Cambridge Unveils Report on Municipal Broadband Feasibility and Business Model Options

Submitted by stannenb t3_11t4od9 in CambridgeMA

Cambridge Unveils Report on Municipal Broadband Feasibility and Business Model Options

March 15, 2023

The City of Cambridge has released the final report for its comprehensive year-long municipal broadband feasibility study, Municipal Broadband in Cambridge: Feasibility and Business Model Options. The report examines the feasibility of the City of Cambridge implementing a municipal fiber-to-the-premises (FTTP) service, providing a detailed FTTP design and cost estimate, and a range of business and financial models for building, operating, and providing service to all premises in Cambridge.

“We have the opportunity to build a gigabit-fiber network that will serve Cambridge for the next generation while protecting our values around data privacy, net neutrality, and  digital equity. While there is still significant work to be done, this report will guide the City’s next steps in its broadband journey,” said City Manager Yi-An Huang.    

The City of Cambridge partnered with nationally recognized firms, CTC Technology & Energy (CTC) and Rebel Group (Rebel), to conduct the study. CTC offers independent strategic, technical, and financial guidance primarily to public sector and nonprofit entities, while Rebel works with public and private organizations on infrastructure needs and financial resources through public-private partnerships, innovative financing, and strategic program management. CTC and Rebel have helped develop municipal broadband strategies for cities and communities across the nation.

The Municipal Broadband in Cambridge report explores several key findings, including:

  • Constructing an FTTP network to reach all 52,300 residences and businesses in Cambridge would cost an estimated $124 million to $161 million in 2022 dollars or $149 million to $194 million when considering inflation.
  • A citywide FTTP network would likely require a significant capital contribution to be financially feasible, including a $150 million upfront City contribution, based on relatively conservative assumptions, including that 40 percent of premises subscribe.
  • There are several business models that the City could explore, each impacting Cambridge’s contribution differently depending on the type of partnership and a variety of business factors.
  • Once the City reaches a decision to move forward on exploring a specific option, there is 18 to 24 months of key activities and decision points before the City would formally decide to execute a specific implementation project.

The report also highlights a high-level FTTP network design and cost estimates developed by CTC to inform the City’s broadband planning effort. The design provides for ubiquitous service within the Cambridge city limits, delivering residential services at symmetrical speeds of up to gigabit speeds and scalable to higher speeds with modest upgrades to electronics in the future.

The report identifies four business models developed by Rebel, each with the potential to meet the City’s goals, albeit to varying degrees and with certain tradeoffs. Regardless of the business model selected, the report suggests that the City should leverage competition to maximize value for taxpayers and subscribers.

A randomized mail survey conducted in May and June of 2022 also provided key insights into broadband access and use, and demand for additional internet service options. The survey found very few gaps in acquisition of residential internet services, but also that lower-income households may be underserved. Additionally, connection reliability ranks as the most important internet service aspect among subscribers, followed by connection speed. Many respondents also would be interested in acquiring services from a new internet service provider (ISP) in Cambridge, and would support a new fiber broadband network, even if it is subsidized by the City.

Any finalized project time horizon would most likely include a five-year construction period and 25 years of operations.

Download the Municipal Broadband in Cambridge: Feasibility and Business Model Options report.

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Comments

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noob_tube03 t1_jch68c0 wrote

I hope the city can agree to cut the discretionary spending program to help fund this instead! Would be amazing to get municipal broadband. Comcast is awful and so expensive

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Footschmutz t1_jci9m6z wrote

It seems like a lot of money, but if 50,000 households pay $60 a month for internet - it’s $200 million in 5.5 years. I’d pay my share if the service was good.

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noob_tube03 t1_jck9bkv wrote

Replying to ik1nky (#2,252,836)

>A citywide FTTP network would likely require a significant capital contribution to be financially feasible, including a $150 million upfront City contribution, based on relatively conservative assumptions, including that 40 percent of premises subscribe.
>
>There are several business models that the City could explore, each impacting Cambridge’s contribution differently depending on the type of partnership and a variety of business factors.

I assumed from this it meant that while it can be added to the budget, the budget has not been accounted for yet

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ik1nky t1_jckahqx wrote

Replying to noob_tube03 (#2,252,885)

They haven't figured out the exact financing for it yet, but the majority will likely be bonded out over a few years and those bonds paid back over their terms. Cambridge has plenty of free cash, for example, we regularly return cash to homeowners($22 million last year) as we can't decide what else to do with it. It's also likely that we also get some contributions from private partners.

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noob_tube03 t1_jckb91g wrote

Replying to ik1nky (#2,252,969)

not to be pedantic, but I hate when people say "return cash to homeowners". Like, no they dont. what they do is not raise tax rates, and offer a tax incentive to not rent out your house. Returning money would be like what the Mass did last year when they sent us a check. Not charging me more money for existing is not the same as returning cash

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that said, I just would love to make this happen by any means, and most people assume big line items like this require some type of fiscal trade off. If there is room in the budget for it as is, hooray! (but also, cut taxes some more then)

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ik1nky t1_jckc47x wrote

Replying to noob_tube03 (#2,253,016)

> not to be pedantic, but I hate when people say "return cash to homeowners". Like, no they dont. what they do is not raise tax rates, and offer a tax incentive to not rent out your house. Returning money would be like what the Mass did last year when they sent us a check.

That's not accurate to Cambridge. We not only don't raise the rate, we lower it every year so that your amount paid doesn't increase. We're not even limiting that increase to inflation or any other factor, just saying no increase. There's no need to constantly cut taxes, we can and should pay for nice things.

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Pleasant_Influence14 t1_jdai2os wrote

I would love this. My parents have community broadband in wester mass and it’s so awesome. No more xfinity. It would be nice if there was at least one other competitor

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cptninc t1_jder05c wrote

How does this compare to simply allowing Verizon to provide TV service without paying tithing? It's hard to imagine the tithing is much more than a rounding error compared to a $194MM capital spend.

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cptninc t1_jdex8hu wrote

Replying to stannenb (#2,325,459)

Why would you jump to that idiotic conclusion?

The owner of the network pays to build it. If Verizon builds the network, the city saves $194MM. How many years worth of tithe is that equivalent to? 20? More? Financially, it's a no-brainer to suspend tithe to allow Verizon into the city.

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stannenb OP t1_jdexvoo wrote

Replying to cptninc (#2,325,501)

And the residents pay for it with their subscription fees.

You can't wish the cost away. And, as you say, the cable franchise fee, is just rounding error. It can't be both a rounding error and critical part of Verizon's decision making.

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cptninc t1_jdf2w6h wrote

Replying to stannenb (#2,325,570)

Verizon charges fees that are the same as what's in the proposal. Same monthly price but without the city making a $194MM spend.

One of the many reasons Verizon is able to match that rate is because it would cost them significantly less than $194MM to build out their network due to their existing infrastructure in the city.

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