1	BROADBAND STRATGIES FOR NEW DEVELOPMENTS
2	INTRODUCTION Broadband Strategies for New Developments Municipal Goals Federal law – Section 253 The Wild West of Development Agreements Case Study - Loma Linda
3	MUNICIPAL GOALS Improve broadband capacity Residential new developments/existing homes telecommuters quality of life Business economic development required asset Competition Better service, lower rates
4	MUNICIPAL GOALS Local government applications Remote meter reading electric water Load management Outage reporting Real time pricing Home security ROW security – shot spotter
5	FEDERAL LAW Section 253 – Level 3 Communication LLC v. City of St. Louis, MO Eighth Circuit decision February 5, 2007 253(a) broad limitation on state and local authority to regulate telecom providers 253(b) – safe harbor for “state” regulations 253(c) – safe harbor for “state and local” governments affirmative defense to 253(a)
6	FEDERAL LAW Under Level 3 Telecom provider has burden to prove 253 (a) violation 253(a) requires “actual or effective prohibition, rather than the mere possibility of prohibition” differs from 1^st, 9^th and 10^th circuits Need not show a “complete or insurmountable prohibition” but an “existing material interference with the ability to compete in a fair and balance market” Municipality has burden to show safe harbor protection under 253(c) 253(c) alone cannot form the basis for a cause of action
7	WILD WEST OF TELECOMMUNICATIONS How are new developments served today? Bidding wars by providers = exclusive deals Typical scenario – Developer entertains offers from providers May receive $200-$400 per unit Exclusive deal with “Homeowners Assoc.”
8	WILD WEST OF TELECOMMUNICATIONS Provider gets preferred access to place fiber to the home as development proceeds Base amount - $40 - in association “dues” for limited cable/broadband services ability to sell additional services 5-10 year deals “Dues” cover provider’s capital costs of facility construction Developer gains upfront cash and fiber to home
9	WILD WEST OF TELECOMMUNICATIONS How can an exclusive deal be legal? Other providers are not prohibited from serving Local government not involved - no Section 253 violation Exclusive deal with association built into dues structure Competitors virtually shut out unless resident is willing to pay twice for service
10	LOMA LINDA, CA Population = 22,000+ Growing suburb outside San Bernardino 55 miles from Los Angeles 8,500 residential units – 8,000 more to be built Municipal water utility
11	CITY NETWORK City has spent $5 mil on fiber backbone City spent another $3 mil on back office/infrastructure May need additional $3-5 mil to complete city ring 3,000 homes now connected $10 mil fiber/infrastructure from developers City estimates total cost of $15 mil Funding sources property tax, utility tax, redevelopment funds, general revenue funds, enterprise funds
12	DEVELOPER REQUIREMENTS In new developments or additions that exceed 50% of value of home Developer must: connect to city network install “smart home” equipment (1 gig capacity/rm) $3,500 total cost $1,000 to wire home – install equipment $2,500 to connect home to city network
13	REACTION TO CITY ORD. Verizon, Time Warner (Adelphia) allowed to connect to home wiring offered option to connect to city fiber offer declined so far Verizon not offering FiOS (under 50k pop) Developers initially resistant has helped increase value of homes residents desire infrastructure
14	COST OF SERVICE City broadband - $30/5 MHz Commercial - $100/15 MHz City priced service at market rates plan is to contract for private operator to run did not want to undercut market City does not offer cable/telephone Residents/businesses 3 choices for broadband City broadband Time Warner – cable modem Verizon DSL
15	LEGAL So far no litigation Section 253 no prohibition on Verizon/Time Warner all providers permitted open access to city network all providers connect to home wiring city network serves multiple functions public safety public works code enforcement
16	THANK YOU!