Broadband Communities

JAN-FEB 2017

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 2017 | www.broadbandcommunities.com | BROADBAND COMMUNITIES | 53 $10,000, rather than the $70,000 or more normally necessary. OVERVIEW e model is available at www. FTTHanalyzer.com. It comes with three tabs for different network sections and a summary top sheet. Unlike the original spreadsheet, upon which the new tool is based, the model now covers five years rather than four. Adding new tabs, each representing a unique section of the network build, is possible at any time as long as the new tabs are placed between existing tabs that represent sections of the build. Any network section except the first or last in the stack can be omitted by deleting its tab or by setting to zero the number of premises passed and the money raised to fund the passings. Any worksheet except the summary sheet can be modified without breaking the model – an important factor for ease of use – though modifications require some care. Read on for details about all these processes. GENERAL ADVICE Users new to the practice of business modeling often attempt to add too much detail in the early stages. Trying to pin down in advance the exact prices for, say, Wi-Fi routers in customer homes is almost never worth the effort. Other costs are far, far higher, and an extra $10 or $20 per unit should not be the make-or-break point in any decision. Polling residents to see how many would use the proposed network and to find out what services they want and will pay for is far more important. Once a network is operating, such items as that Wi-Fi router become more important. As operating experience increases, financial models become progressively more detailed. Broad B and Communities offers two monthly cash flow tools for that purpose. However, when considering a new broadband network, carefully testing key leverage points is most important. ese leverage points include technology (fiber, coax, wireless), expected number of customers, expected average revenue per customer, cost of using existing utility poles, cost of linking to national and state broadband trunk (middle mile) networks and so forth. In a modeling exercise, make sure the uncertainties don't all point in the same direction! Network proponents can easily lowball cost estimates and be overoptimistic about revenues, of course, but those issues are fairly evident. Timing of cash flows is not as easy to understand. A proposed network might indeed meet or exceed its revenue projections but probably not until a few years after operations start. Modeling is especially important for fiber-to-the-home networks because FTTH is different from copper. FTTH networks usually require higher up-front capital expenses than other types of networks, but because they are generally much easier to maintain, they have lower operating expenses. ey use less electric power and are less affected by temperature extremes and flooding. ey can often be repaired remotely, without a truck roll. Capital expenses for upgrades are also lower because FTTH networks are almost future-proof. Once fiber is in the ground, it can accommodate vastly higher bandwidth through changes only to the electronics. Finally, fiber networks have much higher revenue potential than copper networks. e economics of broadband networks can vary widely depending on competition, construction and marketing costs, customer uses and the needs of local businesses. Don't rely on rules of thumb. is magazine has reported on network builds with times to cash-flow breakeven that vary from less than one year to seven years. IS FIBER A POSSIBILITY? Using this model when first considering a network or network expansion can help a community avoid hiring a consultant to develop detailed financial projections when the numbers can't possibly work. In addition, community residents have more confidence in a model if they fully understand what goes into it. To estimate costs quickly, visit Broad B and Communities ' Fiberville. com database of more than 1,000 FTTH deployers (including almost 200 communities). Find a deployer nearby or in a similar circumstance, and call for the basic numbers. Other BROADBAND COMMUNITIES' FINANCIAL MODELING TOOLS The financial models available to view and download at www.FTTHanalyzer.com include investment calculators for • Cable companies, telephone companies or municipalities • Rural providers • Providers in multifamily housing • Multiple neighborhoods (introduced in this article) and the following revenue calculators: • Customer monthly revenue calculator • 18-month operational cash flow calculator. Broad B and Communities placed these models into the public domain for anyone to use and modify free of charge. If the models are incorporated into a commercial package, Broad B and Communities should be credited. Broad B and Communities can provide limited free guidance by telephone to help users get started. More hands-on help and presentations to community or company audiences are available for a small fee. Call 877-588-1649, or contact us at nancym@bbcmag.com.

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