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

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Recap from August 5th Meeting

• Review and presentation of draft business plan
• Review of cost estimates for network deployment
• 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 19th meeting

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

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

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

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 ✓ ✓

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Residential Services & Pricing

Services Packages Description Monthly Rate

Internet Double-Play Triple Play

All Internet Services Are 100% Fiber & Symmetrical (Same upload & download)

Extreme 1 Gigabit Internet

$99.99

Power 400 Megabit

$59.99

Value 200 Megabit

$49.99

Starter 25 Megabit

$19.99

Premium 1 Gigabit Internet + Premium Television

$164.99

Preferred 400 Megabit Internet + Expanded Digital Television

$134.99

Value 200 Megabit Internet + Basic Television

$74.99

Premium 1 Gigabit Internet + Premium Television + Home Phone

$199.99

Preferred 400 Megabit Internet + Expanded Digital Television + Home Phone

$174.99

Value 200 Megabit Internet + Basic Television + Home Phone

$119.99 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.

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Business Services & Pricing

Services Packages Description Monthly Rate

Internet Television Telephone

Business Gig 1000 Megabit down / 1000 Megabit up

$499.99

Business 500 500 Megabit down / 500 Megabit up

$349.99

Business 250 250 Megabit down / 250 Megabit up

$229.99

Business 100 100 Megabit down / 100 Megabit up

$139.99

Business 50 50 Megabit down / 50 megabit up

$59.99

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

10 Business Lines 10 Business lines, unlimited local, custom long distance, advanced calling features

$359.99

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.

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

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

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

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$107.97 $97.96 $88.05 $78.30 $68.69 $59.18 $49.61 $40.36 $30.72 $21.36 $12.24 $4.40 $1.33 $1.89 $1.42 $1.25 $5.54 $0.38 $0.67

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Financial Results (Effective Take Rate: 38% Residential, 41% Commercial)

Break Even SChedule & Cash Balances (Cumulative, Millions)

$1.62

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Business Risk Analysis

Impact Risk Description Oct 2019

High Medium-Low

Organizational

Hampering the broadband business’ ability to function in the competitive environment

Sales & Marketing

Executing the sales and marketing strategy to maximize customer uptake

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

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

$(6.00)

10

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Business Risk Analysis

Annual Revenue at Varied Take Rates

Annual Revenue (Millions) $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $- $(2.00) $(4.00)

Break Even Expected

Effective Take Rate 20% 25% 27.5% 30% 35% 38% 40% 45% Annual Revenue (Millions) $(4.20) $(2.40) $4.27 $7.39 $9.50 $10.30 $13.2

Break Even Expected 11

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Business Risk Analysis

Annual Revenue With Rate Change Percentages

Annual Revenue (Millions) $20.00 $15.00 $10.00 $5.00 $-

Break Even Expected

$(5.00)

• 35%
• 30%
• 26%
• 20%
• 10.0%

0% 10% 20% Annual Revenue (Millions) $(3.10) $(1.00) $2.60 $6.10 $9.50 $13.10 $16.60

Break Even Expected Break Even Expected

Change in Pricing

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Business Risk Analysis

Annual Revenue Under Different Cost Scenarios

Annual Revenue (Millions) $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $-

Worst Case

Scenario 1 Scenario 2 Scenario 3

Expected

Scenario 4 Scenario 5 Scenario 6 Scenario 7

Best Case

Scenario 8 Annual Revenue (Millions) $4.6 $5.3 $6.7 $9.5 $10.1 $10.9 $11.2 $11.6