases by 1 percent for each 10 percentage points of broadband penetration.40 Raúl L. Katz of Columbia Business School presents concurring data, with a wide variation of growth among various countries, but a clear link between level of penetration and economic returns.41

34 Nationwide FTTP construction projects are near completion or underway in Australia, China, Malaysia, New Zealand, Singapore, South Korea, and other Asian nations. More localized investments have been made in significant parts of Western Europe. And the European Union and its members have undertaken significant regulatory change designed to spur FTTP investment by the private sector. 35 iN2015 Masterplan, Infocomm Development Authority of Singapore, (http://www.ida.gov.sg/Infocomm- Landscape/iN2015-Masterplan.aspx). 36 Id. 37 “Benefits of Broadband,” Broadband Communities, November/December 2012 p. 56. 38 Id. 39 Study conducted jointly by Ericsson, Arthur D. Littler, and Chalmers University of Technology. 40 Press Release: “New study quantifies the impact of broadband speed on GDP,” Ericsson, September 27, 2011. (http://www.ericsson.com/news/1550083). 41 Dr. Raúl L. Katz, Presentation: “The Impact of Broadband on the Economy: Research to Date and Policy Issues,” 10th Global Symposium for Regulators, “Enabling Tomorrow’s Digital World”, November 10, 2010, (http://www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR10/documents/GSR10-ppt1.pdf).

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The 2011 study predicts that GDP increases by 0.3 percent when broadband speed doubles; and the effect is repeatable. The report states: “The study also shows that additional doublings of speed can yield growth in excess of 0.3 percent (e.g. quadrupling of speed equals 0.6 percent GDP growth stimulus).”42 So, if a country with average speeds of, for example, 10 Mbps—a generous hypothetical assumption for the United States—saw its average speed increase to 1 Gbps, this would be a hundred-fold increase in average speed, and predict at least a 2.1 percent increase in GDP (since the speed would have doubled more than seven times).

The study observes that growth takes two forms, the first being the short-term economic stimulus caused by the deployment, and the second being the creation of new businesses and increased productivity.43 The latter type of economic boost is what can be sustained over the long-term. According to multiple sources, the cost-savings and production boosts that ultra-fast networks can bring depend on how readily businesses adopt service, and then adapt their practices to leverage the new capacity. In other words, it is only after businesses purchase the service and have it for long enough to change their organizational and strategic practices to make use of the new applications available to them that they will begin to see a true ROI.44

Doug Adams and Michael Curri of the Strategic Networks Group (SNG) make the claim that “developers of ultra-fast broadband networks too often remain focused on the innovation element of their networks rather than moving on to address communication, time and social systems.”45 An earlier study, also by SNG, claims that “the most significant gains from FTTP occur after 2 years of use once organizations have adopted new business models to realize new revenue streams and to transform their business operations for cost avoidance.”46

Adams and Curri’s analysis stands in contrast to the “if you build it they will come” argument made by some gigabit promoters (as in Chattanooga, for example). They hold

42 Press Release: “New study quantifies the impact of broadband speed on GDP,” Ericsson, September 27, 2011. (http://www.ericsson.com/news/1550083). 43 Id. 44 Doug Adams and Michael Curri, “Broadband Is No Field of Dreams,” Broadband Communities, November/December 2012, p. 37. 45 Id. 46 “The Transformative Effects of FTTP,” Strategic Networks Group, (http://www.ftthcommunitytoolkit.wikispaces.net/file/view/SNG+- +The+Transformative+Effects+of+FTTP+-+issued+Mar+2008.pdf).

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that ultra-fast broadband is not a utility but “a new technology that many see as a luxury, and it should be sold by touting the benefits…rather than the feature of speed.”47

In the end, these two views may not be so far apart. Experience seems to be showing that “if you build it they will come” does seem to hold true among tech start-ups and data- driven industries, but not necessarily among other business sectors, which need time and persuasion in order to adopt and adapt. It is also apparent that this distinction of behavior between tech companies and others is observable outside of the United States.48 A chapter in a recent report on the Australian National Broadband Network goes so far as to describe the need for businesses to view new access to high-speed Internet as a “shock”—something potentially disruptive and initially negative, but ultimately beneficial once a business gets the right strategy in place.

But these studies all seem to agree that the gains are real. The current economic impacts of specifically ultra-fast networks are still emerging. Both adoption and speeds matter for these economic impacts, and speed is not the only benefit of FTTP technology; the reliability of fiber networks is also an important incentive for businesses to adopt service.49 If a company is going to transform its entire business model based on its network capacity, all the bandwidth in the world would not matter without the certainty that the network will operate as expected every day. Nevertheless, there is clear consensus that a significant component of the economic development associated with broadband is speed-driven, especially since speed is such an important factor in encouraging adoption in the first place.

3.3 HIGH CAPACITY OVER FIBER IS CRUCIAL FOR COMMUNITY ANCHOR INSTITUTIONS SUCH AS WESTMINSTER’S HEALTH CARE FACILITIES

Nationally, the need for bandwidth by community anchor institutions (CAI) such as public safety facilities, schools, libraries, and hospitals is growing dramatically and is fundamental to state and local interests. The Federal Communications Commission’s (FCC) National Broadband Plan establishes as one of the nation’s key goals that “[e]very community

47 Doug Adams and Michael Curri, “Broadband Is No Field of Dreams,” Broadband Communities, November/December 2012, p. 37 48 Brian Ramsay, “Catalyzing Regional Business Development Through High Speed Broadband: Opportunities and Risks,” Chapter 14 in Regional Advantage and Innovation: Achieving Australia’s National Outcomes, Ed: Susan Kinnear, Kate Charters, Peter Vitartas, New York: 2013. http://books.google.com/books?hl=en&lr=&id=68bsrtc5xrIC&oi=fnd&pg=PA269&dq=gigabit+broadband+ec onomic+development&ots=ylljvV5Ack&sig=7IDatPqe1TcWh02pcGDCHqjL- Lc#v=onepage&q=gigabit%20broadband%20economic%20development&f=false 49 “The Transformative Effects of FTTP,” Strategic Networks Group, (http://www.ftthcommunitytoolkit.wikispaces.net/file/view/SNG+- +The+Transformative+Effects+of+FTTP+-+issued+Mar+2008.pdf).

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should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals, and government buildings.”50 Such speeds are increasingly needed to support the growing demand for high-speed Internet access in education, public libraries, and medicine.

The discussion below examines the potential benefits of the many applications that health care facilities use (and will use in the future) that require higher bandwidth.51 Such applications are generally known as telemedicine or telehealth. These terms do not refer to a single technology or medical application. Instead, they capture a wide array of broadband-enabled physician services, including electronic sharing of medical records, remote monitoring of patients’ chronic diseases, and communicating via videoconference with medical personnel in distant locations.

Combined, these innovations are “transforming medical care by changing the way care is delivered and how people access medical services.”52 Telemedicine is “diminishing the impact of distance and time,” and thereby “expand[ing] capacity, foster[ing] coordinated care, improve[ing] the quality and efficiency of the delivery system and support[ing] more patient self-management.”53

Indeed, the FCC has noted that telemedicine may be the “greatest driver” for higher bandwidth in our country.54

These applications also have significant implications for both the quality and expense of patient care. In 2011, national health spending totaled $2.7 trillion.55 A sizable—and

50 National Broadband Plan: Connecting America, Goal 4. http://www.broadband.gov/plan/goals-action- items.html. 51 Local government, education, and library needs are not addressed here because Westminster, through its involvement in the Carroll County Public Network (CCPN), has already delivered fiber optics to those facilities. Health care represents the key anchor sector of the Westminster economy, in addition to businesses, that still requires the benefits of fiber. 52 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6], at 42 http://www.unitedhealthgroup.com/hrm/unh_workingpaper6.pdf); see also Federal Communications Commission, FCC-12-150, Dec. 12, 2012, at 233 (Statement of Chairman Julius Genachowski) (telemedicine is “transformational”) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC- 12-150A2.pdf. 53 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6] http://www.unitedhealthgroup.com/hrm/unh_workingpaper6.pdf; see also Statement of Commissioner Jessica Rosenworcel. http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-12-150A5.pdf (“These experiences amaze because they can challenge our traditional notions of health care. They can collapse distance and time; enhance the quality of care; improve outcomes; and lower costs.”). 54 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 160 (Appendix B, “Assessment of Broadband Needs of Healthcare Providers”). 55 Laura Berrocal, “Telemedicine: A Force that Can Deliver Healthcare Across the Nation?” Politic365 website, Jan. 26, 2013. http://politic365.com/2013/01/26/telemedicine-a-transformative-force-positioned-to- improve-the-delivery-of-healthcare-across-the-nation-maybe/.

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growing—portion of these services can be delivered through telemedicine, potentially at lower cost.

3.3.1 THE CURRENT STATE OF TELEMEDICINE Dr. Jonathan Linkous, CEO of the American Telemedicine Association, estimates that 10 million Americans were served by telehealth in 2012.56 There are already 200 telemedicine networks in the United States, with nearly 2,000 participating medical institutions.57

The role of broadband in patient health care is even greater if the definition is broadened to include patients’ informal access of medical information online. The Pew Internet and American Life Project found that 72 percent of Internet users (and 59 percent of American adults) have looked online for health information within the past year.58

These numbers are expected to rise. A 2012 market research report projected that the global telemedicine market will triple to $27.3 billion in 2016 (a compound annual growth rate of 18.6 percent over five years).59 And though millions of Americans are already benefitting from telemedicine, the potential is far greater. A 2011 study of 1,006 physicians found that more than half report that they do not use telemedicine at all (see Figure 3).60 This suggests a huge opportunity for continued expansion.

56 Id. (estimating that more than 10 million Americans benefit directly from telemedicine today) 57 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6], at 44 http://www.unitedhealthgroup.com/hrm/unh_workingpaper6.pdf; Telemedicine Defined, ATA http://www.americantelemed.org/learn/what-is-tlemedicine 58 Susannah Fox and Maeve Duggan, “Health Online 2013,” Pew Internet & American Life Project, Jan. 15, 2013. http://www.pewinternet.org/Reports/2013/Health-online/Summary-of-Findings.aspx 59 Nicole Lewis, “Global Telemedicine Market Headed for $27 Billion,” InformationWeek, March 21, 2012; see also Joan Voigt, “Telemedicine: A Prescription for Lower Healthcare Costs?” CNBC, June 28, 2012, http://www.cnbc.com/id/47989411. 60 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6], at 46 http://www.unitedhealthgroup.com/hrm/UNH_WorkingPaper6.pdf

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Figure 3: Telemedicine Adoption by Primary Care Physicians

These trends may be enabled by new laws providing reimbursement to providers for telehealth services. Nineteen states currently have “telemedicine parity laws” requiring private insurers to cover telemedicine, and a larger number provide some Medicaid reimbursement for telemedicine services.61 Such laws create a powerful incentive for providers to invest in the necessary infrastructure to support telemedicine.

3.3.2 BENEFITS OF TELEMEDICINE

3.3.2.1 Ameliorating Staffing Shortages Telemedicine can compensate for a lack of staff in a particular specialty. For instance, according to an American Telemedicine Association case study, there are only two board- certified pediatric dermatologists practicing within a 125-mile radius of Pittsburgh. Absent telemedicine, this shortage would lead to excessive travel and wait times for children in the region. To address that concern, the Children’s Hospital of Pittsburgh established a formal telemedicine program in pediatric dermatology in January 2011. From its launch until November 2012, the hospital provided nearly 500 consultations through tele-dermatology.

61 See American Telemedicine Association, “State Telemedicine Policy Matrix” http://www.americantelemed.org/docs/default-source/policy/state-telemedicine-legislation- matrix.pdf?sfvrsn=36; see also “Arizona and Montana Governors Sign Telemedicine Bills into Law” http://www.americantelemed.org/news-landing/2013/04/10/arizona-and-montana-governors-sign- telemedicine-bills-into-law; Beth Hertz, Feb. 10, 2013, Medical Economics, “Telemedicine: Patient demand, cost containment drive growth: Joining the trend may not be as expensive or time-consuming as you think” http://medicaleconomics.modernmedicine.com/medical-economics/news/modernmedicine/modernmedicine-feature-articles/telemedicine-patient-demand-c

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The response time for participants was less than one hour in the emergency room, and less than 12 hours for inpatient and ICU consults. These initial time-sensitive consultations were typically followed by an in-person visit. The consultations allowed for “more time- efficient, precise care, decreasing patient travel and expense, and even in many cases decreasing prolonged hospital stays.”62

These benefits are amplified in rural areas, where staff shortages are not limited to particular medical specialties. While there are, on average, 105 primary care physicians to every 100,000 people in urban areas, that number plummets to only 65 physicians per 100,000 residents in rural areas.63 Absent telemedicine, rural residents must often travel long distances to receive medical care. In fact, rural primary care physicians report that more than half of their patients that require specialty care must travel more than 20 miles to get it. In contrast, only 6 percent of urban patients are required to do so.64

Rural doctors are similarly required to travel long distances to see patients, reducing the time that they are available to provide care. Telemedicine can eliminate this burden— allowing doctors to spend their time helping patients, rather than traveling to reach them.65 Consequently, “telemedicine applications will be crucial in helping to address current and projected shortages in primary care and rural physicians nationwide, as well as shortages of pharmacists in rural areas.”66 Illustrating this projection is the fact that telemedicine currently is extending medical treatment to Antarctica—“one of the farthest- flung corners of the Earth.”67

FCC Chairman Julius Genachowski highlighted these benefits in a statement accompanying the FCC’s December 2012 Healthcare Connect Order. He noted that, absent telemedicine,

62 American Telemedicine Association, Telemedicine Case Studies: Pediatric Teledermatology: Improving Access in an Academic Children’s Hospital http://www.americantelemed.org/learn/telemedicine-case- studies/case-study-full-page/pediatric-teledermatology-improving-access-in-an-academic-children-s- hospital 63 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6], at 14 http://www.unitedhealthgroup.com/hrm/unh_workingpaper6.pdf 64 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6], at 18 http://www.unitedhealthgroup.com/hrm/UNH_WorkingPaper6.pdf 65 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at p. 14, note 63 (citing USAC Mar. 16 Site Visit Reports at 10 (explaining that the adoption of the Palmetto State Provider’s Network tele-OB/GYN service allows physicians to utilize the entire day seeing patients, instead of spending the day driving to rural areas and only being able to see each patient for a few minutes). 66 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 12 (citing Letter from Chin Yoo of the National Rural Health Resource Center). 67 Sarah Halzack, “Telemedicine makes new advances, all the way to Antarctica,” Washington Post, April 8, 2013, at A11. http://articles.washingtonpost.com/2013-04-07/business/38354192_1_telemedicine-patient- antarctica (noting that telemedicine can “help fill the gaps” by allowing specialists to talk to patients or coach on-site clinicians through highly skilled procedures, like an echocardiogram, thereby avoiding cost- prohibitive flight transfers; “Leaving Antarctica can be an outright odyssey”).

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high-risk expectant mothers in Florence, South Carolina, had to travel 168 miles to see a doctor. Once there, the doctor was only available for three minutes per patient. Tele- consults have eliminated this travel time and increased interactions to an average of 30 minutes. Telemedicine in Jefferson County, Iowa, has reduced the time needed to read a radiology scan from three to four hours to only half an hour. In North Carolina, telemedicine has reduced the time needed to diagnose communicable disease outbreaks from as much as 10 days to only 24 to 48 hours. Genachowski concluded that in each of these cases, “speed can be literally life-or-death.”68

3.3.2.2 Reducing Costs and Other Economic Benefits By reducing or eliminating travel time, telemedicine also offers significant economic benefits. Indeed, telemedicine can “bend[ ] the cost curve.”69 For instance, the Missouri Telehealth Network reports that it has saved Missourians nearly 1,700 roundtrip visits to specialists’ clinics in neighboring cities, resulting in saved fuel costs of more than $293,000.70 Telemedicine also prevents costly transfers between hospitals. In Missouri alone, the network has prevented 706 transport trips between hospitals, resulting in annual savings of approximately $60,000.71 The Universal Service Administrative Company (USAC) reports that keeping patients locally avoids helicopter transport fees of more than $10,000.72

These economic benefits are particularly significant at nursing facilities, where an effective telehealth program can prevent hospital transfers. In a recent assessment of telehealth technologies, NEHI (formerly the New England Health Institute) reported that “extended care eVisits” can dramatically reduce the need for hospitalization. Such eVisits provide voice and/or videoconference functionality, connecting a physician hub to nursing home residents at their bedsides. In one case study, such technology led to a 57 percent reduction in transfers. A study in New York concluded that 40 percent of nursing home hospitalizations were avoidable. With hospitalizations costing an estimated $12,000 per

68 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 233 (Statement of Chairman Julius Genachowski) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-12-150A2.pdf 69 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 14 (citing Pilot Conference Call Mar. 26 Ex Parte Letter (WNYRAHEC et al.) at 2-3. 70 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 14, n. 63 (citing Quarterly Report of Missouri Telehealth Network, WC Docket No. 02-60, at 6 (filed Jan. 31, 2012)). 71 Id. at 15, n. 65 (citing Quarterly Report of Missouri Telehealth Network, WC Docket No. 02-60, at 5 (filed Jan. 31, 2012)). 72 Id. at 15, n. 65 (citing USAC Mar. 16 Site Visit Reports at 3 n.1).

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incident, eVisits—which cost as little as $40 per visit—could thus generate millions of dollars in annual savings.73

The economic benefits of telemedicine can be observed on Nantucket, an island 30 miles from the mainland in Massachusetts. The Nantucket Cottage Hospital has historically had to pay for specialists’ travel and lodging expenses to service its patients. It has now begun to offer telemedicine, performed by doctors at Massachusetts General Hospital, which reduces those costs. Dr. Margot Hartmann, chief executive officer of Nantucket Cottage Hospital, explains that the hospital’s telemedicine program has saved nearly $29,000 annually because “two dermatologists now visit only four times a year, but appear on screen six times a month and see 1,100 patients a year.” What’s more, the program has generated additional income for the hospital by allowing related X-rays and lab services to be performed in house, rather than on the mainland.74

These benefits are not unique to Nantucket. Absent telemedicine, about one-third of hospitalizations for rural patients have occurred at urban hospitals.75 Telemedicine allows rural patients to remain close to home, avoiding costly transfers and adding to the local economy.76 And as far back as 2008, the Benton Foundation estimated that telehealth technologies could prevent:

• Thirty-nine percent (850,000) of transports between emergency departments, with an annual savings of $537 million;

• Forty-three percent (40,000) of transports from correctional facilities to emergency departments and 79 percent (543,000) of transports from correctional facilities to physician office visits, with an annual savings of $280 million;

73 Erin Bartolini & Nicholas McNeill, New England Health Institute, June 2012, “Getting to Value: Eleven Chronic Disease Technologies to Watch,” at 8 http://www.nehi.net/publications/72/getting_to_value_eleven_chronic_disease_technologies_to_watch 74 Pam Belluck, Oct. 8, 2012, New York Times, “With Telemedicine as Bridge, No Hospital Is an Island” http://www.nytimes.com/2012/10/09/health/nantucket-hospital-uses-telemedicine-as-bridge-to- mainland.html?pagewanted=all&_r=1&&pagewanted=print; see also Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 14, note 63 (citing Letter from Linda L. Oliver, Attorney Advisor, Federal Communications Commission, to Marlene H. Dortch, Secretary, Federal Communications Commission, WC Docket No 02-60 (filed Mar. 16, 2012) at 1-2 (explaining that keeping patients locally is “better for patients and helps rural hospitals financially”)). 75 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6] http://www.unitedhealthgroup.com/hrm/unh_workingpaper6.pdf) 76 See, e.g., Federal Communications Commission, FCC-12-150, Dec. 12, 2012, at 4 (reporting on the “Heartland Unified Broadband Network” in the Midwest, which saved $1.2 million in patient transport costs across 8 hospitals over a 30-month period).

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• Fourteen percent (387,000) of transports from nursing facilities to emergency departments and 68 percent (6.87 million) of transports from nursing facilities to physician office visits, with an annual savings of $806 million.77

Such estimates will only increase as innovative applications expand.

3.3.2.3 Monitoring Chronic Conditions Regardless of location, telemedicine holds particular promise for remote monitoring of chronic conditions. Nearly half of Americans (45 percent or 130 million people) suffer from at least one chronic condition, such as arthritis, asthma, cancer, depression, diabetes, heart disease, or obesity.78 That number is expected to increase to 157 million by 2020.79 Treatment of these conditions already accounts for 75 percent of health care spending— $1.5 trillion annually.80

Despite this enormous expense, most Americans with chronic conditions suffer from inadequate treatment. According to the National Center for Policy Analysis, less than one- fourth of patients with high blood pressure control it adequately. Twenty percent of patients with Type 1 diabetes fail to see a doctor annually, with 40 percent of diabetics failing to regularly monitor their blood sugar level or receive recommended annual retinal exams.81 Inadequate monitoring can have deadly consequences: Chronic illness accounts for 70 percent of deaths in the United States.82

77 Jonathan Rintels, "An Action Plan for America: Using Technology and Innovation to Address Our Nation's Critical Challenges," The Benton Foundation, Nov. 2008, at 16. http://www.benton.org/initiatives/broadband_benefits/action_plan; Alexander H. Vo, "The Telehealth Promise: Better Health Care and Cost Savings for the 21st Century," University of Texas Medical Branch, May 2008, at 2; see also Erin Bartolini & Nicholas McNeill, New England Health Institute, June 2012, “Getting to Value: Eleven Chronic Disease Technologies to Watch,” at 8 (finding that eVisit technology in nursing homes led to a 57% reduction in hospital transfers). http://www.nehi.net/publications/72/getting_to_value_eleven_chronic_disease_technologies_to_watch 78 Erin Bartolini & Nicholas McNeill, New England Health Institute, June 2012, “Getting to Value: Eleven Chronic Disease Technologies to Watch,” at 2. http://www.nehi.net/publications/72/getting_to_value_eleven_chronic_disease_technologies_to_watch; see also From Susannah Fox, April 23, 2013, Pew Internet Health (45% of Americans suffer from at least one chronic disease; providing breakdown by disease). (http://www.pewinternet.org/Commentary/2011/November/Pew-Internet-Health.aspx) 79 Amanda Hall, Michael Stellefson, and Jay Bernhardt, Prev. Chronic Dis. 2012, Healthy Aging 2.0: The Potential of New Media and Technology, 9 http://www.medscape.com/viewarticle/761515_print 80 Sondik EJ, et al., 2010, Ann. Rev. Public Health, “Progress Toward The Healthy People 2010 Goals And Objectives, Vol 31:271-281. 81 Devon Herrick, Convenient Care and Telemedicine, National Center for Policy Analysis, NCPA Policy Report No. 305 (ISBN #1-56808-179-0), Nov. 2007, at 8. 82 Jeffrey Harris & Robert Wallace, Sept. 20, 2012, Preventing Chronic Disease, “The Institute of Medicine’s New Report on Living Well with Chronic Illness,” vol. 9 http://dx.doi.org/10.5888/pcd9.120126

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83 Figure 4: Physicians Believe Chronic Conditions Are Among their Biggest Health Challenges

Telemedicine provides an effective option for monitoring chronic conditions. Notably, a large majority (64 percent) of those with chronic medical conditions have Internet access and 53 percent of adults suffering from chronic conditions have already looked online for health information.84 Through remote monitoring, these connected Americans can manage and address their chronic illness at dramatically lower cost. In fact, the Benton Foundation and the University of Texas estimated that remote monitoring could lower hospital, drug, and outpatient costs by 30 percent, reducing the length of hospital stays from 14.8 days to 10.9 days, office visits by 10 percent, home visits by 65 percent, emergency room visits by 40 percent, and hospital admissions by 63 percent.85

Examples of successful telemedicine programs for chronic diseases abound:

• A one-year study of 15 subjects with Type 1 diabetes demonstrated significant improvements for patients using an insulin pump and a real-time continuous glucose monitoring system. Participants had three in-person medical visits (pre- baseline, baseline, and six months) and regularly uploaded data from the glucose meter, glucose sensor, and insulin pump. At the conclusion of the study, participants had a significant increase in the number of daily self-monitoring

83 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6], at 9 http://www.unitedhealthgroup.com/hrm/UNH_WorkingPaper6.pdf 84 Susannah Fox, April 23, 2013, Pew Internet Health http://www.pewinternet.org/Commentary/2011/November/Pew-Internet-Health.aspx 85 Jonathan Rintels, "An Action Plan for America: Using Technology and Innovation to Address Our Nation's Critical Challenges," The Benton Foundation, Nov. 2008, at 16. http://www.benton.org/initiatives/broadband_benefits/action_plan

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blood checks, and reported a significant improvement in quality of life and satisfaction with treatment.86

• In a one-month test of a telemedicine-based care model for treatment of Parkinson’s disease, 78 patients sent frequent video recordings (on average, 3.2 per day) from their home to the treating team via the Internet. The videos were used to inform therapeutic decisions, including drug adjustments. At the conclusion of the month, the participants demonstrated significantly less impairment on a standard rating scale.87

• A study of patients discharged with congestive heart failure and chronic obstructive pulmonary disease found that remote monitoring reduced hospital readmission rates by over 60 percent.88

Remote monitoring is especially helpful for the elderly, since approximately 84 percent of adults aged 65 or older suffer from at least one chronic condition.89 In the event that these individuals are transferred to a nursing home, telemedicine continues to provide benefits by supplementing limited staff. NEHI reports that nursing home physicians spend on average less than two hours per week on site. Telemedicine technologies allow “around- the-clock” audio and videoconferencing consultations with nursing home residents who are unable to meet directly with their physicians. These technologies can already benefit the 1.3 million Americans living in nursing homes.90 As the baby boomer generation ages, demands on limited nursing staff will only increase, providing greater need for remote monitoring technology.91

3.3.2.4 Enabling Electronic Medical Records The continued adoption of Electronic Medical Records (EMR), which will require increasingly robust broadband connectivity, will help to avoid inefficiencies and create

86 Inmaculada González-Molero, et al., Sept. 2012, Journal of Telemedicine Telecare, “Use of telemedicine in subjects with type 1 diabetes equipped with an insulin pump and real-time continuous glucose monitoring,” at 328-332. 87 Frank Marzinzik et al, Evaluation of a telemedical care programme for patients with Parkinson's disease, J Telemed Telecare September 2012 18: 322-327 (reporting a decline in impairment from 31 points at enrolment to 24 points three months after termination of the experiment). 88 Fierce Mobile Healthcare, Ap. 15, 2013, “Remote Care Management Program to Be Rolled Out Nationwide” http://www.fiercemobilehealthcare.com/story/remote-care-management-program-be-rolled-out- nationwide/2013-04-15#ixzz2RNgTWgYx 89 Amanda Hall, Michael Stellefson, and Jay Bernhardt, Prev. Chronic Dis. 2012, Healthy Aging 2.0: The Potential of New Media and Technology, 9 (http://www.medscape.com/viewarticle/761515_print) 90 “The Older Population: 2010,” U.S. Census. http://www.census.gov/prod/cen2010/briefs/c2010br-09.pdf. 91 Erin Bartolini & Nicholas McNeill, New England Health Institute, June 2012, “Getting to Value: Eleven Chronic Disease Technologies to Watch,” at 7-9 http://www.nehi.net/publications/72/getting_to_value_eleven_chronic_disease_technologies_to_watch

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projected savings of up to $81 billion annually—or $670 per household.92 The use of EMR systems is expected to expand dramatically. While such systems have existed in some form for more than 30 years, the Centers for Disease Control and Prevention reported in 2007 that only 34.8 percent of office-based physicians reported some EMR use. By 2012, EMR adoption had increased to 72 percent of office-based practices.93 Significantly, in the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, Congress adopted an incentive payment system under Medicare and Medicaid to encourage health care providers to convert to electronic records. Providers currently receive these payments by demonstrating that they have achieved “meaningful use” of electronic records; by 2015, providers must adopt and exchange electronic records to receive full Medicare reimbursement.94 This requirement is consistent with the Obama administration’s goal of 100 percent utilization of electronic records by 2014.95

Figure 5: Percentage of Office-Based Physicians with Electronic Medical Records/ Electronic Health Records (2001–2012)96

92 Jonathan Rintels, "An Action Plan for America: Using Technology and Innovation to Address Our Nation's Critical Challenges," The Benton Foundation, Nov. 2008, at 18 (citing Rand Health, "Extrapolating Evidence of Health Information Technology Savings," 2005 Public Medical Research data from the National Health Expenditure Data, HHS and "Upgrade America's Health Care System: Pass Health IT Legislation Now," Business Roundtable, April 2, 2008). http://www.benton.org/initiatives/broadband_benefits/action_plan. 93 Centers for Disease Control and Prevention, Chun-Ju Hsiao and Esther Hing, Dec. 2012, NCHS Data Brief, “Use and Characteristics of Electronic Health Record Systems Among Office-based Physician Practices: United States, 2001-2012,” at 1, http://www.cdc.gov/nchs/data/databriefs/db111.pdf. 94 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 12-13. 95 U.S. Department of Health and Human Services Centers for Medicare & Medicaid Services 42 CFR Parts 412, 413, 422 et al. Medicare and Medicaid Programs; Electronic Health Record Incentive Program; Final Rule 96 Figure from: CDC, Chun-Ju Hsiao and Esther Hing, Dec. 2012, NCHS Data Brief: Use and Characteristics of Electronic Health Record Systems Among Office-based Physician Practices: United States, 2001-2012, at 1, http://www.cdc.gov/nchs/data/databriefs/db111.pdf.

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3.3.3 BANDWIDTH REQUIREMENTS OF TELEMEDICINE Telemedicine offers significant economic and health benefits; however, these benefits will only be realized with adequate bandwidth. As outgoing FCC Chairman Genachowski recently declared, “Broadband can revolutionize healthcare in our country, with powerful potential to improve quality of care for patients, while saving billions of dollars. But we’ll only realize the full benefits of this incredible technical revolution if we get all our hospitals and clinics connected.”97

The FCC reports that health care facilities’ broadband needs regularly exceed 100 Mbps. As the following table from the FCC’s National Broadband Plan demonstrates, medical applications such as image transfer require 100 Mbps; that number will multiply by the number of simultaneous users of that application.

Table 2: Bandwidth Required to Achieve Full Functionality of Health IT Applications

Text-Only Remote Basic E-mail + SD Video HD Video Image Transfer HER Monitoring Web Browsing Conferencing Conferencing (PACS) 0.025 Mbps 0.5 Mbps 1.0 Mbps 2.0 Mbps >10 Mbps 100 Mbps Source: Federal Communications Commission98

Broadband capabilities in the United States are not yet sufficient to support the full range of telemedicine applications. In fact, of the 1,006 physicians responding to a 2011 survey by the UnitedHealth Group, 21 percent reported that broadband capability was a barrier in their use of telemedicine.99 This broadband deficit presents a greater barrier in rural areas, because only 60 percent of rural areas have broadband services, as compared to 70 percent of urban areas.100

97 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 233 (Statement of Chairman Julius Genachowski) http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-12-150A2.pdf 98 Ibid. 99 UnitedHealth Center for Health Reform & Modernization, July 2011, "Modernizing Rural Health Care" [Working Paper 6], at 46 http://www.unitedhealthgroup.com/hrm/UNH_WorkingPaper6.pdf 100 Id. at 47.

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Figure 6: Barriers to Telemedicine Perceived by Primary Care Physicians

Bandwidth requirements vary by application. Some telehealth activities are “asynchronous” and can be realized without real-time services. These include a variety of “store and forward” activities—including medical monitoring, e-mailing between patients and providers, and sharing medical images. Other activities require real-time or “synchronous” communications. These include physician office visits conducted via videoconference, specialist visits that require high-definition video (e.g., dermatology), and real-time medical imaging in time-sensitive cases. The latter category is significantly more bandwidth-intensive.

Even store-and-forward telehealth applications, such as sharing medical images with medical providers, can impose significant bandwidth demands—particularly when multiplied across a network with hundreds or thousands of providers. Medical images such as X-rays are often digitally stored in large files; an MRI scan may consume many gigabytes of data, and files up to a terabyte have been seen with some medical studies. While store- and-forward applications require lower bandwidth than videoconferencing, for many fields—like tele-radiology and tele-dermatology—bandwidth needs are still high to ensure that high-quality images are transmitted. Moreover, a more robust network dramatically reduces the time needed to share such files. For instance, it would take six minutes to transmit a 45 MB MRI over a 1 Mbps connection (assuming that there was no competing traffic). It would take only five seconds to transmit the same file over a 72 Mbps connection.101

101 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, 157 (Appendix B) (citing OBI Tech Paper at 5), 159 (comments of RWHC, asserting that 100 Mbps would be sufficient and 1 GB would be optimal for most telehealth applications).

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Bandwidth needs will also grow as reliance on electronic medical records expands. In fact, the Illinois Rural HealthNet anticipates such growth to be “exponential”102 as users begin to share larger files (e.g., CT scans) with one another. USAC estimates that the optimal bandwidth for electronic records is 1.5 to 50 Mbps, but typically only 7.6 Mbps is dedicated to this purpose (see Table 3, below).103 The FCC explains that off-site solutions (e.g., cloud sharing) will not address this disparity, because such applications require greater redundancy, and thus higher bandwidth.104

Bandwidth needs may vary based on how the image is being stored and transmitted, and how many users the system must support. A provider may use a local digital medical- imaging device (like a CT scanner, a digital X-ray machine in an orthopedist’s office, or an ultrasound device in an obstetrician’s office) to create files and upload them to a Web- hosting site so that medical providers elsewhere can view them. Medical centers may also wish to retain their own digital images, and to allow access through a local linkage.105

Real-time telehealth applications, such as video and audio conferencing, require greater network capacity because they are particularly sensitive to latency (delay in delivery of data packets), jitter (variations in latency over time), and packet-loss.106 For instance, a typical conversation cannot be transmitted with latencies greater than 300 milliseconds. Greater delays would “disrupt natural verbal and visual communication patterns.”

Conferencing applications also require stable rates of latency. Data buffers cannot function with excessive jitter, which compromises the quality of a video or audio feed. High levels of packet loss or packets arriving out of order can also cause visible disruptions in an audio or video feed. This may pose a particular problem in tele-psychiatry, where rapport and trust are critical.

USAC reports that while the optimal bandwidth needs for the transmission of HD video consultation averages 22 Mbps, the typical bandwidth dedicated by providers to such consultations is only 8.1 Mbps107 (see Table 3, below).

Bandwidth needs are especially high for emergency telehealth applications (e.g., remote video conferencing during crises). Such emergency applications cannot be scheduled

102 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, 161 (Appendix B). 103 Universal Service Administrative Company (USAC), Rural Health Care Division, April 12, 2012, Appendix A. 104 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 159 & 162 (Appendix B). 105 Robert Rowley, June 3, 2010, EHR Bloggers, “Internet Connectivity and the Future of EMRs” http://www.practicefusion.com/ehrbloggers/2010/06/internet-connectivity-and-future-of.html 106 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 160, notes 42 & 43 (Appendix B) (noting that telemedicine requires high bandwidth because there is little tolerance for latency or other reliability issues). 107 Universal Service Administrative Company (USAC), April 12, 2012, at 3 (Appendix A).

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around network availability. Consequently, the network must be designed to accommodate the greatest level of potential use. Continuous telemetry of critically ill patients likewise demands a reliable network.108 The same applies to tele-stroke applications, where treating physicians must be able to closely and accurately observe movements and facial expressions.

Table 3: Estimated Bandwidth Needs for Telehealth Services109

Minimum Typical Bandwidth Optimal Bandwidth Health Care Use or Service Bandwidth (Mbps) (Mbps) (Mbps) Low Avg High Low Avg High Low Avg High Video Conferencing (non-HD) 0.4 1.0 1.5 0.4 3.5 10 0.8 14 50 Video Conferencing (HD) 1.0 1.5 2.0 1.0 8.1 23 1.5 22 50 Administrative Use 0.4 1.1 1.5 0.4 3.5 10 0.8 13 50 Cardiovascular/Echo 1.0 3.4 9.5 1.0 6.4 10 1.5 18 50 cardiology Dentistry 0.4 1.0 1.5 1.0 3.2 10 1.0 14 50 Dermatology 0.4 1.3 2.0 1.0 3.4 10 1.5 12 50 Dialysis/ESRD 1.0 1.4 1.5 1.0 5.3 10 1.5 21 50 Electronic Medical Records 1.0 1.4 1.5 1.0 7.6 14 1.5 22 50 Emergency Rm/Trauma Care 0.4 6.9 27.0 1.0 9.0 27 1.5 32 100 Gastroenterology 1.0 1.4 1.5 1.0 5.3 10 1.5 21 50 Obstetrics/Gynecology 1.0 1.4 1.5 1.0 4.5 10 1.5 18 50 Orthopedics 0.4 1.1 1.5 1.0 4.2 10 1.5 16 50 Pathology 1.0 1.4 1.5 1.0 4.4 10 1.5 16 50 Physical Therapy 0.4 1.1 1.5 1.0 4.2 10 1.5 16 50 Primary Care 0.4 1.1 1.5 1.0 4.2 10 1.5 16 50 Psychiatry & Counseling 0.4 1.2 1.5 0.8 3.4 10 1.0 14 50 Radiology - MRI/CAT 1.0 4.6 10.0 1.0 9.0 20 1.5 34 100 Radiology - X-ray 1.0 3.1 10.0 1.0 7.5 20 1.5 33 100 Rehabilitation 1.0 1.4 1.5 1.0 5.3 10 1.5 21 50 Remote Monitoring 1.0 3.5 10.0 1.0 6.5 10 1.5 40 100 Specialist Care 0.4 5.5 23.0 1.0 8.0 23 1.5 17 50 Speech Therapy 0.4 1.2 1.5 1.0 3.8 10 1.5 15 50 Training/Education 0.4 1.2 1.5 0.6 3.2 10 0.8 12 50

108 Sujansky & Associates, LLC, Applicability of the California Telehealth Network as the Network Infrastructure for Statewide Health Information Exchange: An Assessment of the Optimal Roles for the CTN in California’s HIE, Oct. 8, 2009. http://www.sujansky.com/docs/CTN_for_HIE_Assessment_SujanskyAndAssociates_2009-10-08_FINAL.pdf. 109 Appendix A of “Health Care Provider Broadband Needs Assessment Summary,” Universal Service Administrative Company, Rural Health Care Division, submitted to Sharon Gillett, Chief, FCC Wireline Competition Bureau. April 12, 2012.

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Minimum Typical Bandwidth Optimal Bandwidth Health Care Use or Service Bandwidth (Mbps) (Mbps) (Mbps) Low Avg High Low Avg High Low Avg High Ultrasound 1.0 1.4 1.5 1.0 5.3 10 1.5 21 50 Average 0.7 2.1 4.9 0.9 5.4 13 1.4 20 58

Linda Oliver, Attorney Advisor to the FCC, explains that a rural hospital may be able to prevent premature stroke damage by transmitting a CT scan of a patient’s head to a neurologist offsite—but only if the preventative medicine is administered “in a timely fashion.” Transmitting such a scan could take 25 minutes via a T-1 connection—with serious health consequences.110

Larger facilities will also have higher bandwidth requirements because they often must simultaneously support multiple patients. For instance, the Oregon Health Network reports that a 10 Mbps symmetrical connection is sufficient for most telehealth applications, but that larger facilities may require upwards of 100 Mbps.111 Others likewise recommend that a rural clinic with five practitioners have 10 Mbps, but that hospitals require at least 100 Mbps.112 The FCC reports that the largest clinics are already upgrading from 100 Mbps to gigabit connectivity.113

Broadband needs for telemedicine are projected to grow exponentially, in part because bandwidth needs are cumulative. As an initial matter, telemedicine needs must be layered on top of existing on-site bandwidth requirements, like e-mail, billing, and accessing patient records.114 Moreover, “telemedicine is dynamically changing with new technologies

110 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 160, n. 49 (Appendix B) citing letter from Linda Oliver to Dortch, 163 (citing Illinois Rural HealthNet Comments at 24) (noting that transmitting a 64 slice CT scan over a T-1 (1.5 Mbps) line would take 4½ hours, compared to only 5 minutes over a 100 Mbps connection). 111 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 158, n. 28 (Appendix B) (citing OHN PN Comments at 12). 112 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 164 (Appendix B) (citing OBI Health Care Tech Paper). 113 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 159, n. 32 (Appendix B) (Southwest Telehealth Access Grid, SWTAG, concludes that “[c]onnections of over 100 megabits or even Gigabit connections are feasible bandwidth needs in the not too distant future.”). 114 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 163 (Appendix B).

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and expanding applications.”115 Consequently, “the growth curve for broadband needs associated with telemedicine is difficult to overstate.”116

3.4 THE RESIDENTIAL MARKET INCREASINGLY REQUIRES HIGH CAPACITY

The range and breadth of existing and potential consumer fiber applications is growing rapidly. The emergence of a significant FTTP test-bed in the forms of the Google and municipal FTTP networks will accelerate the development of these applications, but even before the development of a widespread gigabit market in the United States, preliminary data regarding the impact of high-bandwidth networking is already evident.

For example, dependable, high-speed Internet access greatly improves the ability to work from home, or telework. This is often touted as the “most transformative”117 and “biggest environmental benefit”118 of FTTP. Indeed, telework confers a wide array of primary and secondary emissions benefits, which could provide significant cost savings to the City and its residents by reducing vehicle-operating expenses, the amount of time spent traveling, road repairs, and traffic congestion. In addition, by decreasing miles driven and gasoline burned, telecommuting benefits the environment and reduces greenhouse gases (GHG) by lowering auto emissions. Where telework occurs full time, it can reduce construction demand for office space and related electricity use.119 Indeed, the American Consumer Institute estimates that simply doubling the number of full-time teleworkers (to 20 percent) could reduce national GHG emissions almost 600 million tons over the next 10 years due to reduced auto use, business energy conservation, and reduced office construction.120

115 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 159, n. 31 (Appendix B) (quoting comments of Southwest Telehealth Access Grid, SWTAG). 116 Federal Communications Commission, FCC 12-150, Dec. 12, 2012, at 159, n. 33 (Appendix B) (quoting comments of IRHN: noting “the number of medical procedures that can be digitized and performed remotely will continue to expand.”) 117 Stephen Ezell et al., “The Need for Speed: The Importance of Next Generation Broadband Networks,” Information Technology and Innovation Foundation, March 2009.15. http://www.itif.org/files/2009- needforspeed.pdf. 118 Steven S. Ross and Masha Zager, “Fiber to the Home Is Green Technology,” Broadband Properties, Jan/ Feb 2009, at 30 http://www.bbpmag.com/2009issues/jan09/BBP_JanFeb09_CoverStory.pdf. 119 “Broadband Services: Economic and Environmental Benefits.” 20. (Reporting a $25 million reduction in national real estate costs). 120 Ibid, 25-26. See also Jonathan Rintels, “An Action Plan for America: Using Technology and Innovation to Address Our Nation’s Critical Challenges,” The Benton Foundation, 2008. 24. http://www.benton.org/initiatives/broadband_benefits/action_plan; Consumer Electronics Association, “The Energy and Greenhouse Gas Emissions Impact of Telecommuting and e-Commerce,” July 2007/ 8, 29. http://www.ce.org/Energy_and_Greenhouse_Gas_Emissions_Impact_CEA_July_2007.pdf. (Reporting average

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“Universal, affordable, and robust broadband” is a “necessary prerequisite” for telework.121 In market research conducted by CTC in 2008 in San Francisco, for example, 67 percent of respondents reported that they needed higher speeds than cable modem to telework and 70 percent of respondents indicated that they would telework more if there were sufficient speed.122 Other studies support this finding. Indeed, fiber networks have quadrupled the amount of time employees spend working from their homes.123

Another significant, emerging application for high bandwidth broadband is the area of “aging in place” and other means of using technology to support seniors in their homes. In 2005, 12 percent (35 million) of the U.S. population was over 65. By 2030, that number will rise to 21 percent (71 million).124 This growing demographic also represents a rapidly growing segment of the broadband market. In fact, the Pew Internet and American Life Project reports that the largest increase in Internet use since 2005 occurred in the 70- to 75-year-old age group, with online use for this age group increasing from 26 percent in 2005 to 45 percent in 2009.125 Broadband use has increased by about half for Americans ages 12 to 24, roughly doubled for 25- to 64-year-olds, and more than tripled for seniors 65 and older. Notwithstanding this dramatic increase, broadband use by seniors 76 and older remains relatively low, at only 16 percent.126 By contrast, 61 percent of those aged 50 to 64 have broadband at home.127 Broadband use will undoubtedly continue to rise as younger users age. This provides a tremendous opportunity for extending the benefits of broadband access.

Broadband promises a range of applications that can benefit an aging population. In particular, broadband access can lower medical costs and prevent hospitalization through

daily energy savings from telework of 16-23 kWh/ teleworker, assuming a “typical” vehicle with 21 miles per gallon and a 24 mile round-trip commute). 121 Jonathan Rintels, “An Action Plan for America: Using Technology and Innovation to Address Our Nation’s Critical Challenges,” The Benton Foundation, Nov 2008. 24. http://www.benton.org/initiatives/broadband_benefits/action_plan. 122 At the time the cable modem service deployed in San Francisco was state of the art and comparable to the speeds offered in Westminster at that time, but still insufficient for very high end telework applications such as telepresence or advanced videoconferencing. 123 “The Need for Speed: The Importance of Next Generation Broadband Networks.” See also Irene Berlinsky, “Working at Play, Playing at Work: The Rise of the Prosumer,” IDCLink, January 15, 2009. 124 Robert Litan, “Great Expectations: Potential Economic Benefits to the Nation From Accelerated Broadband Deployment to Older Americans and Americans with Disabilities,” New Millennium Research Council, Dec. 2005. 6. http://newmillenniumresearch.org//archive/Litan_FINAL_120805.pdf. 125 Sydney Jones and Susannah Fox, “Generations Online in 2009,” PEW INTERNET PROJECT DATA MEMO, Jan 2009. 2. http://www.pewinternet.org/~/media//Files/Reports/2009/PIP_Generations_2009.pdf. 126 Jones and Fox. 127 John Horrigan, “Home Broadband Adoption 2009,” Pew Internet and American Life Project, June 2009.http://www.pewinternet.org/Reports/2009/10-Home-Broadband-Adoption-2009.aspx. (The chart at p. 13 illustrates use among all age groups.)

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home-based monitoring; extend employment opportunities through telework; and foster ongoing relationships by allowing homebound seniors to connect to the outside world.128 These benefits translate to dramatic savings in Medicaid and Medicare expenses for the federal and state governments, reduced demand for limited space in hospitals and long- term care facilities, and increased income and savings for residents. Because 60 percent of U.S. healthcare spending is on seniors,129 initiatives that target this population translate to significant government savings. In fact, considering only three categories of benefits (lower medical costs, lower costs of institutionalized living, and additional output generated by more seniors and individuals with disabilities in the labor force), economist Robert Litan identified up to $927 billion in cost savings and output benefits from “business as usual” broadband deployment and an additional $532 billion to $847 billion in economic benefits from accelerated broadband deployment.130 Even the low end of this estimate is equal to half of what the United States currently spends annually for medical care for all its citizens ($1.8 trillion).

Broadband access allows seniors to search for medical information online. Approximately 20,000 medical websites exist for online research,131 with a substantial subset targeted toward senior users. For instance, both the Mayo Clinic and the National Institutes of Health (NIH) have Web pages dedicated to senior health information. Similarly, AARP recently launched a series of online tools designed to help seniors select a physician or hospital and understand and diagnose their symptoms.132 Seniors are already taking advantage of these services. Pew estimates that 70 percent of online adults (ages 64 to 72) and 81 percent of those aged 55 to 63 have used the Internet to find medical information.133 Seniors are more likely to seek information online if they have a dependable, high-speed broadband connection. Such access empowers seniors by allowing them “to be preemptive and interactive in their efforts to combat the harmful effects of aging.”134 It also translates to reduced medical expenses. In fact, as noted previously, Kaiser

128 Richard Adler, “Older Americans, Broadband and the Future of the Net,” Senior Net, 2006. http://www.seniornet.org/research/SeniorNetNNPaper060606.pdf. 129 Charles Davidson and Michael Santorelli, “The Impact of Broadband on Senior Citizens,” U.S. Chamber of Commerce, Dec 2008. 22-23 http://www.uschamber.com/assets/env/broadbandseniors.pdf. 130 Davidson and Santorelli, 18. Additional savings may be possible because broadband can help homebound residents comparison shop for best prices. For instance, a New York-based program helped lower-income seniors save $19,000 on their drug costs alone. 131 Herrick. 14. 132 Davidson and Santorelli. 21-22.(Citing www.mayoclinic.com/health/seniorhealth/HA99999, http://nihseniorhealth.gov/, and News Release, “AARP Launches Four Online Health Tools to Empower Consumers To Make Informed Choices in Care,” AARP, Aug 22, 2008. http://www.aarp.org/research/presscenter/ presscurrentnews/aarp_launches_four_online_health_tools_to_empower.html). 133 Jones and Fox. 134 Davidson and Santorelli. 21.

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Permanente found that allowing enrollees (of all ages) to e-mail questions to their doctor through a secure messaging system led to a 7 percent to 10 percent reduction in primary care visits.135

Broadband also reduces medical costs for seniors by facilitating remote monitoring. Through the use of remote monitoring devices like ECG electrodes or blood glucose sensors, healthcare providers can continuously observe cardiac performance, food intake, and glucose levels, without requiring costly medical examinations or hospitalization. One study reports that 3.4 million seniors will be using such devices by 2012.136 Remote monitoring is particularly useful for chronic diseases (such as coronary heart disease, chronic obstructive pulmonary disease, mental health disorders, diabetes, hypertension, and asthma), which require continued medical care and coordinated treatment among physicians. Chronic illness is prevalent among seniors. In fact, 45 percent of Medicare beneficiaries nationwide suffer from at least one chronic condition, representing nearly 80 percent of national healthcare spending—more than $1 trillion each year.137 Economist Robert Litan estimates that remote monitoring could cut Medicare expenses for the chronically ill by 30 percent, or $350 billion each year.138 As indicated previously, data from the Veterans Administration supports this estimate. The VA has cut hospital admissions by up to 60 percent for participants in its remote monitoring program, which relies on a network of “care managers” who track patient data online and contact participants if records indicate a need for immediate medical attention.139

Medical monitoring enabled by broadband may also delay and potentially eliminate the need for institutionalized living, with dramatic savings. As of 2002, five percent of Medicare-eligible seniors (1.6 million) lived in nursing homes.140 This number is expected to increase as baby boomers retire and life-span increases. In fact, 44 percent of seniors will live in nursing homes at some point during their lifetime.141 This care comes at a significant cost. In 2004, the federal government spent $135 billion on long-term care for

135 Herrick. 14. 136 Davidson and Santorelli. 23. (“Senior Citizens to See High Tech Sensors in Homes, on Bodies to Monitor Health,” Dec. 6, 2007, Senior Journal. http://www.seniorjournal.com/NEWS/Features/2007/7-12-06- SenCit2See.htm.) 137 Litan, 16. 138 Litan, 16-17. 139 Neal Neuberger, “Advancing Healthcare Through Broadband: Opening Up a World of Possibilities,” Internet Innovation Alliance, 2007. Date of Access: July 28, 2009. http://internetinnovation.org/factbook/entry/small-pilot-projects/. 140 Litan, 21. 141 Litan, 21. See also Davidson and Santorelli. 22-23. (Projecting 69 percent of seniors will need eventual long-term care.)

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the elderly.142 Nationally, the annual cost is nearly $78,000 for a private room in a nursing home.143

Internet applications that are designed to “sharpen brain function” could lead to even greater potential savings. (At a minimum, these applications can help reduce isolation and depression among seniors.144) Neurologists have reported that mental exercises, like puzzles, logic games, and reading material available for free through the Internet, can reduce an individual’s chance of developing Alzheimer’s disease by 70 percent.145 Accessing such sources of “mental exercise” online also means that elderly people with limited mobility are not dependent on driving to a store or library to get what they need. According to one analysis, “interventions that could delay the onset of Alzheimer’s disease by as little as one year would reduce prevalence of the disease by 12 million fewer cases in 2050.”146 Because Alzheimer’s and dementia currently cost the United States more than $148 billion annually in Medicaid and Medicare services,147 the potential savings are significant. In addition to these economic benefits, such applications will help allay the concerns of nearly 60 percent of seniors who worry about “staying ‘mentally sharp.’”148

On average in the United States, a private room in a nursing home costs $168 per day.149 The average time a senior citizen will live in a nursing home is projected to be two and a half years.150 If at-home broadband-enabled health monitoring were able to reduce the average resident’s length of stay in a nursing home by six months, the Westminster community would see dramatic reductions in nursing home fees.

The savings in nursing home expenses would be offset by the cost of additional at-home health care, but those fees are a small fraction of the daily cost of nursing home care. Private at-home care averages $19.23 per hour nationally.151 With broadband in the homes of patients, medical monitoring could make it possible to need as little as one hour every day of in-home care.

142 Litan. 21. This includes $92 billion (68 percent) for nursing home care and $43 billion (32 percent) on home care. 143 Litan, 21. 144 Davidson and Santorelli. 15. The same Internet applications can help improve quality of life for seniors who often complain of isolation and experience depression. In fact, studies have found that “seniors who master computer skills appear to have fewer depressive symptoms.” 145 “Four Pillars of Alzheimer’s Prevention: Exercise Physical, Mental and Mind/Body,” Alzheimer’s Research and Prevention Foundation. http://www.alzheimersprevention.org/pillar_3.htm. 146 Davidson and Santorelli. 22. 147 Davidson and Santorelli. 148 Davidson and Santorelli, 12. 149 Debra Caruso and Christina Tso, “LTC Cost by City,” Business Wire. http://www.assn- insurance.com/pdf/LTCCostByCity.PDF. 150 Caruso and Tso. 151 Caruso and Tso.

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In fact, according to AARP, Medicaid funding can support an average of three people in home and community-based settings for the same cost as supporting one person in a nursing home.152 Litan’s estimates are consistent with these figures, finding that the difference between institutionalized and home care is at least $50,000 per person.153

Litan further assumes that home-based monitoring will prevent institutionalization for 1 percent of seniors in 2010, rising to 2 percent to 3 percent by 2030, for an estimated cumulative savings of nearly $1 billion in 2010 and $17 to $32 billion in 2030.154 This approach represents an improvement in the quality of life for seniors in addition to the obvious economic benefits of home-based care. Indeed, an AARP study found that 87 percent of seniors would prefer to have help provided to them in their homes rather than in an institution.155

In terms of Alzheimer’s, while broadband-assisted reduction in deaths caused by the disease is speculative, broadband could postpone or potentially reduce the incidence of the disease. And to the extent that broadband access does postpone the incidence of Alzheimer’s, those residents who are spared will save on medical expenses: On average, individuals affected by Alzheimer’s disease are paying three times as much in health care costs as those who do not have Alzheimer’s or dementia.156

152 Ari Houser, Wendy Fox-Frage, and Mary Jo Gibson, “Across the States: Profiles of Long-Term Care and Independent Living,” AARP, 2009. http://assets.aarp.org/rgcenter/il/d19105_2008_ats.pdf. 153 Litan. 21. (Reporting a price differential of $48,000 to $64,000, depending upon whether the individual is placed in a private or semi-private room). S154 Litan, 23. 155 Davidson and Santorelli. 25. 156 Alzheimer’s Facts and Figures, Alzheimer’s Association. http://www.alz.org/alzheimers_disease_facts_figures.asp?gclid=CIjG-KO705sCFRd75Qodi28qJQ.

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4. ADVANTAGES OF FIBER OVER OTHER BROADBAND TECHNOLOGIES

This section summarizes the current status of fiber and other broadband technologies, as they have been deployed by the communications industry in the United States, and discusses the inherent advantages fiber holds over other technologies.

4.1 WIRELINE ARCHITECTURES

The wireline component is typically the highest-speed portion of a network. Where it is part of a wireless/mobile network, wireline communications provide the backbone between key network locations and the interface with the wireless network (i.e., the base stations or cell sites). The majority of homes and businesses nationwide are connected via wireline communications, and the role of the wireline connection has evolved to provide users’ most intensive needs—high-definition television, telecommuting applications, telemedicine, gaming, data backup, digital media storage and transport, and “cloud” applications.

There are three primary modes of wireline communications:

1) Fiber-to-the-premises (FTTP), adopted by Verizon in some markets 2) Hybrid fiber-coaxial (HFC), used by Knology, Comcast, and other cable operators 3) Digital subscriber line (DSL) used by AT&T over its copper telephone lines

4.1.1 FIBER-TO-THE-PREMISES Since the early 1990s, telecommunications and broadband operators have deployed wireline networks consisting of their legacy infrastructures (copper or coaxial), and the core, backbone, and long-haul components using fiber optic technology. Over that time the providers have expanded the fiber component from the core, to reach closer to the home and business.

Fiber-to-the-premises (FTTP) provides the greatest capacity, reliability, and flexibility of all wireline solutions and is therefore the state-of-the-art wireline transport technology. Fiber itself provides a broad communications spectrum and has a theoretical capacity of hundreds of Gbps per fiber with off-the-shelf equipment; even low-priced equipment can provide 1 Gbps.

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Because it contains no metal components, fiber is not susceptible to interference from outside signals or to corrosion. Fiber installed 20 years ago is not physically or technologically obsolete.

Fiber optic equipment generally has a range of 12 miles with standard passive optical network (PON) electronics157 and almost 50 miles with higher-powered electronics.158 The range reduces or eliminates the need for electronics or powering in the middle of the network, reducing the network’s required staffing and maintenance and improving availability during storms or mass power outages.159 Fiber can be continuously upgraded simply by replacing or upgrading the network electronics at the ends.

Figure 7 illustrates a sample FTTP network, demonstrating how high levels of capacity and reliability are brought directly to the premises—providing connectivity without a technical bottleneck to the Internet or other service providers, and providing a flexible, high-speed backbone for wireless services.

157 ITU-T Recommendation G.984.2 Gigabit-capable Passive Optical Networks (GPON): Physical Media Dependent (PMD) layer spec., p. 10, Table 2a, http://www.itu.int/rec/T-REC-G.984.2-200303-I/en. 158 Cisco Small Form-Factor Pluggable Modules for Gigabit Ethernet, http://www.cisco.com/en/US/prod/collateral/modules/ps5455/ps6577/product_data_sheet0900aecd8033 f885.pdf. 159 Powering is required at the central office facility (usually equipped with long-running generators) and at the user premises (requiring the user to have backup power, such as a battery or a home generator). In contrast, hybrid fiber–coaxial networks have power supplies in each neighborhood with a few hours of battery backup. Once the batteries are depleted, the cable operator must place a generator at each power supply location.

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Figure 7: Sample FTTP Network

4.1.1.1 International FTTP Internationally, FTTP is increasingly common, sometimes initiated by private sector companies, sometimes initiated or mandated by governments. In the Asia-Pacific region, in particular, almost every developed country that competes with the United States in the global economy has a national plan and funding mechanism to build next-generation networks. In Australia, for example, the government will build, own, and operate a fiber optic network to nearly every home and business in the country. In New Zealand, the government is innovatively financing construction (by Telecom New Zealand in some parts of the country, and public power in other parts) of a FTTP network that will eventually reach 75 percent of the population; LTE (4G) wireless service will reach the most rural 25 percent. (The entity representing the New Zealand government in this regard has also required Telecom New Zealand to divest its retail service arm, so that infrastructure ownership and service provision are separate, and the infrastructure owner has no

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incentive to prefer or prioritize its services or content over those of the many service layer competitors.)

In Japan, the central government funded construction of an FTTP network by the private telecom (phone company), but required an open access business model. In Singapore, the government funded construction of ubiquitous FTTP and partnered with a French company, Axia NetMedia, to operate the system.

In Europe, government funding has been somewhat less aggressive, but still very significant. The French government has long offered grants and very low cost loans to providers that will build FTTP in rural areas. Multiple French municipalities have built their own municipal FTTP networks and contracted with private sector partners to operate the networks. In Ireland, the central government has offered loan/grant combinations to county governments that are willing to build middle-mile fiber to key commercial locations and anchor institutions, with the Irish government taking most of the risk in the event of financial challenges to the model.

In Scandinavia, municipalities have been extremely aggressive in constructing fiber both for government and commercial use. Sweden, which has been a leader both in the number of projects and the innovation of the business models, has more than 200 localities that own or operate some level of fiber.

4.1.1.2 FTTP in the United States By the late 2000s, Verizon began constructing fiber optics all the way to homes and businesses in selected markets nationwide. This technology now reaches more than 15 million customers under the brand name FiOS.160 In other parts of the United States, municipal operators and telephone cooperatives have also constructed FTTP networks.

Verizon is providing data, video, and voice services with a maximum offered speed of 300 Mbps download, 65 Mbps upload.161 However, the fiber in the Verizon FTTP network could scale to significantly higher speeds. With the Gigabit Passive Optical Network (GPON) electronics Verizon is currently deploying, each 36-user segment of the network shares 2.4 Gbps of downstream capacity and 1.2 Gbps of upstream capacity; assuming 50 percent penetration, this can provide on average a 133 Mbps committed speed per user and 66 Mbps upstream—with burst capacity significantly higher. The next generation upgrade is 10G GPON technology (10 Gbps downstream, 2.4 Gbps upstream), which is under test by

160 Previously the only premises to receive fiber optics were those receiving the highest-speed business services, such as DS3 (45 Mbps) or greater symmetrical services. 161 “FiOS Internet Speed Comparison Tool,” Verizon website, http://www22.verizon.com/home/fios-fastest- internet/.

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Verizon and deployed for trial users in the Singapore OpenNet.162 When required by customer demand, the operator can activate the 10G GPON on the same fiber as the current GPON, requiring no new outside plant electronics and creating no disruption on the existing network. Future possibilities include wavelength division multiplexing (WDM) solutions with 10 to 100 times the capacity of 10G GPON (again, not requiring a rebuild of the fiber network outside plant).

Although Verizon offers the fastest mass-deployed service in some U.S. communities, it is— as Google’s fiber project in Kansas City illustrates—moving considerably more slowly than the FTTP technology permits. Hong Kong Broadband Network (HKBN) and the Chattanooga, Tennessee Electric Power Board (EPB) are also offering 1 Gbps using FTTP technology.163 Verizon’s engineers have stated publicly that the service levels offered were a matter of business decisions based on what Verizon thought the market would pay for, rather than any technical limitations. Verizon representatives have stated in private meetings that the company anticipates offering 1 Gbps service on its FiOS network by 2017.164

4.1.2 HYBRID FIBER–COAXIAL CABLE Cable operators, including Knology, have extended fiber optics progressively closer to their subscribers’ premises but have generally stopped about one mile from the premises, using coaxial cable for the last mile. Thus, their networks are a hybrid of fiber and coaxial infrastructure. Knology typically only constructs fiber optics on a custom basis to the premises of businesses that subscribe to Metro Ethernet and other advanced services (i.e., generally faster than 50 Mbps).

Cable operators have discussed constructing fiber optics to the premises, starting with new greenfield developments, but so far have generally not done so. They have typically opted instead to install new coaxial cables to new users, even though the construction cost to new premises is approximately the same.

In Westminster, Comcast offers services using HFC technology. This is the dominant type of wireline broadband service in the City; it is available to the majority of the population, and offers greater speeds than DSL. According to the National Broadband Map, Comcast uses

162 Other fiber technologies include WDM PON, which assigns separate wavelengths of light to separate users (a deployment is currently underway in South Korea), and point-to-point fiber networks, such as the Citynet in Amsterdam, with individual users each receiving separate dedicated fibers. 163 HKBN bb1000 description, http://www.hkbn.net/2010/eng/en_service1_1a5.html, HKBN pricing from $27 Gigabit At Hong Kong Broadband, http://www.dslprime.com/fiber-news/175-d/2878-27-gigabit-at- hong-kong-broadband; Your Gig is Here, http://www.chattanoogagig.com; Chattanooga pricing at approximately $350, https://epbfi.com/you-pick/#/fi-tv-essential&fi-speed-internet-30. 164 As recounted by Joanne Hovis, President, CTC.

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the current leading cable technology for broadband, known as Data over Cable System Interface Specification version 3.0 (DOCSIS 3.0). DOCSIS 3.0 makes it possible for cable operators to increase capacity relative to earlier cable technologies by bonding multiple channels together. The DOCSIS 3.0 standard requires that cable modems bond at least four channels, for connection speeds of up to 200 Mbps downstream and 108 Mbps upstream (assuming use of four channels in each direction). A cable operator can carry more capacity by bonding more channels.

Figure 8 (below) illustrates a sample DOCSIS 3.0 network architecture.

Figure 8: Sample DOCSIS 3.0 Network

Ultimately, the maximum speed over an HFC network is limited by the physics of the cable plant; although an HFC network has fiber within certain portions of the network, the

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coaxial connection to the customer is generally limited to less than 1 GHz of usable spectrum in total. By comparison, the capacity of fiber optic cable is orders of magnitude greater and is limited, for all intents and purposes, only by the electronic equipment connected to it—allowing for virtually limitless scalability into the future by simply upgrading the network electronics.

Theoretically, there is significant room for upgrading the speeds in a cable system, especially if there is access to high speed fiber optic backbone. For example, Virgin Mobile is offering 1.5 Gbps service in Britain over a cable network, presumably by bonding more than 30 channels.165 It is critical to note that these are peak speeds, and that the capacity is shared by all customers on a particular segment of coaxial cable; this is typically hundreds of homes or businesses.

The cable industry is now actively developing the DOCSIS 3.1 standard, which will make it possible to:

1. Aggregate the available capacity on the system into larger, more usable blocks rather than 6 MHz television channels,

2. Have larger upstream capacity,

3. Increase the capacity and flexibility of the system without necessitating additional fiber construction, and

4. Create an architecture consistent with migrating the non-IP traffic (i.e., TV channels) to an IP format.

DOCSIS 3.1 is an evolution of DOCSIS 3.0 that uses an orthogonal frequency division multiplexing (OFDM) modulation scheme. This scheme, in which the aggregated IP traffic is spread over a large number of smaller subcarriers, allows the cable operator to move from the 6 MHz channels to much larger spectrum blocks. OFDM is used in DSL, LTE, and WiMAX technologies and allows the communications medium to use large spectrum blocks while effectively and adaptively managing noise and other issues that may emerge.

DOCSIS 3.1 also reallocates the spectrum balance between upstream and downstream directions, so that, with modifications in the amplifiers and other components of the cable system, a larger amount of spectrum is allocated to upstream traffic.

165 Speed is claimed in advertising but no independent verification is available. Also, there is no description of the burst vs. guaranteed speed or the symmetry (upstream/downstream) of the service. See, for example: Beach, Jamie, “Virgin Media trials 1.5 Gbps speeds using DOCSIS 3.0,” telecoms.com, Sept. 14, 2011. http://www.telecoms.com/32896/virgin-media-trials-1-5-gbps-speeds-using-docsis-3-0/.

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From the standpoint of spectral efficiency (Mbps carried per MHz) DOCSIS 3.1 is comparable to 3.0. Therefore a DOCSIS 3.1 system will carry approximately the same order of magnitude of capacity as a system with several bundled DOCSIS 3.0 channels (i.e., the Virgin Mobile system discussed above) but can be managed more efficiently and with more symmetrical (up and downstream) capacity.

Industry claims are that DOCSIS 3.1 carries 10 Gbps downstream capacity. This will not be possible for most actual cable systems—a typical system with 860 MHz capacity will have the first 200 to 250 MHz assigned to upstream, leaving 600 to 650 MHz for downstream. With 10 bps/Hz efficiency, the actual capacity for a shared node area will be closer to 6 Gbps than 10 Gbps, and the capacity will be shared among a few hundred users—but it will still be a significant improvement over most current cable systems. With appropriate planning and node segmentation, it should be possible to regularly deliver more than 100 Mbps to customers on a consistent and steady basis and to fully migrate the television system to IP technology, if desired.166

4.1.3 DIGITAL SUBSCRIBER LINE Copper “twisted-pair” telephone lines remain the main wireline communications medium globally, and considerable effort has gone into extending the capabilities and capacity of these lines. Digital Subscriber Line (DSL) technology expands the capacity of twisted-pair copper lines to provide higher-speed service.

Retail providers selling DSL services on copper lines deliver a maximum speed that depends on the proximity of the central office or cabinet to the customer premises.167

Copper telephone lines are used to provide DSL services. The DSL service area is limited by the availability in the AT&T central offices or remote cabinets, the condition of the copper wires, and the distance from the central office. The available speed varies on a case-by-case basis, depending on the above factors. Usually a DSL customer needs to be within three or four miles of a central office or cabinet.

In the United States, AT&T is a major DSL provider. AT&T also offers a service it calls U- verse in some areas. U-verse utilizes additional fiber to increase broadband capacity over the DSL network.168 The maximum offered data speed of U-verse is 24 Mbps, with

166 “Docsis 3.1 Targets 10-Gig Downstream,” Lightreading, October 18, 2012, http://www.lightreading.com/docsis/docsis-31-targets-10gig-downstream/240135193. 167 The performance and maximum capacity of DSL on a copper telephone line depends on the frequency response of the individual line, which in turn depends on the condition and length of the line. 168 AT&T's U-verse dissected, http://adslm.dohrenburg.net/uverse/.

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additional capacity for video traffic.169 Video and voice are provided in Internet Protocol (IP) format, requiring IP set-top converters for all voice and video services.

4.2 WIRELESS ARCHITECTURES

With the improvement of the quality and speed of wireless communications, the public has become accustomed to using Internet services with wireless technologies, either on a communications link managed by a wireless service provider (i.e., a cellular data plan), on local infrastructure typically managed at a home or business (i.e., a WiFi hotspot), or through a mixture of those two approaches, in which an entity such as a service provider, municipality, landlord, or homeowners association operates a hotspot-oriented infrastructure.

4.2.1 “3G” AND “4G” TECHNOLOGIES For some consumers, even those who receive wireline service to their homes or businesses, their primary contact with the Internet is through their smartphone or wireless-equipped tablet or laptop computer. Nationwide, wireless providers operate a mixture of third- generation (3G) and emerging fourth-generation (4G) technologies. The service providers typically provide devices (telephones, smartphones, air cards, tablet computers) bundled with 3G or 4G services. Typically devices are not portable from carrier to carrier, because they are “locked” into the carrier by software and/or because differences in the technologies used by the carriers limits compatibility of the devices (discussed below). As a result, the purchase of a device is a de facto commitment to a particular service provider, as long as the user uses the device.

169 AT&T U-verse High Speed Internet, http://www.att.com/u-verse/explore/internet- landing.jsp?fbid=regRwrVqL4d.

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Table 4: Typical Performance for Advertised 2G/3G/4G Services

Technology (Download/Upload Service Speeds)170 2G/2.5G–EDGE/GPRS, 3G–EVDO Rev A, HSPA+ 4G – WiMAX/ LTE Applications 1xRTT (600 Kbps–1.5 (1.5 Mbps–6 (128 Kbps–300 Kbps/ 70 Mbps/500 Kbps–1.2 Mbps/500 Kbps–1.2 Kbps–100 Kbps) Mbps) Mbps) Simple text e-mails without Good (2 seconds) Good (1 second) Good (1 second) attachments (50 KB)

Web browsing Good Good Good

E-mail with large attachments or graphics OK (14 seconds) Good (3 seconds) Good (1 second) (500 KB)

Play MP3 music files (5 MB) Bad (134 seconds) OK (27 seconds) Good (7 seconds)

Play video files (100 MB for a typical 10-min. YouTube Bad (45 minutes) OK (9 minutes) Good (3 minutes) video) Maps and GPS for Bad OK Good smartphones

Internet for home Bad OK Good

The strict definition of 4G from the International Telecommunications Union (ITU) was originally limited to networks capable of peak speeds of 100 Mbps to 1+ Gbps depending on the user environment;171 according to that definition, 4G technologies172 are not yet deployed.

In practice, a number of existing technologies (e.g., LTE Revision 8, WiMAX) are called 4G by the carriers that provide them and represent a speed increase over 3G technologies as well as a difference of architecture—more like a data cloud than a cellular telephone network overlaid with data services. Furthermore, a transition technology called HSPA+, an

170 This data assumes a single user. For downloading small files up to 50 KB, it assumes that less than 5 seconds is good, 5-10 seconds is OK, and more than 10 seconds is bad. For downloading large files up to 500 KB, it assumes that less than 5 seconds is good, 5-15 seconds is OK, and more than 25 seconds is bad. For playing music, it assumes that less than 30 seconds is good, 30-60 seconds is OK, and more than 100 seconds is bad. For playing videos, it assumes that less than 5 minutes is good, 5-15 minutes is OK, and more than 15 minutes is bad. 171 “Development of IMT-Advanced: The SMaRT approach,” Stephen M. Blust, International Telecommunication Union. http://www.itu.int/itunews/manager/display.asp?lang=en&year=2008&issue=10&ipage=39&ext=html 172 Such as LTE Advanced, under development.

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outgrowth of 3G GSM technology previously considered a 3G or 3.5G technology with less capability than LTE or WiMAX, has been marketed as “4G” by AT&T and T-Mobile, so the definition of 4G is now fairly diluted. The ITU and other expert groups have more or less accepted this.173

4.2.2 LIMITATIONS OF EXISTING WIRELESS TECHNOLOGIES It is critical to understand that wireless communications technologies are limited and will always provide less capability and flexibility than the wireline technologies available at a given moment in time. Wireless is limited by over-the-air spectrum (i.e., the “channels” used for the signals), by range, and by line-of-sight. When an individual views images or videos on a device such as an iPad or a wireless Roku set-top converter, the communications link has traveled through a fiber optic backhaul connection to a service provider’s base station (or to a home FTTP optical network terminal, cable modem, or DSL modem). From that point the signal travels either over a service provider network with careful signal and capacity modeling,174 or from a hotspot located only a short distance from the user (and usually only serving the users in that premises).

Most consumers will therefore find that wireless broadband has technological limitations relative to wireline:

1) Lower speeds. At their peaks, today’s newest wireless technologies, WiMAX and LTE, provide only about one-tenth the speed available from FTTP and cable modems. In coming years LTE Advanced may be capable of offering Gbps speeds with optimum spectrum and a dense build-out of antennas—but even this will be shared with the users in a particular geographic area and can be surpassed by more advanced versions of wireline technologies (with Gbps speeds already provided by some FTTP providers today).

2) More asymmetrical capacity, with uploads limited in speed. As a result it is more difficult to share large files (e.g., video, data backup) over a wireless service, because these will take too long to transfer; it is also less feasible to use video conferencing or any other two-way real-time application that requires high bandwidth.

173 “ITU softens on the definition of 4G mobile,” NetworkWorld, December 17, 2010. http://www.networkworld.com/news/2010/121710-itu-softens-on-the-definition.html 174 Despite the dedicated spectrum (channel capacity), detailed engineering, and continuous upgrades in technology, wireless providers face significant challenges meeting the demand of users with laptop/tablet and smartphone devices, and have implemented bandwidth limits and other measures to control and ration usage.

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3) Stricter bandwidth caps. Most service providers limit usage more strictly than wireline services. Though wireless service providers may be able to increase these caps as their technologies improve, it is not clear whether the providers will keep ahead of demand. A Washington Post article about Apple’s iPad with 4G connectivity highlighted the issue: “Users quickly are discovering the new iPad gobbles data from cellular networks at a monstrous rate. Some find their monthly allotment can be eaten up after watching a two-hour movie. That has left consumers with a dilemma: Pay up for more data or hold back on using the device’s best features.”175

4) Limitations on applications. For example, users of smartphones and some tablet computers are limited by service providers or device manufacturers to approved applications. Apple limits the applications that can operate on its iPhone and iPad devices. Although Android is an open platform, Verizon Wireless blocks uploads of video from Android wireless devices on its networks by disabling the feature unless the user is on a private WiFi network. The FCC has reiterated that wireless providers have almost unlimited latitude to manage usage on their networks, in effect applying network neutrality rules only to wired networks; service providers can therefore expand their “management” of applications beyond the devices they provide to blocking or slowing applications from users with aircard-equipped PCs or home networks. The 3GPP protocols underlying LTE and subsequent technologies are designed to enable service providers to manage capacity based on application type (i.e., to prioritize particular types of traffic and make others lower priority).

4.3 OTHER TECHNOLOGIES ARE NOT CAPABLE OF SPEEDS ENABLED BY FIBER

Fiber technology offers speeds and capacity that are several orders of magnitude removed from the other technologies that are considered to “compete” with it—as a technical matter and as a matter of physics, those technologies cannot compete with fiber:

A T-1 circuit, for example, is frequently the only “high” bandwidth option available to a small business over copper (and then at considerable cost); it offers 1.54 Mbps, or one 600th of the speed that fiber can deliver using existing, affordable, off-the-shelf technologies (Gigabit Ethernet, 1,000 times one megabit). These speeds will grow dramatically as new technologies become available. The speeds possible over copper, coax, and wireless speeds will also grow, but as a matter of physics, cannot keep up with fiber’s ability to scale.

175 Cecilia Kang, “New iPad users slowed by expensive 4G network rates,” Washington Post, March 22, 2012. http://www.washingtonpost.com/business/economy/new-ipad-users-slowed-by-expensive-4g-network- rates/2012/03/22/gIQARLXYUS_story.html?hpid=z2

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Gigabit over fiber offers more than 25 times the maximum capacity of advanced cable networks,176 more than 75 times the capacity of advanced copper/phone networks,177 and 250 times the capacity of the fastest, most sophisticated commercial wireless services currently available to consumers on PDAs and laptops.178

4.3.1 FIBER HOLDS ADVANTAGE OVER COPPER/COAXIAL TECHNOLOGIES Copper wire has been widely used for carrying voice, video, and data since the days of the telegraph. Progress in telecommunications technology and the growth in popularity of the Internet were characterized by a transition to digital modes of communications and higher demands for communications capacity. As a result, copper telecommunications networks were retrofitted for transferring data as well, with an ongoing shift in the network architectures to support the growing demands.

Copper cabling is predominantly found in two forms: coaxial (coax) cables and twisted-pair cables. Coax cables were originally used for carrying video signals within cable television systems and radio frequency (RF) signals to and from antennas within wireless systems. Twisted-pair copper wire was developed from the invention of the telegraph, and was later used in the traditional telephone industry. Due to rising demands for Internet connectivity, cable TV companies and traditional phone companies adapted their infrastructure with new technologies, including cable modems and digital subscriber line (DSL), to begin offering higher speed data services than simple telephone lines could support.

Coax cables, on the other hand, have one central conductor surrounded by a conductive shield that blocks electromagnetic interference (EMI) from outside sources. Insulating layers separate and protect each conductive component.

All copper cables use electrical signals to transfer information between users. Optical fibers use light rays to transfer the same information through their glass cores. The core is usually made out of specialized glass with low optical attenuation. The cladding, coating, and housing serve to protect the optical core and minimize the optical loss of the core.

Optical fibers and copper cables have different physical compositions, which give the optical fibers inherent advantages over their copper counterparts. For a given expenditure in communications hardware, fiber optics can reliably carry many times more capacity

176 Assuming average downstream speeds of approximately 38 Mbps. Note that cable modem networks are usually engineered to enable far slower upstream speeds. 177 Based on maximum downstream speeds on a VDSL network of approximately 13 Mbps with a maximum distance of 5,000 feet between the customer premises and provider Central Office. Note that DSL networks are usually engineered to enable far slower upstream speeds. 178 Assuming average downstream speeds of 4 Mbps, currently available only in limited markets. Note that wireless networks are usually engineered to enable far slower upstream speeds.

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over many times greater distances than copper wires of any type—far superior in both regards.

The biggest advantage that fiber has over copper is the exponentially greater bandwidth that it can provide. This bandwidth is only restricted by the electronics at either end of the cable; modern fiber equipment is capable of speeds on the order of terabits per second over a single “strand.” In addition, not only do fibers provide more bandwidth, they are able to do so over longer distances as compared to copper cables without necessitating regeneration or amplification, both of which can reduce signal reliability and capacity while increasing costs.

Bandwidth limits on copper cables are directly related to the underlying physical properties of copper. Copper conducts electrical signals at various frequencies, and higher data rates over copper require higher frequencies of operation. Twisted pair wire is limited to a few hundred megahertz in usable bandwidth (at most), with dramatic signal loss increasing with distance at higher frequencies. This physical limitation is why DSL service is only available within a close proximity to the telephone central office. Coaxial cable has a frequency bandwidth of approximately one gigahertz, or more; therefore its capacity is greater than that of twisted pair. Despite its higher capacity, coaxial cable does experience signal attenuation at higher frequencies similar to twisted pair. In other words, coaxial cable is incrementally more capable than twisted-pair wire, though it is still not comparable to the exponentially greater upper limits of fiber.

Within a fiber optic strand, an optical communications signal (essentially a ray of light) behaves according to a principle referred to as “Total Internal Reflection” that guides it through the optical cable. Optical cables do not use electrical conduction, and thus do not require a metallic conductor, such as copper, as their propagation medium. Further, technological innovations have allowed for the manufacturing of very high quality, low impurity glass that can provide extremely low losses within a wide range of frequencies, or wavelengths, of transmitted optical signals, enabling long range transmissions. Compared to a signal loss on the order of tens of decibels (dB) over hundreds of feet of coaxial cable, a fiber optic cable can carry a signal of equivalent capacity over several miles with only a few tenths of a dB in signal loss.

Even with technological advances, copper cables will not be able to live up to customer requirements. This is why communications carriers and cable operators are deploying fiber to replace large portions of their copper networks, and on an increasingly larger scale. Fiber optics is one of the few technologies that can legitimately be referred to as “future- proof,” meaning that they will be able to provide customers with larger, better and faster service offerings as demand grows.

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Fiber is able to provide high-quality signals over longer distances than other media. In contrast, copper is susceptible to cross talk, more rapid signal attenuation, and interference that degrade the signal quality. Longer cables result in greater losses at any bandwidth or frequency of operation. To compensate for this, electrical signals need to be amplified or regenerated every few thousand feet using repeaters and amplifiers, whereas fiber optic signals can travel hundreds of miles without regeneration. This reduces the complexity and expense of operation and maintenance of networks comprised of fiber.

Optical fibers do not conduct electricity and are immune to other electromagnetic interferences. These properties allow optical fibers to be deployed where conductive materials would be hazardous, such as near power lines or within electric substations. Moreover, the cables do not corrode in the way that metallic components can over time, due to weather and environmental conditions, further reducing maintenance costs.

Copper cables transfer data in the form of electrical signals. This makes the data less secure, since it is more readily possible to physically “tap” in to the cables, especially twisted pair, and observe the data. Optical fibers are much more difficult to tap without breaking the connection, making the data they carry more secure.

4.3.2 FIBER HOLDS ADVANTAGE OVER WIRELESS TECHNOLOGIES Fiber and wireless are frequently posited as competing technologies, a common—but inaccurate—perception. Neither can supplant nor compete with the other; rather, these technologies inherently enhance and complement each other. Wireless delivers mobility and fiber delivers capacity and speed. In addition, wireless needs fiber: for purposes of reliability and speed, a wireless network requires a robust fiber optic core backbone that connects it to core resources, to the Internet, and to other public networks. High wireless performance depends on backhaul over a core fiber network and, correspondingly, a wireless network will deliver poor performance if backhaul is inadequate, regardless of the quality of the wireless network itself.

Each network technology has its own distinct advantages and challenges, but fiber is a more flexible, future-proof, and capable technology—and a far less risky investment.

Wireless networks provide mobility and flexibility. Wireless holds a benefit with respect to speed to deployment and flexibility. However, there are significant challenges in providing effective wireless service. Design limitations such as power levels, spectrum availability, and required data capacity require that individual antennas or base stations serve limited areas, such as a few miles or less. The challenge of deploying and managing wireless is also complicated if unlicensed frequencies are used for such technologies as WiFi. Further,

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when a wireless provider needs to migrate to a more advanced technology platform, it may need to re-engineer and redesign its entire system.

Fiber networks hold the advantage in capacity, robustness, and security. Fiber provides almost unlimited capacity. Each single fiber optic strand is theoretically able to duplicate the entire electromagnetic spectrum available to all wireless users. In a practical sense, the capacity limit is imposed by the capability of the electronics connected to the fiber. Further, capacity is constantly increasing as technology improves. Fiber has a life of decades, assuming adequate maintenance, and it can cost-effectively and simply be scaled to dramatically higher speeds as new electronics become available.

There are significant challenges in fiber optic network technology, especially in the high cost of initial construction—particularly for underground installation or where extensive make-ready is required for aerial installation.

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5. THE CURRENT STATE OF BROADBAND SERVICES IN WESTMINSTER

This section provides an overview discussion of the types and quality of broadband available in Westminster, to the residential, business, and anchor institution markets. We begin with an overview of National Broadband Map (NBM) data pertaining to the City, and include a brief analysis of the City’s existing broadband providers and networks.

The National Broadband Map (NBM; http://www.broadbandmap.gov) is the federal government’s primary source of statistics regarding broadband availability nationwide.179

The NBM represents the first time that the United States has attempted to collect these data in one central location in order, ideally, to provide a picture of true broadband availability. It is important, however, to note that the map data are not sufficiently granular to give an accurate picture down to the address level (which would be an extremely difficult and costly task), for a number of reasons:

• First, the national map tracks availability only down to the Census block level; if any location in that block can be served, the entire block will be shown as served—even if many or most of the residents do not actually have access.

• The national map relies heavily on self-reporting by the commercial carriers—all of whom use different methodologies to quantify their service levels (and some of whom do not participate at all).

• The map fails to distinguish between residential broadband and connectivity that is adequate for institutions, government, and businesses; small businesses often need higher capacity broadband than residential users. And, even if broadband is shown on the NBM as available to the residential market, it may not be available to the small business market (and vice versa).

• The claimed wireless coverage generally does not take into account reduced signal levels indoors or in areas where terrain or other features obstruct the signal and reduce the speed and availability of service.

179 The NBM is a collaborative effort among the Federal Communications Commission and the Department of Commerce’s National Telecommunications and Information Administration (NTIA). NTIA is also the agency that oversees the $7.2 billion in Broadband Technology Opportunities Program (BTOP) stimulus grants authorized under the American Recovery and Reinvestment Act of 2009.

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All of that said, the NBM, along with its state-level counterpart the Maryland Broadband Map (MBM) which uses the same database, is the logical first step in identifying the City’s supply of broadband and is extremely helpful as a resource at less granularity than the address level.

According to data from the map, 100 percent of Westminster residents and businesses have access to some level of broadband service. The most ubiquitous broadband technology available in the City is wireless, followed closely by DSL and cable modem. Fiber optic infrastructure is not available to residential customers.

Given that the NBM data rely heavily on self-reporting by the commercial carriers, the NBM may overstate the broadband coverage in the City. However, if the NBM’s data are accurate or close to accurate, this broadband landscape suggests a monopolistic incumbent market.

Figure 9 below shows the NBM availability data for each technology type throughout the City.

Figure 9: National Broadband Map Data—Westminster Availability Compared to Nationwide Availability180

The NBM indicates that the following providers offer service in Westminster:

180 Source of data and figures on Westminster from the National Broadband Map: http://www.broadbandmap.gov/summarize/state/maryland/census-places/westminster

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Table 5: National Broadband Map Data—Broadband Providers in Westminster

Provider Technology

Atlantic Broadband Cable Modem (DOCSIS 3.0)

Comcast Cable Modem (DOCSIS 3.0)

Cavalier Telephone, LLC T1

Verizon DSL

MegaPath (Platinum Equity, LLC) DSL, T1

Freedom Wireless Broadband Fixed Wireless

AT&T Mobile Wireless

Sprint Nextel Corporation Mobile Wireless

T-Mobile Mobile Wireless

Verizon Communications Inc. Mobile Wireless

The NBM further reports that 100 percent of the population has access to download/upload speeds greater than 3 Mbps/0.768 Mbps.

Figure 10: National Broadband Map Data—Broadband Speeds Available to City Residents

Broadband connectivity data for community anchor institutions (CAI) gathered at the state and national level are incomplete. The NBM identifies 79 recognized CAI sites; it identifies 17 as connected to broadband, 9 lacking connections, and 54 unknown. (Data on CAIs

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connected to the City or County network are not included: NBM data are entirely carrier- reported.)

Figure 11: National Broadband Map Data—Community Anchor Institutions Connected

Wireline broadband service in Westminster is widely available, but customers face significant limitations in service options. Most Westminster residents have three wireline providers from which to choose: Comcast, Verizon, and MegaPath (see Figure 12). According to the National Broadband Map, DSL service is available to all City residents; additionally, 92.2 percent of City residents have access to cable modem service (see Figure 9). Verizon serves the City with phone and DSL service; MegaPath also sells DSL service, and provides a symmetrical download/upload connection as a service option. Comcast provides cable modem service throughout the City.181

181 The National Broadband Map states that both Comcast and Atlantic Broadband provide cable modem services in Westminster; however, the Atlantic Broadband website appears to deny that they serve the area (zip codes 21157 and 21158). http://www.atlanticbb.com/pop_findservices.asp?site=atlantic

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Figure 12: National Broadband Map – Number of Providers Available

The Maryland Broadband Map confirms these claims. Asymmetric DSL appears to be ubiquitous, and cable modem coverage show few gaps in service (see figures below).

Figure 13: Maryland Broadband Map –DSL Coverage in Westminster182

182 http://www.mdbroadbandmap.org/map/

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Figure 14: Maryland Broadband Map – Cable DOCSIS 3.0 Coverage in Westminster183

Despite universally available wireline and wireless broadband, however, the City’s broadband landscape shows some notable limitations. First, there is no advertised fiber-to- the-premises service whatsoever in the City, a finding backed by the NBM data. The most advanced wireline service available throughout the City is cable modem. The table below summarizes the advertised wireline service options available to Westminster residents from incumbent providers.

Table 6: Wireline Broadband Service Summary—Westminster

Monthly Cost (Without Max. Download Discounts) DSL – Verizon184 0.5 to 1 Mbps $19.99 1.1 to 15 Mbps $29.99 DSL and T1 – MegaPath DSL Cost not specified. 1.5 Mbps to 6 Mbps T1 costs of $199 and up. 192 Kbps to 1.5 DSL Cost not specified. Mbps185 Cable Modem – Comcast 20 Mbps $42.95 to $64.95

183 Ibid. 184 Verizon only guarantees these prices to remain constant for the first 12 months of services. 185 Symmetrical download/upload speed DSL service.

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Monthly Cost (Without Max. Download Discounts) 50 Mbps $58.95 to $74.95 105 Mbps $114.95

The NBM indicates that both Cavalier Telephone, LLC and MegaPath offer leased T1 services; however Cavalier offers service to fewer than 51 residents; the company website indicates it is no longer accepting new residential customers.186

Though the City has a considerable inventory of DSL and cable modem service, there are some notable limitations for Westminster broadband customers are apparent from this picture. The most significant limitation is that Westminster has no fiber-to-the-premises service. There is no technology available that can provide close to gigabit speeds to end- users. Residential and business users face considerable costs to get speeds of over 100 Mbps from Comcast.

As an alternative to the wireline options in Westminster, one fixed wireless provider, Freedom Wireless, offers advertised symmetrical speeds of up to 5.0 Mbps.187 The price of these services range from $69 per month to $299 per month, making it a very costly service for the speeds provided. Finally, within Westminster’s mobile broadband market, Sprint and Verizon both claim to offer 4G LTE, the fastest cellular data technology currently offered by incumbent providers. AT&T has not deployed 4G LTE coverage in Westminster, but does provide 4G HSPA+ (sometimes referred to as a 3.5G technology), and T-Mobile offers only 2G data coverage.188

To conclude, Westminster’s most advanced high-speed service is cable modem provided by Comcast. This service covers the majority of the City, and provides the highest speeds. The service options are costly, but the DSL and wireless alternatives do not appear to offer a great deal of cost relief to consumers looking for alternatives. Due to the lack of any FTTP offerings, the adoption rate for Comcast cable service is likely to be high despite the cost.

186 http://www.cavtel.com/ 187 http://fwbnet.net/coverage.html 188 Sources for mobile data coverage: http://www.att.com/network/? http://www.t-mobile.com/coverage/pcc.aspx/ http://network4g.verizonwireless.com/#/coverage http://coverage.sprint.com/IMPACT.jsp?.

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6. RESIDENTIAL SURVEY RESULTS FROM PRIOR MARKET RESEARCH

In 2009, CTC conducted a survey on behalf of the Cable Regulatory Commission of Carroll County (CCRN) to assess the local communications market including services purchased by residents, their satisfaction with those services, and future needs for enhanced communications services. The survey gathered a substantial amount of information about the Internet, television, and telephone services of Carroll County residents. A total of 567 useable survey responses were received, including 194 received from residents of Westminster.

This section summarizes the findings from that survey for Westminster respondents. Although the information is now somewhat dated, it offers a useful window into residents’ opinions on broadband, and the data was readily available for analysis without incremental effort to gather or process data.

We suggest that, if the City decides to move forward with its fiber efforts, more extensive survey work is merited. Conducting a new, scientifically valid survey of Westminster residents would allow some longitudinal comparisons and a better understanding of the potential market for fiber-based services.

Key findings of the 2009 residential communications survey for Westminster residents include:

• Nearly 90 percent of homes purchased Internet access. Approximately one-half of Internet subscribers used a cable modem to access the Internet.

• Comcast had the largest share of Internet customers within Westminster, comprising 57 percent of the Internet market. Verizon offered DSL service and had approximately 21 percent of the market.

• The average subscriber paid an estimated $49 per month for Internet service in 2009. The average monthly cost for paid wireless service ($62) and for cable modem connection ($53) was higher than the average monthly cost for DSL ($33) or dial-up ($24).

• Two-thirds of those with home Internet reported being frequent Internet users. Moderate and frequent Internet users were most likely to have a cable connection or a paid, wireless connection than “basic” Internet users.

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• Almost all respondents with Internet access used it for e-mail and for general Internet browsing. Two-thirds used the Internet for streaming audio and/or video, accessing an employer network, working from home, or downloading music or videos.

• Most used their home Internet connections for personal use, and six in 10 used it at least partly for work-related purposes. Those who used their home Internet for business purposes were more likely to have a paid, wireless service compared to those who used their home Internet for personal tasks only.

• Customers were moderately satisfied with most aspects of Internet service, although there was a sizeable “service gap” (difference between importance and satisfaction) with all aspects of Internet service. The largest “service gaps” were for price paid and connection speed.

• Three-fourths would be very likely to switch Internet service for the same price, and one-half would be likely or very likely to switch for $10 more per month. However, just a small segment of respondents would be willing to switch for a $20 per month increase, which indicated there would be just a small market for high-bandwidth Internet services at a price increase greater than $10.

• More than one-half of respondents said cable television was their primary method of watching television and video programming, and 42 percent primarily used a satellite service. Cable subscribers paid more per month on average for their television service, compared with satellite subscribers ($79 vs. $67).

• More than one-fourth of those with television service reported watching television shows on the Internet/computer, and 4 percent watched local programming. Additionally, 8 percent watched television shows on a PDA or phone.

• More than six in 10 residents had landline telephone service from Verizon or Quantum; most indicated it was their primary service. Although most respondents had cell phone service, just 36 percent said it was their primary number. Thirteen percent had Internet-based telephone service, including 6 percent who used it as their primary service.

• The ability to buy selected channels and access to websites and information were the most highly rated of the enhanced services listed. In comparison, a much smaller proportion said the ability to bundle services was very important.

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• More than one-fourth said that the availability of high-speed, affordable Internet service would increase the possibility that they would start or continue a home- based business. Most individuals would need a high-speed or very high speed Internet connection to support a home-based business.

• Four in 10 employed respondents reported teleworking from home at least some of the time. However, most of those individuals typically telecommuted just one day or less per week. Nearly four in 10 working repondents who did not telework from home full-time said they were interested in doing so. Most respondents indicated that they would need a high-speed Internet connection to allow them to work from home.

• A slight majority of respondents agreed that they would like to use the Internet for educational purposes or to access community information and resources, but disagreed that the competitive market was working well to deliver high-quality Internet services that their family can afford.

• Overall, there was a moderate level of agreement with the listed statements about the government's role in providing communication services. Furthermore, most disagreed that the government should have no role in the development or operation of communication services. However, a sizeable segment of respondents were neutral or disagreed to some extent with the various statements.

6.1 SURVEY PROCESS

A total of 567 useable surveys were returned by the cut-off date (including 194 from respondents with a Westminster mailing address), providing a gross response rate of 22.7 percent. Given approximately 6,900 households in the City of Westminster and 194 responses, the confidence interval for the Westminster segment of the data was approximately ±7.0 percent at the 95 percent probability level for aggregate responses. That is, for responses at the aggregate level across all Westminster respondents (not sub- segments of Westminster responses), the survey results would have been within ±7.0 percent of the actual value across all Westminster households 95 percent of the time.

The survey results presented in this section are weighted by the age of the respondent to reconcile differences between the ages of survey respondents and the Westminster population as a whole. The 2010 Census was used as the benchmark for the population distribution by age cohort (for all persons age 18 and older). The weighting calculations are shown in Table 1. The results shown in the remainder of this report represent the age- weighted survey responses to most accurately represent the broader population of the City.

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Table 1: Age-Weighting Calculations Age-Weighting Calculations Survey 2010 Age Cohort Respondents Census Weight 18-34 years 8.9% 37.5% 4.232 35-44 years 16.7% 16.5% 0.990 45-44 years 28.6% 17.2% 0.601 55-64 years 25.0% 11.2% 0.450 65 years & older 20.8% 17.6% 0.843 Total 100.0% 100.0%

As is true in many mail and phone surveys, younger residents were less likely to respond. Thus, the weighted results provide a more accurate representation of the Westminster population as a whole.

The remainder of this report summarizes the responses from Westminster residents. Information related to Internet services and needs are emphasized, while television and telephone responses are also summarized due to the trend toward more Internet-based television and telephone service offerings.

6.2 SURVEY RESULTS

The residential survey results are presented and discussed in the following sections. In addition, comparisons or cross-tabulations of responses based on demographics or services types are included to evaluate key correlations or distinctions among major subgroups of service types or other characteristics.

6.2.1 INTERNET SERVICE Questions were asked related to home computers, Internet service types and providers, use of the Internet for various activities, and satisfaction and importance of features related to Internet service. This information provided valuable insight into residents’ need for various Internet and related communications services.

Computers and Internet Access More than 90 percent of Westminster residents had at least one computer in their home, with nearly half of homes having both desktop and laptop computers (see Figure 1).

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Figure 1: Type of Computer(s) in Home Computers Used in Home None 9%

Both desktop and laptop Desktop 43% 30%

Laptop 18% Use of computers varied significantly by key household characteristics and demographics. As Table 2 indicates, those with Internet access, those with children in the household, those above a high school level of education, and those under age 65 were more likely to have a computer at home.

Similarly, younger and more educated respondents, as well as those with children in the household, were more likely to report having Internet access at home (see Table 3). Overall, 88 percent of respondents reported having access to the Internet within their residence.

Table 2: Type of Computer(s) in Home by Key Household Characteristics Type of Computers In Home Both desktop and None Desktop Laptop laptop Total Internet Access in Yes 0% 31% 20% 48% 100% Home No 64% 25% 2% 9% 100% Use Home Internet Personal use 0% 31% 21% 49% 100% Access For: Business use 0% 23% 20% 57% 100% Have pre-schoolers No 13% 32% 18% 37% 100% and/or school-aged children in home Yes 0% 29% 18% 53% 100% Education High school or less 28% 41% 6% 26% 100% Some college or technical school 9% 36% 25% 30% 100% Two-year college or technical degree 6% 29% 8% 57% 100% Four-year college degree 4% 20% 21% 55% 100% Some graduate school or higher 2% 31% 21% 46% 100% Age Less than 35 years 0% 19% 31% 50% 100% 35-44 years 0% 32% 16% 52% 100%

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Type of Computers In Home Both desktop and None Desktop Laptop laptop Total 45-44 years 2% 36% 7% 55% 100% 55-64 years 9% 43% 11% 38% 100% 65 years and older 43% 38% 8% 11% 100% Percentages are to be read across rows e.g. 19% of respondents less than age 35 have a desktop computer, 31% have a laptop, and 50% have both. Read down columns to compare responses by demographic groups, e.g. 43% of respondents ages 65 and older have no computer at home, compared with 0% of respondents less than age 45.

Table 3: Internet Access at Home by Key Household Characteristics Internet Access at Home Yes No Total Have pre-schoolers No 82% 18% 100% and/or school-aged children in home Yes 99% 1% 100% Education High school or less 58% 42% 100% Some college or technical school 86% 14% 100% Two-year college or technical degree 95% 5% 100% Four-year college degree 94% 6% 100% Some graduate school or higher 98% 2% 100% Age Less than 35 years 94% 6% 100% 35-44 years 94% 6% 100% 45-44 years 96% 4% 100% 55-64 years 89% 11% 100% 65 years and older 57% 43% 100% Total Westminster residents 88% 12% 100% Percentages are to be read across rows e.g. 82% of respondents with no children in the household have Internet access and 18% do not. Read down columns to compare responses by demographic groups, e.g. 82% of respondents with no children in the household have Internet access, compared with 99% of those with children.

Internet Connection As Figure 2 indicates, more than one-half of Westminster households with Internet access used a cable modem as their primary connection. Smaller shares primarily used wireless, DSL, or dial-up. Very few primarily used another type of Internet connection.

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Figure 2: Primary Internet Access

Primary Internet Access 60% 53% 50%

40%

30% 18% 20% 16% 10%

with with Internet Access 10% Percent of Percent of Respondents 2% 1% 1% 0% Cable Wireless DSL Dial-up Satellite Wireless Other Modem (paid (free service) hotspot)

A larger share of respondents aged 18 to 34 reported using a paid, wireless connection, compared with older adults (see Figure 3). No respondents aged 18 to 34 reported using DSL. Older respondents appeared somewhat more likely to use dial-up and less likely to use faster Internet connections.

Figure 3: Internet Connection by Age of Respondent

Internet Connection by Age of Respondent 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% with with Internet Access 65 years Percent of Percent of Respondents 18-34 years 35-44 years 45-54 years 55-64 years and older Other 0% 3% 0% 0% 0% Wireless (free hotspot) 0% 0% 0% 0% 5% Satellite 0% 0% 2% 10% 0% Dial-up 7% 3% 15% 12% 20% DSL 0% 28% 26% 31% 25% Wireless (paid service)) 33% 10% 9% 7% 0% Cable Modem 60% 55% 47% 40% 50%

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Connection Speed Overall, one-fourth of respondents with Internet access reported their connection to be slow or very slow. Although based on a relatively small number of cases for some types of connection, it appears that paid, wireless connections were considered to be faster than other types of connections. As might be expected, most dial-up users evaluated its connection speed as very slow. (See Figure 4.)

Figure 4: Speed of Internet Service

Speed of Internet Service 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Wireless Dial-Up DSL Cable (Paid Total Service) Very slow 72% 6% 6% 2% 11% Slow 14% 11% 13% 20% 14% Acceptable 11% 47% 38% 12% 34% Fast 0% 34% 32% 50% 32% Very fast 3% 2% 11% 15% 9%

Type of Internet User Figure 5: Type of Internet User Two-thirds of those with Internet access reported being frequent Basic/ Occasional Internet users. Another 27 percent user were moderate or typical users, while 7% just 7 percent said they were basic or Moderate/ occasional users (see Figure 5). Typical user 27% As Figure 6 indicates, frequent users were more likely to have fast Internet connections. More than one-third of Frequent basic Internet users had dial-up user 66% service, and 39 percent primarily used DSL. Moderate and frequent users Percent of Respondents with Internet Access

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were most likely to have a cable connection, and they were more likely than basic Internet users to have a paid, wireless connection.

Figure 6: Internet Connection by User Type

Internet Connection by User Type 70% 58% 60% 53% 50% 39% 40% 36% 30% 25% 21% 19% 16% 20% 14% 13% 10% 7% 0% 0% Frequent user Moderate/Typical user Basic/Occasional user

Dial-Up DSL Cable Wireless (Paid Service)

In general, younger adults and those with children in the home were more likely to be frequent Internet users (see Table 4). The vast majority of those with pre-school or school- aged children at home, as well as most of those under age 45, considered themselves to be frequent Internet users. Just over one-half of those aged 45 to 64 said they were frequent users, while most of those aged 65 and older with Internet access said they used it moderately or occasionally.

Table 4: Type of Internet User by Key Household Characteristics Internet Access at Home Frequent Moderate Basic Total Have pre-schoolers No 54% 34% 12% 100% and/or school-aged children in home Yes 82% 18% 0% 100% Education High school or less 60% 30% 10% 100% Some college or technical school 72% 23% 6% 100% Two-year college or technical degree 59% 29% 12% 100% Four-year college degree 73% 20% 7% 100% Some graduate school or higher 60% 36% 4% 100% Age Less than 35 years 87% 13% 0% 100% 35-44 years 72% 24% 3% 100% 45-44 years 58% 32% 9% 100% 55-64 years 52% 33% 14% 100% 65 years and older 10% 70% 20% 100% Percentages are to be read across rows e.g. 54% of respondents with no children in the household are frequent Internet users, 34% are moderate users, and 12% are basic users. Read down columns to compare responses by

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demographic groups, e.g. 54% of respondents with no children in the household are frequent Internet users, compared with 82% of those with children at home.

Uses of Internet Westminster residents used their home Internet connections for a variety of purposes (see Figure 7). The majority of respondents used it for e-mail (98 percent) and for general Internet browsing (97 percent). Two-thirds used the Internet for streaming audio and/or video, accessing an employer network or working from home, or downloading music or videos.

Figure 7: Uses of Internet

Uses of Internet Email 98% General browsing 97% Streaming audio/video 68% Accessing employer network 67% Downloading music/video 67% Education/courses 47% Online games 46% Local government services 33% Home-based business 16%

0% 20% 40% 60% 80% 100% Percent of Respondents with Internet Access Most (97 percent) used their home Internet connection for personal use, and six in 10 used it at least partly for work-related purposes (see Figure 8).

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Figure 8: Use of Internet at Home

Use of Internet at Home

97% 100% 90% 80% 70% 62% 60% 50% 40%

with with Internet Access 30% Percent of Percent of Respondents 20% 10% 0% Personal use Business use

The results suggest that those who used their home Internet for business purposes were more likely than those who did not use it for work to have a paid, wireless plan. Overall, cable was the primary connection type for both groups (see Figure 9).

Figure 9: Internet Connection by Home Use of Internet

Internet Connection by Home Use of Internet 70% 59% 60% 50% 50% 40% 27% 30% 24% 20% 12% 12% 8% 10% 3% 2% 2% 0% 1% 1% 0% 0% Cable Wireless DSL Dial-up Satellite Wireless Other Modem (paid (free service) hotspot) Use for Business Purposes Do Not Use for Business Purposes

Additionally, use of the Internet varied by age, as well as presence of children in the household for some activities. Homes with school-aged children were more likely than those without children to use the Internet for most activities, with the exception of general Web browsing and e-mail (see Tables 5 and 6).

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Table 5: Uses of Internet by Presence of Children in Household Have Pre-School or School-Age Children at Home No Children Have Children Uses of Accessing employer network 60% 76% Internet General browsing or surfing 95% 100% Email 97% 100% Streaming audio and/or video 58% 82% Downloading music or videos 51% 89% Education/courses 37% 62% Online games, multi-gaming 40% 56% Interaction with local government services 26% 43% Home-based business 10% 23% Total Number of Respondents 93 68 Table 5 indicates the percentage of respondents who said they use the Internet for each activity. Read across rows to compare percentages by demographic groups, e.g. 60% of those with no children in the household use the Internet for accessing their employer network or for working from home, compared with 76% of those with children at home.

Table 6: Uses of Internet by Age of Respondent Age of Respondent 18 to 34 35 to 44 45 to 54 55 to 64 65 Years Years Years Years Years and Older Uses of Accessing employer network 80% 83% 68% 55% 5% Internet General browsing or surfing 100% 100% 100% 90% 90% Email 100% 100% 96% 95% 95% Streaming audio and/or video 93% 83% 53% 43% 10% Downloading music or videos 100% 83% 43% 29% 10% Education/courses 67% 52% 38% 31% 10% Online games, multi-gaming 60% 62% 30% 29% 25% Interaction with local government services 47% 28% 23% 38% 10% Home-based business 13% 17% 19% 21% 10% Total Number of Respondents 63 29 32 19 17 Table 6 indicates the percentage of respondents who said they use the Internet for each activity. Read across rows to compare percentages by demographic groups, e.g. 80% of those ages 18 to 34 use the Internet for accessing their employer network or for working from home, compared with just 5% of those ages 65 and older.

Main Internet Provider Comcast had the largest share of Internet customers within Westminster, comprising 57 percent of the Internet market (see Figure 10). Verizon offered DSL service and had approximately 21 percent of the market. Another 6 percent of respondents reported using AOL. No other Internet service provider had more than 5 percent of the market.

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Figure 10: Main Internet Provider

Main Internet Provider 70% 57% 60% 50% 40%

30% 21% 20% 10% 10% 6% with with Internet Access 3% 2% 1% <1% Percent of Percent of Respondents 0%

Monthly Internet Cost The average subscriber paid an estimated $49 per month for Internet service. Nearly one- half paid $41 to $60 per month, and one-fourth paid more than $60 monthly. Another 18 percent paid $21 to $40, and 11 percent paid less than $20 per month (see Figure 11).

Figure 11: Monthly Cost for Internet Service

Monthly Cost of Internet Service 50% 46% 45% Average= $49/Mo. 40% 35% 30% 25% 20% 18% 17% 15% 11% with with Internet Access 8%

Percent of Percent of Respondents 10% 5% 0% $1-$20 $21-$40 $41-$60 $61-$80 More than $80

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The estimated average monthly cost for paid wireless service and for cable modem connection was higher than the estimated average monthly cost for dial-up or DSL (see Figure 12).

Figure 12: Estimated Average Monthly Cost for Internet Service by Connection Type

Estimated Average Monthly Cost of Internet Service

$70 Average= $49/Mo. $62 $60 $53 $50

$40 $33 $30 $24 $20 $10 $0 Dial-Up DSL Cable Wireless (Paid Service)

Importance and Satisfaction with Internet Service Aspects Customers were asked to rate their level of satisfaction (using a scale where 1=Very Dissatisfied and 5=Very Satisfied) with various aspects of their Internet service, along with the importance (using a scale where 1=Not at All Important and 5=Very Important) of those factors.

Overall, the most important service aspect was connection speed (73 percent Very Important; 4.7 mean), followed by price paid for service (65 percent Very Important; 4.5 mean), billing and overall customer service (49 percent Very Important; 4.3 mean), and mobility within Carroll County (41 percent Very Important, 3.7 mean) (see Table 7).

Overall, most Internet users appeared to be moderately satisfied with most aspects of their Internet service, although there was some room for improvement (see Table 7). The various items received similar satisfaction ratings, although it was typical for price to receive lower satisfaction ratings.

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Table 7: Importance of and Satisfaction with Internet Service Aspects

Mobility Billing/ Within Price Paid for Connection Customer Carroll Service Speed Service County 1-Not at All Important 0% 0% 0% 11% 2 1% 1% 1% 7% 3 10% 6% 13% 24% 4 24% 21% 37% 17%

Importance 5-Very Important 65% 73% 49% 41% Mean 4.5 4.7 4.3 3.7 1-Very Dissatisfied 14% 15% 8% 17% 2 25% 22% 6% 13% 3 36% 25% 43% 42% 4 15% 28% 30% 17%

Satisfaction 5-Very Satisfied 11% 11% 13% 12% Mean 2.8 3.0 3.3 2.9

Gap Analysis: Although most Internet users were relatively satisfied overall, assessing the gaps between importance and satisfaction can help providers identify what features might need improvement in Westminster (see Figure 13). The results suggest that customers were only moderately satisfied with the most important aspects of service. There was a sizeable “service gap” (difference between importance and satisfaction) with all aspects of their Internet service.

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Figure 13: Evaluation of Internet Service

Evaluation of Internet Service Mean Rating 5.0 4.7 4.5 4.3 4.0 3.7 3.3 2.8 3.0 2.9 3.0

2.0

1.0 Price Paid for Connection Speed Billing/Customer Mobility/Wireless Service Service Access

Satisfaction Importance

The gaps for these aspects were partially driven by the relatively high importance placed on most of these aspects by respondents. At the same time, these gaps identified aspects where Internet service could be improved in Westminster. In addition to total price paid for service (it is typical for price to have a large gap compared with other items), the largest gap occurred for connection speed. Mobility received a somewhat lower importance rating, and therefore was performing better in terms of meeting expectations compared with other service areas (i.e., had a smaller service gap between importance and satisfaction). (See Table 8.)

Table 8: Gap Between Satisfaction and Importance Ratings

Mean Satisfaction Mean Importance GAP < = > Significance Price Paid for Service 2.8 4.5 -1.7 Expectations not met Connection Speed 3.0 4.7 -1.7 Expectations not met Billing/Customer Service 3.3 4.3 -1.0 Expectations not met Mobility 2.9 3.7 -0.8 Expectations not met

Internet service aspects are considered “under-performers” when satisfaction scores are lower than importance scores. Westminster residents were only moderately satisfied with aspects deemed as somewhat to very important to customers.

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The satisfaction with various Internet aspects was also evaluated by major connection type. The data indicated that respondents with paid wireless connections were generally the most satisfied with connection speed, billing and customer service, and mobility (see Figure 14). However, those with paid wireless connections also placed more importance on mobility (see Table 9). Cable modem users were the least satisfied with the price paid for their service.

Figure 14: Satisfaction with Internet Service by Service Type

Satisfaction with Internet Service by Service Type Mean Rating 5.0 4.1 3.7 3.8 4.0 3.6 3.5 3.5 3.3 2.9 2.9 2.9 3.1 3.1 3.0 2.5 2.5 2.6

2.0 1.8

1.0 Price Paid for Service Connection Speed Billing/Customer Mobility/Wireless Service Access Dial-Up - Satisfaction DSL - Satisfaction Cable - Satisfaction Wireless - Satisfaction

Table 9: Mean Importance and Satisfaction Ratings by Connection Type

Importance Satisfaction Gap (Satisfaction - Importance) Dial- Dial- Dial- Up DSL Cable Wireless Up DSL Cable Wireless Up DSL Cable Wireless Total price paid 4.8 4.2 4.6 4.6 3.6 3.3 2.5 2.9 -1.2 -0.8 -2.0 -1.7 Connection speed 4.6 4.3 4.7 5.0 1.8 2.9 2.9 3.7 -2.8 -1.4 -1.7 -1.3 Billing/customer service 4.6 4.0 4.4 4.4 3.5 3.5 3.1 3.8 -1.1 -0.5 -1.3 -0.6 Mobility 3.6 3.2 3.5 4.8 2.5 3.1 2.6 4.1 -1.1 -0.2 -0.9 -0.7 Mean Importance ratings based on a scale where 1=Not Important and 5=Very Important. Mean Satisfaction ratings based on a scale where 1=Very Unsatisfied and 5=Very Satisfied.

Likelihood of Switching to Very Fast Internet Service Using a scale where 1=Very Unlikely and 5=Very Likely, respondents were also asked their likelihood of switching to much faster Internet service for various price increases.

Three-fourths would have been very likely to switch Internet service for the same price, and one-half would have been likely or very likely to switch for $10 more per month.

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However, just a small segment of respondents would have been willing to switch for a $20 per month increase, which indicates there would have been just a small market for high- bandwidth Internet services at a price increase above $10 (see Figures 15 and 16).

Figure 15: Likelihood of Switching to Very Fast Internet (100 Mbps) for Price Change

Likelihood of Switching to Very Fast Internet

100% 90% 80% 70% 60% 50% 40% 30% with with Internet Access

Percent of Percent of Respondents 20% 10% 0% $20 More $10 More Same Price Very Likely 12% 31% 75% Likely 4% 19% 12% Neutral 26% 16% 4% Unlikely 18% 9% 1% Very Unlikely 39% 25% 8% Figure 16: Percentage Somewhat or Very Likely to Switch to Very Fast Internet (100 Mbps)

Likelihood of Switching to Very Fast Internet

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Same Price $10 More $20 More Percent Somewhat or Very Likely to Switch Likely Very or Somewhat Percent Price Change from Current

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6.2.2 TELEVISION SERVICE Questions were asked related to home television service, including the use of Internet to support television services.

Television Programming More than one-half of respondents said cable television was their primary method of watching television and video programming, and 42 percent primarily used a satellite service (see Figure 17). Only 4 percent of respondents watched television over the air/antenna as their primary method, and very small shares either did not have television or primarily watched TV over the Internet.

Figure 17: Primary Method for Watching Television

Primary Method for Watching TV

60% 53% 50% 42% 40% 30% 20% 10% 4% <1% 1% 0% Cable Satellite Over the On the Internet Do not receive air/antenna on my or watch computer programming

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Figure 18: Watch Television on Internet or Mobile Device

Ever Watch Television On: 30% 27%

25%

20% Television Shows 15% Local Programming

10% 8%

5% 4%

Percent Watching Percent Watching on Each Device 0% 0% Internet/Computer PDA/Phone Respondents with television service were also asked whether they ever watched television shows on the Internet/computer or on a PDA/phone. More than one-fourth reported watching television shows on their computer over the Internet, and 4 percent watched local programming via the Internet. Eight percent also watched television shows on a PDA or phone (see Figure 18). (We note that, to the extent that new televisions connect to the Internet and bandwidth permits, it is likely that residents will increasingly use the Internet for television viewing.)

Television Service Cost Cable subscribers paid more per month on average for their television service, compared with satellite subscribers (see Figure 21). Six in 10 of those with cable service spent over $80 per month, compared with three in 10 of those with satellite.

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Figure 21: Monthly Cost of Television Service

Monthly Cost of Television Service 100% 90% 80% 70% 60% Avg Monthly Cost 50% Total:$73/Mo. 40% Cable: $79/Mo. 30% Satellite: $67/Mo.

Percent of Percent of Cable/ 20% Satellite Subscribers Satellite 10% 0% Cable Satellite Total Over $80 61% 30% 47% $61-$80 24% 36% 30% $41-$60 10% 29% 19% $21-$40 4% 5% 4% < $20 0% 2% 1%

Importance and Satisfaction with Television Service Aspects Cable and satellite customers were asked to rate their level of satisfaction (using a scale where 1=Very Dissatisfied and 5=Very Satisfied) with various aspects of their television service, along with the importance (using a scale where 1=Not at All Important and 5=Very Important) of those factors.

Television customers were moderately satisfied with most service aspects of their service, but a significant proportion were dissatisfied with the price paid (see Table 10). The largest service gap (gap between mean ratings given to importance and satisfaction) occurred for “price paid for service” and for “billing/overall customer service,” in part because of the higher level of importance placed on these items. Local programming and availability of premium or special channels was of moderate importance.

In general, cable customers indicated larger service gaps for the price paid and for billing/ overall customer service compared with satellite customers (see Figure 22). This was driven by both the higher levels of importance placed on service aspects, as well as lower levels of satisfaction.

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Table 10: Importance of and Satisfaction with Television Service Aspects

Premium/ Special Billing/ Price Paid for Local Channel Customer Service Programming Availability Service 1-Not at All Important 2% 6% 7% 2%

2 2% 19% 13% 2% 3 10% 25% 31% 14% 4 24% 18% 27% 32%

Importance 5-Very Important 62% 32% 23% 50% Mean 4.4 3.5 3.5 4.2 1-Very Dissatisfied 20% 13% 6% 11%

2 33% 5% 11% 14% 3 29% 25% 30% 32% 4 12% 37% 30% 30%

Satisfaction 5-Very Satisfied 7% 19% 23% 14% Mean 2.5 3.4 3.5 3.2

Figure 22: Monthly Cost of Television Service

Importance and Satisfaction with Television Service Aspects by Provider

5.0 4.6 4.4 4.5 4.2 4.1 3.8 4.0 3.6 3.6 3.6 3.5 3.5 3.4 3.5 3.2 3.3 3.0 2.9 3.0 2.5 2.2 2.0 1.5 1.0 Price Paid for Service Local Programming Premium/Special Billing/Customer Availability Channel Availability Service

Cable - Importance Cable- Satisfaction Satellite - Importance Satellite - Satisfaction

6.2.3 TELEPHONE SERVICE Survey respondents were also asked about their telephone service, including primary and secondary services, and the use of Internet-based phone services.

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Type of Telephone Service More than six in 10 residents had landline telephone service from Verizon or Quantum; most indicated it was their primary service (see Figure 23). Although more than nine in 10 reported having cell phone service, just 36 percent said it was their primary number. Thirteen percent had Internet-based telephone service, including 6 percent who used it as their primary service.

Figure 23: Type of Telephone Service

Telephone Service

100% 7% 90% 80% 37% 70% 3% 73% 57% 60% 87% 50% 40% 30% 60% 5% 20% 36% 10% 22% 7% 0% 6% Land Line - Cable Company - Internet-Based - Cell Phone Verizon/Quantum Comcast Vonage, Skype, etc. Primary Alternate None

6.2.4 ENHANCED COMMUNICATIONS SERVICES Survey respondents were also asked about enhanced communications service, including their desire for and importance of a number of options.

Importance of Enhanced Service Features Using a scale where 1=Not at All Important and 5=Very Important, respondents were asked to evaluate the importance of various enhanced services. The ability to buy selected channels (48 percent Very Important, 4.2 mean) and access to websites and information not blocked by their Internet provider (53 percent Very Important, 4.1 mean) were the most highly rated of those items listed (see Figures 24 and 25). In comparison, just 32 percent said the ability to bundle services was very important.

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Figure 24: Importance of Enhanced Service Features

Importance of Enhanced Service Features

Ability to Buy Selected 5% 2% 14% 31% 48% Channels Access to Websites and 8% 7% 10% 23% 53% Information Option to Purchase Very Fast 11% 7% 13% 25% 43% Bandwidth

Choice of Providers 11% 4% 25% 19% 41%

Ability to Bundle Services 13% 6% 20% 29% 32%

0% 20% 40% 60% 80% 100% 1 - Not at All Important 2 3 4 5 - Very Important

Figure 25: Mean Rating Given to Importance of Enhanced Service Features

Importance of Enhanced Service Features Mean Rating 5= Very Important 5.0 1= Not at all Important 4.5 4.2 4.1 3.8 4.0 3.7 3.6 3.5 3.0 2.5 2.0 1.5 1.0 Ability to Buy Access to Option to Choice of Ability to Bundle Selected Websites and Purchase Very Providers Services Channels Information Fast Bandwidth

Home-Based Business Internet Service Needs Fifteen percent of respondents indicated they already had a home-based business, and another 5 percent planned to start one in the next three years (see Figure 26). More than one-fourth said that the availability of high-speed, affordable Internet service would increase the possibility that they would start or continue a home-based business (see Figure 27). Most individuals would need a very high speed (37 percent) or a high-speed (36 percent) Internet connection to support a home-based business (see Figure 28).

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Figure 26: Plan to Start Home-Based Business Figure 27: Impact of High-Speed Internet

Plan to Start Home-Based High-Speed Internet Would Business in Next 3 Years Increase Possibility of Starting

Already Home-Based Business have a Yes home- 27% based business 15%

Yes No 4% 81%

No 73%

Figure 28: Connection Speed Needed to Support Home-Based Business

Internet Speed Needed to Support Home-Based Business 40% 37% 36% 35% 30% 25% 20% 14% 15% 12% 10% 5% 1% 0% Very High High Speed DSL or Cable Low Speed This business Speed Modem would not require the internet

6.2.5 TELECOMMUTING In addition to questions about their use of communications services, respondents were asked about their employment status, commuting patterns, and use of the Internet for telecommuting.

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Employment Status About eight in 10 survey respondents were employed, with 11 percent working part-time and 68 percent working full-time (see Figure 29). Approximately 21 percent of respondents indicated that they did not work outside the home.

Figure 29: Employment Status Respondent Employment Status

Choose not to work outside the Full-time and Self- home Unemployed employed Retired 3% 1% 17% 14%

Part-time and Self- Part-time employed 4% 7%

Full-time 54%

Figure 30: Method of Commuting Method of Commuting The majority of employed respondents Primary Method of Commuting commuted by car alone (89 percent), while only 2 percent carpooled (see Car 89% Figure 30). Only 3 percent teleworked/ Public Transportation 4% telecommuted full-time. Few took public Telework/Telecommute 3% transportation (4 percent) or used another mode of transportation as their Carpool 2% primary means of commuting. Walk <1% Other 1%

0% 20% 40% 60% 80% 100%

Percentage Working Outside Home

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Telecommuting Four in 10 employed respondents reported teleworking from home at least some of the time (see Figure 31). However, most of those individuals typically telecommuted just one day or less per week. About 6 percent telecommuted full-time.

Figure 31: How Often Respondents Telework from Home

How Often Telework from Home 70% 61% 60% Average = 0.69 days/week 50% 40% 30% 20% 16% 6% 7% 10% 3% 5%

% of Working Respondents Working % of 2% 0% Never; Do Full-time 4 days per 3 days per 2 days per 1 day per Less than 1 not work week week week week day per from home week

One-fourth of those who never teleworked from home or who teleworked just part-time indicated that their employer allowed teleworking; 16 percent said they were unsure. (See Figure 32.) Nearly four in 10 working repondents who did not telework from home full- time said they were interested in doing so. Most respondents indicated that they would need high-speed (10 to 100 Mbps) or very high speed (100 Mbps or more) Internet connection to allow them to work from home (see Figure 33).

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Figure 32: Ability and Interest in Teleworking from Home Employer Allows Telecommuting Interested in Telecommuting

Not sure Not Sure 11% 16% Yes 25% Time

- Yes 38% Telework Full No 51% No

% of Working Respondents Who Do Not Not Do Who Respondents Working % of 59%

Figure 33: Internet Connection Speed Required for Teleworking

Internet Speed Would Need to Work From Home 40% 34% 35% 32% 30% 27% 25% Time - 20% 15% 10% 7% 5%

Telework Full 0% 0% Very High High Speed DSL or Cable Low Speed None - work at Speed modem home is not % of Working Respondents Who Do Not Not Do Who Respondents Working % of feasible

As discussed previously, approximately four in 10 employed residents telecommuted some of the time, although most telecommuted just one day per week or less frequently. When asked about their desire to telecommute, most of the subset of working residents who did not telecommute full-time indicated that they would have liked to telecommute at least one day per week (see Figure 34). A large proportion of residents indicate that they would have liked to telecommute two or three day a week, relative to the share that was doing so.

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Figure 34: How Often Respondents Would Telework

Days Per Week Would Work from Home If Had Sufficient Internet Speed and Capacity 50% 46% 45% 40% Average = 1.32 days/week Time - 35% 30% 25% 20% 18% 14% Telework Full 15% 13% 10% 8% 5% 1%

% of Working Respondents Who Do Not Not Do Who Respondents Working % of 0% None One Two Three Four Five or more

The combination of the desire for increased telecommuting and the need for fast Internet speeds to support telecommuting indicated that increased broadband Internet availability could have increased telecommuting among Westminster residents.

Commuting Approximately three-fourths of employed persons who did not telework full-time commuted five or more days per week (see Figure 35). Another 18 percent commuted three or four days.

Figure 35: Days Per Week Physically Commute to Work

Number of Days Physically Commute to Work 90% 80% 76% 70% Average = 4.44 days/week

Time 60% - 50% 40% 30% Telework Full 20% 11% 10% 4% 7% 1% 1%

% of Working Respondents Who Do Not Not Do Who Respondents Working % of 0% None One Two Three Four Five or more

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On average, employed respondents who did not telework full-time commuted 27.1 miles and 40.0 minutes to work each way (see Figure 36). Four in 10 commuted over 30 miles each way, and two-thirds spent at least 30 minutes traveling one-way. Approximately one- half travelled for at least 25 miles and spent at least 40 minutes commuting each way.

Figure 36: One-Way Commute Distance and Time

One-Way Commute Distance and Time

70% 65%

60% Avg. distance = 27.1 miles Avg. time = 40.0 minutes

Time 50% - 41% 40%

30% 20% Telework Full 20% 15% 13% 11% 8% 7% 10% 5% 6% 5% 5%

% of Working Respondents Who Do Not Not Do Who Respondents Working % of 0% 5 or less 6 to 10 11 to 15 16 to 20 21 to 30 More than 30 Miles Commute Minutes Commute

6.2.6 POTENTIAL COMMUTE REDUCTIONS VIA INCREASED TELECOMMUTING The battery of questions on commuting and telecommuting provided the opportunity to estimate the potential economic and environmental impacts that could be achieved by increased telecommuting. As shown previously, the availability of very high speed Internet was a key enabler of increased telecommuting.

Survey data could be used to estimate the impacts of commuting and telecommuting across Westminster’s 6,900 households. Survey data indicated that approximately 75 percent of respondents were employed full-time (the remainder worked part-time or were retired, unemployed, or chose not to work outside the home) and 89 percent of working respondents commuted via car alone (i.e., did not carpool). The average number of commuters per home was 1.74. The product of these figures (6,900 households * 75% * 89% * 1.74) yields an estimate of approximately 8,000 full-time workers who commuted alone by car in Westminster.

On average, if they did not telecommute full time, workers physically commuted 4.44 days per week (see Figure 35). When asked about their desire to telecommute, respondents indicated that they would have liked to telecommute 1.32 days per week, on average (or

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physically commute 3.68 days per week), (see Figure 34). The difference of 0.76 days per week (4.44-3.68) was the potential fewer days per week that could be driven by car-alone commuters through increased telecommuting.

Car-alone commuters physically commuted an average of 27.1 miles and 40.0 minutes each way (see Figure 36). Assuming a potential reduction of 0.76 days per week commuting, the potential savings was 330,000 miles and 486,000 minutes per week. Assuming 48 working weeks per year (the remainder being vacation or holiday), Westminster residents would have had the potential to save 15.8 million miles and 23.3 million minutes per year through increased telecommuting.

The economic benefits of increased telecommuting are somewhat subjective, but could be estimated. Assuming a gasoline cost of $3.50 per gallon and an average vehicle efficiency of 21 miles per gallon (EPA estimate), the annual potential gas savings from reducing commuting by 15.8 million miles would have been 753,000 gallons of gas and $2.6 million. In addition, the time spent commuting would have been reduced by 23.3 million minutes (388,000 hours). Assuming an average time “value” of $20 per hour, the potential annual economic value from reduced commuting time would have been $7.8 million.

Environmental impacts could also be estimated. Assuming that commuting vehicles

produce approximately 1.1 pounds of CO2 per mile (a standard estimate), a reduction of

15.8 million miles translates to an estimated reduction of 8,690 tons of CO2 per year through increased telecommuting. If monetized at $20 per ton, this translates to $173,800 per year.

There are also many other positive benefits from reduced commuting that are not

quantified in this section. These include reductions of NOx, CO2, and other vehicle emissions, along with reduced road congestion that could lead to fewer or delayed road building and reconstruction, reduced maintenance, and possibly reduced accidents and insurance costs.

6.2.7 ROLE OF THE COUNTY Respondents were asked to rate their level of agreement with statements about high-speed Internet access, using a scale where 1=Strongly Disagree and 5=Strongly Agree.

Respondents were most likely to agree that their family used or would like to use the Internet for educational purposes (27 percent Strongly Agree, 3.5 mean) and their family used or would like to use the Internet to access community information and resources (24 percent Strongly Agree, 3.5 mean), (see Figures 37 and 38).

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Figure 37: Agreement with Statements About the Internet

Agreement with Statements About the Internet

Use for Educational Purposes 14% 9% 20% 30% 27%

Use to Access Community Info 5% 17% 29% 25% 24%

High-Speed Internet Access as Important as 12% 12% 32% 22% 22% Other Utilities Would Consider Availability of High-Speed 21% 12% 34% 18% 15% Internet in Choosing Where to Live Competitive Market Is Working Well to 29% 20% 32% 12% 7% Deliver Affordable, High Quality Internet

0% 20% 40% 60% 80% 100% 1 - Strongly Disagree 2 3 4 5 - Strongly Agree

Figure 38: Mean Agreement Rating for Statements About the Internet

Agreement with Statements About the Internet Mean Rating Use for Educational Purposes 3.5

Use to Access Community Info 3.5

High-Speed Internet Access as Important as 3.3 Other Utilities Would Consider Availability of High-Speed 2.9 Internet in Choosing Where to Live Competitive Market Is Working Well to 5= Strongly Agree 2.5 Deliver Affordable, High Quality Internet 1= Strongly Disagree

1.0 2.0 3.0 4.0 5.0

Respondents were least likely to agree that the competitive market was working well to deliver high-quality Internet services that their families could afford (7 percent Strongly Agree, 2.5 mean). There was considerable variation in responses, suggesting different segments of users who place more or less value on high-speed Internet access. Overall, there appeared to be a need for quality, affordable Internet in the area (see Figures 37 and 38).

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Overall, there was a moderate level of agreement with the listed statements about the government's role in providing communication services (see Figures 39 and 40). Furthermore, most disagreed that the government should have no role in the development or operation of communication services. However, a sizeable segment of respondents were neutral or disagreed to some extent with the various statements.

Figure 39: Agreement with Statements About the Government's Role

Agreement with Statements About the Government's Role Local Govt Info Should Be Available Over County 2%6% 25% 25% 42% Website

Govt Should Help Ensure All School-Aged Children 6%3% 26% 18% 47% and Teachers Have Access to Broadband Internet

Govt Should Help Ensure All Residents Have Access 9% 6% 20% 16% 50% to Competitively Priced Broadband Internet

Govt Should Develop Networks to Deliver High- 8%4% 23% 25% 40% Speed Services to Public Safety Depts

Govt Should Develop Networks to Deliver High- 8% 6% 26% 23% 37% Speed Services to Schools, etc.

Local Govt Info Should Be Available Over Cable 3%9% 38% 20% 32% Network

Govt Should Help Ensure All Residents Have Access 12% 10% 31% 11% 37% to Very High Speed Broadband

Govt Should Have No Role in Development or 32% 26% 20% 13% 8% Operation of Communication Services

0% 20% 40% 60% 80% 100% 1 - Strongly Disagree 2 3 4 5 - Strongly Agree

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Figure 40: Mean Agreement Ratings for Statements About the Government's Role

Agreement with Statements About the Government's Role Mean Rating

Local Govt Info Should Be Available Over County Website 4.0 Govt Should Help Ensure All School-Aged Children and Teachers Have Access to Broadband Internet 4.0 Govt Should Help Ensure All Residents Have Access to Competitively Priced Broadband Internet 3.9 Govt Should Develop Networks to Deliver High- Speed Services to Public Safety Depts 3.8 Govt Should Develop Networks to Deliver High- Speed Services to Schools, etc. 3.7 Local Govt Info Should Be Available Over Cable Network 3.7 Govt Should Help Ensure All Residents Have Access to Very High Speed Broadband 3.5 Govt Should Have No Role in Development or 5= Strongly Agree Operation of Communication Services 2.4 1= Strongly Disagree

1.0 2.0 3.0 4.0 5.0

Household Characteristics Information about each respondent’s home, age, education, income, and other characteristics was also gathered to help define the respondent group and to investigate correlations between these characteristics and responses to other questions. Correlations between this information and selected survey responses were discussed previously in this report. Other key correlations are presented in this section.

Children in Household Forty-five percent of respondents had children living in the home, with 27 percent having school-aged children (see Figure 41).

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Figure 41: Children Under Age 18 In Household

Children Under Age 18 In Household

10%

No Yes 16% 63% 45%

11%

Pre-Schoolers Only School-Aged Children Only Both Pre-Schoolers and School-Aged

Households with children under age 18 were more likely to report having Internet access (99 percent vs. 82 percent for homes without children), (see Figure 42).

Figure 42: Internet Access by Presence of Children Under Age 18 In Household

Internet Access by Children in Home 99% 100% 90% 82% 80% 70% 60% 50% 40%

with with Internet Access 30% Percent of Percent of Respondents 20% 10% 0% No Children in Home Have Children in Home

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Education Respondents were also asked about the highest level of education attained. Nearly one-half of respondents had completed a four-year college degree, some graduate school, or a graduate degree. Just 15 percent had a high school education or less (see Figure 43).

Figure 43: Highest Level of Education Completed

Education (Highest Level Attained) 30% 24% 25% 23% 19% 20% 15% 15% 11% 10% 5% 5% 4% 0% Some high Completed Some Two-year Four-year Some Graduate school high school college or college or college graduate degree technical technical degree school school degree

As indicated in Figure 44, those with a high school diploma or less education were far less likely to report having Internet access, compared with those with higher levels of education. However, it was unclear whether this was directly due to education level or whether it was more related to income, age, or other factors.

Figure 44: Internet Access by Highest Level of Education Completed

Internet Access by Education 98% 100% 95% 94% 86% 90% 80% 70% 58% 60% 50% 40% 30% 20%

with with Internet Access 10%

Percent of Percent of Respondents 0% High School or Some College or Two-Year Four-Year Graduate (Some Less Technical School College or College Degree or Completed Technical Degree) Degree

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Age The ages of survey respondents, Census data, and the data weighting calculation were discussed earlier in this report. Because younger individuals were under-represented, survey data were weighted to match the population distribution of age groups according to U.S. Census figures (see Figure 45).

Figure 45: Population and Sample Distributions

Age Cohorts 40% 37% 35% 29% 30% 25% 25% 21% 20% 16% 17% 17% 18% 15% 11% 9% 10% 5% 0% 18-34 years 35-44 years 45-54 years 55-64 years 65 years and % Adults (Census) % Survey Respondents older

There were a number of correlations observed between age and the types of communications services used. As Figure 46 indicates, those aged 65 and older were much less likely to report having Internet access in their home.

Figure 46: Home Internet Access by Age of Respondent

Internet Access by Age of Respondent

96% 100% 94% 94% 89% 90% 80% 70% 57% 60% 50% 40% 30% with with Internet Access 20% Percent of Percent of Respondents 10% 0% 18-34 years 35-44 years 45-54 years 55-64 years 65 years and older

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7. RECOMMENDATIONS FOR INITIAL PILOT PROJECTS

As the City moves forward with its feasibility study of building a City-owned fiber infrastructure, we strongly recommend a separate and complementary effort to initiate pilot projects in two areas of the City—one residential area centered on the Lutheran Village community, and one business area focused on the industrial park near the airport. These relatively low-risk pilot projects would provide a full-scale test for planning and building a Citywide fiber network, with a private partner to operate and provide retail services over the infrastructure.

The pilot project can become the first stage of a citywide fiber network. The pilot can be a standalone network that seamlessly merges into a citywide network in later years.

This report creates a budget for the pilot project. In the pilot project, City will construct fiber within particular areas of the City, and the private partner will provide advanced broadband services to connected homes and businesses using the fiber. The private partner will be responsible for interconnecting outside networks such as the Internet to the fiber. The private partner will provide electronics to “light” the fiber and carry services over the fiber, will interface with the customer, and will be responsible for maintaining the fiber.

Both pilot areas are in proximity to Carroll County Public Network (CCPN) fiber. We understand that the County envisions building a “hut” near the airport as the interface point between CCPN and fiber to area businesses. The fiber in the business area will connect to this “hut.” The residential area fiber is planned to connect to CCPN where CCPN fiber ends at Old New Windsor Road.

Although the pilot is designed to reach CCPN to maximize use of existing resources, the pilot is not necessarily restricted to private partners using the CCPN fiber, and any private partner who has a means to connect to the proposed city pilot fiber may connect. If, over the course of the project, the CCPN fiber is not available, or if CCPN does not provide a cost- effective means of connecting to the Internet, the City pilot will still be technically feasible.

The Carroll County Department of Economic Development and the County have been consulted and support the City’s proposed pilot project (i.e., for the City to build fiber to individual homes and businesses within the City). Such a collaborative effort would expedite serving the businesses in the area and reduce the costs borne by a service provider to serve those businesses.

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Figure 15 illustrates the proposed fiber construction connecting to homes and businesses, and how it may leverage the existing CCPN fiber and connect to the Internet.

Figure 15: High-Level Overview of Fiber Pilot Project Construction

The sections below outline, at a high level, the proposed fiber routes and related estimates of construction and maintenance costs for the residential and business pilots. In summary, the estimated pilot project costs are as follows:

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Table 7: Estimated Cost of Fiber Pilot Projects

Cost Category Details Totals Residential area Outside Plant 8,750 feet @ $19 per foot $166,250 Homes 100 homes in quads @ $300 per home $30,000 Mid-rise apartment building 300 apartments in five mid-rise $150,000 buildings @ $500 per unit Assisted-living facility 50 units in one building @ $500 per $25,000 unit Nursing facility 103 rooms in one building @ $500 per $51,500 unit Business area Outside plant and drop 9,350 feet @ $19 per foot $177,650 cables Maintenance Utility locates Per year $25,000 Regular wear and damage Per year $25,000 Total Construction, drops, and first-year maintenance $650,400

7.1 RESIDENTIAL PILOT PROJECT: CARROLL LUTHERAN VILLAGE

We identified Carroll Lutheran Village as a potential location for a residential pilot project. Covering about 90 acres, the Village presents well-defined boundaries and enough population density to allow a relatively small fiber build to reach a large group of residents. The Village is also located near CCPN fiber, which may provide a cost-effective option for connecting the pilot fiber to the Internet and outside networks. And the Village includes varied types of housing and construction, which would provide insight for the City into potential construction issues around single- and multi-family dwellings.

In addition to these physical attributes, the Village offers another significant incentive as a pilot location: Because of the various levels of healthcare services provided to residents, an FTTP project there would offer insight into the benefits and impacts of high-capacity broadband for telehealth (see Section 3.3).

As illustrated in Figure 16, the proposed fiber construction would cover most streets in the Village. Based on conservative assumptions, we estimate the outside plant fiber construction to encompass about 8,750 feet and cost, at an average of $19 per foot, approximately $170,000:

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Fiber Cost per Foot Total Fiber Cost Construction 8,750 feet $19 $166,250

Connecting each of the residential units with a fiber drop would cost about $260,000, based on the following assumptions:

Drop Cost Total Drop Housing Type Number of Units per Unit Cost Homes 100 homes in quads $300 $30,000 300 apartments in five Mid-rise apartment building $500 $150,000 mid-rise buildings Assisted living facility 50 units in one building $500 $25,000 103 rooms in one Nursing facility $500 $51,500 building Total Estimated Drop Costs $256,500

The total residential pilot project construction, then, would cost approximately $430,000.189 This is a conservative estimate that can be refined as a more detailed design is done. Our estimates do not include the cost of electronics at each customer premises, nor do we specify a fiber architecture (e.g., PON, Active Ethernet). The Village fiber connection can interconnect with CCPN near the intersection of Old New Windsor Pike and Long Valley Road. We further assume, based on information provided by the City, that the City may share fiber construction costs with the Village.

189 For this high-level cost estimate, we have treated each bed in the nursing facility as a separate unit, akin to an apartment. The cost and construction estimates will be further developed through the design process.

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Figure 16: Residential Fiber Pilot Area—Carroll Lutheran Village

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7.2 BUSINESS PILOT PROJECT: WESTMINSTER TECHNOLOGY PARK, CARROLL COUNTY AIR BUSINESS CENTER, AND VICINITY

Our proposed business pilot project area encompasses the Westminster Technology Park190, the Carroll County Air Business Center, and vicinity—chosen for the area’s size, density of businesses, proximity to CCPN fiber, and identification by the City and Carroll County as a prime economic development zone that would both benefit from fiber connectivity and help the City and County meet their broadband policy goals. It would address a longtime deficiency in broadband access in the technology park.

As illustrated in Figure 17 below, the proposed fiber construction routes would efficiently and cost-effectively reach a high percentage of business locations in the area. Based on conservative assumptions, we estimate that building infrastructure to 110 business premises would require about 9,350 feet of outside plant fiber construction and cost, at an average of $19 per foot, approximately $180,000:

Fiber Construction Cost per Foot Total Fiber Cost 9,350 feet $19 $177,650

As with the residential pilot project, our estimates do not include the cost of electronics at each customer premises. 191 The fiber can interconnect with CCPN, potentially at a “hut” location under consideration.

The business pilot could also include the Carroll County Commerce Center, a business park located about a mile south of the Air Business Center and a quarter mile from the CCPN fiber on Route 97. The Center’s three buildings are connected by conduit to Route 97, so the City may be able to facilitate a fiber connection without any additional construction.

A projection of potential network revenues depends on the results of the City’s request for information (RFI) and subsequent partner negotiations; that said, we believe that the revenues would likely be sufficient to cover the network’s maintenance costs. The cost of maintenance of outside plant of this nature is dominated by the cost of managing requests for utility location, estimated at $25,000. Adding a margin for regular wear and tear and accidental damage, we estimate the yearly maintenance cost to be $50,000.

190 See “Westminster Technology Park: A Carroll County Economic Development Initiative,” brochure. http://www.carrollbiz.org/realestate/propertypdfs/WestminsterTechParkBro_low.pdf 191 Businesses currently operating in the area include General Dynamics, the Maryland Division of Rehabilitation Services, the U.S. Social Security Administration, and Carroll County administrative offices.

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Figure 17: Business Fiber Pilot Area

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APPENDIX A: REQUEST FOR INFORMATION

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Request for Information

for

Services, Operations, and Maintenance of City-Built Fiber Optic Network

City of Westminster

Issued: April 12, 2013

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Table of Contents

I. Introduction ...... 123

II. Project Background...... 124

III. Background on City of Westminster ...... 124

IV. Policy Goals ...... 125

Statement of Need ...... 125

Goals ...... 125

V. Existing Fiber Assets ...... 126

VI. Role of County and Consortium Assets (CCPN/ICBN/MDBC) ...... 127

VII. Map and General Construction Parameters ...... 127

VIII. Information Required to Respond to This RFI and Response Procedure ...... 129

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I. INTRODUCTION Located about 35 miles northwest of Baltimore, the City of Westminster, Maryland is situated in a rural to semi-rural area in Carroll County. Westminster has an affluent and forward-looking population and large businesses and institutions. The proximity to Baltimore and the Baltimore- Washington corridor also means there is significant interest in residents working closely with employers and clients and partners in the region as well as telecommuting.

The City does not lie on the routes of any major highways or rail lines, but City officials are planning now to ensure the local economy will have robust Internet access and strong connections to all information highways.

City officials have prioritized pursing access to affordable broadband networks. The City is considering construction of a municipal fiber-to-the-premises (FTTP) network, and is seeking private partners interested in utilizing municipal dark fiber to provide network services to homes and businesses.

This Request for Information (RFI) has been initiated to enable the City to identify one or more private partners who will provide network services to end-users within the City limits using City- built fiber infrastructure. The City seeks input from potential partners regarding the terms and conditions under which partners would operate and manage Internet and other network services to homes and businesses over City-owned fiber.

We are particularly interested in providers who will use the fiber to provide ultra-high-speed network access. We define ultra-high-speed as being in the multiple-hundred megabit to gigabit- per-second range.

We also seek partners who will take on network maintenance responsibilities. This role may either be done by the network service provider or by a separate partner.

We view the primary policy goal of this network to be economic development. Broadband enables communities otherwise at a disadvantage to participate on more equal footing in the emerging global economy. With the Internet as a driving vehicle many businesses can locate anywhere—as long as there is enough bandwidth at affordable prices. High tech firms and other companies that rely on high connection speeds will go where they can flourish. Responses to this RFI should state how the respondent’s approach will further the City’s goals of attracting businesses and residents, and encouraging economic retention in the City.

We seek to make Westminster a more desirable place for firms and residents—who see the quality of life benefits of broadband both directly through home connections and through enhanced services provided by the business community.

Interconnection with other government led fiber networks in the City will potentially provide the means to connect outside the City. The Carroll County Public Network (CCPN), a countywide institutional network (I-Net), connects schools and other institutions throughout the County. The

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Inter-County Broadband Network (ICBN), a consortium of counties currently building fiber to government sites and community anchor institutions, constructed fiber that is contiguous with CCPN infrastructure, and together the networks will provide access to the commodity Internet through points-of-presence in Baltimore. The ICBN has connections to Baltimore Technology Park (BTP), multiple AiNet datacenters, and the collocation facility at 111 Market Street in Baltimore either planned or underway.

When built, the Westminster City fiber network would enjoy access via the CCPN and ICBN fiber, providing a means for high-speed Internet bandwidth to be imported from across the state.

II. PROJECT BACKGROUND In 2012, the Mayor and Common Council unanimously voted to approve a feasibility study for building a municipal FTTP network. Council members identified a lack of adequate connectivity among businesses within the City as a primary reason for proceeding with the study.

III. BACKGROUND ON CITY OF WESTMINSTER The City of Westminster is an incorporated community in Carroll County, Maryland. According to the U.S. Census, the City has a population of approximately 18,600 with 7,700 housing units. About 27 percent of the population age 25 and above has a bachelor’s degree or higher.

Westminster is the seat of County government, and to several higher education institutions including McDaniel College, a private four-year college. The largest employment sector in the City is educational, with the County school district (Carroll County Public Schools) employing about 3,700, and McDaniel College about 640. Other major employers within the City include: Carroll County government, Carroll Lutheran Village (a non-profit retirement community), and General Dynamics Robotics Systems.

Immediately outside the city limits, Carroll Community College employs about 500 workers. There are a number of major private employers just outside the City as well, including Carroll Hospital Center (non-profit), Random House, English American Tailoring, and Knorr Brake Corporation.

The health care sector is a significant portion of the local economy. Carroll Hospital Center itself employs upwards of 1,700 people, and is affiliated with a large group of multi-specialty practices.

Westminster has a significant commuter population. The City is about 35 miles northwest of Baltimore; 32 miles east of Frederick; 56 miles north of Washington, D.C.; 57 miles northwest of Annapolis, the state capital; and 60 miles south of Harrisburg, Pennsylvania's state capital. However, Westminster does not lie on the route of any Interstate or U.S. highways. The lack of a major arterial route in and out of town leads to significant commute times for City residents. According to an analysis conducted by The Business Journals, about 32 percent of Westminster

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residents have a commute time of 45 minutes or more. Another 14 percent have a commute of 30 to 44 minutes.

IV. POLICY GOALS

STATEMENT OF NEED

The City is seeking one or more Service Providers to operate fast, affordable services over City- constructed fiber optics. The City will construct fiber to some or all Westminster homes and businesses, and the City will lease the fiber or fiber capacity to Service Providers to sell services and manage the relationship with the customer.

The City also seeks a partner who will maintain the network infrastructure. This role may be performed by a Service Provider or by a separate partner.

This RFI is released for the purpose of optimizing the City’s initiative and incorporating the needs and creative ideas of potential FTTP Service Providers. This information will assist in finalizing the Westminster FTTP network design and defining the relationship between the City and Service Providers.

We wish to find prospective partners interested in leasing City owned dark fiber or fiber capacity, and determine what services these partners would propose to provide.

We anticipate developing a pilot project for a portion of the City within the next year. The specifics of the pilot are to be determined.

Though no contracts or formal relationships will be established through this RFI, it will provide valuable information that will significantly influence the Westminster City fiber project and create a community of potential Service Providers for City homes and businesses. It will also enable the City to understand the capabilities and interests of potential partners and determine how to best include them.

All interested Service Providers are strongly encouraged to respond. We welcome the response of incumbent Service Providers, as well as competitive providers, non-profit institutions, public cooperatives, as well as entities that are not traditional Internet Service Providers, but are interested in offering service under innovative business models (application providers, as an example). Nontraditional providers may respond as part of a partnership with a network service provider, or may provide a separate response outlining their approach.

GOALS

There are several central goals to the City’s FTTP network undertaking. Respondents to this RFI and any possible subsequent RFP should indicate whether and how their proposal serves these goals:

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1. Offer service to any customer connected to the City fiber network; serving only limited areas of the City or specific types of customers is less desirable.

2. Offer unique services and speeds and network performance better than that provided by the incumbent networks in the City. For example, providing hundreds of megabits or gigabit speeds, providing symmetrical services, providing services that continue operating when commercial power fails, providing service level agreements, and providing direct connectivity between locations on the City fiber.

3. Propose connectivity services leveraging the ICBN middle mile connections to the Baltimore Technology Park and other locations where a provider can cost- effectively and competitively connect to commodity Internet and secure cloud services.

4. Ideally propose an approach that includes open access, where the City fiber network is open to multiple Service Providers in addition to the respondent.

5. Respond to the needs of health care providers and patients.

6. Respond to the needs of the large and small businesses connected to the City fiber.

7. Provide cost-effective services for price-sensitive customers and flexible pricing plans.

The City seeks an uninhibited network, where Service Providers may offer a range of services, and network operators are neutral with respect to Service Providers, applications, websites, type of use, and type of connection device.

The City seeks Service Providers who will offer lit broadband services and partners to handle maintenance and operations of the network. The City also seeks partners who will extend the City fiber if expansion is needed.

For the network to have the intended economic and quality of life impacts, we consider both cost and availability of service to be important. We encourage responses that address both to maximize adoption of service.

The City will negotiate terms of funding user premises installation costs with prospective partners.

V. EXISTING FIBER ASSETS The public fiber infrastructure that currently exists in the City includes assets built by the CCPN and ICBN. CCPN provides broadband service to public locations including the schools, the County’s public library, and Carroll County Community College. CCPN’s primary purpose is

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County and local institutional use; however, through a partnership with the Maryland Broadband Cooperative (MDBC), a portion of the County dark fiber (72 strands) is available for leasing to the business community. ICBN fiber, constructed through a federal grant to the State of Maryland Department of IT, will ultimately be sub-granted to Carroll County with a minimum of 24 dark fiber strands made available for open access lease, likely on terms similar to that of the CCPN fiber.

VI. ROLE OF COUNTY AND CONSORTIUM ASSETS (CCPN/ICBN/MDBC) The City network will include interconnections with the CCPN and ICBN. The ICBN connection will provide a route from the City network to POP locations in the Baltimore region operated by the MDBC and other commercial service provider and collocation entities. Therefore, interconnections with state and consortium owned fiber is critical to the success of the municipal network in providing high-speed access to the commodity Internet. We encourage respondents to this RFI to offer strategies for leveraging these assets to the greatest mutual benefit of the City and its partners. In addition, responses should consider the following items:

• What risks, if any, do you foresee in integrating network service over the City network with CCPN, ICBN, or MDBC fiber? What strategies would you employ to alleviate these risks?

• How could the City network be used to serve community anchor institutions within the City not being served by County or consortium fiber?

• How would you approach management of the interconnections between the City network and other networks from a network architectural standpoint and a business model standpoint?

VII. MAP AND GENERAL CONSTRUCTION PARAMETERS

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VIII. INFORMATION REQUIRED TO RESPOND TO THIS RFI AND RESPONSE PROCEDURE The City of Westminster requests the following information—in as much detail as is practicable—from respondents:

1. Affirm that you are interested in this partnership and address the core policy goals and requirements listed above. If you cannot meet any of those requirements, indicate the requirements to which you take exception and provide an explanation of the exceptions.

2. Provide a statement of experience discussing past performance, capabilities, and qualifications. Identify other networks your firm has designed, built, maintained or operated; include the levels of broadband speed, availability and adoption among different categories of end-users and unique capabilities or attributes. Discuss other partnerships with other service providers, government or non-profit entities you have undertaken, particularly any involving dark fiber leasing. Describe the nature of the projects and your firm’s role. Explain how your firm is a suitable partner for this project.

3. At a very high level, summarize the technological and operational approach you would use for this project. How would you use technology to meet the City’s goals? What approach would you use to interconnect with the Internet and other public networks? How would you perform network management? Under what scenarios would you require route diversity or other special features in the City fiber? At what sort of facility (or facilities) would you place network electronics? Would you require direct, dedicated fiber connectivity to all premises or would a passive optical network be suitable in some cases?

4. Summarize the business approach you would use for the project. How would your business plan help meet the City’s goals? What are the key assumptions? What are your main areas of risk, and how can the City help reduce the risks?

5. If you currently operate communications facilities, inform us as to whether they are operated on an open access basis.

6. What is your proposed schedule for implementing service? Offer a timeline with key milestones. Would you be able to begin service before the entire City was constructed? Are there areas of the City you would recommend be constructed first?

7. Are you proposing to perform fiber network maintenance? If so, describe your ability to perform network maintenance on an ongoing and as-needed basis. Provide estimates of the operating cost of maintaining the fiber optic outside plant for a City fiber network and include your main assumptions.

8. What are your requirements for the City to meet in order for you to partner with the City on this project? What, if any, are the financial requirements you have of the City in order to enter into a partnership? If you do not address this question as to financial requirements, it will be assumed that you are interested in the partnership but have no

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financial requirements whatsoever of the City.

9. What service options would you plan to offer over this network (for example, data only, voice and data, a triple play of voice, data and cable television, etc.)? What download/upload or symmetrical speeds would you offer and guarantee to end-users? How will your residential and business offerings differ?

10. Provide a statement of how your proposed participation would help the City’s economic development goals. Describe your interests and plans to hire local contractors and providers in Westminster, and how your participation would help local job creation. Describe your relationships with local businesses in Westminster as well as your interest and plans to engage them in this project. Describe your relationships with socially and economically disadvantaged small businesses in Westminster as well as your interest and plans to engage them in this project.

11. Provide three (3) references, including contact information, from previous contracts or partnerships.

All interested respondents are asked to submit a letter of intent via email by April 19, 2013 to [email protected], or via hard copy to:

City of Westminster Attn: Robert Miller 56 W. Main St. Westminster, MD 21157

Final RFI submissions must be received by close of business on May 3, 2013.

Please send a hard copy of the RFI response to the address above. Additionally, please email a final copy of the RFI response in PDF format to [email protected] by May 3, 2013.

Please identify any proprietary and/or confidential information as such.

Questions related to this RFI should be emailed to [email protected] no later than 4:00 PM on April 26, 2013.

The following is the schedule for responding to this RFI. The schedule is subject to change:

April 12, 2013 – RFI Released April 19, 2013 – Deadline for Submitting Letter of Intent to Respond to RFI April 26, 2013 – Deadline for Submitting Questions FINAL DEADLINE – May 3, 2013 – RFI Responses Due

The City of Westminster thanks you in advance for your thoughtful response.