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City of Madison Fiber-To-The-Premises Feasibility Analysis

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City of Madison Fiber-To-The-Premises Feasibility Analysis City of Madison Fiber-to-the-Premises Feasibility Analysis Prepared for City of Madison August 2016 CTC Report | City of Madison FTTP Feasibility Study | August 2016 Contents 1 Executive Summary ................................................................................................................. 1 1.1 Project Background .......................................................................................................... 1 1.2 Methodology .................................................................................................................... 1 1.3 Residential Market Research Identified Unmet Demand ................................................ 2 1.4 The City’s Core Objectives Are Equity, Ubiquity, Competition, Consumer Choice, and Control ........................................................................................................................................ 3 1.4.1 Ubiquitous FTTP Deployment Will Create Consumer Choice and Competition ....... 4 1.4.2 New Broadband Competition Will Create Benefits for Equity ................................. 5 1.4.3 Meeting the Need for Broadband Services to Small and Medium Businesses in Madison Will Promote Economic Vitality and Innovation ...................................................... 6 1.5 Building Ubiquitous FTTP in Madison Would Cost at Least $143.5 Million ..................... 8 1.5.1 Dark FTTP Cost Estimate – No Network Electronics, Service Drops, or CPEs ........... 8 1.5.2 FTTP Cost Estimate for Fiber, Network Electronics, Service Drops, and CPEs ....... 10 1.5.3 MUFN Decreases FTTP Construction Costs ............................................................ 13 1.6 Madison Would Require Lease Payments of at Least $15 per Passing per Month to Cover Its Costs ........................................................................................................................... 13 1.7 Recommendations ......................................................................................................... 14 1.7.1 Consider Adopting a Partnership Model in Which the City Owns the Dark Fiber Network ................................................................................................................................ 14 1.7.2 At the Appropriate Time, Publish a Dark Fiber Rate Card to Promote Fiber Leasing 15 1.7.3 Target a 1 Gigabit Per Second (Gbps) Service Offering to Meet the Emerging Broadband Benchmark ......................................................................................................... 16 1.7.4 Continue to Coordinate and Collaborate with Madison Gas and Electric .............. 18 1.7.5 Consider Exploring a Procurement Process to Further Evaluate Partnership Opportunities ........................................................................................................................ 18 1.7.6 Prioritize the Continuation of Service to Customers in Pilot Service Areas if Feasible 19 2 The City’s Goals and Priorities .............................................................................................. 20 2.1 The City’s Core Objectives .............................................................................................. 20 CTC Report | City of Madison FTTP Feasibility Study | August 2016 2.2 Promoting Equity ............................................................................................................ 21 2.2.1 Addressing Areas of Need ....................................................................................... 21 2.2.2 Bridging the Digital Divide with Pilot Fiber Project ................................................ 22 2.3 Understanding Competition and Open Access .............................................................. 23 2.3.1 Facilities-Based Competition .................................................................................. 24 2.3.2 Competition at the Dark Fiber Level ....................................................................... 25 2.3.3 Competition at the “Lit” Services Level .................................................................. 26 2.3.4 Over-the-Top Content Offers Service-Level Competition and a Variation on Open Access 27 2.3.5 Evolving Over-the-Top Providers ............................................................................ 29 3 Market Analysis: Assessment of the Local Broadband Marketplace ................................... 32 3.1 Enterprise Market .......................................................................................................... 32 3.1.1 Dark Fiber Services .................................................................................................. 32 3.1.2 Lit Services .............................................................................................................. 34 3.2 Residential and Small Business Services ........................................................................ 38 3.2.1 Cable ....................................................................................................................... 39 3.2.2 Digital Subscriber Line (DSL) ................................................................................... 39 3.2.3 Satellite ................................................................................................................... 40 3.2.4 Wireless ................................................................................................................... 41 4 Residential Market Research ................................................................................................ 44 4.1 Survey Process ................................................................................................................ 45 4.1.1 Overview ................................................................................................................. 45 4.1.2 Coordination and Responsibilities .......................................................................... 45 4.1.3 Survey Mailing and Response ................................................................................. 46 4.1.4 Data Analysis ........................................................................................................... 46 4.2 Survey Results ................................................................................................................ 47 4.2.1 Home Internet Connection and Use ....................................................................... 48 4.2.2 Television and Telephone Service ........................................................................... 70 4.2.3 Telework and Home Businesses ............................................................................. 76 4.2.4 Respondent Opinions .............................................................................................. 80 ii CTC Report | City of Madison FTTP Feasibility Study | August 2016 4.2.5 Respondent Information ......................................................................................... 85 5 Framework for Options to Meet City’s Goals: Public–Private Partnership Models ............. 90 5.1 Overview of Partnership Frameworks ........................................................................... 90 5.1.1 Risk .......................................................................................................................... 90 5.1.2 Benefit ..................................................................................................................... 91 5.1.3 Control .................................................................................................................... 91 5.2 Public–Private Partnership Models ................................................................................ 92 5.2.1 Model 1: Private Investment, Public Facilitation .................................................... 92 5.2.2 Model 2: Private Execution, Public Funding ........................................................... 95 5.2.3 Model 3: Shared Investment and Risk (Dark FTTP Partnership)............................. 98 5.3 Additional Strategic Considerations for Public–Private Partnerships .......................... 103 6 Engineering Analysis: FTTP Network Requirements and Design ........................................ 105 6.1 Field Survey Methodology for Network Design and Cost Estimate ............................. 105 6.2 FTTP Network Requirements ....................................................................................... 107 6.2.1 User Applications and Services ............................................................................. 107 6.2.2 Network Design Considerations ........................................................................... 112 6.2.3 Target User Groups ............................................................................................... 122 6.3 FTTP Network Design ................................................................................................... 125 6.3.1 Network Architecture ........................................................................................... 125 6.3.2 The Role of the Metropolitan Unified Fiber Network (MUFN) ............................. 129 6.3.3 Network Design Assumptions ............................................................................... 131 6.3.4 Network Core and Hub Sites ................................................................................. 133 6.3.5 Distribution and Access Network Design .............................................................. 134
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