Accessibility Statement City of Lakeland Broadband Business Plan - - PowerPoint PPT Presentation

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DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND City of Lakeland Broadband Business Plan Presentation to City Commission August 19, 2019

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 2 Recap from August 5 th Meeting • Review and presentation of draft business plan • Review of cost estimates for network deployment 1 2 3 • Analysis of the three deployment options • Direction from City Commission: • Finalize business plan based on Citywide deployment • Review plan and financials with City staff • Present this option at August 19 th meeting

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 3 Deployment Assumptions • Deployment of fiber to the home to 100% of homes and businesses • About 44,000 total premises • City will offer Internet, television and telephone services • City will offer bundles of most popular options • Effective take rates: 38% residential, 41% commercial • Year 1: Engineering, funding, organizational structure, key hires • Year 2: Construction, building operations, main hiring • End of Year 2: First services available • Years 3 – Beyond: Additional construction phases, operational scaling • Pricing levels based on creating the most competitive packages at the lowest rates • O&M costs estimated with annual escalators • Staffing costs using industry standard rates, plus a 35% overhead (Lakeland’s rate) • Renewal and replacement – 5, 10 and 20 year cycles based on asset lifetime • Financing matches term of each asset class • Operating reserves set as a percent of revenue, per year • Capital reserves set as a percent of total capital, per year

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 4 Operational Assumptions Operations Insource Outsource ✓ General Management ✓ Engineering ✓ Project & Construction Management ✓ Call Center ✓ Customer Service ✓ Billing ✓ Finance & Accounting ✓ ✓ Sales & Marketing ✓ Plant & Equipment Maintenance ✓ Warehousing & Inventory Management ✓ Customer Installations

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 5 Residential Services & Pricing All Internet Services Are Services Packages Description 100% Fiber & Symmetrical Monthly Rate (Same upload & download) 1 Gigabit Internet $99.99 Extreme $59.99 Power 400 Megabit Internet 200 Megabit $49.99 Value $19.99 Starter 25 Megabit $164.99 1 Gigabit Internet + Premium Television Premium Double-Play $134.99 Preferred 400 Megabit Internet + Expanded Digital Television $74.99 Value 200 Megabit Internet + Basic Television 1 Gigabit Internet + Premium Television + Home Phone $199.99 Premium Triple Play $174.99 Preferred 400 Megabit Internet + Expanded Digital Television + Home Phone 200 Megabit Internet + Basic Television + Home Phone $119.99 Value Actual pricing may vary depending on market conditions at the time of launch. Prices are exclusive of taxes and fees Taxes. Current providers charge same taxes and fees.

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 6 Business Services & Pricing Services Packages Description Monthly Rate 1000 Megabit down / 1000 Megabit up $499.99 Business Gig $349.99 Business 500 500 Megabit down / 500 Megabit up Internet 250 Megabit down / 250 Megabit up $229.99 Business 250 $139.99 Business 100 100 Megabit down / 100 Megabit up $59.99 Business 50 50 Megabit down / 50 megabit up Television Prices are customized based on each programming package and type of business 20 Business Lines 20 Business lines, unlimited local, custom long distance, advanced calling features $679.99 Telephone $359.99 10 Business Lines 10 Business lines, unlimited local, custom long distance, advanced calling features Single Business Line Unlimited local, custom long distance, advanced calling features $39.99 Actual pricing may vary depending on market conditions at the time of launch. Prices are exclusive of taxes and fees Taxes and fees are levied on all existing providers.

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 7 Funding Requirements (Effective Take Rate: 38% Residential, 41% Commercial) Funding Category Total Costs Service Area 44,000 Homes & Businesses Fiber Feeder/Distribution $53,308,812 Fiber Service Drops $15,713,504 Equipment & Implementation $10,686,640 Building Improvements $800,000 Total Capital Costs $79,593,698 Working Capital $17,000,000 Total Investment Required $97,508,956

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 8 Financial Results (Effective Take Rate: 38% Residential, 41% Commercial) Break Even SChedule & Cash Balances (Cumulative, Millions) $107.97 $97.96 $88.05 $78.30 $68.69 $59.18 $49.61 $40.36 $30.72 $21.36 $12.24 $4.40 $1.89 $1.42 $5.54 $1.33 $1.25 $0.38 $0.67 $1.62 2022 2023 2025 2026 2027 2029 2030 2032 2033 2035 2036 2037 2039 2021 2031 2024 2028 2034 2038 2040

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 9 Business Risk Analysis Impact Risk Description Organizational Hampering the broadband business’ ability to function in the competitive environment High Sales & Marketing Executing the sales and marketing strategy to maximize customer uptake Oct 2019 Political Will Political will resulting in a change in direction “midstream”, not based on the needs of the business Time to Market Sales & marketing getting ahead of operations, not meeting customer expectations Medium-Low Technology Change Adapting to the changing technology environment, falling behind the curve Operational Integration of operational departments and processes to win customers and keep them happy

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 10 Business Risk Analysis Annual Revenue at Varied Take Rates $16.00 $14.00 $12.00 $10.00 Annual Revenue (Millions) $8.00 $6.00 $4.00 $2.00 $- $(2.00) $(4.00) Break Even Expected $(6.00) Effective Take Rate 20% 25% 27.5% 30% 35% 38% 40% 45% Annual Revenue (Millions) $(4.20) $(2.40) 0 $4.27 $7.39 $9.50 $10.30 $13.2

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 11 Business Risk Analysis Annual Revenue With Rate Change Percentages $20.00 $15.00 Annual Revenue (Millions) $10.00 $5.00 $- Break Even Break Even Expected Expected $(5.00) -35% -30% -26% -20% -10.0% 0% 10% 20% Annual Revenue (Millions) $(3.10) $(1.00) 0 $2.60 $6.10 $9.50 $13.10 $16.60

DRAFT INFORMATION ONLY CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND 12 Business Risk Analysis Annual Revenue Under Different Cost Scenarios $14.0 $12.0 Annual Revenue (Millions) $10.0 $8.0 $6.0 $4.0 $2.0 Worst Case Break Even Break Even Expected Expected Expected Best Case Change in Pricing $- Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Scenario 7 Scenario 8 Annual Revenue (Millions) $4.6 $5.3 $6.7 $9.5 $10.1 $10.9 $11.2 $11.6