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PIRC Presentation

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by Joshua Montgomery on 21 May 2014

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Transcript of PIRC Presentation

Broadband vs. Fiber - An Illustration
Wicked Fiber
Historic Perspective
Neighborhood Selection
Our Technology
Economic Development Policy Objectives
Wicked Fiber Request
Source of Funds
Return on Investment
Direct Cost/Benefit Ratio- 1:1.53
City Threshold - 1:1.25

Historic Perspective
2005 - Founded as Non-Profit Lawrence Freenet to provide Internet to low income families
2005 to Present - Wicked provides
Free
service to dozens of non-profits, charities and low income families
2006 - Raised $1.7 Million in Equity $800,000 in debt
2008 to 2009- Survives financial crisis, improves technology
2010 - Puts first fiber-optic infrastructure into production
2011 - Becomes fastest ISP in the State of Kansas
2012 - Organization restructured, non-profit shuttered
2012 - Offer to give the ISP to the City of Lawrence

Neighborhood Selection
Wicked Technology
Economic Development Policy Objectives
Encourage existing industry to expand
Assist new business start-ups
Recruit new companies from out-of-state and internationally
Encourage high technology and research based-businesses
Encourage training and development of Lawrence area employees
Encourage the location and retention of "good corporate citizens" that add to quality of life through civic support and philanthropy
Economic Development for the 21st Century
Excerpted from Provo Utah fiber promotion - Copyright City of Provo (2013)
Offer Prompts CTC Report
CTC Report Highlights Broadband Problem in Lawrence
"...the residential and small business service offerings are costlier, slower, and more limited than in other comparable communities." - April 2013 CTC Report

CTC report provides great information, but does not examine Wicked Broadband's proposal

CTC's proposed strategies for the City of Lawrence fail the real world test
Seattle Gigabit project now dead
City of Lawrence's first middle mile customer decided to build separate network

Not a single network world wide has been built without substantial investment by government
Including Google Fiber
Dawn Fiber Builds Own Middle Mile
Dawn Fiber, an local ISP start-up, elects to build own network rather than lease middle mile fiber from the City of Lawrence
Middle Mile leasing strategy proposed by CTC requires both capacity and customers

East Neighborhood selected via Pre-Registration Contest
10% of Addresses Pre-Registered
459 Businesses
3,762 Employees
$619M in economic activity
Central & West Neighborhoods selected for proximity to existing fiber and R&D staff
Common carrier fiber network
Promotes Competition
Enables Innovation
Drives Prices Down

System can accommodate up to four carriers at each address simultaneously
Four (4) fibers per address
Best way to bring Google Fiber to Lawrence
Future Proof - Theoretical Limit of 8 Petabits Per Second [8,000,000 Gigabits] enough capacity to download the entire sum of human knowledge (250 exabytes) in 1.5 hours

Active Ethernet network
100x Faster than Average American Broadband

Customers Love the Service
Taken from City of Lawrence Economic Development Goals, Process and Procedures - 5/18/10
"I would highly recommend you switch to Wicked"
- Shirley Goodburn House Director at Alpha Delta Pi
"The students at Triangle are consistently able to rely on quality uninterrupted service and no limits on bandwidth or number of devices. The old contract prices we had with other companies offered little to no support, and terrible speed at double the cost. -
Eric Bloom Treasurer at Triangle Fraternity
Our Fiber Optic Customers Love the Service
"We were the first household to have access to the 1 Gbps Fiber services....With our previous provider, we constantly had difficulty streaming movies and such, but we have had zero issues since switching to Wicked Broadband -
Kim Hirmas
"This new bandwidth allows us to be more competitive and this in turn should lead to job growth here at our company over time." - Tim Hunsinger President Scanning America, Inc.
"[Wicked Broadband's] customer service is tops, internet service is excellent and the staff is always there to help." - Nancy Combest House Director Sigma Kappa Sorority
"Sigma Nu places a very heavy load on our Internet service, as most guys in the house enjoy downloading a lot of music, movies and programs as well as streaming shows and movies from sites like Netflix and Hulu. This being said, our service is very fast and very reliable."
- Jandon Riesenberg Chapter President Sigma Nu Fraternity
"We went from daily drops in broadband bandwidth during high-use times to steady Internet service."
- Judy Carpenter House Director Delta Upsilon Fraternity
Policy Goal:
Assist new business start-ups
Chattanooga, TN...."The entrepreneurial community in Chattanooga is booming as well. Thanks to organizations like the Lamp Post Group, entrepreneurs have access to the financial and technological resources to help get their start-ups moving from concept to reality. The Lamp Post Group is one of the many start-up based groups that have formed since [Chattanooga's] SmartGrid creation." - KU SBDC - Page 24


Kansas City, KS...."In the 14 months since [Google Fiber's launch], Kansas City Startup Villiage has grown to 13 properties and 25 start-ups within six blocks of one another. "- KU SBDC - Page 24
Policy Goal:
Recruit New Companies from Out-of-State and Internationally
Bristol, VA....
"Northrop Grumman created over 700 jobs because of easy access to the BVU network.....In 2010, DirectTV, one of BVU's competitors opened up 100 jobs in the area for a virtual call center. Again, access to a gigabit netowrk was listed as the main reason for the placement of the center in Bristol."
- KU SMDC - Pg 23

Lafayette, LA...
"NuComm....opened a Lafayette call center and created 1,000 jobs in the process."
- KU SMDC - Pg 23

Chatanooga, TN...
"HomeServe...created 350 jobs in Chattanooga after learning about the capacity of the city's network."
- KU SMDC - Pg 24
Policy Goal:
Encourage high technology and research based businesses
Chatanooga, TN..."The city’s entrepreneurial community, including technology incubators the Lamp Post Group and Company Lab, has united under the banner GigCity to collaborate on programs and activities that galvanize additional gigabit network apps development. These include bringing teams of students and entrepreneurs to Chattanooga this summer to develop leading-edge apps for the network." - Craig Settles - http://goo.gl/qjxHyp

Kansas City, KS..."Google Fiber turned Kansas City into a magnet for tech startups." - Brad Reed - BGR - http://goo.gl/7sNiF7

Boston, MA..."Boston startup scene hurt by poor connectivity options." - Barb Darrow - Gigaom - http://goo.gl/psifij
Policy Goal:
Encourage Existing Industry to Expand
Chatanooga, TN...
"After the network went live, [Volkswagon] decided to expand its manufacturing presence and open corporate offices in Chattanooga's downtown."
- KU SBDC - Pg 24

Bristol, VA...
"When Alpha Natural Resources, a major employer headquartered in Bristol, merged with a rival company located in the Washington D.C.-Baltimore metro, it was determined that due to network strength in Bristol, the D.C.-Baltimore offices would be moved to Bristol."
- KU SBDC - Pg 23
Policy Goal: Encourage Training and Development of Lawrence area Employees

Bristol, VA..."...to ensure that the locals would be able to compete, the University of Virginia created a software engineering curriculum at a satellite location in the nearby town of Wise." - KU SBDC - Pg 23
Policy Goal:
Encourage the location and retention of "good corporate citizens" that add to quality of life through civic support and philanthropy
Wicked Broadband already provides
FREE
service to:
Dozens of low income households
Relay for Life
Ecumenical Christian Ministries
Headquarters Counseling Center
Lawrence Community Shelter
O'Connel Youth Ranch
Downtown Lawrence
Judah Worship Center
Habitat for Humanity
Just Food, Inc.
Wakarusa Township Fire Dept
Wicked Fiber will extend 1 Gbps service to:
Habitat Re-Store
Lawrence Art Center
Other Eligible Entities as Requested
Downtown Lawrence
Just Food, Inc.
Headquarters
Wicked Fiber: Firmly In Line with Policy Focus
Taken from City of Lawrence Economic Development Goals, Process and Procedures - 5/18/10
"Horizons 2020 specifies that businesses within the following industries should particularly be a focus of economic development efforts:
Life Sciences/Research
Information Technology
Aviation and Aerospace
Value-added Agriculture
Light Manufacturing and Distribution"
Taken from City of Lawrence Economic Development Goals, Process and Procedures - 5/18/10
Wicked Fiber: Requested Incentives are Among those Explicitly Stated in the Official Policy
"1-2104 ECONOMIC DEVELOPMENT INCENTIVES
When Appropriate, the City may utilize incentives in order to achieve its economic development goals. One or more incentives may be utilized, depending on the application. These include, but are not necessarily limited to, the following :
Loans/Grants:
Provide capital to existing and new businesses for projects related to new growth and expansion, providing job training, assisting with business relocation expenses, and other types of assistance which further the community's economic development goals.
I
nfrastructure:
Provide infrastructure improvements related to needs of businesses or to assist in making property useable and available for businesses or other designated economic development activities (i.e.
infrastructure
for industrial property, etc.)"
Wicked Fiber's Request
1. Waiver of first $20K in franchise fees for 5 five years
Category: Tax Abatement
City Expenditure: $0
2. Permission to co-locate splice cases in City hand holes
Catagory: Infrastructure
City Expenditure: $0
3. Permission to splice into leased fiber under City supervision
Catagory: Infrastructure
City Expenditure: $0
4. Thirty year leases of middle mile fiber as specified
Category: Infrastructure
City Expenditure: $0
5. $500K infrastructure grant
Category: Loan/Grant
City Expenditure: $500K
Source of Funds: Franchise Fees
Overall franchise fees are growing

Westar's November 21st rate increase is an opportunity to re-invest in franchise tax growth

The City can re-invest the un-budgeted funds and use them restore telecommunications revenue growth
From 2006 to 2012 franchise taxes grew faster than any other source of revenue
But, franchise revenue growth has slowed

Why? Telecommunications fees have been declining
Re-investing Un-budgeted rate increase funds will replace shrinking telecommunications franchise revenue
[
Projection without re-investing
Projection with franchise re-investment
Benefits
Direct franchise fee payments ($706K over 5 yrs)
Encourage local industry expansion
Assist new business start-ups
Recruit new companies from out-of-state
Encourage high-technology and research based businesses
Save $250K over 5 years for eligible government entities
Free service to non-profits, low income residents and interested government entities
Total cost : benefit ratio - $1 spent : $1.53 benefits
Direct Franchise Fee Payments
Encourage Industry Expansion
"This new bandwidth allows us to be more competitive and this in turn should lead to job growth here at our company over time." - Tim Hunsinger President Scanning America, Inc.
"The 2011 study predicts that GDP increases by 0.3% when broadband speed doubles; and the effect is repeatable"
- CTC - Enhancing Broadband in Lawrence - Pg 41

GDP in Target Neighborhood = $619M
Broadband Speed Increase = 10x = Doubling 3x
Projected Change to GDP in = 0.9% * $619M = $5.57M
Assist New Business Start-Ups
Chattanooga, TN...."The entrepreneurial community in Chattanooga is booming as well. Thanks to organizations like the Lamp Post Group, entrepreneurs have access to the financial and technological resources to help get their start-ups moving from concept to reality. The Lamp Post Group is one of the many start-up based groups that have formed since [Chattanooga's] SmartGrid creation." - KU SBDC - Page 24

Kansas City, KS...."In the 14 months since [Google Fiber's launch], Kansas City Startup Villiage has grown to 13 properties and 25 start-ups within six blocks of one another. "- KU SBDC - Page 24
Recruit New Companies from Out-of-State
Wicked Fiber is already garnering national attention
This project allows Lawrence to keep the initiative
Encourage High Technology and Research Based Businesses
Who's Next? Could they be here in Lawrence?
All of these successful start-ups are bandwidth intensive
All of these organizations are eligible for free Gigabit service
Chamber of Commerce
City of Lawrence
Douglas County
Douglas County Casa, Inc.
Douglas County Community Foundation
Douglas County Sheriff's Office
Downtown Lawrence, Inc.
Fire Station No 1
Habitat for Humanity
Headquarters Counseling Center
Hillcrest Elementary School
Hobbs Park
Just Food, Inc.
Lawrence Arts Center
Lawrence Community Building
Lawrence Police Department
Lawrence Public Library
New York Elementary School
Van Go, inc.
CTC Heavily Involved in Seattle Process
Vendor Funded Buildout Fails
Getting Google Fiber
Provo, UT jumped the line
Provo provided Google with existing fiber
Offering one of the four fibers to Google may bring them to Lawrence
Google Fiber is not a common carriage network
Free Service to Non-profits, Low Income Residents and Interested Government Entities
Save $250K Over 5 Years for Eligible Government Entities
Current Internet Service Payments
Douglas County - $1,775/Mo (100 Mbps)
City of Lawrence - $1,900/Mo (100 Mbps)
Lawrence Public Library - $500/Mo(est.)

Total Cost : Benefit Ratio $1 Cost : $1.53 Benefits
Direct Costs
$500K Infrastructure Grant
$100K Franchise Fee Waiver
$600K Total Cost

Remunerative Benefits
$706K Franchise Fee Payments
$250K Free Services
$956K Total Benefits
Calculation
$956K/$600K = 1.53


1.53
See the full transcript