Broadband Communities

JAN-FEB 2014

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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JANUARY/FEBRUARY 2014 | www.broadbandcommunities.com | BROADBAND COMMUNITIES | 47 the community's middle-mile infrastructure. Te provider leases 150 miles of backbone fber (out of a total backbone build of 300 miles) instead of constructing it, and that fber is available within weeks of the agreement. 12 Te avoided cable construction cost is more than $16 million – a savings only marginally ofset by the cost of leasing fber; at $1,000 per mile per year, the fber lease costs $150,000 annually, or $750,000 over fve years. In addition, the use of locality facilities for hubs saves $100,000 in construction costs for each of the 30 hubs (out of the total 40 hubs), for a total avoided cost of $3 million. As with the fber, lease fees are modest relative to the avoided construction cost. In this scenario, the requirement for developers to construct outside plant has been in efect for a few years, and 20 percent of residential buildings have outside-plant pathways for fber to the rights-of-way. Tis reduces construction costs by $5,000 per building for 75 buildings relative to a scenario with no outside-plant requirement, in which perhaps only 5 percent of buildings would have available conduit to the rights-of-way. Te aggregate construction savings in this step is $375,000. Similarly, the locality's requirement for inside-plant cable pathways has also been in efect for some time, again resulting in 20 percent of buildings' having inside-plant pathways, compared with 5 percent in a community without the requirement. Te potential savings under this scenario is $500 per unit, or a total of $1.5 million. Te opportunity to attach to the cleared space on the poles without make-ready on the 20 percent of poles where replacement or upgrade has been performed saves the provider both signifcant time and the cost of make- ready. (Signifcant savings also accrue to the other attachers, which do not have to dedicate resources to the make-ready process.) Te savings from this beneft averages $8 per pole, for a total avoided make-ready cost of $5.3 million. In sum, the estimated capital savings for a service provider constructing a fber network in the community is approximately $21 million out of the provider's total cable plant 13 and hub construction costs of $251 million (approximately $1,000 per passing). Table 1 lists the individual costs. In this hypothetical scenario, the majority of the total savings comes from leasing cable plant from the locality rather than constructing new plant. IMPACT ON CONSTRUCTION TIMING Signifcantly, the costs of cable plant construction and the hub buildings would have been incurred in the frst year or two of construction, and the costs of indoor cable pathways and building entrances would have been incurred in the frst three years. Tis $21 million in savings is more signifcant than other cost reductions because it occurs at a time when there is no subscriber revenue; therefore, the savings reduces the amount of capital that needs to be raised or borrowed. Te savings, then, reduces the level of risk in the overall project. Te community's eforts also make it possible for the broadband operator to reach more customers more quickly. A broadband operator with rapid access to fber or conduit throughout a locality can begin serving customers within months of starting construction. It can begin ofering service near the community's fber and conduit end points and focus on underground construction while negotiating pole attachment agreements and performing make-ready. As a result, the entire construction schedule could be accelerated by a few months to a year on a three-year project. Te result is an early revenue stream and the ability to move quickly to provide services (and competition) in the community. v Joanne S. Hovis is president, and Andrew Aferbach is CEO and director of engineering, of CTC Technology & Energy, a consulting and engineering frm that has been involved in planning, designing and engineering many fber optic networks. Tis article is excerpted from a longer report, which can be downloaded from www.gigabit- communities.com. Google Inc. provided funding for the report, but the report and its conclusions represent the views and analysis solely of CTC. Cost Category With Community Facilitation (millions) Standard Build (millions) Backbone Aerial $2.9 $6.4 Backbone Underground $7.5 $15.0 Access/Distribution Aerial $58.6 $63.9 Access/Distribution Underground $150.0 $150.0 Business/Multidwelling Unit Outside Plant $2.0 $2.4 Business/Multidwelling Unit Inside Plant $8.0 $9.5 Hub Build $1.0 $4.0 Table 1: Network deployment costs The endnotes to this article, as well as additional graphics, appear in the digital edition, online at www.bbcmag.com. BBC_Jan14.indd 47 1/27/14 1:46 PM

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