Broadband Strategic Plan Nicollet County, Minnesota August 2, 2020 Finley Engineering CCG Consulting Nicollet County Broadband Report Table of Contents Page Executive Summary ...........................................................................................................3 Findings...............................................................................................................................5 Recommendations / Next Steps.........................................................................................9 I. Market Analysis............................................................................................................12 A. Providers, Products, and Price Research.................................................................................. 12 B. Surveys / Interviews................................................................................................................. 28 C. Broadband GAP Analysis ........................................................................................................ 34 II. Engineering Design and Cost.....................................................................................73 A. Network Design ....................................................................................................................... 74 B. The Technology........................................................................................................................ 78 C. Competing Technologies.......................................................................................................... 81 III. Financial Projections.................................................................................................97 A. Services Considered................................................................................................................. 97 B. Financial Assumptions ............................................................................................................. 99 E. Financial Results .................................................................................................................... 112 IV. Other Issues..............................................................................................................121 A. Funding for Broadband Networks.......................................................................................... 121 B. Finding an ISP Partner ........................................................................................................... 131 C. Our Recommendations / Next Steps ...................................................................................... 136 Exhibit I: Service Areas of the Incumbent Telephone Companies ...........................144 Exhibit II: Study Area ...................................................................................................145 Exhibit III: Backbone Fiber Design ...........................................................................1456 Exhibit IV: Hybrid Network Design ............................................................................145 Exhibit V: Summary of Financial Results...................................................................145 Page 2 Nicollet County Broadband Report EXECUTIVE SUMMARY Finley Engineering and CCG Consulting submit this Broadband Feasibility Study that provides our findings and recommendations for bringing better broadband to the rural parts of Nicollet County. The first phase of the study was to look at the need for broadband in the county. We tackled that task in several ways. We first communicated with residents and businesses through surveys, speed tests, and interviews to understand the broadband needs in the county. We talked to the existing service providers in the county to understand their long-term plans for broadband expansion. We investigated the current broadband products and prices available in the county today. Our analysis verified the county’s belief that the rural parts of the county have slower and mostly inadequate broadband. We then looked at what we call the broadband gaps in the rural parts of the county. This involved comparing broadband in the rural areas to broadband available in the cities in the county and elsewhere in the country. This report discusses the various broadband gaps we identified during our research and includes things like the urban / rural gap mentioned above. We discuss the homework gap where students without home broadband don’t perform as well in school. We discuss the computer gap where homes without computers don’t do as well as homes with them. We look at the broadband speeds available in the county today and compare them to other places. We discuss a number of ideas for overcoming the various identified broadband gaps. One of the issues we identified is that the databases the FCC uses to define broadband availability overstate the broadband available in the rural areas of the county. The FCC believes that most of the homes in the county have access to broadband of at least 25/3 Mbps – something that we are certain is not true. Unfortunately, the faulty maps are used by the FCC when determining the areas that are eligible for federal broadband grants. We discuss steps the county should consider taking to correct the FCC maps. The next phase of the study quantified the cost of bringing broadband to rural parts of the county. Finley Engineering studied three scenarios for bringing better broadband. The first scenario brings fiber to all rural parts of the county. The second scenario brings fiber to everywhere except the area served by Nuvera, since the company is likely to eventually bring fiber to those areas. The third scenario considered bringing fiber to Nicollet and to six wireless towers and would provide fiber broadband to 750 homes and businesses and bring 50 Mbps wireless broadband to the rest of the rural areas. Finley Engineering undertook the engineering analysis in such a way that they could generate the cost for building to any portion of the county if an ISP wants to consider coming to Nicollet County. We think this might be one of the most important parts of our product, since knowing the cost of building a network is generally the number one question asked by any ISP considering serving there. Next, CCG Consulting created financial models that reflect the potential profitability for an ISP operating a broadband business in the rural parts of Nicollet County. Just like with the Finley Engineering analysis, we could modify our work to fit some smaller footprint if an ISP were to be interested. These studies include assumptions that we think are representative for estimating the revenues and the costs from operating a broadband business. We were not surprised to find out that grants would be required to finance fiber construction in the rural parts of the county. That was fully expected; we’ve never seen a rural area where customer revenues fully Page 3 Nicollet County Broadband Report support the cost of fiber without some grant assistance. Our analysis shows that building fiber everywhere in the rural parts of the county would require at least 4.3 million in grants. We conclude the report by providing a list of specific steps that Nicollet County should consider after getting this report. The most obvious next step is to share this report with ISPs. This study is going to answer a lot of questions about serving in Nicollet County and might bring interest from an ISP that might not have otherwise considered coming to the county. There are a number of other recommendations talking about ways that the county can address the various broadband gaps. Page 4 Nicollet County Broadband Report FINDINGS Following are our primary finding: Existing Providers and Market Rates. The county has a long list of ISPs operating somewhere in the county today. This includes incumbent telephone service provided by CenturyLink, Consolidated Communications, and Nuvera. There are three incumbent cable companies operating in the populated areas including Comcast, Charter Communications, and Mediacom. There is some fiber to homes in the north of the county that has been built by RS Fiber Cooperative. There are several wireless providers in the county including MVTV, LTD Broadband, Radio Link, Nuvera, and the RS Fiber Cooperative. Some rural homes get home broadband using the cellular broadband from AT&T, Verizon, and T-Mobile, which recently merged with Sprint. The county is also served with satellite broadband and cable TV. The study looks at the key products and prices currently offered by these existing ISPs. The Study Areas. The county elected to look at a study that brings faster broadband to all parts of the county that are either unserved or underserved today using the Minnesota state definition of broadband. That defines anything slower than 25/3 Mbps as unserved and speeds between 25/3 Mbps and 100/20 Mbps as underserved. The study area is essentially all of the areas outside the cities, and a map is shown on a map in Exhibit II. The Study Scenarios. The broadband studies assume that the County will be seeking ISP partners to bring better broadband to the rural parts of the county, and our analysis was done from the perspective of the ISPs. The studies considered three scenarios: Bringing fiber to all of the rural parts of the county. Bringing fiber to all of the rural county except the area served by Nuvera (since they are likely to bring fiber to that area eventually). Bringing better broadband with a network