City Council Agenda Packet 05-23-2005 Special
City of Monticello, Minnesota
.
City Council Workshop
May 23, 2005 at 5:00 PM
Presentation by:
Milda Hedblom & Springsted Incorporated
The World of Broadband
A. Introduction by Council member Wayne Mayer
B. Broadband Options
C. Fiber Network Options. Flavors of fiber optic networks
D. Fiber Network Goals in Monticello
E. Fiber Network Benefits to Monticello
F. Fiber Optic Network Risks to Monticello
G. City Options for Fiber Optic Services
H. legal Requirements, Political Considerations, Business Needs As Owner/Operator
. I. Financing the Fiber Optic Network
J. Experience and testimony by Dennis Nelson, City of Windom Administrator
.
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MUNI DEBATE: SMALL CITIES . 1'1.1> I",:.'~j:::~~,::>
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Small Cities Can Do This:
~.
How Windom, MN Built a
Fiber-to-the-Home Network
John Gumpcl . Director {!/Product Management, Primal Solutions
.
Bringing fiber 10 rhe home is II
major financial and technical
undenaking. 'X'hilernany (IOlll-
Inunities rco.>gnil.e the economic
;!fld social bendlt, these project, can bring,
they also view the obstacles and challenges
a, daunting barriers. 'Ihis anicle examines
rh(, journey 10 broadband rah,n by one
Sill all community, Windolll, Minnesota.
Windom's succC.\s proves thlll it io possible
[0 rollout a next-'geIH.Tation broadhalld net-
work on time and wirhin hlldgn.
When sn];JIlc:r communitie.\ cornpare
their resout<;(,S and budgns with these larger
effons, Ihey often experielln: "sticker shock"
and delay making decisions alld taking :lC-
rion. J'lowevcr, smaller cOllllnunities caH
;md have successfully built ;lnd deployed
FTTI-I networks wirh limited blldgets and
resources.
"l11e City of Windolll I'a\ shown dUI
through eHecriw planning, n:.\(,arch and
educatioll, and by working closely wirh
carefully selected vendors, srnaller com-
munities call successfully rollout the kinds
of advanced communic~rions services re-
quired to support eCOllornic growth ~nd
enhance the likHyks and well-lwing of
their residellls.
We describe how Windom's project be-
gan, wbon] Windom selened as vendor
partnt:rs, issucs hced and remlrs achieved.
Includcd is firsr-hand advice frorn city lead
crs OIl what other dries should cotlsidcr be-
D)re .\taning their own broadband proj,Tt,.
.
Introducing the City of Windom
Windolll is a regional rL,nsportation hnb
in sOlltllwesu.;rn Minnesota 13'5 tndes hotn
Sc Paul. Ii bas ~ diverse ecoll(Jlnic base thai
iw,ludes manuEinuring, agriculwrc medi-
52
BROADBAND PROPERTIES
cal, and adnh C;lfe facilities. Its popularion,
however, is only 5,000. For over 100 years,
Windom Municipal Urilitks (WMUl has
provided t1H' City of Windom wilh electric,
w~ter and wasrcwater services. For dw pan
rwenty years WMU has also operated aIld
maintained a cable television systeJlI,Win-
dOIll Cable Communications (\xrCC).
Last momh, Windom launched a new
citywide ilber.-ro-Ihc-hol1w network. TIle
pron," took less than a ycar from the deci"
,ion to stan. 'The emire journey to broad-
b,lIld, however, lOok far longer. In the laIC
90s, WindoIlI officials began investigating
options ((n upgrading the city--owunl and
operated cable television system. Initial in-
vestigations suggored th~t new technolo-
gies would enabk lhe city to nor only up-
grade its cable sysrern, bur ro also provide
voi(:(I communicariOIls and much-needed
high-speed dar~ and Internet acn,s\ sn-
vitTs.
Be!,)re Windom could f(mTlally ,kdi-
c~te resou rces to addressing irs nllnrnuni-
cations cha lIengl', however. the city was re-
quired by state law to obrain a lwo-rhirds
majority vote of approval CrOHI its citizens.
] .argt,ly due ro the incumbent telecomIllu--
niC<lrions operaror's anlJouncem.elH rhar it
would upgrade irs infrastrucrurc ;lud roll
out digital subscriber line (DSL) ,ervices
in Windom's area, th" initi~1 VOrl' in ]')99
<.)1] a nt'W cit)'--olVn(,d nt'twork failed. Bllr
after the incumbent canc<:Ikd its plam
for 05L, a citizens group pcritioned
Windom's city council to put the releconl--
rnunications ptoject back on the ballot. In
spring 2000 Windom received approval
by th" vorers to lwgin work on a next-gcn-
eration broadband u.lmmunications infra-
SI ructure projeCL.
www.broadbandproperties.com
MAY 2005
Getting Started by Getting Educated
According to Dennis Nelson. Windom
Ciry Adminisrraror, the firsr challenge the
community fan,d was getting educated
about available tech nologies and about the
oprions that would w(lrk besr for Windom_
".My advice m orlwr communirics inws-
rigaring a communiry nnwork," said Me.
Nelson, "is to get educatedl"
So, in carll' 20lH, Windom's city coun-.
cil 1,}rnlt"J ~ relecommunicnions commit--
ree In~de up or community residents, 'the
council had tWO ,nandate,: Fint, /.() under-
stand and educate residents oC the (OHUnU--
niry about available options 1,-,1' upgrading
the existing cable television system; and
,(:cond, to investigatc rhe feasibility of of~
kri ng addition a I ColnllltI n ieations servin!>
to the conul1l1llity.
'I he committee hired Vectren C:ommu-.
nicariol1S Services w do a feasibility Hudy.
In addition ro evaluating the existing ca-
ble inCr;ISlrIlCrUre, Vectren evaluarc.d the
strengrh of the cOllllllunity's willi ngness to
pay for new voice, data and video sLTvices.
Findings of rlw srudy, which were based
on focus groups and surveys :.1> welJ as eco--
nomic and financial cmalysis, suggesred the
fi)lIowi Ilg:
. Residents and business owners believed
that their currem tdeeommunicuions ser-
vices were not adequate.
. '1 ht: communiry .supportnl the ciry's (kci-
sioll 10 i tnprov,; the loealnerwork.
. Resitk-nts and business owners expressed
!Tun and confidence in city managemenr
and the relecomrnunications comminn,.
. Financial and economic an~lysis support-
ed tbe objectives of dl(' project.
Based on the favorable resulrs oC rhr
srudy, the telecommllllications comnJilttT
.
Key Vendors, Windom FTTH Rollout
.
cOll1mL,iont,d a second study to evaluate
deployment options. TwelVe: scenarios
Wc:re considernL a nd a libcr-to"rhe"homc
,olurion was recollllllendnl. Once the
ciry understood what it wanted to build, it
could address the challenge oHundi nt:.
Funding without Taxes
Windom chose to fund itsFT'TH project
with nluuidpal revenue honds. Windom's
plan is to r'Vay these bonds fron, revenues
generated hy till' new services it'. will pro-
vide. rather tlun horn tax revenues.
"Our liming was per/cu," said Me. Nel-
SOf]. "When our bond.\ were issued, imeresl
r:Hn were at near-hisrorical low.\."
Windom rcc;:dvnl $9.4 million from it.\
bond issue, or which $800.000 was used to
pay the first two y<:ars of interest, leaving
$8.6 million available to fund the projeCl.
Based on linanda Is and projections th;u
were audited ;!nd vnifi(,d by an outskk
third party. the City orWiudom expect.\ to
Ix proflrable wirhi.n seven years.
Critical Process ofI'artner Sclecriou
After feasibility, the next step W;''i uer-
work de.sign. For this rask, \(lindom select-
ed Finely Engineering of St. Paul. Finely's
design was completed and approv(:d by rfl(:
communk~dons (omnlinn' ill thr SLUTl-
mer of 2003.
With the nerwork design complerr,
Windom's telecomnlunicat.iol1S COIT1JT,it,.
tee began select.ion or orh"r partllers who
wou ld be needed to build and run rhe net-
work.
"Choosing the right lnix of vendor pan-
flUS is a crucial srep in rhe process:' said
Mr. Nelson. In addition to a standard
R FP prucess. thr commiuce relied heavily
on v(:ndor interviews, evaluation of vendor
Expected Service Take Rates
.
backgrounds and customer references to en..
sure that the city would select capable and
trusted partners. lhe table lists the vendors
Windom selected.
To eHicient.ly ;Ind eHcctivdy servkr
2,000 homes ~nd 300 businesses with ekc-
rricity. w;ller, wastewater. cable television,
Tl1terr\(~t and telephone, the dty's mpport
systems needed to be upgrJded,
Windom chose Technology Soludons
& Consuharm eISe), a local professional
services organization. to help identify and
sckct critica I operations support infra-
suucture, including a customer care and
billing (CCIl) solutiOn.
"Finding;! .lingle CCB solution that
could manage the city', tr"dition;\1 utility
service.\ along wid, it, new te!e:communi-
cations ,ervices was a challenge," said Jody
Crowe,lI of TCS, 'lh(, (City cho,e' Connect
CCH fWfll my firm. Primal Solutiuns.
Staffing, Launch and Take Rates
Tt) run il.S new operarions, Windom add-
ed. f(mr positions fO ils t.elecommunicarions
staif, bringing the rotal [() six - a modest size
considering the value of the new services the
city can now olkr. induding IIcxr genera-
tion triple-plav combinations of voice. digital
"able and high spenl] nrnnel. W'indom be-
g.1l1 building it.\ 'H;W network last June. By
last month buildour was complete with no
delays and no eosl ovcrnIlIS. Lllln(:h wa, a
lew weeks ago,
Windom's fiber network, which runs en"
rirely through underground "onduit, pass",
2,000 homes and 300 businesses. or the
2 ,500 stru(:(u res passed. only live declined
hookup to the neVi network.
Based on teasibility studies, connection
rates and additional market research, Win-
dom city officials expect" to see service rake
rates outlined in the accompanying table. .
About the Author
John Gu.rrlpef 1Il'l'rsel'5 produrt rin;r/opment
for Primal SolutiO!H of Imine. CA, whose 'd~
ferin:;.' include billing ,wlutio!7.i for mu.niri-
pa/itin, utilitil'J, and othl'r tIltitin launrh-
ing FI TH 1l('tll.l()r!C, IllIIi JI'r/iices. He can he
I"("/lhcdlll johll Gu In;wl(iJ l'rinlil!. com.
MAY 2005 , www.broadbandproperties.comiBROADBAND PROPERTIES 53