Broadband Communities

AUG-SEP 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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36 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | AUGUST/SEPTEMBER 2014 COMMUNITY BROADBAND safety communication towers, libraries, city halls, police departments, school districts and the state of Minnesota's high-capacity backbone. Ultimately, it also connected with the Dakota and Carver County networks and provided redundant paths out of the county, one to Mankato and the other to the 511 Building in Minneapolis, where hundreds of carriers interconnect. Te connection to the 511 Building meant that any carrier in the building could ofer services to Scott County, rather than the county's being dependent on the small number of carriers with infrastructure in the county. Te state Office of Enterprise Technology agreed to manage portions of the network in return for access to some of the connections, which lowered costs. Even early in the network's useful life, the results have been tremendous. Te local school district, which had paid approximately $58 per Mbps, slashed its costs to less than $7 per Mbps. Te schools now have almost unlimited capacity to upgrade to faster speeds that would have been cost- prohibitive to lease from a telephone or cable company. Te network is also responsible for bringing jobs to the region. When Emerson Process Management was selecting a site for a 500-job, $70 million investment, Scott County could ofer it afordable access to the fber network. Shakopee News reported: "Dependent on projected usage and other assumptions, over a 20-year period, it is estimated this would result in a net- present-value savings of between $1.1 million and $1.7 million for Emerson." Emerson picked Scott County. Te recent decision from Shutterfly to locate in Scott also came with an agreement to use Scott County fiber to lower its costs of connectivity. Ensuring that businesses will have an afordable – and, often more important today, reliable – Internet connection is increasingly essential to a healthy business environment. Te Dakota and Scott County conduit and fiber investments position them to ensure that those connections are available. WINDOM In southwestern Minnesota, approximately 4,600 people call Windom home. Te community is 135 miles southwest of the Twin Cities metro and is the county seat of Cottonwood County. Traditionally an agricultural community, Windom is home to several manufacturing plants. PM Beef, Toro, Fortune Trucking and Big Game Tree Stands are some of the biggest employers. Windom Municipal Utilities (WMU) began providing electric services to the community in 1895, at a time when private electric companies often claimed that electric networks were too complicated for local governments to manage. Te city also provides water and wastewater services. WMU began ofering cable services via its Windom Cable Communications (WCC) in the mid-1980s. In the late 1990s, Windom residents were frustrated by the refusal of the private sector to provide high-speed Internet connections. Dial-up was available, but Qwest had not yet deployed DSL in town. Meanwhile, the municipally owned cable company was losing customers to satellite providers, part of a larger cable trend nationally. When it investigated upgrading the cable facility, WMU realized that upgrading to FTTH would beneft the community signifcantly by allowing the utility to also ofer telephone and Internet access. However, per state law, ofering phone service would require passing a referendum by a 65 percent supermajority. Minnesota is the only state to have such a requirement. In 1999, Windom put the measure on the ballot but did not meet the supermajority threshold, in part because Qwest announced prior to the vote that it would soon expand DSL to Windom. After the referendum lost, Qwest chose to delay the investment. Exasperated local citizens asked for another referendum. Local officials were skeptical, given the time and expense of another ballot initiative on which the city was legally prohibited from taking a position and whose opponents were much better financed. However, in 2000, more than 70 percent of the voters supported the new initiative. In 2004, Windom issued $9.47 million in revenue bonds, using the financial tool most municipal fiber networks have used. Te utility sold bonds to private investors to be repaid with the revenues of the system. Shortly after beginning to connect subscribers to the new network, the utility encountered a problem not uncommon among small networks: Te demand was actually too high; more people were taking service than expected. Tough this may seem an odd problem, it results from the high up-front costs of connecting a home. At that time, connecting a home cost more than $1,500, an amount that is gradually paid of over a few years as the subscriber makes monthly payments for services. Adding too many subscribers too quickly requires an enormous up-front investment. Te mix of services is also important. Tose who subscribe to all three services – television, telephone, and Internet access – generate enough revenue to pay of the connection costs in a year or two, but a household taking only telephone services could take more than five years to recoup costs. Community-owned networks can face a tough decision in this situation, choosing between rapidly paying of Ensuring that businesses will have an afordable and reliable Internet connection is increasingly essential to a healthy business environment.

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