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

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

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Accessibility Statement City of Lakeland Broadband Business Plan - DRAFT by Magellan Advisors The City of Lakeland is committed to facilitating the accessibility and usability of its website, lakelandgov.net, and all documents therein for all

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Accessibility Statement City of Lakeland Broadband Business Plan - DRAFT by Magellan Advisors The City of Lakeland is committed to facilitating the accessibility and usability of its website, lakelandgov.net, and all documents therein for all people with disabilities. If you use assistive technology (such as a Braille reader, a screen reader, or TTY) and the format of this document interferes any way with your ability to access the information presented, please contact us. If you do encounter an accessibility issue, please be sure to specify the document page(s) in your email, and we will make all reasonable efforts to make the page accessible for you. Users who need accessibility assistance may also contact Jenny Sykes, ADA Specialist, at 863.834.8444 or Jennifer.Sykes@lakelandgov.net. Our website and all PDF documents on lakelandgov.net will be reviewed and tested on an ongoing basis, utilizing assistive technologies by users who have knowledge of and depend on the performance of these technologies.

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

City of Lakeland Broadband Business Plan

Presentation to City Council August 5, 2019

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Broadband Business Plan Project Timeline

Governance

Options to structure a broadband enterprise and how it would

  • perate within the City
  • rganization

Cost Estimates

Cost estimation, funding and financial results for building and

  • perating a broadband

enterprise

Final Business Plan

Council Presentation of the Most Feasible Options for Deployment

Feb 2019 Mar 2019 Apr 2019 July 10th July 22nd August 5th

Project Kick-Off Market Research Business Strategy

Project ramp-up, Residential & Deployment Options goal-setting, business surveys, Financial Plans milestones and market dynamics Operations & Staffing Plans project plan and competitive environment

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SLIDE 4

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Deployment Options

Fiberhoods Citywide Citywide + County

1 2 3

Service available based Service available to Service available to

  • n number of customers

homes and businesses in homes and businesses in that sign-up in each area the City limits the City limits and County

  • 3-5 Years
  • 3-5 Years
  • 3-7 Years
  • Up to 20,000 Homes

& Businesses

  • Up to 44,000 Homes

& Businesses

  • Up to 112,000 Homes

& Businesses

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SLIDE 5

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Key Assumptions in Each Option

  • FIOS overbuild is optional in all models
  • Triple-play services offered in all models
  • 38% residential take rate, 41% commercial take rate
  • 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
  • Standard pricing based on market research
  • O&M costs estimated with annual escalators
  • Staffing costs using industry standard rates, plus a 35% overhead (Lakeland’s rate)
  • Renewal and replacement – 7, 10, 20 and 25 year cycles based on asset lifetime
  • Financing: 20 year, annual payment of P&I, 4% rate, 1% cost of issue
  • Reserves: Operating reserves set as a percent of revenue

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Key Assumptions in Each Option

Operations General Management Engineering ✓ ✓ Project & Construction Management Call Center ✓ Insource Outsource ✓ Customer Service ✓ Billing ✓ Finance & Accounting ✓ Sales & Marketing ✓ ✓ Plant & Equipment Maintenance ✓ Warehousing & Inventory Management ✓ Customer Installations ✓

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SLIDE 7

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Services & Pricing (38% Expected Take Rate, Triple-Play Services)

Services Monthly Price

Internet Only 25 Megabit

$19.99

200 Megabit

$49.99

400 Megabit

$59.99

1 Gigabit

$99.99

Double-Play Value (200 Megabit Internet + Basic Television)

$74.99

Double-Play Preferred (400 Megabit Internet + Expanded Digital Favorites Television)

$134.99

Double-Play Premium (1 Gigabit Internet + Premium Television)

$164.99

Triple-Play Value (200 Megabit Internet + Basic Television + Home Phone)

$119.99

Triple-Play Standard (400 Megabit Internet + Expanded Digital Favorites Television + Home Phone)

$174.99

Triple-Play Premium (1 Gigabit Internet + Premium Television + Home Phone)

$199.99

Excludes taxes & fees. Taxes and fees for City broadband services will be at the same levels as what the competition passes through to customers today 4

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SLIDE 8

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Financial Results – Comparing the Three Options (38% Expected Take Rate, Triple-Play Services)

Within the Within the City City Entire Service Financial Metrics Fiberhoods (No FIOS) (With FIOS) Area Total Investment $51,257,896 $89,500,000 $96,844,759 $226,556,691 Revenues Exceed Expenses 4-7 Years 4-6 Years 4-7 Years 9-10 Years Annual New Revenue to the City $1,500,000 $6,700,000 $10,500,000 $18,900,0005

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SLIDE 9

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Sensitivity Analysis – Take Rate Adjustments

Sentitivity Analysis Impact of Take Rates on Annual Revenues

Fiberhoods Within the City Entire Service Area

Revenue in Millions $30 $25 $20 $15 $10 $5 $0

  • $5

Take Rate

  • $10

20% 25% 30% 35% 38% 40% 45% 50% Fiberhoods $(4.20) $(3.00) $(1.85) $(0.67) $1.50 $1.80 $2.69 $3.10 Within the City $(3.30) $(1.20) $1.90 $4.60 $6.70 $7.20 $9.90 $12.60 Entire Service Area $(7.80) $(3.60) $5.40 $16.40 $19.60 $21.70 $24.30 $26.10

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SLIDE 10

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Sensitivity Analysis – Price Adjustment

Sentitivity Analysis Impact of Price Changes on Annual Revenue

Annual Revenue in Millions

Fiberhoods Within the City Entire Service Area

$50 $40 $30 $20 $10 $0

  • $10

Pricing Increase/Decrease

  • $20
  • 30%
  • 20%
  • 10%

0% 10% 20% 30% Fiberhoods $(3.0) $(2.2) $(0.8) $1.5 $2.1 $3.5 $4.9 Within the City $(2.5) $- $3.7 $6.7 $9.2 $11.9 $14.7 Entire Service Area $(15.8) $(7.4) $1.8 $19.6 $25.5 $33.1 $43.1

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DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Financial Results – Other Options To Consider

  • Could the City offer other options?

1. Internet and phone only, no television 2. Aggressively priced gigabit internet and phone only

  • Why?
  • Some communities provide only internet and phone without television
  • Pros: less complex, lower operational costs
  • Cons: lower take rates, incomplete packages
  • Another alternative
  • Some communities provide low priced gigabit internet and phone
  • Pros: drives higher take rates, promotes digital equity
  • Cons: Higher take rates must offset lower prices to be sustainable

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SLIDE 12

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Financial Results – Other Options

Financial Metrics Within the City (No FIOS) ORIGINAL Internet & Voice Only (No Television) Gigabit Founding Member (Longmont Model) Expected Take Rate 38.07% 30% 60% Total Investment $89,500,000 $95,000,000 $95,000,000 Revenues Exceed Expenses 4-6 Years 4-7 Years 8-9 Years Annual New Revenue to the City $13,000,000 $5,500,000 $5,500,000 9

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SLIDE 13

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Financial Results – Comparing the Three Options (38% Expected Take Rate)

Within the City Within the City Entire Service Investment Category Fiberhoods (No FIOS) (Adding FIOS) Area 20,000 Homes &

35,000 Homes & 44,000 Homes & 96,000 Homes &

Service Area Businesses

Businesses Businesses

Businesses Fiber Feeder/Distribution $25,961,711

$47,440,153 $53,308,812

$135,030,623 Fiber Service Drops $5,213,824

$14,607,806 $14,607,806

$42,781,288 Equipment & Implementation $5,281,300

$10,400,980 $10,877,080

$23,944,780 Building Improvements $550,000

$800,000 $800,000

$800,000 Total Capital Costs $37,006,835

$73,248,939 $79,593,698

$202,556,691 Working Capital $14,251,061

$16,251,061 $17,251,061

$24,000,000 Total Investment Required $51,257,896 $89,500,000 $96,844,759 $226,556,691 10

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SLIDE 14

DRAFT INFORMATION ONLY

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

Simple Implementation Roadmap (Sample Only)

Phase 1 Phase 2 Future Phase Construction Construction Construction Begins Begins

Oct 2020 Oct 2021 2024-2025 2026-2027 Oct 2019 2022-2023

Engineering Begins First Customers Connected Phase 3 Construction

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SLIDE 15

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

DRAFT INFORMATION ONLY

Detailed Implementation Roadmap

2019 – 2020

  • Project Mgmt Year 1
  • Engineering
  • Construction Procurement
  • Equipment Procurement
  • Installation Procurement
  • Content Procurement
  • Construction Accounting
  • First Wave of New Hires
  • NCTC (Video Programming)
  • Cable Franchise
  • Enterprise Fund Structure
  • Regulatory Filings
  • Funding Acquisition

2020 – 2021

  • Project Mgmt – Year 2
  • Construction Phase 1
  • Data Center Installation
  • Office Space Lease
  • Data Center Installation
  • Second Wave of New Hires
  • Construction Accounting
  • Business Processes
  • Operations, Policies &

Procedures

  • Call Center Installation
  • Establish Sales Office
  • Branding & Advertising
  • First Customers Connected

2021 – 2022

  • Project Mgmt – Year 3
  • Construction Phase 2
  • Closeout Phase 1 Contracts
  • Operational Scaling
  • Third Wave of New Hires

2022 – 2023

  • Project Mgmt – Year 4
  • Construction Phase 3
  • Closeout Phase 2 Contracts
  • Operational Scaling
  • Fourth Wave of New Hires

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CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

DRAFT INFORMATION ONLY

Overview of the Options

  • Option 1: Fiberhood Deployment
  • City segmented into 20+ geographic fiber zones
  • Costs, number of customers and payback are known for every fiberhood
  • City solicits signups in each fiberhood
  • When a fiberhood reaches the signup rate, the City builds
  • Each zone can have a different signup rate, based on costs
  • Buildout could be limited to a certain amount each year, controlled by City
  • For example:
  • The City needs 2,000 out of 8,000 households to signup to generate enough revenue

to pay back the investment

  • Estimated 3 zones per year over 4 years, 50% of the City deployed
  • The deployment could be lower or higher, based on demand
  • This creates uncertainty for deployment
  • If every zone meets the signup rate, how does the City buildout?

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SLIDE 17

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

DRAFT INFORMATION ONLY

Overview of the Options

  • Option 2: Citywide Deployment
  • Covers the entire City
  • 9,000 homes/businesses are in FIOS territory
  • 35,000 homes/businesses are not in FIOS territory
  • City could choose whether to build to these premises now or later
  • Perhaps build to them after the other areas have been deployed
  • Magellan has modeled it both ways
  • First year includes startup activities and engineering
  • Years 2-5 include construction for non-FIOS zones
  • Years 6-7 include construction for FIOS zones (optional)

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CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

DRAFT INFORMATION ONLY

Overview of the Options

  • Option 3: Citywide & County Deployment
  • Covers City and portions of the County
  • Fiber within the City
  • Fiber in denser areas of the County
  • Wireless in less dense areas of the County
  • City can select whether to deploy in FIOS areas
  • For both the City and County
  • Wireless would not be deployed where FIOS exists
  • Not a competitive service with FIOS

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SLIDE 19

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

DRAFT INFORMATION ONLY

FIOS – Should the City Overbuild?

  • Map illustrates FiOS service areas
  • Red shaded areas show FiOS according to FCC
  • Black dots with numbers show actual FiOS customers

and their speeds from market survey

  • FiOS covers a good portion of the LE service area
  • 40,634 total customers
  • 9,011 in the City
  • 31,623 in the County
  • Risky for City to buildout in areas where FiOS is

already entrenched

  • Very few cases of multiple competing FTTH networks

in a single market

  • Frontier could reduce its prices since it’s plant is

already partly depreciated

  • Result is lower uptake for Lakeland
  • Uncertain future for the FiOS network. Will Frontier sell,

invest or maintain it?

Pink Shaded Area: FiOS Service Area Green Area: Outside City Zones Black Dashed Line: City Limits Blue Dashed Line: LE Service Area

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SLIDE 20

CONFIDENTIAL & PROPRIETARY PROPERTY OF THE CITY OF LAKELAND

DRAFT INFORMATION ONLY

City of Lakeland Broadband Business Plan

Questions

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