Demand Aggregation Workshop and How to Bring Broadband Home

1. Demand Aggregation Workshop and How to Bring Broadband Home • It’s the Harry and Mark Show!!

3. New York Pennsylvania Ohio Maryland West Virginia Virginia Kentucky Tennessee North Carolina South Carolina Mississippi Alabama Georgia

4. This Isn’t the Field of Dreams • You can’t do a “build it and they will come” because nobody will support the “build-out” without a solid ROI • Broadband will EVENTUALLY come to a theatre near you – how long are you willing to wait to see the movie or are you waiting for the video release? • You must take the initiative locally to obtain broadband services in your near future

5. What is Demand Aggregation? • What is it? • Aggregation of all internet usage within the business and commercial sector of the community

6. Partnerships – Building Relationships • Locally within the community • Regionally – multi-county • Partnerships may involve working with existing service providers and building new alliances – key element

7. Issues Within the Community • What are your issues? • Lack of service • Lack of high speed access • Price to high • Quality of service • Service interruptions • Lack of competition

8. This is a Business Application • Businessand commercial use such as traditional businesses, large educational and health sector users • This process does not benefit residential users

9. Sparkplug Needed!! • AC, Champion, or Autolite? [Guy’s thing!] • A “strong” locally committed individual or organization to champion the entire effort from beginning to end • You must have a SPARKPLUG or the process will fail

10. What’s Needed? • Committed local citizens (sweat equity) • Contributed local services including meeting space, printing costs, etc. • This is not a cheap undertaking you may need Big Bucks (and we aren’t talking about the four legged kind with antlers)

11. Reality Check (or Will the Contract for Services ever be in the Mail!) • Not a short term effort • You may not get a marriage proposal or a solid business case that makes sense to a service provider

12. Six Case Models

13. The Findlay Ohio Model • Issues: • Lack of high speed access • No local POP (we’re not talking about sodas and soft drinks!!) • Strong businesswoman became Sparkplug. • Three sector collaboration model; business, health and private higher education/college

14. Findlay Model Continued… • Process began in March 2000 • Off-shoot of E-COM Ohio study • Established Telecom Infrastructure Committee (TIC) • Average core of 5-15 members • All members were invited • Formal subcommittee of Findlay Chamber of Commerce

15. Findlay Model Cont… • Conducted two studies to determine Demand for services • First study focused on key business and major IT users • Second study went to 30-45 businesses • Sparkplug/chairman of TIC committee coordinated all communications between members

16. Findlay Model Cont… • All expenses were absorbed by local businesses • TIC planning meetings were closed to the public • All Chamber meetings were open to the public • No media involvement initially • Chamber received routine updates from IT committee

17. Findlay Model Cont… • Service providers initially contacted • No involvement once the planning process started • At completion of planning process, vendors were invited to make a presentation • 15 providers made presentations including telco, cable, ISPs and others

18. Findlay Model Cont… • TIC concluded that service providers would not make investment in infrastructure because demand did not generate enough ROI • TIC decided to fund infrastructure development through private venture capital funds - $500 K

19. Findlay Model Cont… • POP was installed and turned up on 9/1/01 • Created “Silicon Alley” in CBD to serve major businesses in community • A for-profit company was established to run the new ISP • www.centracomm.net

20. Findlay Model Cont… • Centracomm continues to expand • Service providers immediately started offering DSL and cable modem and other enhanced services once the POP was in place

21. Findlay Model Cont… • Model was successful in bringing both high speed access and a POP to Findlay

22. Dalton GA Utilities Model • DU was looking for a means to connect its numerous off-site facilities in the community to its central HQ to improve management over-site • DSL and cable modem services were not available • DU decided to install fiber infrastructure

23. Dalton Model Cont… • DU provides water/sewer/gas/electricity service to the community • Many large business users are in close proximity to DU off-site facilities • DU is part of a statewide wholesale electric service provider)

24. Dalton Model Cont… • Planning committee established in Sept 1998 • Small committee (CEO and 2 IT managers) • Initial concept was internal business application • When getting ready to string fiber, DU decided to overbuild and offer commercial service to schools, etc.

25. Dalton Model Cont… • Planning phase was short; based on internal requirements • ROW access was not an issue because DU owned existing utility poles and R-O-W • Initial planning to fiber placement took one year in duration

26. Dalton Model Cont..,. • DU decided to use an ATM network with six switches [lots of horsepower – mid-sixties muscle car!!] • DU constructed a mesh network design with built-in redundancy • Network included wireless applications with antennae on existing water towers (convenient if you happen to own all the water towers!)

27. Dalton Model Cont… • Entire project was internally funded by DU • A consultant was used for engineering design and fiber placement • DU conducted a survey of key businesses in close proximity to DU’s facilities

28. Dalton Model Cont… • DU held an open house for large industrial companies to showcase the fiber network • DU produced a public information video to be run on local community TV network • New ISP providers have come into the community

29. North Carolina Model • 23 county effort • Initial discussions began in 1993 • In 1995, Appalachia NC became involved in a statewide strategic telecommunications planning effort • ARC underwrote the Appalachian Region

30. NC Model Cont… • In Spring 2000, ARC began funding a Demand Aggregation project in the 23 county area • Southwestern Community College became the Sparkplug for the project • SCC invited other major partners to participate • Five to eight key individuals coordinated the whole project efforts

31. NC Model Cont… • Purpose was to secure high speed access for economic development purposes • Steering committee was formed • A technology advisor and legal advisor were added to the steering committee – Pro Bono • Local planning officials, economic development individuals and 14 Chambers of Commerce participated in the project

32. NC Model Cont… • Four committees were established; business, legal, political and technical • Over 100 organizations participated on the committees • Each member was required to sign a non-disclosure/confidentiality agreement – this was a key element that was critical in moving the project along!!

33. NC Model Cont… • Committee discussions included: ‘tiering’ of telephone services, redundancy, scalability, subscription rates, legal issues, quality of service issues, ‘last-mile and middle-mile’ issues, cost for internet access, POP needs, demand aggregation issues, economic development needs, and many other topics

34. NC Model Cont… • A major survey and data collection process was undertaken • $12.6M plus in demand usage was identified (internet/local and LD) • Analysis was done of existing telephone bills • This was an eye-opening experience and not a Bloody Mary in the morning!!!!!

35. NC Model Cont… • This allowed the steering committee to share normally ‘protected confidential data’ with potential service providers who were willing to sign non-disclosure agreements • A second demand aggregation survey was undertaken and more demand was identified • The project has just been completed with the development of a for-profit / non-profit partnership arrangement that will build numerous interconnecting sections [both last mile and middle mile] to connect to existing telecommunication infrastructure.

36. NC Model Cont… • In January 2002, a $4.3M federal grant from the Library of Congress was approved that would underwrite deployment of fiber optic network to serve schools and libraries. In FY 2003 an additional $10M was approved by a Congressional earmark. • Incidental costs associated with the planning process were absorbed by local committee members

37. NC Model Cont… • ARC invested $582k in the demand aggregation project – including salary, travel, supplies, marketing and advertising costs, web-page development and other services • Numerous consulting and legal services were provided pro bono

38. NC Model Cont… • The media was not initially involved in the process – however steering committee members gave numerous presentations throughout the 23 county area and the media picked up on what was being done

39. NC Model Cont… • From the beginning, the steering committee was seeking a service provider “alliance partner[s]” • Initial contacts with telcos were not encouraging • Service providers indicated they would be interested in the project findings

40. NC Model Cont… • Initially, service providers felt there was not enough demand to warrant the infrastructure investment • After $12.6M of demand was identified, two service providers were considered as being possible alliance partners • One of the providers decided that there simply was not an adequate ROI and withdrew

41. NC Model Cont… • The second provider was contacted • A number of issues were identified; ownership of equipment, the need for subsidized funding; middle-mile connectivity concerns were paramount, ROI projected to far into future, sharing of annual revenues between service provider and non-profit organization • So, is it really possible to have a revenue sharing arrangement with a service provider?

42. NC Model Cont… • Persistence pays off….. • In late 2002 “Wholesale Transport” costs began to tumble [$1,600 / $20 anywhere on net] and as a result numerous secondary service providers became potential partners. • A new 501 organization was established in order to own and deploy infrastructure • New telecommunication competition came into the market place, prices continued to drop, and deployment is occurring!!!!!!!

43. Sonet Ring and POP • In partnership with DukeNet and other providers a 214 mile 48 strand - Sonet ring is being established • A POP has been established in Asheville that is linked to Greenville’s POP, and the POP in the Research Triangle. • The State of NC and local partners provided funding for the network • Pricing on the ring is priced at Tier 1 level – like Washington DC! A total Win!!!!!!!!!!!

44. The Berkshire Connect Model • In the mid-90’s, two major companies left the area which resulted in 13-14,000 people losing their jobs • Several new tech firms moved into the area and needed high speed access • T1’s were available from telco but there were service quality issues and pricing was a major concern for the small business sector • Existing local businesses had pent-up demand for increased telco services

45. BC Model Cont… • Community leaders recognized the need to improve their economic development base • Increased telco services were viewed as an integral part of future economic / social development of the community • Initial planning group started in 1996 • All four sectors were involved in the initial planning stages • Local Planning Commission became the coordination organization

46. BC Model Cont… • Mission was twofold: expand high speed access and lower existing LD rates within the business community • This was a business/commercial user model (did not include residential users) • In the early stages, there were community-wide seminars to discuss steps to be taken • Local press attended these initial seminars

47. BC Model Cont… • Three committees were established; cultural arts, education, and business/industry • Some members were recruited; all were volunteers • A “coordinating task force” was established to coordinate the overall process • A “critical user” sub-committee was eventually formed to address technical issues

48. BC Model Cont… • The critical user sub-committee became bogged down (in a quagmire of technical muck jargon and lost their way in the swamp!!) • They couldn’t figure out which technology would work best – fiber vs wireless, radio vs microwave, satellite vs 2- tin cans on a tight string!!!!

49. BC Model Cont… • The coordinating task force met monthly and all other committees met as needed • Beginning in the Fall of 1997, a consultant was hired to develop a business plan and address the technical network issues

50. BC Model Cont… • A survey was done of the major business users to gather information on their use of T1 lines, the cost of service, and the quality of service • The survey also explored additional high speed line needs of the business community • A key component for the businesses was lowering LD rates