HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/26/2016 - BROADBAND STRATEGIC PLAN UPDATE-MARKET DEMAND OVERDATE:
STAFF:
April 26, 2016
Seonah Kendall, Economic Policy & Project Manager
Mike Beckstead, Chief Financial Officer
WORK SESSION ITEM
City Council
SUBJECT FOR DISCUSSION
Broadband Strategic Plan Update-Market Demand Overview.
EXECUTIVE SUMMARY
The purpose of this item is to provide City Council an update on the Broadband Strategic Plan and review the
recent findings of the Broadband Market Demand Study, formation of the Broadband Citizen Committee and
Expert Review Committee, and next steps.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
This is a Broadband progress report, which will overview the recently completed market demand study and
provides Council with an update on the plan for 2016.
BACKGROUND / DISCUSSION
On November 3, 2015, 83% of Fort Collins voters supported Ballot Issue 2B, which overturned Senate Bill 05-
152, removing legal barriers for the City’s involvement, direct or indirect, in providing telecommunication services.
This vote allows the City and citizens to consider and pursue the best decisions based on the needs and desires
of the community. It is important to note that the November election did not commit the City to providing
broadband services in Fort Collins, nor does it mean that such services would be available immediately.
Additionally, in late 2015, the City of Fort Collins engaged Uptown Services LLC, a Colorado consulting firm, to
provide six deliverables related to the City’s exploration of broadband services:
Asset Report and Map(s)
Broadband Service Market Demand Report
Target Broadband Standards Report
Feasibility Analysis - by business model
Strategic, Financial, Operational and Technological Risk and Opportunities Report - by business model
Broadband Strategic Plan Synopsis and Recommendation Report
This update will focus on the recently completed market demand study and the implications to the financial
feasibility analysis and overall broadband plan.
Fort Collins Market Demand Study
In March 2016, Uptown Services completed three market segment (residential, small business, large
business/institutional) studies to identify unique needs (services) by sector of population and/or geographical
areas, and estimate demand and take-rate (i.e., potential subscribership rate) assumptions by sector. The market
research results will contribute to the feasibility analysis as inputs to model development. The methodology and
research parameters used for the Fort Collins Market Demand Study include:
April 26, 2016 Page 2
Market Demand Study Findings - Residential Survey
The residential market demand survey asks questions around Internet, voice and video services as part of the
overall inputs for the financial feasibility analysis. A high speed Internet service is the primary focus of the
broadband study, but the appeal of bundling services at a minimal cost is being investigated. The study
confirmed that almost all Fort Collins households use the Internet. Governing.com’s “America’s Most Connected
Cities” stated that 91.4% of Fort Collins residents have at least one wired connection. Ninety-nine percent of Fort
Collins households surveyed use Internet at home. Of these connected homes, cable modem and digital
subscriber lines (DSL) have the vast majority of the market share at 94%. Additionally, the study indicated that
Internet usage is prevalent across all income and age groups.
Questions around customer service satisfaction levels were also surveyed, as this plays a role in the market
demand for alternative broadband services. Respondents were asked to rank customer satisfaction from a scale
of 1 - 10, with 10 being “totally satisfied” and 1 being “not at all satisfied,” by service categories: cable television,
satellite television, non-pay television (i.e., antenna, basic channels), DSL, cable modem, telephone and electric
utility. The average customer satisfaction was high for electric utility at a mean rating of 8.7, while the average
mean for DSL was 6.8 and cable modem was 6.6. Sixty-four percent of the respondents rated the City’s Utility
brand a 9 or 10 rating. Other internet services had significantly lower customer service satisfaction selection of 9
or 10 ratings.
Lower prices, increased Internet speed and reliability dominate the wish list of service improvements respondents
identified for broadband. Branding and bundling were secondary in importance. Additionally, 81% of respondents
acknowledged the importance of having low cost, high-speed Internet.
In addition to questions about current broadband services, market share and customer service satisfaction, the
broadband market demand survey asked respondents about their interest and purchase intent (willingness to
switch) for broadband services, if offered by an alternative fiber network provider. Seventy percent of
respondents would definitely or probably switch to the fiber network for Internet services. Furthermore, if
respondents answered ‘definitely’ or ‘probably’ switch to the fiber network for Internet services, they were asked
the reason for the switch. The top three reasons given by respondents for a switch were: need for higher
capacity, lower prices and the City as a preferred provider. Among the list of potential providers, 45% of
respondents stated the City as the preferred provider, most likely due to brand recognition and customer service
reputation. Notably, the City as a preferred provider, as well as purchase intent, ranked higher among younger
households (20-34 years of age).
April 26, 2016 Page 3
Market Demand Study Findings - Small to Mid-Size Business Survey
A similar survey was deployed to the small-to-mid-size business (SMB) segment. The survey found that Comcast
and CenturyLink are the only two Internet Service Providers (ISPs) with SMB market share in Fort Collins (about
96% of respondents). Two-thirds of SMB respondents in Fort Collins are under contract for their Internet and
voice services. Additionally, SMB respondents had similar responses to the residential respondents in regard to
customer satisfaction by service and customer needs. One item to note is that SMBs put a larger emphasis on
the need for improved reliability, most likely due to reliance on technology and the Internet for business
operations.
Market Demand Study Findings - Large Business/Institution Qualitative Survey
The objective of the large business/institution qualitative survey is to qualify the current and future capacity needs,
unmet needs, and interest and level of support for the development and implementation of a fiber broadband
network. Some of those interviewed could be potential customers as major commercial accounts, or they could
be an influencer in the community. Uptown Services conducted 24 interviews and aggregated the responses for
confidentiality.
Uptown Services found that due to multiple incumbent providers competing in the large business/institution
segment, fiber is not only deployed, but activated to many of these business locations. Advance data needs are
being met with dedicated connections for the business/institutions sole usage. However, many of the large
business/institutions interviewed would consider the City as a fiber network provider - lower price was a key factor
for these firms.
Take Rate
The consultants use a conservative research technique from the Packaged Goods sector to estimate potential
subscribership rate. This technique has been utilized for over 30-years and was developed as firms realized
research respondents, for various reasons, overstate purchase intentions during research as compared to the
eventual penetration of a product that was commercially launched.
Municipal systems, which are not-for-profit enterprises, measure a broadband project “success” by the level of
their “take rate” - that is, the percentage of potential subscribers who are offered the service that actually
subscribe. Uptown Services is estimating that the take rate for residential Internet service in Fort Collins at 38.8%
and 45% for small business (i.e., 38.8% of residents are estimated to subscribe to the fiber network, if offered).
Small business penetration is over a 7-year period compared to5-years for residential (consumer behavior
indicates that small business owners will first try the service at home before determining whether to switch at their
business).
Online Broadband Survey
Due to interest, staff made the majority of the residential phone survey available online to anyone who wanted to
participate. This was not intended to be statistically valid, but rather to allow more residents to engage in the
conversation. Over 1,800 responses were received and the results were in line with the statistically valid,
residential phone survey. The exception being that the online questionnaire saw a higher response from younger
demographics. Full results can be viewed online at fcgov.com/broadband.
Staff reviewed and themed the write-in comments for the following questions:
What would you like to see most improved from your current services (broadband, cableTV, Internet, local
telephone) and; any additional comments?
Staff received 1,453 comments addressing improvements and themed them by the following categories:
Speed (33%)
Price (26%)
Reliability (17%)
April 26, 2016 Page 4
Customer Service (10%)
Miscellaneous (14%)
The 687 “additional comments” were themed in the following categories:
Support for a municipal broadband option and/or addressed broadband as a utility. (27%)
Dissatisfaction with current service or providers and/or addressed the need for additional competition.
(26%)
A desire for fiber/Google fiber/better infrastructure. (19%)
Thank you for the opportunity to weigh in and for looking at this initiative. (15%)
Need for affordable, reliable, high speed service for the community as a whole, business needs, or our
economic future. (8%)
Miscellaneous or other. (15%)
Broadband Citizen Committee
The core team has convened a group of 18 citizens representing a variety of geography, skill- and user-level, and
overall broadband interest. The purpose for this citizen group is to:
Review and discuss materials provided by City staff and Uptown Services;
Help staff design communications for the broader public; and
Be a liaison to the public regarding current process, engagement opportunities, and to share questions.
The Broadband Citizen Committee has met twice since the beginning of 2016, and staff anticipates the group
meeting about every six weeks throughout 2016.
Expert Review Panel
City staff has worked to put together a Broadband Expert Review Panel (“ERP”). The purpose of the Broadband
ERP is to:
Provide independent, expert technical review during the development of the City’s broadband plan to
ensure that critical questions are posed and assessed;
Review and discuss documents provided by City staff and Uptown Services, LLC to ensure that the
project’s feasibility; and
Guide the preparation of the overall Broadband plan through the panels review of methodologies and
assumptions, and to ensure that the assumptions in the plan are appropriate and reasonable.
The Broadband ERP will convene in Fort Collins on May 2, 2016. The first meeting with the Broadband ERP will
familiarize the panelists to the Fort Collins community, staff and the project.
Members of the Broadband ERP include:
Lev Gonick, co-founder and Chief Executive Officer of OneCommunity. Mr. Gonick and OneCommunity
was recognized by Broadband Communities with their Cornerstone Award for “using fiber to build an
inclusive society and empower individuals.”
Robert Houlihan, Chief Technology Officer of Cedar Falls Utilities. Mr. Houlihan manages the Cedar Falls
Utilities network infrastructure, which services over 13,000 Internet and cable TV subscribers.
Blair Levin, Senior Fellow at Brookings Institute. Mr. Levin’s served as Executive Director of the Federal
Communications Commission’s (FCC) 2009 National Broadband Plan and as the FCC Chief of Staff from
1993 - 1997.
Deb Socia, Executive Director of Next Century Cities, a new initiative that strives to support community
leaders across the United States as they seek to ensure that all have access to fast, affordable and
reliable Internet. Prior to Ms. Socia’s role at Next Century Cities, she was the Executive Director of the
Tech Goes Home program, whose mission is to ensure digital equity through training, hardware and low
cost Internet access.
April 26, 2016 Page 5
Next Steps
With the completion of the broadband service market demand report, Uptown Services and City staff has begun
work on a 15-year pro forma forecast. As part of the greater financial analysis, Uptown Services and staff will
work to complete an analysis of various business structure options by exploring strategic, financial and
organizational implications of each business structure.
The feasibility analysis methodology creates a market-driven demand planning tool that is flexible and will allow
for various options and strategies rather than a detailed business plan of a single option. Based on the findings of
the financial and strategic analysis, the broadband core team will engage citizens, businesses and City Council
(the next work session is scheduled for August 23, 2016) to present findings, goals and strategies of the
broadband plan. Following this work and community outreach, staff anticipates having a recommendation
outlining a long-term broadband plan in late fall 2016.
ATTACHMENTS
1. Fort Collins Market Demand Report (PDF)
2. Powerpoint presentation (PDF)
FTTP Feasibility Study
for
The City of Fort Collins
Broadband Market Demand Report
March 2016
Uptown Services, LLC
Dave Stockton & Neil Shaw, Principals
ATTACHMENT 1
4/20/2016 2
This report summarizes the research findings of 3 specific market segments in Ft. Collins:
1. Residential Market
† Quantitative Survey Design
† Consumption Patterns
† Satisfaction & Attribute Importance
† Demand Estimation
2. Small Business Market
† Same as residential
3. Large Business Market
† Depth Interview Participants
† Current Service Configuration and Price Levels
† Available Service Features and Needs
† Satisfaction & Attribute Importance
† Demand Estimation
Study conducted by Uptown Services, LLC
Residential Quantitative Survey
Current Broadband Services Usage
4/20/2016 4
† Area of Interest: Universe of • 60,000 households (HHs)
v Total sample size of 400 respondents
v 95% Confidence Interval with ± 4.9 sample error)
† Results weighted to reflect Ft. Collins actual age distribution from 2010 Census
data (age of householder)
† Respondents screened to ensure
v Decision-maker for telecommunications and entertainment services in the
home
v Respondents with immediate family members employed by any of the
following were excluded:
The City of Fort Collins
CenturyLink
Comcast
Study conducted by Uptown Services, LLC
† 99% of Fort Collins households use the
Internet at home
† Cable Modem and DSL have the vast
majority of market share at 94%
4/20/2016 5
1%
99%
Incidence of Internet Households
No Internet Have Internet
37%
57%
4% 2%
Internet Market Share
(Households)
Dial Up DSL Cable Modem Satellite Other
Study conducted by Uptown Services, LLC
† Comcast and CenturyLink are the only
two ISPs with material market share in
Fort Collins
† Stated average monthly Internet spend
is $46 per household
4/20/2016 6
Comcast CenturyLink FRII Rise Broadband Other
61%
37%
1% 0% 1%
Internet Access Provider Market Share
0%
10%
20%
30%
< $30 $30 $40 $50 $60 $70 > $70
Monthly Internet Spend
Study conducted by Uptown Services, LLC
† Internet usage is prevalent across
all income and age groups
† Overall, the type of Internet does
not vary significantly across age
groups
4/20/2016 7
0%
5%
10%
15%
20%
Up to $50k $50k -
$100k
$100k -
$150k
$150k -
$200k
> $200k
Incidence of No Internet by Income
0%
20%
40%
60%
80%
20 - 34 35 - 44 45 - 54 55 - 64 65 - 74
Internet Type by Age
Cable Modem DSL Satellite
0%
5%
10%
15%
20%
20 - 34 35 - 44 45 - 54 55 - 64 65 - 74
Incidence of No Internet by Age
Study conducted by Uptown Services, LLC
† Wireless substitution is lower than the
national average at 24% of HHs
† A further 9% of wireline phone users will
drop for wireless in the next 12 months
† The average number of lines is:
v All Households: 0.9
v Wireline Households: 1.1
4/20/2016 8
None 1 2 3 or More
41%
46%
42%
7% 6%
24%
64%
8% 5%
Number of Phone Lines in the Home
National Average
Longmont
Ft Collins
20 - 34 35 - 44 45 - 54 55 - 64 65 - 74
67%
6%
10%
16% 14%
Households Without Wireline Phone Service
by Age
Definitely Won't
Probably Won't
Might/Might Not
Probably Will
Definitely Will
44%
24%
14%
12%
6%
Q12: “How likely are you to disconnect the
wired phone line and only use your cell…”
Study conducted by Uptown Services, LLC
Source: National Health Interview Survey, July-December 2013
† CenturyLink still maintains market share
leadership of the residential voice market
† Stated residential spending on local
phone service averages about $34
monthly per HH
4/20/2016 9
0%
10%
20%
30%
$20 $30 $40 $50 > $50 DK
Monthly Local Phone Spending
44%
32%
0%
24%
Q8: “Who is your local phone service
provider?”
CenturyLink Comcast TDS No Wireline
Study conducted by Uptown Services, LLC
† Only 68% of households use traditional
pay TV (cable or satellite dish)
† In Fort Collins today, 32% of households
do not have Pay TV
† The national average for HHs without Pay
TV is 24% (Pew Research)
† Stated average monthly spend:
v Cable: $70
v Satellite: $68
4/20/2016 10
44%
24%
14%
10%
8%
Q2: “For TV service, do you have…”
Cable Satellite Off Air
Online Other/None
0%
10%
20%
30%
40%
$25 $50 $75 $100 $125 + Don't
Know
Monthly Pay TV Spend
Cable
Satellite
Study conducted by Uptown Services, LLC
† Over-the-Top (OTT) or online TV viewing
has recently become a material substitute
service for traditional cable TV with a
majority of households using OTT
† Among younger households, up to 35%
are using OTT or Off Air as a substitute
service
† Uptown estimates a further 7% of pay TV
users in Fort Collins will ‘cut the cord’ in
the next 12 months
4/20/2016 11
63%
36%
Q6: “Do you sometimes watch TV online?”
(Among Pay TV Households)
Yes No
Definitely
Probably
Might/Might Not
Probably Not
Definitely Not
5%
7%
16%
31%
41%
Likelihood of Cancelling Pay TV for OTT
(among all pay TV users)
20 - 34 35 - 44 45 - 54 55 - 64 65 - 74
23%
9%
5%
1% 2%
12%
15% 15% 15% 14%
Households Using Substitute Service In Place of
Pay TV by Age
Online Off-Air Study conducted by Uptown Services, LLC
† Across all households in Fort Collins
40% have all 3 services from a single
provider. This is higher due to
incidence of wireline voice service
† The importance of bundling is low
when compared to our 2013
Longmont survey
4/20/2016 12
20%
40%
40%
Incidence of Triple Play Bundle
Have All 3 Services From Multiple
Providers
Have All 3 From Single Provider
Do Not Have All 3 Services
Very
Important
Somewhat
Important
Neither Somewhat
Unimportant
Very
Unimportant
18%
20%
29%
10%
24%
19%
30%
22%
13%
15%
Importance of Having All 3 Services from a Single Provider
(Among All Respondents)
Ft Collins Longmont
Study conducted by Uptown Services, LLC
4/20/2016 13
0.0
2.0
4.0
6.0
8.0
10.0
Cable TV Satellite TV Non-Pay TV DSL Cable Modem Telephone Utility
6.7
7.7
5.6
6.8 6.6
7.5
8.7
6.7
7.5
5.7
6.6 7.0
7.2
8.6
Satisfaction Rating by Service/Service Provider
(Mean Rating on a 1-10 Scale)
Ft Collins Longmont
0%
20%
40%
60%
80%
Cable TV Satellite TV Non-Pay TV DSL Cable Modem Telephone Utility
23%
36%
29%
23% 19%
41%
64%
20%
31%
12% 15%
23%
31%
65%
Satisfaction Rating by Service/Service Provider
(Percent Rating a ‘9’ or ’10’)
Study conducted by Uptown Services, LLC
† The chart below compares the results of this study with 24 other markets where Uptown has
completed similar quantitative research:
Northern Ohio (2) Washington North Carolina Oregon (2)
Southern Ohio Wisconsin Kansas (2) Alabama
Georgia Oklahoma (2) New York Arkansas
Tennessee (4) Michigan Kentucky Colorado (2)
4/20/2016 14
5
6
7
8
9
Cable Satellite TV DSL Cable Modem Telephone Utility
Satisfaction Rating by Service/Service Provider
(Mean Rating on a 1 to 10 Scale)
† While reliability and price are always important, Internet speed has dramatically increased in
importance over the last several years. Bundling and Brand are secondary in importance to
other attributes…
4/20/2016 15
0.0
1.0
2.0
3.0
4.0
5.0
Brand Service Bundle Customer
Service
Internet Speed Price Reliability
2.0
3.0
4.4 4.4 4.4
4.8
3.1
2.8
4.4 4.4 4.5
4.8
Importance Rating of Select Broadband Service Attributes
(Mean Rating on a 1-5 Scale)
Ft Collins Longmont
Study conducted by Uptown Services, LLC
† Question 33: “What aspect of Internet speed is most important?”
4/20/2016 16
Download Most Important Upload Most Important Both Important
37%
1%
59%
34%
4%
59%
Importance of Internet Speed on Download vs. Upload
Ft Collins Longmont
Study conducted by Uptown Services, LLC
† Lower prices and increased Internet speed dominate the wish list for services improvement
as Internet speed has gained importance…
4/20/2016 17
Bundling Service
Channel Selection
Customer Service
Nothing
Reliability
Increased Internet Speed
Lower Prices
1%
4%
10%
10%
34%
34%
37%
6%
9%
15%
16%
29%
49%
Q32: “What would you like to see most improved from your current broadband
services?”
Longmont
Ft Collins
Study conducted by Uptown Services, LLC
† Question 29: “In your opinion, is the availability of low-cost, high-speed Internet important
to the future local economy?”
4/20/2016 18
Very Important Somewhat
Important
Neither Somewhat
Unimportant
Very Unimportant
81%
14%
2% 2% 1%
68%
25%
4% 2% 1%
Importance of Having Low Cost High-Speed Internet
Ft Collins Longmont
Study conducted by Uptown Services, LLC
† Over half of Ft Collins households support the payment of a monthly $5 surcharge to help
fund the new fiber network…
4/20/2016 19
I would not support
I would be neutral
I would support
22%
35%
43%
22%
21%
57%
Q34: “Would you support adding a $5 monthly fee to your electric bill to partially fund the
construction and operation of this network for the first 24 months of operation?”
Ft Collins Longmont
Residential Quantitative Survey
FTTP Market Potential
† 70% of respondents indicated they would definitely or probably switch to the
FTTP system for Internet service…
4/20/2016 21
Internet Phone Video
Definitely 40% 25% 19%
Probably 30% 31% 32%
Might/Might Not 19% 17% 19%
Probably Not 6% 11% 17%
Definitely Not 3% 13% 10%
Don't Know 3% 3% 3%
0%
25%
50%
75%
100%
Q25-27: “How likely would you be to subscribe to [insert service] if it were 10% less
than Comcast or CenturyLink charges?
Study conducted by Uptown Services, LLC
† Uptown uses a ‘Likert Scale’ with Overstatement Adjustment
v Conservative research techniques from the Packaged Goods sector
v Clearly specify purchase intent vs. “interest” and removes overstatement bias
† Example: “How likely would you be to subscribe?”
v Definitely Would 21.5% x 70% = 15.0%
v Probably Would 35.6% x 30% = 10.7%
v Might/Might Not 20.0% x 10% = 2.0%
v Probably Would Not 10.4% 27.7% = Penetration Estimate
v Definitely Would Not 4.4%
v Don't Know 8.1%
4/20/2016 22
Residential
(Terminal / Year 5 Eroded)
Longmont
(Terminal)
Video 24.6% / 20.9% 23.2%
Internet 38.8% 36.4%
Telephone 28.6% / 14.3% 19.6%
Study conducted by Uptown Services, LLC
† Expected Internet purchase intent by
current connection type:
v Cable Modem User: 43% would switch
v DSL User: 36% would switch
v Satellite User: 36% would switch
April 16 Study conducted by Uptown Services, LLC 23
Definitely Would Probably Would
47%
27%
33% 36%
35%
26%
Purchase Intent by Internet Connection
(Top Two Box at 10% Discount)
Cable Modem DSL Satellite
39%
24%
33%
2% 2%
Internet Market Share Post FTTP System
(Households)
FTTP System DSL Cable Modem Satellite Other
37%
57%
4% 2%
Current Internet Market Share
(Households)
FTTP System DSL Cable Modem Satellite Other
† The majority of respondents, when given the choice, would prefer to receive high speed
Internet from the City…
4/20/2016 24
11%
15%
45%
4% 3%
23%
9% 12%
52%
8%
19%
Q28: “Among the following list of potential providers, who would you prefer to
receive high-speed Internet service from?”
Ft Collins Longmont
Study conducted by Uptown Services, LLC
† In terms of both preference for the City as well as purchase intent, younger households
(20-34) place the greatest value on the fiber project and the City’s role…
4/20/2016 25
20 - 34 35 - 44 45 - 54 55 - 64 65 - 74
54%
49%
37% 35%
43%
88%
78% 78% 81%
71%
51%
44%
34% 32%
23%
Prefer City As Provider Low Cost High Speed Internet 'Very Important' Definitely' Subscribe
Study conducted by Uptown Services, LLC
† Question 31: “In stating that you would ‘definitely’ or ‘probably’ subscribe to the fiber
network for Internet service, what is the primary reason you would switch?”
4/20/2016 26
Prefer City as Provider Prefer the Lower Price Prefer Higher Capacity Other Reason
20%
36%
39%
4%
Study conducted by Uptown Services, LLC
4/20/2016 27
0%
10%
20%
30%
40%
50%
Market A
Market B
Market C
Market D
Market E
Market F
Market G
Market H
Market I
Market J
Market K
Market L
Market M
Market N
Market O
Market P
Market Q
Market R
Market S
Market T
Market U
Market V
Market W
Market X
Market Y
Market Z
Ft Collins
Terminal Penetration by Service
(Across all Tested Price Points)
Video Internet Phone
Study conducted by Uptown Services, LLC
† Business case projections for voice penetration reflect the quantitative research outcome and
reflect ongoing wireless (voice) and OTT (video) substitution within the residential segment…
4/20/2016 28
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year
Service Penetration
(By Year Since Launch)
Phone Video Internet
Study conducted by Uptown Services, LLC
4/20/2016 29
0%
10%
20%
30%
40%
50%
0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 102 108
Month
Internet Penetration
(By Month Since Launch)
Sallisaw, OK Morristown, TN Pulaski, TN Wilson, NC
Tullahoma, TN Murray, KY Bristol, VA Ft Collins Forecast
Study conducted by Uptown Services, LLC
4/20/2016 30
0%
5%
10%
15%
20%
25%
30%
0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96
Month
Phone Penetration
(By Month Since Launch)
Sallisaw Morristown Pulaski Wilson Tullahoma, TN Bristol, VA Ft Collins Forecast
Study conducted by Uptown Services, LLC
4/20/2016 31
0%
10%
20%
30%
40%
50%
60%
0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 102 108
Month
Video Penetration
(By Month Since Launch)
Sallisaw, OK Morristown, TN Pulaski, TN Wilson, NC
Tullahoma, TN Jackson, TN Murray, KY Columbia, TN
Bristol, VA Ft Collins Forecast
Study conducted by Uptown Services, LLC
April 16 Study conducted by Uptown Services, LLC 32
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 102 108
Month
Internet Penetration
(By Month Since Launch)
Sallisaw, OK Morristown, TN Pulaski, TN
Wilson, NC Tullahoma, TN Clarksville, TN
Murray, KY Salisbury, NC Bristol, VA
LPC LPC - All Premises LPC - Serviceable Premises
Small Business Quantitative Survey
Current Broadband Services Usage
4/20/2016 34
† Area of Interest: Universe of • 7,000 small business establishments
v Establishments with 0-19 employees
v Total sample size of 50 respondents
† Respondents screened to ensure
v Decision-maker for telecommunications services at the business
v Have Internet
v Located within city limits and not home-based
v Respondents with immediate family members employed by any of the
following were excluded:
The City of Fort Collins
CenturyLink
Comcast
Study conducted by Uptown Services, LLC
† Comcast and CenturyLink are the only
two ISPs with material small business
market share in Fort Collins
† Stated average monthly Internet spend
is $98 per small business
4/20/2016 35
54%
42%
1% 0% 2%
Internet Access Provider Market Share
0%
10%
20%
30%
Monthly Internet Spend
Study conducted by Uptown Services, LLC
14%
26%
6%
2%
8% 8%
2%
34%
Subscribed Download Speed
† CenturyLink still maintains market share
leadership of the small business voice
market
† Stated spending on voice service averages
about $370 monthly per small business
4/20/2016 36
0%
10%
20%
30%
40%
Monthly Local Phone Spending
48%
28%
16%
6% 2%
Q8: “Who is your local phone provider?”
CenturyLink Comcast Other
No Wireline Don't Know
Study conducted by Uptown Services, LLC
1 2 3 4 5 6 8 +
13%
15%
26%
15%
13%
6%
13%
Number of Phone Lines at the Business
(Among establishments with wireline voice)
† Only 24% of small businesses have pay TV
at their business
† Stated average monthly spend is $71
4/20/2016 37
22%
2%
76%
Q2: “For TV service, do you have…”
Cable TV Satellite None
0%
10%
20%
30%
40%
50%
60%
$50 $100 $150 Don't Know
Monthly Pay TV Spend
Study conducted by Uptown Services, LLC
† Two-thirds of small businesses in Fort
Collins are under contract for both their
Internet and voice service.
4/20/2016 38
66%
6%
2%
26%
Incidence of Provider Contracts
Both Internet and Voice
Internet Only
Voice Only
No Contract
Study conducted by Uptown Services, LLC
4/20/2016 39
0.0
2.0
4.0
6.0
8.0
10.0
Pay TV Internet Voice Utility
5.1
6.9 7.3
9.0
Satisfaction Rating by Service/Service Provider
(Mean Rating on a 1-10 Scale)
0%
20%
40%
60%
80%
Pay TV Internet Voice Utility
8%
28% 24%
78%
Satisfaction Rating by Service/Service Provider
(Percent Rating a ‘9’ or ’10’)
Study conducted by Uptown Services, LLC
† While reliability and price are always important, Internet speed has dramatically increased in
importance over the last several years. Bundling and Brand are secondary in importance to
other attributes…
4/20/2016 40
0.0
1.0
2.0
3.0
4.0
5.0
Brand Customer Service Internet Speed Price Reliability
1.8
4.7 4.5
4.6
4.9
2.0
4.4 4.4 4.4
4.8
Importance Rating of Select Broadband Service Attributes
(Mean Rating on a 1-5 Scale)
Small Business Residential
Study conducted by Uptown Services, LLC
† Question 25: “What aspect of Internet speed is most important?”
4/20/2016 41
Download Most Important Upload Most Important Both Important
16%
4%
76%
37%
1%
59%
Importance of Internet Speed on Download vs. Upload
Small Business Residential
Study conducted by Uptown Services, LLC
† Lower prices and increased Internet speed dominate the wish list for services improvement
as Internet speed has gained importance…
4/20/2016 42
Bundling Service
Channel Selection
Customer Service
Nothing
Reliability
Increased Internet Speed
Lower Prices
10%
10%
48%
34%
32%
1%
4%
10%
10%
34%
34%
37%
Q23/32: “What would you like to see most improved from your current
broadband services?”
Residential
Small Business
Study conducted by Uptown Services, LLC
† Comcast and CenturyLink are the only two ISPs with material small business market share in
Fort Collins
4/20/2016 Study conducted by Uptown Services, LLC 43
Same As Have
Now
20M 50M 100M 1G Don't Know
26%
12%
18%
2%
36%
6%
Q24: “What level of Internet download speed would you want if the following
were available to your place of business?”
† 88% of small businesses indicated they would definitely or probably switch to
the FTTP system for Internet service…
4/20/2016 44
Internet Phone Video
Definitely 44% 38% 12%
Probably 44% 44% 14%
Might/Might Not 10% 12% 16%
Probably Not 2% 6% 10%
Definitely Not 46%
Don't Know 2%
0%
25%
50%
75%
100%
Q19-21: “How likely would you be to subscribe to [insert service] if it were 10% less
than Comcast or CenturyLink charges?
Study conducted by Uptown Services, LLC
4/20/2016 45
Residential
(Terminal / Year 5 Eroded)
Small Business
(Terminal / Year 7 Eroded)
Video 24.6% / 20.9% (Year 5) 14.2% / 11.2 (Year 7)
Internet 38.8% 45.0%
Telephone 28.6% / 14.3% 41.0%
Diffusion % (Years 1-7) 0 / 45 / 75 / 90 / 100 / 100 / 100 0 / 25 / 50 / 70 / 80 / 90 / 100
Study conducted by Uptown Services, LLC
† The majority of respondents, when given the choice, would prefer to receive high speed
Internet from the City…
4/20/2016 46
6%
24%
36%
2% 4%
0% 2% 2%
24%
11%
15%
45%
4%
0% 0% 0%
3%
23%
Q28: “Among the following list of potential providers, who would you prefer to
receive high-speed Internet service from?”
Small Business Residential
Study conducted by Uptown Services, LLC
4/20/2016 47
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year
Service Penetration
(By Year Since Launch)
Phone Video Internet
Study conducted by Uptown Services, LLC
Large Business & Institutions
April 16 49
Internet Access
Metro Ethernet
(Transport)
Dedicated Internet
(Access)
Market Segment
Small Businesses and
Medium/Large
depending on sector
Medium to Large Business and Institutions
Network
Architecture
Last Mile
(Copper, Coax, or
Fiber)
Last Mile
or
Middle Mile (Fiber lateral to ring)
Potential Market
Size
Majority of
connections
(90% of all premises)
Typically less than 100 connections per urban
market
Connection Type Shared bandwidth
(GPON)
Dedicated Private
Circuit(s) or MAN
Dedicated bandwidth
(ActiveE)
Typical Data
Service Set
Standard Internet tiers
up to 1G
Point-to-point
transport from 100M
to 10G+
Dedicated access
bandwidth from 100M
to 10G+
April 16 Study conducted by Uptown Services, LLC 50
† Typical High Capacity Needs and Desired Service Attributes
† Infrastructure Availability: Fiber is the Standard
† Dedicated Capacity: Superior to shared bandwidth connections
† Competitive Pricing
† Service Experience: Reliability, Customer Service, and Responsiveness
† Network Integration: Select firms require national/global tier 1 provider
† High Capacity Providers in Fort Collins
† Infrastructure & Bandwidth: FRII, Comcast, CenturyLink, Level3, PRPA
† Bandwidth: FRII, Comcast, CenturyLink, Level3, PRPA, AT&T, Integra
April 16 Study conducted by Uptown Services, LLC 51
† Qualitative assessment of large business market in Ft. Collins
† 24 Depth Interviews of 30-40 minutes
† Responses aggregated for confidentiality
† Identify key market characteristics
† Fiber availability, capacity needs, performance criteria
† Current price levels, use of contracts, and connection requirements
† Estimate potential market share
† Satisfaction and switching criteria
† Openness to City-provided fiber services
April 16 Study conducted by Uptown Services, LLC 52
Retail Goods
v New Belgium Brewery
v Odell Brewing Co.
Other
v Fort Collins Chamber of
Commerce
Technology
v Riverside Technology
v Numerica
v Wolf Robotics
v Woodward Inc.
v Technigraphics (CACI)
v Air Resource Specialist
v Broadcom
v CSI Web
Education/Government
v Poudre School District
v Poudre River Library
District
v Colorado State Univ.
Manufacturing
v Rodelle
v Tolmar
v Forney Industries
v In-Situ
Health Care
v Univ. of Colorado Health
Services
v Press One Customer Care
v Exponential Engineering
v Neenan Archistruction
v Brinkman Construction
Retail Service Provider
v FRII
April 16 Study conducted by Uptown Services, LLC 53
Nationally, aggressive rollouts of fiber by incumbent and alternative providers have substantially
increased the availability of fiber to commercial buildings…
"The majority of new fiber deployments were focused on connecting medium and smaller buildings in
the metro areas surrounding major cities across the U.S. Broader accessibility to on-net fiber has started
to shake up the services markets.“ - Rosemary Cochran, principal at Vertical Systems Group
11%
19%
28%
32%
39%
43%
2004 2008 2010 2011 2013 2014
Percentage of Commercial Buildings Served by Fiber
(Total U.S. Buildings with 20+ Employees)
Source: Vertical Systems Group, April 2015
April 16 Study conducted by Uptown Services, LLC 54
Due to multiple incumbent providers competing for the commercial segment, fiber
has been deployed to most business locations and is heavily utilized. Advanced data
needs are being met, but businesses will consider the City as a provider option…
19
17
1
15
24
17
19
1
3
19
5
8
3
1
0% 20% 40% 60% 80% 100%
Will Consider the City?
Under Contract?
Have Unmet Needs?
Have Redundancy?
Dedicated Connection?
Have Fiber?
Fiber Available?
Yes
No
April 16 Study conducted by Uptown Services, LLC 55
Satisfaction levels are moderate and higher for alternative providers
¡ Average satisfaction is 3.7 in Fort Collins
¡ Average satisfaction in Pasadena is 3.4
¡ Four providers were rated by 3 or more firms
3.0
3.5
5.0
5.0
3.2
3.9
4.0
4.3
1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
Integra
AT&T
City of Ft Collins
PRPA
CenturyLink
Comcast
FRII
Level3
Satisfaction Rating by Service/Service Provider
(Mean Rating on a 1-5 Scale)
= Less than 3 responses
Primary Providers
in Fort Collins
Reasonably Satisfied
• Reliability
• Technical Knowledge
Areas for Improvement
• Proactive Service
• Local Staffing/Support
April 16 Study conducted by Uptown Services, LLC 56
Among selection factors, reliability and cost rank highest, likely a result of the
commoditization of high cap services…
2.0
3.0
4.0
5.0
Brand VAS Local Support Technological
Superiority
Redundancy Customer
Service
Cost Reliability
2.4
2.6
3.8 3.8
4.2 4.3 4.3
5.0
Broadband Provider Selection Criteria Importance
(Mean Rating on a 1-5 Scale)
April 16 Study conducted by Uptown Services, LLC 57
$100
$46
$63 $63
$35
$43
$20
$100
$36
$15
$12
$19
$25
$3
$20
$8 $9 $10
$2 $4 $4 $4
$0
$20
$40
$60
$80
$100
$120
5
10
20
20
20
40
40
50
50
50
50
50
50
60
100
100
100
100
100
100
100
140
200
200
200
250
250
300
300
500
700
1000
1000
1000
1000
Fort Collins Dedicated Access
4/20/2016 58
11%
11% 50%
28%
Voice Solution Type
(% of Respondents)
1FBs
PRI
Hosted PBX
VoIP over Data
Study conducted by Uptown Services, LLC
Large businesses in Fort Collins are moving away from traditional voice circuits and
onto VoIP platforms that move traffic onto the firm’s data connection.
† Average cost per analog line (1FB): $50 per month
† Average cost per PRI circuit (1FB): $400-$500 per month
4/20/2016 59
5%
62%
33%
City Revenue
Diversification
New Tech. and
Econ.
Development
Provide Better
Service
Percentage of Respondents by Motivation Choice
(Closed Ended with 3 Options)
Study conducted by Uptown Services, LLC
April 16 Study conducted by Uptown Services, LLC 60
Research Findings:
† Fiber is widely available and there is a high incidence of dedicated access via fiber
† Most firms have sufficient bandwidth currently, but some would upgrade if cost effective
† Telecom and broadband needs are being met, but firms are open to considering the City
network for a data connection. Lower price is a key switching factor for these firms
† Some firms will wait to evaluate the track record of the FTTP system
Pro Forma:
† Estimate the dedicated access market as 5% of the all commercial entities (• 400) with
penetration growing to 20% by Year 8.
† High incidence of dedicated access, but competitive. Estimate ARPU at $1,500 per
connection to reflect • 30% discount (at tiers of 500M+)
† Voice services can be delivered via PRI, analog lines, and hosted PBX solutions, but
migration to VoIP over the data connection will limit long term revenue potential.
April 16 61
† The two incumbents have the vast majority of market share for both Internet and
voice services in Fort Collins
† Satisfaction for Internet and voice service benchmarks low. Video is average.
† Top market needs are:
† Mass Market: Lower prices, increased Internet speed, and improved reliability
† Complex Market: Lower prices and carrier-grade reliability
† Mass market purchase intent is very high and exceeds Longmont survey metrics
† Complex market needs are being met, but price levels are high up to 200M
† Strong provider preference for the City within the mass market. The complex market
is open to considering the City FTTP network as a provider option.
† The project appeal and purchase intent is strongest among younger households
1
Broadband Market Demand Study – City of Fort Collins
Study Conducted by Uptown Services, LLC
ATTACHMENT 2
2016 Timeline
2
Residential Survey
3
• 400 respondents
• Statistically valid phone survey
• Asked opinions on broadband,
voice and video
Internet Service
Cable Modem and DSL have the vast
majority of market share at 94%
4
57%
37%
4% 2%
Internet Market Share
(Households)
Dial Up Cable Modem DSL Satellite Other
Satisfaction Ratings
5
6.7
7.7
5.6
6.8 6.6
7.5
8.7
6.7 7.5
5.7 6.6
7.0 7.2
8.6
0.0
2.0
4.0
6.0
8.0
10.0
Cable TV Satellite TV Non-Pay TV DSL Cable Modem Telephone Utility
Satisfaction Rating by Service/Service Provider
(Mean Rating on a 1-10 Scale)
Ft Collins Longmont
23%
36% 29%
23% 19%
41%
64%
20%
31%
12% 15%
23%
31%
65%
0%
20%
40%
60%
80%
Cable TV Satellite TV Non-Pay TV DSL Cable Modem Telephone Utility
Percent Rating a ‘9’ or ’10’
Satisfaction Rating Benchmarks
The chart below compares the results of this study with 24 markets where
Uptown has completed similar quantitative research:
6
5
6
7
8
9
Cable TV Satellite TV DSL Cable Modem Telephone Utility
Satisfaction Rating by Service/Service Provider
(Mean Rating on a 1 to 10 Scale)
• Northern Ohio (2)
• Washington
• North Carolina
• Oregon (2)
• Southern Ohio
• Wisconsin
• Kansas (2)
• Alabama
• Georgia
• Oklahoma (2)
• New York
• Arkansas
• Tennessee (4)
• Michigan
• Kentucky
• Colorado (2)
Residential Customer Needs
7
6%
9%
15%
16%
29%
49%
1%
4%
10%
10%
34%
34%
37%
Bundling Service
Channel Selection
Customer Service
Nothing
Reliability
Increased Internet Speed
Lower Prices
QUESTION:
“What would you like to see most improved from your current broadband services?”
Fort Collins
Longmont
Electric Bill Surcharge
8
22%
35%
43%
22%
21%
57%
I would not support
I would be neutral
I would support
QUESTION:
“Would you support adding a $5 monthly fee to your electric bill to partially fund the
construction and operation of this network for the first 24 months of operation?”
Fort Collins
Longmont
Purchase Intent
9
47%
33% 35%
Definitely Would
Purchase Intent by Internet Connection
(% ‘Definitely Would’ at 10% Discount) Cable Modem
DSL
Satellite
40%
“DEFINITELY WOULD”
30%
“PROBABLY WOULD”
30%
OTHER RESPONSE
INTERNET
Question:
“A fiber optic network could provide high-speed internet service to your household. How likely would you be
to subscribe to internet if it were 10% less than Comcast or CenturyLink charges?
Provider Preference
10
11%
15%
45%
4% 3%
23%
9% 12%
52%
8%
19%
CenturyLink Comcast The City FRII A new provider Don't Know
QUESTION:
“Among the following list of potential providers,
who would you prefer to receive high-speed Internet service from?”
Fort Collins
Longmont
Take Rate = % Potential Subscribers
11
RESIDENTIAL
FORT COLLINS
LONGMONT
Internet 38.8% 36.4%
Note: At just over one year since launch, Longmont NextLight has an actual subscribership of 40-45%,
most likely due to their Charter Membership Pricing
Internet Market Share Impact
12
39%
33%
24%
2% 2%
Internet Market Share Post Fiber System
(Households)
57%
37%
4% 2%
Current Internet Market Share
(Households)
Fiber Cable Modem DSL Satellite Other
Small Business Survey
13
• Establishments with
0-19 employees
• Total sample size of
50 respondents
• Responses came back
similar to residential
Customer Needs
14
1%
4%
10%
10%
34%
34%
37%
10%
10%
48%
34%
32%
Bundling Service
Channel Selection
Customer Service
Nothing
Reliability
Increased Internet Speed
Lower Prices
QUESTION:
“What would you like to see most improved from your current broadband services?”
Small Business
Residential
Large Business Interviews
Study conducted by Uptown Services, LLC
15
RETAIL GOODS
• New Belgium Brewery
• Odell Brewing Co.
OTHER
• Fort Collins Chamber of
Commerce
TECHNOLOGY
• Riverside Technology
• Numerica
• Wolf Robotics
• Woodward Inc.
• Technigraphics (CACI)
• Air Resource Specialist
• Broadcom
• CSI Web
EDUCATION/GOVERNMENT
• Poudre School District
• Poudre River Library
District
• Colorado State Univ.
MANUFACTURING
• Rodelle
• Tolmar
• Forney Industries
• In-Situ
HEALTH CARE
• Univ. of Colorado Health
SERVICES
• Press One Customer Care
• Exponential Engineering
• Neenan Archistruction
• Brinkman Construction
RETAIL SERVICE PROVIDER
• FRII
Needs Are Being Met
16
19
17
1
15
24
17
19
1
3
19
5
8
3
1
Will Consider the City
Under Contract
Have Unmet Needs
Have Redundancy
Dedicated Connection
Have Fiber
Fiber Available
Yes
No
$0.05
$0.60
$1.85
$0.59
$- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 $2.00
Longmont
NextLight
Fort Collins Cable
Modem
Fort Collins DSL
United States
Minimum Price (in USD) Per Mbps Download
as Published by the OECD, September 2014
Internet Value
17
Citizen Ad-Hoc Committee
18
Eighteen citizens representing a variety of geography, skill and
user level, and overall broadband interest.
This group has been engaged to:
• Review and discuss materials provided by City staff and Uptown Services
• Help staff design communications for the broader public
• Be a liaison to the public regarding current process, engagement opportunities,
and to share questions
Staff anticipates convening the group meeting about every six weeks
throughout 2016.
Expert Review Panel
19
Purpose of the Expert Review Panel:
• Provide independent, expert technical review during the development of the
broadband plan so that critical questions are posed and assessed.
• Review and discuss documents by City staff and Uptown Services to ensure
that the project’s feasibility, sufficiency in information collected, and
communication needs are being addressed.
Time Commitment – at least three times in 2016
1st meeting – May 2, 2016
Expert Review Panelists
20
Lev Gonick
• Chief Executive Officer, OneCommunity
• Founding member, GigU
Rob Houlihan
• Chief Technology Officer, Cedar Falls Utilities
Blair Levin
• Senior Fellow at Brookings Institute
• Served as Executive Director of the Federal Communications Commission’s 2009 National Broadband
Plan, and as Chief of Staff for the FCC 1993 - 1997
Deb Socia
• Executive Director, Next Century Cities
2016 Timeline
21
Questions?
22
Fort Collins Shared Access
Pasadena
Typical Municipal
Price levels in Fort Collins benchmark as high for capacities below 200M but are
more competitive at higher capacities. Average spending per connection is $1,575
per month…
Source: Fort Collins Depth Interviews among 23 commercial institutions (2016) and Pasadena Depth Interviews among 19 commercial institutions (2014).