Study results to be presented Oct. 6, Rockport Opera House

Survey results: Owls Head, Rockland, Rockport residents want faster Internet, support municipal role in delivery

Fri, 10/02/2015 - 3:00pm

ROCKPORT — Midcoast residents could, if money were no consideration, have access to high speed broadband. They want it, according to a recent independent survey of Owls Head, Rockland and Rockport residents and the fiber exists, having been laid around the state five years ago. Connections to it, however, are inconsistent, and private Internet service providers have yet to offer hook-ups to all area residences and businesses — “premises,” as they are called.

If the municipalities, however, wanted to build out and hook up high speed Internet to its premises on their own, the costs have been estimated at $7 million for Rockland, $8 million for Rockport, and $3.1 million for Owls Head.

Those estimates are included in the final report of Tilson Technology, which will be presented during an Oct. 6 workshop with the municipality leaders. The fiber optic survey workshop begins at 6 p.m. and will be streamed live at http://livestream.com/rockportmaine, as well as televised on public access Channel 22.

Today, there are five privately-owned ISPs catering to premises in the Midcoast, and the connection speeds to the Internet vary widely. There are rural homes in Lincolnville that have faster upload and download speeds to the Internet than homes in downtown Camden, suburban Rockport or urban Rockland.

Meanwhile, the Maine School and Library Network provides fiber connections to all the public schools and libraries in the municipalities. And last year, Rockport invested in expanding its high speed fiber access network through its village, where Maine Media Workshops and Bay Chamber concerts are located. 

The inconsistencies of connection strength is why the municipalities of Owls Head, Rockland and Rockport commissioned Boston-based telecom and IT company Tilson Technology to investigate how to provide town citizens with high-speed Internet. The $52,000 contract called for Rockport and Rockland to each pay $22,000, and Owls Head, $8,000. 

With a public policy push, those three communities decided they wanted to see substantial improvements in how local residents and business owner connect to the Internet. To those towns, it is a matter of economic health.

The Three Ring Binder

In 2010, with $25.4 million from the federal government in stimulus money and $7.6 in private funds, the privately owned Maine Fiber Company began building the Three Ring Binder, a network of strung fiber optic cable that loops around the state to rural and economically disadvantaged areas.

The 1,100-mile network passed through more than 100 communities, theoretically to offer broadband to 110,000 households, 600 community anchor institutions, and a number of last-mile service providers.

The public-private partnership was intended to provide 100 Mbps broadband speeds for University of Maine campuses, community colleges, government facilities, public safety departments, the state’s research and education network, and rural healthcare clinics and hospitals.

The goal was to encourage economic development to in Western and Eastern Maine, northern New Hampshire, Vermont, and on to New Brunswick. 

The Three Ring Binder is a “Middle Mile” network, meaning it does not go to each home or business building, fire station or hospital. 

Those connections are known as “Last Mile” but since the Binder was built, few “Last Miles” have been created.

In 2014, Rockport ran a spur of fiber from the Binder to Rockport Village to service Maine Media workshops, the Rockport Public Library and the Rockport Town Office. 

That left town leaders looking to the next step, which is to see how the rest of Rockport could be connected to broadband.

Last spring, Town Manager Rick Bates said: "Our world is changing faster than any of us can imagine and all of the old rules of economic development are quickly going out the window, because of our ability to be connected. We have seen a dramatic shift in the way people work.... The Internet is critical to making that possible, and it has to be an Internet that is not just fast, but blazing fast. Mediocre is not good enough for us to be competitive.”

The notion of municipalities investing and building out their own public Internet service is not uncommon. In Oregon, the town of Sandy, with a population of10,000, is as an example of a municipality that took matters in its own hands in ensuring broadband to residents. SandyNet, the city’s public broadband utility, eschewed a wireless network in favor of a fiber optic network, and in 2014, the city council there issued a revenue bond for $7.5 million to improve and expand its network.  Sandy, Ore., now offers 100 mbps service throughout the municipalities to accounts for $39 a month.

In Maine, the city of Sanford just announced that it will be investing $1.5 million in a public-private partnership to expand the fiber network there. The city of South Portland is partnering with the privately-owned GWI to extend fiber through more neighborhoods there, and Islesboro is also partnering with GWI to lay fiber to that Waldo County island.

The Tilson study for Owls Head, Rockland and Rockport is now complete (see attached PDF), and is an analysis of what currently exists, and what the costs might be if the municipalities stepped in to build high speed Internet connections to their citizens’ premises on the taxpayers’ dime.

In late September, Rockland’s Community and Economic Development Director Audra Caler-Bell distributed a memo to the city councilors and manager. (See attached PDF).

In it, she wrote that the total cost of building out a network that will reach every premise in Rockland is $7.6 million while building a backbone network would be $1 million.

She summarized the recommendations of the city’s Economic Development Advisory Committee, which comprises local citizens.

“Council should make a commitment to actively supporting the goal of providing all premises in Rockland with access to the fastest broadband speed technologically available at the lowest price possible,” she wrote.

“The city should thoroughly explore the financial implications of a model where the city provides every premise in Rockland with access to fiber (1 gig per second speeds) and builds a fee into property taxes for the availability of this service and charges additional fees for usage. However, residents and business can choose whether or not to take advantage of this service or purchase internet access from another provider. Financial modeling would include determining what the lowest possible fee per premise would be based on different projections for take rates of users who choose to take advantage of this service.” 

 

Some basic findings of the Tilson study are as follows:

• The companies (aside from mobile wireless carriers) currently providing Internet service to the Midcoast include Lincolnville Communications, Time Warner Cable, GWI and Redzone. Time Warner Cable covers almost all of premises in the area – their largest coverage gap is in Owl’s Head in the Ballyhac Road area. Downtown Rockland has the most service competition, with all five retail providers offering services there.

• Time Warner dominates the retail Internet service market with an estimated 70 percent of the market share. In the survey, Time Warner customers reported that their favorite service attribute was the ability to get Internet, phone or TV on one bill. This attribute was more important than reliability, speed, price, and customer service. 

• Random survey results show property owners are supportive of a municipal role in improving broadband and the majority are willing to switch providers for a faster speed. They are also price sensitive, with a self-reported 14 percent willing to pay more than $75/month for service 10100 times faster than their current service. This self-reported take rate correlates closely with the observed rate on the GWI Rockport network, according to Tilson.

• Fiscally, Tilson projected that the three municipalities could see a 10-year increase in gross domestic product output of $42 million to $169 million, along with wage increases, and state and local tax revenue: “Among other effects, broadband enhances efficiency and productivity of firms, facilitates commerce, attracts jobs, increases consumer options, and saves residents money,” the study said. 

• Costs: Assuming a 100 percent buildout to all locations, the projected average capital cost per premise is lowest in Rockland ($2,497), which is a function of their relatively highest density of buildings and the fact that there are no underground utilities. The average cost per premise is followed by Owls Head ($3,364), then Rockport ($3,976). Rockport’s average capital cost per premise is the highest due its relatively low density and the presence of underground utilities.

• Total cost of a regional build-out and hookup (with a 75 percent take rate) is estimated at $18.8 million. Rockland’s investment would be $7 million; Rockport, $8 million; and Owls Head, $3.1 million.

• Tilson ran financial analyses on several network and operating models that would give all locations in each municipality equal access to an FTTP network. All of Tilson’s scenarios required minimum take rates [system buy-ins by residents and businesses] of 65-75 percent in order to be cash-flow positive in five years.

“These minimum take rates do not factor into the potential upside of municipal savings on existing telecommunications services, or additional revenue from add-on services like voice, IPTV and wholesale fiber leases,” the study said. 

Broadband: high-capacity transmission technique using a wide range of frequencies that enables a large number of messages to be simultaneously communicated. Broadband includes several high-speed transmission technologies such as Digital Subscriber Line (DSL), Cable Modem, Fiber, Wireless, Satellite, Broadband over Powerlines (BPL).

In January 2015, the Federal Communications Commission changed the definition of broadband and raised the minimum download speeds needed from 4Mbps to 25Mbps, and the minimum upload speed from 1Mbps to 3Mbps.

With the FCC change, the number of U.S. households without broadband access tripled, and illustrated that the country lagged behind other countries in Internet capacity. Moreover, the FCC said, “a significant digital divide remains between urban and rural America: Over half of all rural Americans lack access to 25 Mbps/3 Mbps service.”

Download and Upload: To download is to consume (move files from the Web to a personal computer, watch movies, etc.). To upload is to produce/send (photos, files, video) to the Web. To analysts, the uploading capacity of the Internet is even more important than the downloading, because it reflects economic productivity.

Mbps: Megabits per second. Not to be confused with megabyte (MB). A megabit is an increment used to measure download speed. Megabyte refers to a file’s size. A megabit is one-eighth the size of a megabyte, “meaning that to download a 1MB file in one second you would need a connection of 8Mbps.

Then there are the gigabytes (GB) and a gigabit (Gb), with the same ratio. A gigabyte is eight times larger than a gigabit.

• A price points of $70 per month for symmetric 1 Gbps service can be supported without a municipal subsidy for the ‘Town Wide Utility’ network and operating model. The Town Wide Utility model that assumes universal coverage and 100 percent subscription.

• A wholesale model operating model will require either high take rates, or a municipal capital or operating subsidy to maintain a wholesale rate compatible with a $70/month retail price point. Tilson estimates that to achieve positive cash flow in five years and service debt with network revenues, a wholesale fiber solution will require take rates of 65 to 75 percent. 

“Take rates of this nature are not common in cable overbuild situations such as planned here,” the study said. “Tilson believes that the network must break even at a much lower rate in order to remain feasible. This can only happen if network revenues are not necessary for servicing debt. Therefore, Tilson believes that any solution will require either private or public subsidy capital cost subsidy.”

The next steps, according to Tilson, are are for each municipality:

1) clarify its most important goals;

2) solicit information from potential service providers, funders and network operators;

3) pick a target operating model; and solicit private partners.

Tilson is warning municipalities that while there is unmet demand for broadband in the Midcoast, it mostly reflects dissatisfaction with quality, not lack of access.

Therefore, the region should not anticipate federal subsidies.

“Local public or private capital will be required to realize a network solution,” Tilson said.

“Furthermore, there is limited potential for the municipalities to enjoy any net revenue from these networks,” the study said. “For example, Rockport’s revenue sharing model with GWI is almost certainly not scalable. There is very little cash flow potential in a low cost, fiber to the premise business model. If the municipalities elect to pursue fiber-based solutions, they will need to provide the capital and should expect little in the way of cash returns from network operations.

“If the municipalities decide that the benefits of building out a fiber network are great enough to proceed, we recommend accepting the strong likelihood that they will need to explicitly create a sustainable revenue source, not rely on individual user choices to create one. If they proceed with developing a underlying network like the one that Rockport currently employs, this means funding a large portion of the municipal costs out of general revenue, not the fees generated by the network. Under this model municipalities may even wish to consider providing ISPs access to the network at nominal costs to stimulate usage and encourage lower retail prices. In the alternative, under a model that seeks to provide internet to everyone as a service of the municipality, this means understanding that this also needs to be funded out of general revenue or from non-optional user charges; the finances of the system likely cannot depend on voluntary sign-ups.”


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