City of San Luis Obispo Broadband Plan 51
social, and economic divide. The school district is proud of its services thus far and yearns to provide equal opportunity to all students and their families within the region.
Real Estate and Land Use
The real estate and land use focus group provided better understanding of the connectivity climate in the SLO area as it relates to housing development patterns. The overall consensus among participants was that a strategic plan would be very helpful as greater connectivity results in more business, more prospective buyers, and a growing population.
All attendees agreed that SLO is becoming an expensive city with increasing demand for housing development projects and has been deemed the 2nd least affordable city in the country for a few years in a row. The many residents that can work from home are moving further outside of the City to escape escalating prices, which is driving demand for broadband to the outskirts of the City.
A strong internet connection increases the sales prices of real estate and draws buyers. Tim Williams with Astound shared that their services are traditionally commercial, but they are now expanding into residential services in SLO County. Real estate stakeholders note that real estate pricing and attractiveness can be enhanced simply by providing developing areas with a solid internet connection. If the broadband development process does not begin to connect developing communities soon, then property values could be affected due to a sub-standard connection.
The focus group participants all thought connectivity in and around the city was better than outside it, creating a digital divide in the county. Attendees noted areas of extreme need in Dalido and San Luis Ranch, where there are a lot of development plans, but internet services are currently very limited. While this is nominally about residential development it is also about business development due to the number of people in the area working from home. Their homes are now their offices, which increases the demand for better connectivity. Competitive options for internet services in the residential areas make them more attractive to prospective buyers.
The land around the San Luis Obispo County Regional Airport has seen quite a bit of development and recent business relocations. Proximity to the coast along with convenient travel attracts prospective buyers, particularly businesses with oil money, to the area.
Participants expressed desire to keep current business and attract new ones based on the city’s reputation for technology and the presence of California Polytechnic State University (“Cal Poly”).
City of San Luis Obispo Broadband Plan 52
Transportation and Utilities
Representatives of Peak Wi-Fi (“Peak”), City of San Luis Obispo Public Works Department, and the San Luis Obispo Council of Governments (SLOCOG) participated in a transportation and utilities focus meeting. All participants voiced an interest in improving connectivity and infrastructure for the area. The SLOCOG representative noted that there are many countywide efforts and plans to increase broadband access. SLOCOG views collaboration and a holistic approach including city projects as keys to success, increased efficiency, and digital equity as a focal point.
Peak Wi-Fi is providing transport for major carriers and wireless broadband to the community, capable of providing gigabit per second or faster connections. The ISP’s goals include better understanding community needs, working more closely with the City, and closing gaps. Peak identified increased supporting infrastructure as one of their current objectives, hoping to get more antennas out. Peak has established infrastructure on streetlight poles, and water tanks spread all over but wants to expand. Peak noted that cameras for public safety and traffic management, which are installed on traffic signal poles, could be connected via their network with some customization. Focal areas for the company over the next 5 years or so include the Los Osos corridor and portions of the north county.
The Traffic Engineering Division of the City’s Public Works department has interconnected most of its traffic signals. One of their goals is to deploy fiber to all traffic signals and incorporate fiber into their current infrastructure, which is largely twisted-pair copper wire.
They are specifically focused on communication links with low reliability traffic signal interconnections in major arterial corridors. The Division is open to sharing infrastructure with other departments and for other purposes, but they have had issues with unauthorized work by third-party vendors on some traffic signal poles resulting in damage to City wiring. They also have video feeds set up on traffic poles, but believe that their current speeds are not fast enough to leverage this infrastructure or deploy various other tracking tools. Their focal points include key communication channels with low reliability as well as major arterial corridors. Many of the cameras need to be updated.
Participants agreed that the city should invest in new technologies and products for ongoing data collection like cameras and high-speed communications. The future of electric vehicles is still unclear, but participants were very interested in how this technology will affect the region as a whole. Participants also agreed that broadband will provide flexibility for people now working in remote positions. Participants noted the relatively large presence of software engineers and similar professionals and saw improved
City of San Luis Obispo Broadband Plan 53
infrastructure and communications as means to attract more such professionals as well as get local businesses to stay and grow in the area.
Conclusions & Implications
A broad range of stakeholders provided inputs to the City’s Broadband Plan. Survey results show that many households do not have broadband that meets state standards, particularly in the southern neighborhoods. Whether this is due to high costs or limited availability is unclear, but results suggest the City’s southern neighborhoods have less capacity than the areas around downtown. Charter is the dominant provider with the most economical services, but the average monthly costs are over $80 per household just for internet. Given that respondents were generally more educated and older than the overall population, and slower services tend to be cheaper but less economical, it is likely that lower income families are effectively under-served with broadband.
While respondents indicated reliability was the most important factor, and they were generally satisfied with it (a) many reported experiencing regular outages and (b) there was clear dissatisfaction with costs and ambivalence about customer service. Respondents were willing to pay substantially more than the competitive rates for broadband, which are generally below $80 and/or $0.30 per Mbps per month. Generally, respondents were willing to pay a bit higher rate per Mbps but wanted lower monthly recurring costs— approximately $0.40 and $60, which is equivalent to 150 Mbps throughput.
Again, it should be emphasized that this is among households that are likely to have relatively high disposable income and relatively low connectivity requirements. Current consumer behavior suggests they are willing to pay over $80 a month for broadband and/or nearly $1.00 per month per Mbps, recognizing that higher speeds are much more economical. In other words, broadband customers expect steep quantity discounts. At the same time, much of the utilization appears to be for general purposes. Increased use for productive purposes, including income-producing (e.g., operating a home-based business or working remotely) and time-intensive (e.g. telehealth appointments) activities may increase willingness to pay.
Stakeholder input substantiated some of these key points, especially for social services and workforce development. More economical, flexible options are required to deliver services and support disadvantaged populations. But limited connectivity isn’t just impacting lowerincome members of the community. Downtown businesses, research activities, tech companies, and tourism are all hamstrung by limited connectivity options, low speeds, uneven coverage, and unreliable services.
City of San Luis Obispo Broadband Plan 54
While the survey suggests that connectivity is adequate throughout most of the City, stakeholder inputs indicate that “adequate” is not adequate. The City needs multiple providers offering a wide range of technological solutions throughout the city and beyond.
For example, public health workers need the ability to access their systems in trailer parks in the southern part of the City but also in the neighborhoods and downtown core. Tech executives need consistent connectivity from the airport, around downtown, onto Cal Poly campus, and beyond, for their own purposes and for their team members. Students and their families have very similar needs for very different but complementary purposes. The City itself needs the infrastructure to operate and maintain quality of life but also for making visitors feel comfortable, safe, and welcomed. Generally, San Luis Obispo needs a foundation for sustainable growth to deal with high cost of living, equally accommodate its affluent and disadvantaged residents, and provide a platform for technology innovations to improve operations and support economic development.
City of San Luis Obispo Broadband Plan 55
5. Capital Improvement Program
Analysis
A Capital Improvement Program (CIP) outlines the planned and ongoing capital projects for a city that maintain or replace existing infrastructure assets such as streets, sidewalks, lighting, parks, and water/sewer lines, or construct new infrastructure assets. Long-range projects may involve significant excavation and improvements that provide the opportunity to jointly deploy broadband assets at marginal cost, typically through adding communications conduit to open trenches/excavation, or by planning for wireless/Wi-Fi capabilities and smart city applications on poles, public buildings, or other public areas.
As a key task in its scope of work, Magellan undertook a detailed review of the City’s CIP, including all the projects identified in Figure 37, and meeting with the City’s engineers and CIP Committee to understand current standards, processes, and gaps as it relates to economic and efficient broadband expansion.
5.1 CIP COMMITTEE
Magellan met with members of the City’s CIP Committee24 in order to understand current processes, particularly as it relates to utility coordination, considerations for broadband deployment, and how the City’s standards and specifications address joint trenching opportunities and new construction techniques.
If the City undertakes a CIP project that interacts with utilities, the only coordination is a City notice to the utility owner of a requirement to relocate their facilities as needed to accommodate the project. Utilities that have no assets within the project area are not notified and have no opportunity to jointly deploy new infrastructure.
The IT Department is represented on the CIP Committee by Administration Department staff and submits projects primarily for ongoing maintenance and replacements of IT assets. Historically, project reviews by the CIP Committee have not included consideration of opportunities for broadband implement that relies, in part, on “incremental and opportunistic” network builds. Moreover, the IT Department does not have a funding source to cover the marginal and incidental costs specific to broadband, and such project costs would require a budget from the General Fund or other alternative funding source. 24 The City’s CIP Committee includes Public Works, Finance, Utilities, Community Development, Parks & Recreation, Public Safety, and the Assistant and Deputy City Managers.
City of San Luis Obispo Broadband Plan 56
In addition to the need for an effective, curated, and managed CIP and utility coordination program, the City would benefit from updating its codes, standards, and specifications to discourage “go it alone” projects and incentivize joint builds (e.g., official road moratoriums coupled with a dig once ordinance), allow for new construction techniques now required by California state law (e.g., microtrenching), or update outdated standards to allow for economic joint builds (e.g., separation requirements between wet and dry utilities). These new policies and standards could be coupled with internal procedures and processes that allow for fair and simplified cost-sharing arrangements when joint trenching does occur, ensuring that larger projects with multiple funding sources – including state and federal grants – retain strict separation to comply with project eligibility requirements.
5.2 PROJECT REVIEW
Magellan undertook a detailed review of all City CIP projects that were either in design or planning stages (see Figure 37) to evaluate their potential synergies with broadband expansion.
City of San Luis Obispo Broadband Plan 57
Figure 37 - City CIP Projects
All CIP projects should be considered for deploying smart city applications or devices.
However, Magellan evaluated each project for additional broadband opportunities: to deploy new communications conduit in open trenches (joint trench), connecting new or existing City assets, expanding community Wi-Fi or wireless distribution points, or to take advantage of critical bridge, creek, or freeway crossings. More than 50 projects were identified as possible coordination opportunities, shown in Appendix B.
City of San Luis Obispo Broadband Plan 58
No budget information was identified for the CIP projects on the database provided by the City (larger project budgets typically indicate a bigger scope of work and, thus, more opportunity for significant broadband expansion). Further evaluation of these projects is warranted to clearly identify possible synergies and timing for broadband deployment.
Each of the projects listed in Appendix B does provide some opportunity – typically to jointly install communications conduit at the same time that a trench or other excavation takes place (also known as “dig once”). The engineering and labor of digging a trench (or, even more costly, directional boring) accounts for 35-65% of the total cost of deploying underground conduit; open excavation allows conduit to be placed simultaneously at a fraction of the normal cost. Even if the planned CIP excavation is minimal – for example, adding conduit to just a single block or section of road, or providing conduit for a key bridge, road, or waterway crossing – adding the broadband asset during other planned construction provides significant cost savings and can, over time, assist in incrementally building a robust public fiber optic network.
5.3 UTILITY & CIP COORDINATION
Broadband Infrastructure Fund
Many cities create dedicated funds for revenues generated from leases of City assets by private telecommunications companies. A dedicated fund with ongoing revenues— separate from the General Fund—prioritizes new City/public technology deployment for future build opportunities (locating new smart city devices concurrent with expansion of private wireless connectivity, or funding for fiber network expansions through incremental builds/joint trench coordination). Creating an fund in the early stages helps plan strategically for the years to come when use of public assets/ROW will increase, creating significant new City revenues. Additionally, the unscheduled nature of joint trench/dig once opportunities means cities need a dedicated funding source outside of the normal budgeting process to take advantage of open trenches to further the broadband plan.
Cities often will ensure ongoing funding to this fund by dedicating any revenues received through the license of City assets or lease of City land to private telecom for the placement of cell towers, antennas, or revenues received as payments for conduit occupancy rights or dark fiber leases.
Utility Coordination, Joint Trench and “Dig Once”
Both wireline and wireless broadband services, including cellular coverage, require fiber optic cable. The Infrastructure Investment and Jobs Act (IIJA) and SB 156 in California are making significant investments in fiber optic technology, particularly in constructing new
City of San Luis Obispo Broadband Plan 59
open-access middle mile networks and last-mile fiber networks. Transportation and utility infrastructure are utilizing smart technologies and thus require their own connectivity to operate, improving traffic and reducing impact on natural resources. Additionally, IIJA provides more funding for traditional infrastructure programs (i.e., transportation)—not just specifically for broadband—which will require major excavation along public rights of way, and thereby open up opportunities for joint trenching and utility coordination.
State and federal policies are being established for coordination of utility work in the public rights of way to foster efficient and cost-effective placement of fiber whenever the public rights of way are opened for any project. The Federal Highway Administration implemented a new rule25 in 2022 to facilitate installation of broadband infrastructure. To accommodate broadband in federal highway projects by FHA rule the state department of transportation is to identify a “broadband utility coordinator” to be responsible for facilitating infrastructure efforts in the rights of way. This is a substantial change of policy direction at the federal level, toward allowing the use of federal highway funding to expand broadband infrastructure and encouraging broadband utility coordination while working on projects involving work in the rights-of-way.
Similarly, Caltrans has implemented new policies under state legislation pertaining to wired broadband facilities on state highway rights of way on its website. This includes a new resource for “Accommodation of Wired Broadband Facilities within Access-Controlled State Highway Rights-of-way”26 dated March 14, 2022 that addresses state legislation and considers the new rule from FWHA. The Caltrans website provides contact information for its Broadband Coordinators, including for San Luis Obispo, which is in District 5.27 Inventory and mapping of Caltrans-owned wired data communications assets including broadband conduits is available from the Caltrans district contact.
The Golden State Network is a new public corporation that will build and operate statewide middle-mile network in Caltrans rights of way. The City should explore these opportunities with the District 7 representatives on broadband utility coordination and GSN. Deployment of additional broadband infrastructure for other purposes can be planned in conjunction with traffic fiber for Intelligent Transportation Systems (ITS) and the City’s broadband plan.
Implementation of the utility coordination begins with effective coordination at the local level. City departments should ensure they are coordinating on major projects, especially 25 See, 23 CFR Part 645.307(a), and “Assessment of City Policies and Ordinances” 26 https://dot.ca.gov/-/media/dot-media/programs/traffic-operations/documents/encroachmentpermits/attachment-a-wired-bb-accommodation-a11y.pdf 27 Caltrans Broadband Coordinators, Caltrans. https://dot.ca.gov/programs/design/wired-broadband/poc
City of San Luis Obispo Broadband Plan 60
CIP projects, to include broadband infrastructure where needed by considering at early stages of the projects how can it be used to expand broadband capacity and availability.
Going forward, all significant City projects and initiatives should include explicit consideration of broadband implications. Broadband is critical infrastructure and general plan elements should incorporate actions which support expansion of broadband infrastructure.
Planning ahead for major CIP projects that involve excavation will allow the City to costeffectively install conduit and/or fiber concurrent with other major projects: water main replacements, street paving, sidewalk, curb and gutter replacements all can be used as opportunities to add in City conduit at a fraction of its typical cost.
Coordination should be expanded for any excavation work among all the utilities— electricity, gas, cable, internet, telephone, water, sanitation, and city street work. Providing sufficient notice ahead of excavation work will encourage more private investment from the communications industry who can install their own, private conduit at the same time that trenches or streets are opened up. Coordination can be mandated through a joint trench or “dig once” ordinance, although enforcement of any such ordinance requires close coordination and curation by the city.
28 The City should actively identify any CIP projects that involve excavation and plan accordingly to install City-owned conduit and/or fiber cable, and should share those CIP projects, plans and schedules with other telecommunications providers so they can similarly avail of the opportunity to cost-effectively expand their networks.
Sharing this planning information among all entities working within the ROW is critical to the success of utility coordination. The City should curate and share an active planning list of all major projects occurring in the public rights-of-way – including collecting planned projects from private utilities and developers – so that telecommunications conduit and/or cables can be installed during any major excavation.
Effective and successful joint trenching/utility coordination programs are backed by a strong municipal code that requires cooperation among utilities and the City – and which is supported by an updated road moratorium list that incentivizes coordination while discouraging “go it alone” projects. The City should develop an ordinance to implement a dig once program and update publicly-available road moratorium lists. 28 For an example of an effective dig once ordinance, see the City of South San Francisco:
https://www.ssf.net/departments/public-works/engineering-division/dig-once-policy/-fsiteid-1
City of San Luis Obispo Broadband Plan 61
Development Conditions
The Public Works Engineering, Utilities, and Community Development Departments each review discretionary entitlement applications, but largely only for compliance with City codes, standards, and specifications – not for opportunities to jointly install or deploy new City assets during construction. Including IT in entitlement application reviews would afford the City more opportunities to identify broadband opportunities within private development projects.
Moreover, inclusion of requirements to place fiber/conduit, concurrent with development, in developer agreements, through the entitlement process, or as conditions of project approval would ensure faster, more efficient provision of fiber-optic based next generation broadband services furthers achievement of the Broadband Plan.
The City could require developers to include broadband infrastructure at the time of building the development to provide broadband fiber and conduit infrastructure faster, at the time of development. Similarly, broadband access and internal building wiring can be required for affordable and public housing, and CDBG and other HUD funds can be applied to this purpose.
City of San Luis Obispo Broadband Plan 62
6. Conceptual Network Design
6.1 CONCEPTUAL NETWORK ROUTES
The conceptual network design to connect all City facilities, buildings, parks, parking structures, traffic signals, and water assets into a City-wide ring network would require approximately 18.4 miles of new backbone fiber and 5 miles of laterals for service drops, in addition to upgrading 120,000 feet of the existing City network with splice points, handholes, cabinets and supporting infrastructure (Figure 38).
Figure 38 - Conceptual Network Design
City of San Luis Obispo Broadband Plan 63
A city-wide backbone ring network means that the broadband signal can come from two separate directions; if a backbone cable gets cut, the signal can be routed through an alternate path to continue to provide end line service. Creating a backbone loop is critical for not only uninterrupted City services, but also if the City (or its private partner) were to utilize this backbone to provide competitive retail internet services to the community and businesses. Retail internet services must be able to ensure loop redundancy to eliminate or minimize service outages.
The existing City-owned/controlled fiber network in Figure 38 is depicted in blue and varies from 96 to 288 strand cable29, as well as some conduit with legacy copper cables that would need to be replaced with fiber. Proposed new backbone construction is depicted in red and would be comprised of two 2” conduits deployed underground at 36 inches below the surface, filled with a 288-count fiber-optic cable, capable of meeting future demand.
New laterals and service drops are a single 2” conduit with a 24-count fiber cable. In addition to the 20.4 miles of new construction, the conceptual design includes 22.8 miles of required upgrades, additional fiber, and splicing of the existing City communications network to ensure redundant loops architecture and flexibility for future growth.
Table 14 - New Sites Added to City Backbone
City Assets Connected to City Backbone
in Conceptual Design
Traffic Signals (3)
City Parks (30)
City Water Tanks (10)
Lift & Pump Stations (3)
Lift stations and water tanks are currently connected via different technologies, primarily through wireless radio equipment. However, wireless connections are not as reliable as fixed fiber, and are subject to weather, maintenance, and other events that can interrupt connectivity. Moreover, building fiber paths to these assets extends the City’s backbone into new neighborhoods that could be leveraged through a public private partnership to provide more community members and businesses with improved internet options and services.
29 Some of the data was retained on an aging software system that is no longer compatible with City systems and could not be accessed. It’s anticipated that as the project moves into design engineering and undergoes field surveys, more information will come to light – including additional fiber cables with different strand counts, and/or some fiber connections to existing assets that are not currently showing up in records or maps.
City of San Luis Obispo Broadband Plan 64
Some City sites are currently connected via third party fiber (e.g., private ISPs, County of SLO, etc.), which means the City must rely on external parties to ensure continued service to critical City facilities. The conceptual network design includes construction of new routes to replace these leased lines, which would enable the City to connect all facilities solely through City-owned, City-controlled fiber. However, the City could retain these third-party fiber paths and reduce the total construction costs (see Table 18).
There are 82 traffic signals in the City; 76 of these are already connected through the City’s signal interconnect network. Three more are proposed to be connected in the Conceptual Design generated in this project. However, there are three remaining traffic signals that are too remote to justify the cost for constructing a lateral fiber path; the City should consider interconnecting these signals using wireless or radio technology in the interim.
6.2 PHASED IMPLEMENTATION PLAN
The Conceptual Network Design can be implemented in a phased approach in order to prioritize the loop architecture necessary for greater community and business access, ensure critical site connectivity, provide flexibility relative to grant availability, budgets, and resource constraints, and to maximize the network reach into new markets to attract a private partner. The phases outlined below can be further broken down into sub-phases or built incrementally and opportunistically through effective CIP and utility coordination.
The main reason some areas within a community remain underserved30 is typically because private companies, in the context of a corporate financial plan, weigh the project’s capital costs against the market and timeline for a return on their investment; capital investment can’t be justified in areas that are costly to build and that don’t have adequate anticipated revenues. Often, these underserved areas coincide with neighborhoods and/or census tracts with other socioeconomic challenges, which further exacerbates the Digital Divide and quality of life.
However, public investment or access to public infrastructure can offset the private capital required, and encourages market entry. The phased approach will incrementally provide more cables into more neighborhoods – initially to connect City assets – but which can then be leased to private Internet Service Providers (ISPs), thereby reducing the private investment required for new entrants, encouraging more market competition, and enhancing retail data services for residents and businesses. 30 “Underserved” is defined by the State of California Public Utilities Commission as services offerings below the minimum of 100 Mbps downstream and 20 Mbps upstream.
City of San Luis Obispo Broadband Plan 65
Phase 1 – City Backbone Loop & Critical City Sites
Phase 1( Figure 39) would modify the City communications backbone into a redundant loop to ensure uninterrupted services to City facilities and/or other locations receiving data services, such as potential future residential and business subscribers.
Figure 39 - Phase 1 – City Backbone Loop & Critical City Sites The phase includes 52,348 feet of new conduit & fiber backbone construction and 5,391 feet of new conduit and fiber laterals. The phase also includes upgrades to 22.8 miles of
City of San Luis Obispo Broadband Plan 66
the existing City Communications network, including new splice points and pull boxes, and architecting the existing and new networks into a single, redundant loop.
Phase 1 would directly connect the following critical City facilities and assets with redundant services, ensuring uninterrupted City service delivery:
Table 15 - City Facilities & Assets Connected with Redundant Services in Phase 1 City Asset Location
Fire Station 4 1395 Madonna Road
Parking Structure 879 Morro Street
Water Treatment Plant 35 Prado Road
Traffic Signals (3)31 Various Locations
Phase 1(b) – Residential Backbone Extension
City staff and City Council feedback following the April 4, 2023 Broadband Update identified four areas in which to consider backbone extensions in order to penetrate more residential neighborhoods. These four areas included a section of Los Osos Valley Road, an area at South Higuera Street and Chumash Drive, a residential area south of Orcutt Road in the southeast of the City, and the area immediately adjacent and northeast of the airport.
The section of Los Osos Valley Road did have a backbone extension; but that particular section is largely commercial and has minimal residential homes. Similarly, the area adjacent to the airport is commercial and does not have residential neighborhoods.
However, the South Higuera/Chumash Drive area and the Orcutt Road areas both have significant residential neighborhoods. Magellan thus added backbone extensions through these areas to maximize the number of households that could reasonably access the City’s future network, resulting in 13,801 feet of new fiber and conduit backbone construction (Figure 40).
31 There are three remaining traffic signals that are too remote to justify the cost for constructing a lateral fiber path; the City could interconnect these signals using wireless or radio technology.
City of San Luis Obispo Broadband Plan 67
Figure 40 - Phase 1B - Residential Backbone Extension
Phase 2 – Water Assets & Parks
Phase 2 adds 31,149 feet of new conduit and fiber backbone and 16,990 feet of new laterals that connects City water tanks, lift stations, and City parks (Figure 41) These connections allow the City to not only connect these sites into its backbone network, but also to expand community and business access and leverage these locations for smart city devices and wireless distribution infrastructure.
City of San Luis Obispo Broadband Plan 68
Figure 41 - Phase 2 - Water Assets & Parks
Water tanks (typically at a higher elevation with better line-of-sight) and parks (geographically dispersed throughout residential neighborhoods) can enhance community connectivity by passing more residences and businesses that could subscribe to services, or through Wi-Fi or other wireless internet access points.
Table 16 - City Assets Connected in Phase 2
New Assets Connected
City Parks (30)
City Water Tanks (10)
Lifts & Pump Stations (23)
City of San Luis Obispo Broadband Plan 69
6.3 CONSTRUCTION COSTS ESTIMATE
Because the City already has a significant fiber backbone established, there is relatively less new infrastructure to construct as compared to other jurisdictions without existing assets.
The estimated capital construction cost of the Conceptual Network Design is $13,522,728, which includes design and engineering for the entire build, required upgrades to 120,198 feet of existing City conduit and fiber cables, as well 119,679 feet of new construction (see Table 17).32 Once a competitive bid is selected and the contract completed, construction should be able to be completed within an 8-10 month period.
Table 17 - Estimated Construction Costs of Conceptual Network Design Length
(feet)
Price per
Foot
Estimated
Cost
Phase 1 – City Backbone Loop & Critical City Sites
Design & Engineering
Design & Engineering (New Construction) 57,739 $ 1.75 $ 101,044 As-Builts (Existing City Network Upgrades) 120,198 $ 0.20 $ 24,040 Fielding Survey -- -- $ 50,000
Public Engineering Stamps -- -- $ 50,000
Phase 1 Design & Engineering Subtotal $ 225,084
Construction
Existing City Network Upgrades 120,198 $ 5.00 $ 600,990 New Backbone Construction 52,348 $ 110.00 $ 5,758,280
New Lateral Construction (City Assets) 5,391 $ 80.00 $ 431,280 Phase 1 Total 177,937 -- $ 7,015,634
Phase 1B – Residential Backbone Extension
Design & Engineering
Design & Engineering (New Construction) 13,801 $ 1.75 $ 24,152 As-Builts (Existing City Network Upgrades) -- $ 0.20 -- Fielding Survey -- -- $ 15,000
Public Engineering Stamps -- -- $ 20,000
Phase 1 Design & Engineering Subtotal $ 59,152
32 Construction costs are based on Magellan’s analysis of comparable cities, recent construction bids, equipment and material costs, and a regional assessment of the labor and construction market. An inflation factor has been included to address future cost increases.
City of San Luis Obispo Broadband Plan 70
Construction
Existing City Network Upgrades -- $ 5.00 --
New Backbone Construction 13,801 $ 110.00 $ 1,518,110
New Lateral Construction (City Assets) - $ 80.00 --
Phase 1B Total 13,801 $ 1,577,262
Phase 2 – Water Assets & Parks
Design & Engineering
Design & Engineering (New Construction) 48,139 $ 1.75 $ 84,243 As-Builts (Existing City Network Upgrades) -- $ 0.20 -- Fielding Survey -- -- $ 25,000
Public Engineering Stamps -- -- $ 35,000
Phase 2 Design & Engineering Subtotal $ 144,243
Construction
Existing City Network Upgrades -- $ 5.00 --
New Backbone Construction 31,149 $ 110.00 $ 3,426,390
New Lateral Construction (City Assets) 16,990 $ 80.00 $ 1,359,200 Phase 2 Total 48,139 $ 1.75 $ 84,243
TOTAL – ALL PHASES 239,877 $ 13,522,728
The construction estimates in Table 17 are based on the assumption that if the City does not have maps or data indicating fiber exists, it would need to be constructed. However, there does appear to be some fiber routes that were installed on an ad-hoc basis over time, and may not be recorded in the City’s maps, or may simply be retained only as institutional knowledge by some City departments. The design engineering and field surveying process would verify and record all existing assets, likely uncovering additional fiber that would eliminate the need for some of the new construction, thereby lowering the total overall construction costs. A completed design and engineering process will likely identify some areas where overhead poles exist and aerial cables can be used instead of undergrounding new conduit, which can cut deployment costs by as much as 35-45%.
The construction costs can be reduced – significantly for Phase 1 – if the City were to retain and even expand its use of third-party fiber. There is more than 27,690 feet of available third-party fiber (County or privately-owned) that could be utilized in in the Conceptual Network Design that, if utilized, could reduce the total construction costs by $3 million.
City of San Luis Obispo Broadband Plan 71
Table 18 - Estimated Construction Costs if Utilizing Third Party Fiber Third Party Fiber Option
New
Construction/Upgrade
Length (feet)
Third Party Fiber
Length (feet)
Revised
Estimated
Cost
Phase 1 153,407 24,530 $ 4,274,405
Phase 1B 13,048 753 $ 1,493,114
Phase 2 45,732 2,407 $ 5,473,217
TOTAL 212,187 27,690 $ 10,421,050
However, some third-party fiber leased by the City may explicitly be for City services use – and lease agreements may prohibit providing any internet services to the community or business.
Construction costs can be even further reduced through effective utility coordination, implementing a dig once/joint trench program, and aligning broadband expansion projects with other major CIP projects, particularly those with excavation in the City right-of-way.
The labor required for excavation can account for 40-60% of total construction costs. When work is coordinated between utilities and public agencies, all parties can expand their fiber footprint at a fraction of the cost by taking advantage of synergies with other projects.
6.4 NETWORK PASSINGS ANALYSIS
Should the City elect to solicit one or more private ISP partners, it is important to consider the potential subscriber reach of any City network – both residential and business - as an aggregation of possible customers will attract qualified private partners and ultimately determine the fair market value the City should anticipate for the use of its public network.
Placing a 750-foot buffer around the backbone network and cross-referencing the residential address database and the City’s current business license list provides the ability to quantify those potential subscribers that can be economically connected into the City’s network (typically addresses falling within 750 feet is a reasonable distance that can be bridged by a private ISP through last mile service drops).
City of San Luis Obispo Broadband Plan 72
Table 19 - Residential and Businesses Addresses falling within 750-foot Service Buffer Residential Units Businesses
Phase 1 21,679 1,750
Phase 1B 2,660 0
Phase 2 3,180 45
TOTAL 27,519 1,795
Additionally, 99 of the City’s public, affordable, and/or deed-restricted housing sites are located within 750’ of the backbone network. Connecting affordable housing sites to a City network – while ensuring affordable rates for high-speed broadband for residents – could help address disadvantaged communities, close the Digital Divide, and benefit from state and federal grant opportunities through the CPUC, CASF, and the U.S. Department of Housing & Urban Development (HUD).
Figure 42 identifies those residences, businesses, and affordable/public housing sites that fall within the 750-foot buffer of the entire City network (existing fiber and proposed new construction).
City of San Luis Obispo Broadband Plan 73
Figure 42 - Serviceable Addresses within 750' Buffer of Conceptual Design Although more than 29,000 potential subscribers fall within the 750-foot buffer, individual service drops to connect each address to the City’s backbone will still be required, which will generate significant need for start-up capital (service drops within a 500-750 buffer are typically estimated at $2,500 per unit).
City of San Luis Obispo Broadband Plan 74
7. Financial Analysis
7.1 START-UP CAPITAL & OPERATIONAL COSTS
Organizational capacity is needed to deploy, manage, and operate a network. Investment increases with the level of control in businesses models including staff and systems for these purposes. The following staffing, capital, and operational costs and resources will be needed to provide varying levels of internet provision for the community or businesses, which demonstrate the investment needed to transition a city network into a retail internet provider network. However, with the right public-private partnership, many of these capital, staffing, and operational costs could be assumed by a private partner, relieving the City of significant ongoing liabilities. However, the potential cost and scope of these costs should be considered when negotiating and evaluating a partnership arrangement.
Staffing and Systems Options
At the minimal level of an infrastructure-only business model, the City of San Luis Obispo will need at least one network technician and part of a GIS specialist position. It would probably be best to combine these roles in a Network Infrastructure Manager position responsible for executing and tracking adds, changes, or moves.
Other departments, particularly Public Works, will see marginal increases in workload as they accommodate network assets in other projects and programs. The capacity to promote the network as a useful asset for business will be needed to generate revenue.
This function could be part of Economic Development’s work and may be shared by staff responsible for tracking revenue from cell site leases. It would be advisable to invest in specialized fiber management software, which may require additional staff capacity.
Any business model beyond leasing a limited amount of dark fiber will require dedicated staff. If the City were to build-out a robust fiber network and undertook delivery of a high level of retail services, it would need a Broadband Director with strong understanding of facilities leasing and maintenance to be responsible for overall organizational performance, focused on finances and governance. If the City is actively promoting use of the network, it will also need a Marketing Manager for identifying and managing lessees. The Marketing Manager may also work with wholesale customers to promote their internet services to the community.
At this level, the City will have a “Broadband Department” comprised of a Director, Infrastructure Manager, and Marketing Manager. The Broadband Department will need a fiber management system (FMS) and should have a maintenance fund to cover repair costs
City of San Luis Obispo Broadband Plan 75
(approximately $75,000 for one-time software costs with annual fees of 15%). Major maintenance or repair tasks—anything requiring excavation—may be contracted out or may be handled by Public Works. If the Broadband Department offers any service that involves a service level agreement, it will need external contractors on stand-by and a dedicated full-time Network Engineer.
Table 20 - Fully-loaded Cost Estimates for Staffing a Broadband Enterprise Position Annual Cost
Broadband Director $178,200
Accounting Manager $126,360
OSP/Engineering Supervisor $157,140
Sales & Marketing Manager $129,600
Headend/Network Engineer $113,400
Customer Support Manager $105,300
Technical/NOC Support Manager $129,600
Business/Enterprise Account Manager $72,900
Network/NOC Technician (Data Center/Inside) $97,718
Technical Service Rep Level 1 $50,544
Technical Service Rep Level 2 $60,653
Field Services Technician (in-house) $77,501
Field Locates Technician (in-house) $72,446
A retail broadband enterprise has substantial overhead and operating costs, as well as a much larger capital investment in infrastructure and equipment. Payroll can account for 90% or more of ongoing costs for a broadband enterprise. For reference purposes, Table 20 lists estimated annual costs to fully staff a broadband enterprise. Equipment licenses, maintenance, refresh, and upgrades create recurring costs. Limiting operations to a backbone network greatly reduces both up-front and on-going costs while providing critical functionality and setting the stage for private investment.
Network Infrastructure Options
There are various types of network infrastructure. Generally, local broadband networks are composed of core (backbone), distribution (last mile), and access infrastructure, terminating at subscribers’ premises where it connects to private infrastructure, including routers and equipment that connect end-user devices. Local broadband networks typically utilize a ring design, which increases flexibility and resilience by minimizing risks from an equipment failure or fiber cut. Local broadband networks interconnect with long-haul and middle-mile networks to secure data paths to the internet.
City of San Luis Obispo Broadband Plan 76
Backbone routes follow major thoroughfares, as well as some secondary streets where appropriate to complete a ring. Spurs may be used to extend into remote areas where it is not practical to complete a ring. Last-mile infrastructure reaches into homes, offices, vehicles, and literally the palm of your hand. The City of San Luis Obispo is not going to become a retail broadband service provider, so is unlikely to deploy last mile distribution and access infrastructure.
Therefore, we focus on backbone infrastructure, which could be leased to third party Internet Service Providers who would then design and construct the last mile connections in order to serve subscribers. We analyze the preliminary route design in order to assess the potential geographic reach, municipal facilities, subscribers, and customers within a reasonable buffer (~750’) that could be connected via last mile infrastructure by an ISP.
We also review options for access infrastructure because (a) it defines prospective providers’ capital investment and connectivity requirements, (b) it is required for achieving some of the City’s goals, mission, and vision, and (c) the City may decide to deploy it for specific projects or purposes.
Equipment and Services
Backbone fiber can be managed as a physical asset by assigning specific strands to specific users, commonly on a lease basis. Strands in various cables must be physically spliced together or optically interconnected, including via splitters, to form complete paths so that any light shone (transmitted) down the fiber is seen (received) at the other ends. This approach has relatively low cost because it doesn’t require purchasing or operating equipment, but it can also be very inefficient.
For example, if two strands in a 10-mile-long backbone (20 strand-miles total) are used to connect two sites that are a mile apart (2 strand-miles), the other 18 strand-miles become stranded and can only be used on each side of the interconnected sites. This approach also misses the benefit of redundant paths: If the fiber is cut between the two sites, the connection is lost because the information can’t flow in other directions.
There are two general classes or types of services that can be provided over modern network infrastructure: access or transport. Access services are relatively inexpensive, “best effort” that do not include any solid performance guarantees, which are typically considered retail broadband. Transport services are dedicated services that typically come with guaranteed bandwidth and uptime commitments, which are referred to as service level agreements (SLAs). Transport services are variously referred to as “backhaul,” “bulk IP,” “carrier-class,” “enterprise,” “long-haul,” “managed,” “metro,” or “middle-mile” services,
City of San Luis Obispo Broadband Plan 77
depending on the context. Generally, they are used by large organizations, including internet service providers.
Access and transport services are complementary but involve different components and costs. As San Luis Obispo is most likely to offer transport as part of any future public sector connectivity business, we describe transport services infrastructure first, followed by information about co-location, a related service. We include a reasonably comprehensive consideration of access service infrastructure, as San Luis Obispo may seek private partners to offer those services using a portion of the City’s network.
Transport Services
Transport services involve relatively few stable, but high-performance connections. Users are major businesses and institutions, including network service providers. The service is moving information from one point to another, rather than leasing an asset, so the value comes from ensuring the information keeps moving. This requires equipment that lights the fiber, maintains connections, and transmits data as diagrammed in Figure 43. Some form of interconnection with other networks or services, which requires additional equipment, is commonly a part of transport service.
Figure 43 - Transport networks Architecture
Networks typically have a core network composed of a few centralized sites—called central offices, data centers, or headends depending on type of ISP—interconnected by fiber in a ring architecture. Core sites contain critical equipment to connect the local network to the global network. They must be secure, with reliable power and backups, and preferably
City of San Luis Obispo Broadband Plan 78
centrally located. At least one site, but ideally two, must connect to high-capacity dedicated internet services, ideally via different providers with fiber following separate routes, for backhaul.
Transport customers typically have substantial network operations of their own that incorporate services where needed, which requires next generation technologies— specifically software-defined wide-area networks (SD-WAN) and sophisticated management systems. Customers may require dual-homed connections, which connect to the core site via two diverse routes, and redundant connections to cloud services, tier 1 ISPs, and other service providers.
Transport service providers often co-locate in other companies’ data centers to reduce costs. Access service providers generally prefer to own their core network sites, where they can access infrastructure called “pedestals” or “points of presence” (POP). This is changing somewhat with the emergence of wholesale open access infrastructure. Interconnection sites between different providers ranges from massive data centers to relatively small structures.
The network equipment required to deliver broadband services to customers is comprised of several functional groups and multiple components. All business models require core equipment, which is very similar to what the City of San Luis Obispo has in place already for its wide-area network. This must be supplemented with various types of access equipment and infrastructure.
Core Equipment
The core equipment aggregates traffic from all access equipment, connecting customers and routing their data to and from the IP edge equipment or other end-point destinations.
Standard network protocols provide link redundancy and dynamic traffic re-routing in the event of an equipment failure or fiber cut. Core equipment can easily support thousands of customers and hundreds of gigabits of traffic throughput at deployment and will accommodate future system growth through the addition of service modules, optical interfaces, and/or software licenses.
Internet Protocol Edge (IP Edge) Equipment
Separate from the core switches, the network must maintain an “internet perimeter.” The internet perimeter will include internet routers and internet firewalls to be used to manage routing throughout the network. Firewalls will be utilized to protect critical back-office systems, including provisioning, network management, data storage, and other information. The two core switches will be interconnected to two internet routers providing redundancy for internet services in the event of a single interface or equipment failure. As
City of San Luis Obispo Broadband Plan 79
mentioned above, backhaul circuits should be acquired from at least two providers using diverse paths, one of which should be a Tier 1 provider.
Estimated Costs
The estimated one-time capital costs for equipment and services to establish a transport network for the City of San Luis Obispo’s 63 sites, based on vendor-provided pricing, would be about $550K as summarized in Table 21. The core network in this scenario would consist of the City’s data center as the “central office” and a secondary, backup site, which we assume would be an existing City facility. We assume that each site would have a single router combining edge/core functionality, an aggregation switch, cloud service/firewall appliance for security, Internet Protocol services, and management software for server, network elements, and back-office functions.
Table 21 - One-time Capital Expenses for Transport Network equipment Item Unit Cost Quantity Total
Core/Edge Routing $80,000 2 $160,000
Switching $7,500 2 $15,000
Software $15,000 2 $30,000
Security $50,000 2 $100,000
Management $30,000 2 $60,000
IP Services $5,000 2 $10,000
Spares $15,000 1 $15,000
$390,000
CPE $1,200 63 $75,600
$465,600
Pro Services $78,000 1 $78,000
Total Capital Cost $543,600
Utilizing this approach, all the City’s sites would get 1 Gbps connections, scalable to 10 Gbps. Each site requires customer premise equipment (CPE) that terminates the transport network and provides an interface to the site’s local area network (LAN). We assume there is existing LAN equipment capable of 1 Gbps connections. Sites without connections or legacy equipment would involve additional site-specific costs. Annual maintenance and other recurring equipment costs are estimated at $47,000.
The central office would house core and edge equipment for ISPs serving customers within the area. Other carriers could be co-located in these sites so circuits and traffic could be connected and routed to the rest of the world. Equipment and facilities requirements are reasonably modest—primarily separate, secure cages for providers and major network users to place equipment, along with environmental controls and clean, reliable power. We assume the central office would be the City’s data center. Otherwise, costs to build out a
City of San Luis Obispo Broadband Plan 80
data center, not including property acquisition or construction costs, could be an additional $500,000.
Access Services
The major difference between a local transport network and a fiber access network is the addition of access and distribution infrastructure, including hubs and multi-site terminals, illustrated in Figure 44. The core network delivers much the same functionality to broadband distribution hubs—also called points-of-presence (POP)—as to transport service customer sites. The dedicated connections function as feeder lines, which are also typically deployed in rings, between the core sites and distribution hubs. Thecore and feeder networks and hubs comprise the “transport” network. Access requires additional equipment that supports connections to many customers.
Figure 44 - Passive Optical Network (PON) Architecture
Feeder fiber connects optical line terminators (OLT) in the core sites to passive splitters called fiber distribution hubs (FDHs), typically in outdoor cabinet enclosures placed strategically throughout the service area. Splitters may also be located within the access POP itself. In areas where aerial fiber deployment may be used, FDHs may be placed aerially or transitioned from the aerial pole to a ground mounted FDH. As this plan is limited to assessing major corridors as fiber routes, we assume coverage is limited to customer premises within 500 feet of the backbone. This requires only a single FDH.
The distribution network branches out from the FDHs. Multiple access lines drop off the distribution lines—hence the term “fiber drops”—via drop terminals into customer premises. Major sites can be directly and diversely connected to the core sites via “laterals,”
City of San Luis Obispo Broadband Plan 81
basically putting them on the feeder network. The backbone fiber may be used for a distribution, feeder network, and/or laterals, as well as core network. The particular use of specific fiber strands is a matter of how they are spliced together and where they terminate. Indeed, a single fiber cable can accommodate multiple physically separate networks for purposes such as SCADA or traffic signal interconnection.
Hubs may be powered cabinets, prefabricated shelters, or existing structures with sufficient space for equipment racks and other components. Fiber in the routes analyzed above could connect retail service providers’ POPs anywhere in the City of San Luis Obispo with backhaul via diverse routes to multiple upstream service providers for maximum fault protection. In practice, a distribution infrastructure can and should be built in a phased manner in response to consumer demand and/or in conjunction with other capital projects.
Feeder and Distribution Fiber
Feeder infrastructure that extends from the POPs to neighborhoods and business districts typically requires only a few fibers, at most a single 24-strand buffer tube. The backbone typically consists of 288-strand fiber therefore at least a hundred strands would be available for use as distribution. The estimated costs are based on feeder fibers are sized based on the demand forecast and sizing of each enclosure to ensure that each service area is well equipped for broadband services. These details are addressed in engineering design to get optimal coverage for the least practical costs.
Each OLT serves 512 subscribers at a 1:32 split. The number of POPs and OLTs per POP depends on the number subscribers. The cost includes OLT and backhaul hardware necessary to connect each POP to the core routers. In an actual design/implementation, each OLT would not need backhaul hardware, two line cards, 16 optical interfaces, etc.
Distribution fiber extends from the splitters in the FDHs to network access points (NAPs), or drop terminals, which connect individual fibers entering customers’ premises. NAPs may be attached to aerial strand, located in ground level pedestals or placed in underground vaults or hand holes located near the sidewalk or curb in residential neighborhoods or business districts. NAPs are costed as an integral component of the distribution infrastructure estimates. Fiber distribution to NAPs will be sized based on the service area density to provide service to between 8-12 premises per NAP.
Fiber Service Drops
Fiber drops connect from each NAP to the customer premise equipment that delivers broadband service. At the customer premise, the drop cable terminates in a protective “clamshell” enclosure attached to a home or building for storage of slack and connection to
City of San Luis Obispo Broadband Plan 82
the home equipment. Drop fiber may be installed aerially or underground, typically for a flat fee. Providers may charge additional drop costs for special circumstances such as burying fiber through difficult landscapes or under driveways. The estimated average cost of a fiber drop at the time of this study, including all of these components and labor and recognizing that drops can vary greatly in complexity and distance, is $2,500.
Optical Network Terminal
An Optical Network Unit (ONU), sometimes called an Optical Network Terminal (ONT), serves as the demarcation point between the retail ISP’s fiber network and the router or firewall connecting to the customer’s local area network (LAN). There are two general methods for installing ONTs. The first method involves mounting an outdoor rated ONT on an exterior wall of the structure and extending service wiring inside the premise. The second method involves extending the fiber into the premise and installing an indoor-rated ONU inside. In either case, the ONT is typically installed somewhere near the fiber entrance and an AC power source. The ONT terminates the fiber-based PON signals and provides customer access to their services through traditional copper interfaces. XGS-PON ONT’s supporting greater than 1 Gbps data service may also support optical small form-factor pluggable (SFP) interfaces for connection to enterprise-class LAN equipment.
7.2 OPERATING REVENUE & EXPENSE
PROJECTIONS
Whether the City elects to operate a retail data network itself or enters a public-public partnership with a private ISP to operate on its behalf, the proposed network will necessarily need to demonstrate financial viability and, by extension, consider rough revenues and expenses if operated as a retail subscriber network. The model below works from the premise that the City completes construction for both Phase 1, 1B, and 2, the City’s new expanded 58-mile backbone network does not carry any debt or associated debt service (i.e., constructed using grant funds), and thus could potentially provide retail internet services to residents and businesses falling within a 750-foot buffer of the backbone.
Given the number of dependencies and uncertainties that come with projecting expenses and revenues based on a conceptual routing (as opposed to a fully engineered & designed network), the best approach may be to provide a conservative estimate of expenses and revenues. The model uses the following assumptions:
• Excludes the estimated $13,522,728 construction costs because it is assumed to be constructed using state and federal infrastructure grant funds
City of San Luis Obispo Broadband Plan 83
• $50 per month Residential subscription rate for 1 Gbps symmetrical service • $150 per month Business subscription rate for 1 Gbps symmetrical service • 30% take rate over the first three years of units within the 750’ buffer of the subrings o The 750’ buffer touches a total of 27,119 residences and 1,795 businesses. The 30% take rate in 3 years equates to 8,136 residential subscribers and 539 business subscribers by Year 3, and assumes no subscriber growth thereafter. • Estimated construction cost per service drop of $2,500 to be incurred by the network provider/owner (not grant funds)
• Minimal cost recovery for service drops through a one-time installation fee:
o $250 for business installation
o $50 for residential installation
• 2% annual inflation for recurring expenses
• Other potential revenues from dark fiber leases/IRUs, macro-micro cell site leases, data transport circuits, etc., are excluded from this projection.
Table 22 - Phases 1, 1B, & 2: Projected Operational Revenues & Expenses Year 1 Year 2 Year 3 Year 10 Year 20
REVENUES
Retail Subscribers 1,950,240 3,900,480 5,850,720 5,850,720 5,850,720 Installation Fees 180,470 180,470 180,470 -- --
TOTAL ANNUAL
REVENUES 2,130,710 4,080,950 6,031,190 5,850,720 5,850,720
EXPENSES
Direct Costs of Services 353,000 616,701 667,826 622,006 713,512 Administrative Costs 770,349 1,293,617 1,851,568 2,238,804 2,700,440 Reserves 53,268 740,218 788,974 784,462 784,462
TOTAL ANNUAL
EXPENSES 1,176,617 2,650,536 3,308,368 3,645,272 4,198,414
CASH FLOW
Beginning of Year -- (6,789,576) (10,618,382) 5,542,622 32,623,009 ADD: Net Income 332,417 1,495,688 2,836,853 2,314,967 1,761,824 ADD: Depreciation 674,944 674,944 674,944 674,944 674,944 LESS: CAPEX (7,796,938) (5,999,438) (6,028,352) (50,000) (50,000) END OF YEAR (6,789,576) (10,618,382) (13,134,937) 8,482,532 35,009,777
City of San Luis Obispo Broadband Plan 84
Critically, the model also assumes the City constructs the network, and does not rely on third party fiber. If the City were to continue utilizing third party fiber, it’s likely that those parties would not allow the City (or a private partner) to generate revenue off those fibers through retail internet service under the current terms of their agreement with the City.
The model also does not calculate or include any internal rate of return that private equity might seek in exchange for providing the significant start-up capital required ($2,500 per address to construct service drops, customer equipment, etc. necessary to begin offering service to paying subscribers). While the models project a seemingly large revenue stream by Year 20, that figure will be reduced once a private partner begins to account for their own investment returns.
The cash flow is anticipated to be negative through Year 7, with a debt requirement of approximately $13.1 million to sustain operations in Year 3 (the initial capital requirements are driven from service drops and equipment purchases). This demonstrates the City need for a private partner to not only bring operational experience, but also private capital in order to sustain cash flows through the first few years. However, breakeven is hit by Year 8, with $2.5 million in estimated positive revenues, and could reach as much as $35 million in Year 20.
This projection is intended only as a tool to assist the City as a starting point in negotiations with a private partner, and is not a definitive accounting of income, expenses, or guaranteed market share.
City of San Luis Obispo Broadband Plan 85
8. Business & Service Models
To determine which business model for municipal broadband is best, local governments should understand various factors, such as: community needs, competitive market factors that define infrastructure options, and organizational and operational capabilities of the local government itself.
The various business models involve different levels of investment and control that come with varying risks and rewards. The City of San Luis Obispo has numerous options – from a lassie-faire, public policy-only approach all the way across the spectrum to a full retail internet business.
Figure 45 - Broadband Business Models Differing Levels of Control and Investment
8.1 BUSINESS MODELS
Public Policy Only
The municipality utilizes its public policy tools to shape and streamline the private sector’s efforts to design, construct, and manage broadband infrastructure. Focus areas include right-of-way access, permitting processes and costs, construction practices and placement methods, franchise agreements, and utility fee assessments. Examples of broadband policies and standards include joint trenching and “dig once” policies, utility relocations, road moratoriums, and funding mechanisms for design, labor, and materials. A public policy approach is not a model per se; however, it can be combined with other models for municipalities to take a more active, direct role and maximize impacts.
City of San Luis Obispo Broadband Plan 86
Public Services Provider
Municipalities utilize publicly-owned fiber and broadband resources to interconnect multiple public organizations with fiber or wireless connectivity. These organizations are generally limited to the community anchors within their jurisdiction, including local governments, school districts, higher educational organizations, public safety organizations, utilities, and healthcare providers. Santa Monica, California and Scott County, Minnesota utilize the Public Services Provider model.
Infrastructure Provider
Municipalities provide conduit and dark fiber services to local organizations businesses, and even ISPs and broadband providers. These organizations use public fiber to connect to one another and to data centers to reach the Internet, cloud services, and other content networks. Dark fiber33 is the core product of most infrastructure providers and is generally utilized by larger businesses and institutions in order to reduce their telecommunication expenses and achieve higher bandwidth speeds. Huntsville, Alabama and Lincoln, Nebraska are two municipalities that utilize the Infrastructure Provider model.
Open-Access Provider
Municipalities that own substantial fiber-optic networks in their communities will equip the network with the electronics necessary to establish a transport circuit to interconnect ISPs with the local network. The concept of open access enables competition among ISPs across a network that is owned by the local government. The municipality remains neutral and non-discriminatory, and is open equally to any providers that seek to deliver services over the network. Typically, this model works best in large cities with substantial demand – both residential and commercial. Utopia in Utah and Ammon, Idaho are two examples of an Open Access Provider model.
Municipal Retail Provider
Municipalities construct significant fiber networks, including service drops to individual businesses and residences, and offer competitively priced Internet by providing services directly – i.e., the municipality is providing broadband as a utility. In order to compete with the incumbent providers, municipalities will offer triple-play services consisting of phone, television, and Internet, along with providing the required customer service center, billing 33 “Dark Fiber” is simply the fiber optic pathway – the user (or lessee) must provide their own equipment and connections on either end of the fiber to function and transmit data. “Lit Fiber” is the full suite of data services, where the subscriber just needs to “plug in” in order to access the internet; the owner of Lit Fiber provides the end line equipment and connectivity to the world wide web.
City of San Luis Obispo Broadband Plan 87
services, technical, installation, and field maintenance crews, and supporting administrative staff to operate an ISP. Chattanooga, Tennessee and Sandy, Oregon are two cities that utilize the full broadband utility model.
Public-Private Partnerships
Public-private partnerships (P3s) are an emerging business model that provides an innovative solution to an ongoing municipal broadband issue: how does a local government invest in municipal broadband without operating a broadband network? The key factors that define a public-private partnership, as opposed to simply a customervendor relationship, is that: (a) all parties contribute, (b) each parties’ benefits are shared based on their contributions, and (c) one partner does not pay another; there are few or limited transactions between partners.
Generally, P3s create a cooperative platform for a local government and one or more private organizations to plan, fund, build, and maintain a broadband network within the municipality’s jurisdiction. To make a P3 successful, each organization should align on negotiable agreements, which can include:
• Who has rights to access the network – is it exclusive or non-exclusive? • What are the public and private partners’ goals and how are they incentivized? • What roles and responsibilities does each partner have? • What assets are financed through the public?
• What revenue model is used to recoup investment?
• What requirements must the private partner meet, in terms of service availability, speed, price, build locations, and performance schedules? • How will the partners determine future buildouts and who pays for them? • What happens if the private assets are sold or acquired? The essence of such a partnership is that for-profit and for-people entities collaborate to achieve complementary, if not common, objectives. The bottom line for private entities is profit, while it is quality of place for public agencies. In concept, private entities can flexibly mobilize resources where there is money to be made and public agencies can redistribute resources to ensure no one is left out. A P3 can help realize both these outcomes: public involvement reduces risk to private investment, and private involvement enables faster and more extensive execution. Generally, partnerships decrease risks while enabling larger or new forms of rewards.
Magellan recommends San Luis Obispo consider a public-private partnership model to implement the Broadband Plan in which the City could publicly solicit and select a private ISP to operate, manage, and sell retail internet services over publicly-owned fiber in
City of San Luis Obispo Broadband Plan 88
exchange for lease payments, revenue share, new City network construction, or a combination thereof. This P3 approach is particularly suitable to the City given capital resource constraints, existing conduit- and fiber-sharing arrangements that could multiply subscriber reach, and the relatively limited amount of new construction required as identified in the Conceptual Network Design.
Additionally, an experienced private ISP partner will be required if the City were to apply for SB 156 Last Mile grant funding, as the City cannot currently demonstrate experience and capacity to operate and maintain a retail internet service network. Leveraging a publicprivate partnership could also help secure the local match funds required for both the SB 156 Last Mile and EDA grants.
Initial revenue and expenses projections suggest that expanding the City backbone by constructing the Conceptual Design would achieve positive cash flows and generate a return on investment, which will be attractive to a qualified private partner. Completing Phases 1 and 2 would pass more than 24,000 residences and nearly 1,800 businesses, providing them with greater access to internet services. The final plan report will contain a detailed financial analysis that will assist the City in soliciting and negotiating any potential future public-private partnership.
8.2 GOVERNANCE
Implementing a City-wide broadband project – even through a public-private partnership - will require a governance and operational structure to ensure it meets the needs of City while effectively leveraging and managing public resources. The governance structure is designed to oversee the network and to ensure its long-term evolution and financial sustainability.
Within the context of a public-private partnership with an ISP to operate and manage the day-to-day operations of the network, there is an important distinction between governance and operations: governance is future-focused, and deals with transformational issues to ensure relevance, whereas operations address daily transactional issues to ensure continuity of defined services.
As owner of the public infrastructure, the City – through its elected leaders and appointed administrators – should be tasked with exercising the executive decision making and implementation. However, the City leaders and administrators would benefit from the input of key stakeholders, organized around the common goal of expanding broadband in the community, and formally tasked with advising the City on the strategic growth of the network.
City of San Luis Obispo Broadband Plan 89
Broadband Advisory Board
A City-appointed Broadband Advisory Board can act as primary liaison within the community, provide oversight and evaluation of the project, and present informed recommendations to City leaders and administrators for consideration. Specifically, the Advisory Board should include the following:
1. Strategic Leadership. The governing board must understand the vision and goals of this broadband initiative, and act to ensure the benefit of all businesses, citizens, and institutions within the City.
2. Well-defined Processes. Processes for making recommendations should be equitable, transparent, and designed for quality, simplicity, agility, and speed.
3. Collaborative Decision-making. The board should set priorities, and to make objective recommendations that are driven by the business needs of the organization and constrained by the availability of resources, reached through consensus, based on documented and communicated decision criteria, and flexible yet related to overall goals.
4. Sustained performance and learning. Education is an important aspect of governance. The board should create and participate in opportunities to learn about emerging technologies and should serve as a sounding board for new ideas and initiatives that may capitalize on the network.
Advisory Board members can be nominated for appointments, or added ad-hoc by the City, to serve the strategic interests of the organization. A formal charter will need to be developed to address and define the scope and purview of the board.
City of San Luis Obispo Broadband Plan 90
9. Funding Options
9.1 GRANT FUNDING OPPORTUNITIES
The state and federal broadband policy environment strongly supports expansion of local public broadband infrastructure in California and the US. State and national policy is squarely focused on eliminating the “digital divide” by funding a coordinated, shared approach to deploy broadband infrastructure for broadband access available to all citizens and communities. The State of California, recognizing the importance of internet access, leveraged federal funds for broadband development in Senate Bill 156 by using federal American Rescue Plan Act (ARPA) funds. The State of California is also expanding broadband infrastructure funding under the existing California Advanced Services Fund and is planning to distribute sub-grants for broadband infrastructure under the NTIA’s Broadband Equity, Access, and Deployment program.
ARPA
The major elements of the SB 156 broadband budget are:
1. $3.25 billion in funding (all from ARPA) for construction of a state-owned openaccess middle mile network designed to provide connectivity for rural and urban areas to achieve the greatest reductions in the number of households unserved by broadband service under state and federal standards.
2. $2 billion in funding ($1.072 billion from ARPA) for “last mile” projects, funded through the Broadband Infrastructure Grant Account program, divided between rural and urban counties.
3. $750 million (general funds) to assist local governments and non-profit organizations in financing broadband projects.
Other major provisions of SB 156 include:
1. Establishment of the Office of Broadband and Digital Literacy at the Department of Technology, with duties including oversight of the acquisition and management of the statewide open-access middle-mile network.
2. Requirement for CPUC to identify and prioritize statewide open-access middle-mile locations according to specified priorities, including:
a. Locations where there is no known open-access affordable middle-mile networking, that would enable last mile connections.
b. Areas unserved or unserved by open-access middle-mile networks where such networking can be built expeditiously.
City of San Luis Obispo Broadband Plan 91
c. Locations that would enable last mile connections to unserved residences and community anchor institutions and tribal lands.
3. Requirement for CPUC to prioritize state highway rights-of-way for open-access middle mile network construction.
4. Stipulates that the open-access middle-mile network is for a public purpose and can be leased for less than fair market value.
5. Exempts certain broadband projects from CEQA requirements.
6. Removes limitations on local governments receiving grant funding.
Last Mile Federal Funding Account
The 2021 California Budget Package included $2 billion in funding (partially from federal ARPA funds) created by Senate Bill 156 for the construction of last mile fiber networks to serve un- and under-served households ($1 billion for rural areas and $1 billion for urban areas)34. The funding was allocated by county, with San Luis Obispo County receiving $22.3 million in order to reach and serve 10,575 un/under-served households already identified.
Competitive applications for funding must demonstrate clear readiness to build and operate a fiber network as evidenced by:
• The applicant (city, county, tribal organization, etc.) will receive up to 20 of 100 total points in the evaluation based on experience and capacity in operating and maintaining a retail internet service network or have an experienced private ISP partner, and
• Local match funding is required in order to be awarded maximum points, estimated at up to 20% of the total project cost, which could be provided partially or in full by a private partner.
However, updated maps were released by the CPUC in early April 2023 that incorporate five key eligibility indicators:
1) Mass Market Unserved Locations - locations lacking access to wireline 25 Mbps downstream and 3 Mbps upstream, excluding locations with only legacy technology (e.g. Digital Subscriber Line and Cable DOCSIS 2.0 or older) 2) CalEnviroScreen 4.0 Index – disadvantaged communities burdened by multiple sources of pollution and with population characteristics that make them more sensitive to pollution.
34 California Public Utilities Commission Last Mile Federal Funding Account, https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/broadband-implementation-forcalifornia/last-mile-federal-funding-account
City of San Luis Obispo Broadband Plan 92
3) Socioeconomic Vulnerability Index – the relative socioeconomic standing of a community based on five indicators: poverty, unemployment, educational attainment, linguistic isolation, and percent of income spent on housing. 4) Disadvantaged communities (DACs) – CalEPA’s index based on census tracts receiving high overall and cumulative CalEnvirosScreen scores and areas under the control of federally recognized Tribes.
5) Low-Income Areas - areas where aggregated household incomes are less than 80 percent of area or state median income.
Figure 46 shows each of these five eligibility indicators within the City of San Luis Obispo, demonstrating areas throughout most of the City with some level of need and eligibility for Last Mile grant funding. (Note: No areas of the City fell under the DAC category).
Figure 46 - Last Mile Federal Funding Account Eligibility Map35 35 Source: California Public Utilities Commission Last Mile Federal Funding Account, https://federalfundingaccountmap.vetro.io/map#5.65/37.393/-116.87
City of San Luis Obispo Broadband Plan 93
Looking specifically at CPUC-designated unserved locations within 750’ of the proposed Conceptual Design backbone identifies grant-eligible areas that could reasonably be connected and served via a future City network (see Figure 47) SB 156 Last Mile grant funding does allow for the funding and construction of backbone and middle-mile networks, provided that those are directly supporting last-mile distribution to eligible locations. The City should identify at least 2-3 concentrations of unserved locations along the Conceptual Network Design and include fiber-to-the-premises service drops as part of any SB 156 Last Mile funding application to ensure grant eligibility.
Figure 47 - CPUC-Designated Unserved Locations within 750’ of City Backbone
City of San Luis Obispo Broadband Plan 94
The buffer analysis in Figure 47 identifies a significant number of unserved locations within a reasonable distance from the City’s proposed Conceptual Design that could be connected to improved broadband through an SB 156 Last Mile grant application.
Table 23 - CPUC-Unserved Locations by Phase
Phase Number of CPUCUnserved Locations
Phase 1 – Citywide Loop 161
Phase 1B – Residential Extension 30
Phase 2 – Water & Park Assets 26
The CPUC is still in process of rolling out the Last Mile grant process: an engineering, economic, and business case tool is expected to be released in May 2023, with the application window now anticipated to open in June 2023.
California Advanced Services Fund (CASF)
The California Advanced Services Fund was created in 2007 to bridge the “digital divide”.
CASF is administered by the CPUC and has been modified progressively over the past 15 years. The latest modification under SB 156 increased CASF funding, modified CASF programs, and created new CASF subaccounts.
Broadband Infrastructure Account
The infrastructure account is used to subsidize the cost of middle-mile and last-mile infrastructure to expand the state’s broadband network. The Commission gives preference to programs and projects in communities with demonstrated low broadband access and in communities facing socioeconomic barriers to broadband access. SB 156 modified infrastructure account requirements to define “unserved area” as those without internet access service of at least 25 Mbps download and 3 Mbps upload, and to require CASF funded projects to provide speeds of at least 100 Mbps download and 20 Mbps upload.
The CPUC has further modified Broadband Infrastructure Account provisions to recognize new federal funding from the Broadband Equity, Access and Deployment Program under the IIJA (below). More recently the CPUC postponed the deadline for infrastructure grant applications to June 1, 2023. The postponement was due to delays in updating the California Interactive Broadband Map which identifies unserved locations eligible for grant funding. Part of the delay was from adding socioeconomic data as an additional layer. The updated new map (Figure 48) indicates there are unserved locations in San Luis Obispo for which the City could apply for funding from the Broadband infrastructure Account.
City of San Luis Obispo Broadband Plan 95
Figure 48 - CASF Infrastructure Account Eligibility36
Public Housing Account
SB 156 expanded eligibility for grants and loans to include publicly supported housing developments, and other housing developments or mobile-home parks with low-income residents, and to make funding available to low-income communities to finance projects to connect broadband networks that offer free broadband service that meets or exceeds state standards, if the low-income community does not have access to any broadband service provider that offers free broadband service that meets or exceeds state standards. This will support up to 100 percent of the costs to install inside wiring and broadband network equipment in eligible public housing.37
36 Source: https://broadbandmap.ca.gov/
37https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/california-advanced-services-fund/casfadoption-account
City of San Luis Obispo Broadband Plan 96
Broadband Adoption Account
Local governments and other eligible organizations with programs to increase publicly available or after school broadband access and digital inclusion, such as digital literacy training programs are eligible to apply for grants. Digital inclusion projects may include digital literacy training programs and public education to communities with limited broadband adoption, including low-income communities, senior citizen communities, and communities facing socioeconomic barriers to broadband adoption. Publicly available or after-school broadband access projects may include free broadband access in community training rooms or other public spaces, such as local government centers, senior citizen centers, schools, public libraries, nonprofit organizations, and community-based organizations.38
Infrastructure Investment and Jobs Act
The most recent Federal broadband funding programs arise from the Infrastructure Investment and Jobs Act (IIJA). The IIJA will provide generational funding for broadband deployment and be available beginning this year and next from the IIJA.
The IIJA contains the Broadband Equity, Access & Deployment program (BEAD). The BEAD program provides grant funding for broadband planning and deployment, mapping, digital equity, and adoption projects and activities. A total of $42.45 billion is funded nationally for this program to be administered by the National Telecommunications and Information Administration (NTIA) and allocated among the states in block grants. The allocation to each eligible state will be based on the proportion of unserved locations in each state, as determined by the Federal Communications Commission’s (FCC) Broadband DATA maps. The current expectation is that the NTIA will announce state allocations of BEAD funds based on the FCC broadband mapping by June 30, 2023.
The California Public Utilities Commission (CPUC) is administering the sub-grants in the state and has an open rulemaking proceeding39 to determine the rules for CPUC sub-grants under federal rules administered by the NTIA. Per the IIJA, a state may award BEAD fund sub-grants competitively for eligible uses to include:
38 https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/california-advanced-services-fund/casfadoption-account 39 Order Instituting Rulemaking Proceeding to Consider Rules to Implement the Broadband Equity, Access, and Deployment Program; Rulemaking 23-02-016; before the California Public Utilities Commission, filed February 23, 2023.
City of San Luis Obispo Broadband Plan 97
• Projects deploying or upgrading broadband facilities in unserved or underserved areas;
• Projects deploying or upgrading broadband facilities to connect an eligible community anchor institution;
• data collection, broadband mapping, and planning (beyond the planning fund allocation);
• installing internet and Wi-Fi or providing reduced cost broadband in multifamily residential buildings with priority to those with unserved households or where the percentage of households at or below 150% of the poverty line exceeds the national average;
• broadband adoption programs including provision of devices; • training and workforce development; and,
• other uses including Digital Equity programs.
Federal requirements regarding state broadband infrastructure grants include:
• Funds will be disbursed based on a competitive grant process administered by each state under rules promulgated by the National Telecommunications and Information Administration (NTIA). The CPUC
• Funding will be based on updated FCC mapping of broadband availability. • Priorities and specific allowed uses of funds:
o First, infrastructure for areas without 25/3 Mbps service. o Then infrastructure for areas without 100/20 Mbps service. Then eligible community anchor institutions.
o Multi-Dwelling Units (MDUs): Installing internet and Wi-Fi infrastructure or providing reduced-cost broadband within a multi-family residential building, prioritizing those with a substantial share of qualified low-income households. o Programs for broadband adoption including provision of affordable internetcapable devices. o Broadband data collection, broadband mapping and planning. • Project requirements for funding:
o Speeds of at least 100/20 Mbps with low latency. Higher speeds will receive priority.
o 25% match required from non-federal sources, such as in-kind contributions, unspent COVID relief funds or provider investment.
o Projects prioritized based on higher speed, greater scalability, faster buildout and service coverage for high poverty areas.
o Projects must be completed within four years.
o Projects must offer at least one low-cost broadband option (rates are not regulated, but determined by state, approved by NTIA).
City of San Luis Obispo Broadband Plan 98
o Additional requirements included regarding service quality, reliability, cyber rules, prohibition on using gear manufactured in China, required technical and operational capacity for the subgrantees.
Broadband Mapping
Distribution of federal BEAD funding is determined by the proportion of business and residence locations in each state that are unserved by broadband. Unserved locations are identified by the FCC Broadband map “broadband data fabric”, constructed using data collected from various sources. The FCC has published a series of draft maps open to challenge since September 2022. The latest challenge window closed on March 15, 2023 and the CPUC submitted its challenge – identifying locations it believes are unserved in addition to those depicted on the FCC map – prior to that. NTIA expects to announce its BEAD allocations, relying on FCC broadband mapping, to each state by June 30, 2023.
Economic Development Administration (EDA) Grants
The EDA periodically offers grant assistance for cities seeking to develop or redevelop key commercial areas or corridors, and publicly owned fiber optic networks are an eligible expense for these funds. EDA grants typically tie eligibility and competitive scoring criteria to specific job creation or retention, making key development sites or zones prime candidates for EDA funding where high-speed broadband could help attract or retain key employers. EDA’s Notice of Funding Opportunity was released March 15, 2023 and there is no submission deadline – applications will be accepted on an ongoing basis.
Proposed projects must be consistent with the region’s current Comprehensive Economic Development Strategy. EDA has funded projects for expansion or enhancement of public facilities with higher quality fiber optic cables and telecommunications infrastructure and broadband infrastructure deployment. Applications are relatively complex and timeconsuming to submit and process, and a local match is required, ranging from 20-40%.
The City should consider future EDA grants as a possibility, particularly where it aligns with its key economic development areas and major development projects.
9.2 ALTERNATIVE FUNDING MECHANISMS
Special Taxing Districts
Special taxing districts have been used throughout the State of California to fund infrastructure investment including broadband. Most common special taxing districts are fire protection, health care and water districts. Other types of special districts include sanitation, life support/EMS, transportation, libraries, and others. Community Service
City of San Luis Obispo Broadband Plan 99
Districts are one type of Special District, which is “independent” in nature. In contrast, the County Service Area is “dependent” since it is governed and administered by the County.
Community Service Districts (CSD)
More than 300 communities formed community service districts between 1955 and 2005, under the previous laws.40 The underlying theory of these CSDs was to support consistent and adequate service levels across large and diverse geographical areas within counties.
The CSD statute was amended in 2005 to remedy its structure which had become convoluted over time and to convert it to modern statutory construction. In 2008, Senate Bill 1191 added provisions to allow a community services district to construct, own, improve, maintain and operate broadband facilities and provide broadband services “if a private person or entity is unable or unwilling to deploy broadband services.”41 The CSD is obliged to transfer ownership and operation (or lease the operation) of the broadband facilities when that entity is “ready, willing and able to take over the facility” or operation.
The transfer or lease is to be at “fair market value.”42 A CSD must be approved by the Local Agency Formation Commission (LAFCo) prior to undertaking the activity. Residents initiate the formation of a CSD through petition or resolution at the county level. A CSD can issue bonds or form an improvement district to support bond issuance. Property owners will pay taxes or special assessments for services including infrastructure development within the district. The CSD may be governed by an independent board of directors.
County Service Areas (CSAs)
A CSA is a form of special district that is governed by the county Board of Supervisors, administered by county staff and is designed to deliver more county services to a specific geographic area where constituents are willing to pay for them. Residents (by petition) or county supervisors (by resolution) initiate the formation of a CSA. Once proposed, the formation of the CSA is subject to public notice and hearing. If more than 50% protest, voter approval at a special election may be required.
The basic premise of a CSA is to fund consistent and adequate levels of service across large and diverse geographical areas or in small communities in unincorporated areas that the County would not otherwise be able to fund through traditional sources (property tax, sales 40 Cal. Gov. Code § 61001(a)(4).
41 Cal. Gov. Code § 61100.
42 Id.
City of San Luis Obispo Broadband Plan 100
tax, fuel tax, etc.). This funding is created by a direct assessment, paid by property owner for a particular service. The most common type of service and associated assessment is for road and drainage maintenance in new subdivisions, but there are others ranging from lighting to fire protection. One benefit of CSAs is that they allow a county to segregate costs and benefits of providing additional services.
Community Facilities Districts
The Mello-Roos Community Facilities Act of 1982 allows establishment of Community Facilities Districts (CFD) to support financing of public improvements and services by a county, city, special district or joint powers authority43 – the CFD must have a sponsoring local government agency. Formation of a CSD requires a two-thirds majority vote of residents living within the proposed boundaries. Upon formation, a special tax lien is placed on each property in the CFD, which is covered by a Special Tax paid each year. Also, municipal bonds can be sold to fund initial investments.
A CFD can be used to finance “maintenance and operation of any real property or other tangible property with an estimated useful life of five or more years that is owned by the local agency or by another local agency pursuant to an agreement entered into under Section 53316.2”.44
43 Joint Powers Authorities are legally created entities that allow two or more public agencies to jointly exercise common powers. Forming such entities may not only provide a creative approach to the provision of public services, but also permits public agencies with the means to provide services more efficiently and in a cost-effective manner. https://www.bbknowledge.com/general/the-ins-and-outs-of-joint-powers-authoritiesin-california/ 44 Cal. Gov. Code § 53313(g), emphasis added.
City of San Luis Obispo Broadband Plan 101
10. Recommendations
1) Expand the City’s Fiber Backbone Loop to Provide
Greater Access for the Community and Businesses.
The City can complete a backbone loop necessary for a qualified operator to provide competitive, reliable retail internet services to the community and business at an estimated cost of $13.5 million. The backbone loop design would also connect remaining City facilities and assets – including parks, water tanks, and lift stations. Construction costs can be further reduced to $10.4 million through lease or use of third-party fiber, or broken into more than two phases, depending on project funding availability. 2) Initiate Design & Engineering for Phase 1, 1B, & 2.
Ensuring the City can submit a competitive SB 156 Last Mile grant application and/or a CASF Infrastructure Account grant application will necessitate completing the full design engineering for Phases 1, 1B, & 2. Based on discussions with the City’s Public Works Department around staffing capacity, the City should plan to begin with Phases 1 and 1B.
This will allow the Cit to use its allocation of SLFRF funds before the statutory deadline for those funds expires.
Design engineering will include field surveying and verification, identifying additional usable assets that may not be recorded in City maps, value engineering to reduce the overall cost, confirming the final routing and design, and compiling a Bill of Materials. This work will demonstrate to the State and the CPUC that the City is “shovel-ready” to begin construction.
3) Solicit & Negotiate a Public Private Partnership.
The City is in a favorable position to leverage an expanded, looped backbone network through a public-private partnership, which could secure: (a) the qualified network operator needed for grant eligibility, (b) all or part of the required match funding for SB 156 Last Mile grant funds, (c) a partner willing to construct all or a portion of Phases 1, 1B, & 2 in exchange for rights to sell retail internet services utilizing City fiber, or a combination thereof. The City should publicly solicit ISPs for a partnership through an RFP process, select a qualified partner, and negotiate a partnership agreement in concert with a SB 156 Last Mile grant application. City IT staff should lead this effort, and consult with applicable City departments and Council per City purchasing policies.
City of San Luis Obispo Broadband Plan 102
4) Pursue Competitive Grant Opportunities through SB
156 Last Mile Federal Funding Account and the CASF
Broadband Infrastructure Grants.
The State of California and the CPUC have designated more than $22 million in broadband construction grant funding for San Luis Obispo County through the SB 156 Last Mile grant process, and CASF allocates $150 million annually (through 2032) for broadband infrastructure grants, which both aim to connect unserved and disadvantaged households with high-speed fiber services. The City is eligible for both of these funding sources and should pursue these grants to cover the backbone loop design construction costs of $13.5 million and for the marginal costs to connect CPUC-designated unserved households and other at-need neighborhoods. The City should identify which concentrations of unserved locations will be included in the initial grant application based on the CPUC maps and the proximity to the proposed Conceptual Network Design. Other municipalities – and the County itself – will be competing for these grant funds, which will require the City to demonstrate commitment, completed planning, and construction readiness in order to secure a grant award.
5) Coordinate Joint Build for CIP and Utility Projects
Coordinating infrastructure expansion through joint utility work is the most cost-effective strategy to expand City broadband assets, particularly into under-served areas and new developments. Effective coordination on all projects that require excavation will ensure that all utilities—public and private—can economically expand their broadband footprint in San Luis Obispo. The City can incrementally and opportunistically build its own fiber network, connect key City facilities, and enable Smart City applications. The full CIP analysis can be found in the full plan document, starting on page 57. 6) Apply Development Conditions to new Projects to
Expand Public and Private Fiber Assets
The City should implement favorable development conditions through City Council action and ordinance that requires developers on new projects to place fiber/conduit to ensure faster, more efficient provision of fiber-optic based next generation broadband services.
City of San Luis Obispo Broadband Plan 103
7) Explore a Broadband Infrastructure Fund to finance
future smart city applications and network
expansion
Many cities create dedicated funds for revenues generated from leases of City assets by private telecommunications companies. A dedicated fund with ongoing revenues— separate from the General Fund—prioritizes new City/public technology deployment for future build opportunities (funding for fiber network expansions through incremental builds/joint trench coordination or for locating new smart city devices concurrent with expansion of private wireless connectivity).
Creating a fund helps plan strategically for the years to come when use of public assets/ROW will increase and could create significant new City revenues. The unscheduled nature of joint trench/dig once opportunities means cities need a dedicated funding source outside of the normal budgeting process to take advantage of open trenches.
The City should consider holding revenues generated by the City through lease or other agreements for use of City broadband infrastructure – including cellular antennas on street light poles, placement of cabinets or vaults in the ROW, leasing land or towers for cell tower installation, dark fiber or conduit occupancy leases, or other telecom-related/ROW revenue generating activities – in a separate account to offset maintenance and expansion costs. 8) Adopt broadband infrastructure and fiber-optic
standards.
The City should adopt standards and industry best practices to ensure City investments are future proof, adaptable, and support multi-vendor interoperability over the expected 30-50 year life cycle. Broadband infrastructure should include strategically placed access points, high-count (288+ strand) fiber optic cable, and installation standards for depth, separation from other utilities, and allowing new installation technologies (e.g., microtrenching) when appropriate to ensure future builds are simple, cost-effective, flexible, and durable.
City of San Luis Obispo Broadband Plan 104
Appendix A: Participating
Stakeholders
Ancient Peaks
Astound Broadband
Broadband Consortium of the Pacific Coast
Cal Poly Center for Innovation and Entrepreneurship
Cal Poly Division of Research and ED
City of SLO Community Development Department
City of SLO Economic Development
City of SLO IT
City of SLO Network Services
City of SLO Public Works
Community Action Partnership of SLO
County of SLO Behavioral Health
Downtown SLO CEO
Housing Authority of SLO
Lumina Alliance
Oasis Associates
Peak WiFi
People’s Self-Help Housing
REACH
San Luis Coastal Unified School District
SGT Dee CEO
SLO CASA
SLO Chamber
SLO Child Development Resource Center
SLO Council of Governments
SLO County Health Agency
SLO County Public Health
SLO Noor Foundation
SLO Tourism
Trust Automation
VHV Real Estate
City of San Luis Obispo Broadband Plan 105
Appendix B: CIP Projects with
Broadband Opportunities
Project
No. Project Title Description Status BroadbandOpportunities 1000506 Bus Shelter
Replacements Replace bus shelters, end of life Planning Wireless/Wi-Fi connectivity 100083 New Buckley Lift
Station
Avila Ranch development, SW of
Airport Specific Area Planning Connect City Assets
91369
Fiero, Clarion Gravity
Sewer, Airport Lift
WW Station
Replace Airport Lift Station Planning Connect City
Assets
1000082 Silver City Lift Station Replacement Planning Connect City Assets
1000079 Foothill Lift Station Replacement Planning Connect City Assets
1000543
Stenner Canyon
Water line
replacements
Replace the water pipes to
Stenner Canyon Planning
Joint Trench;
Bridge/freeway
crossing
1000545
California Ave -
Stafford to Mill Water
line replacements
Replace a critical transmission
main crossing Highway 101. Design
Joint Trench;
Bridge/freeway
crossing
1000547
Chorro - Highland to
Meinecke Water Line
Replacements
Replace the water pipes on
Chorro from Highland to
Meinecke
Planning
Joint Trench;
Bridge/freeway
crossing
1000544
Highland - Oakridge
to Cuesta Water Line
Replacement
Replace the water pipes on
Highland from Oakridge to
Cuesta
Planning
Joint Trench;
Bridge/freeway
crossing
1000546
Highland at UPRR
and Cal Poly
Waterline
Replacement
Replace the water pipe crossing
Highland at UPRR Planning
Joint Trench;
Bridge/freeway
crossing
1000545
California Ave
Stafford to Mill Water
Line replacement
Replace a critical transmission
main crossing Highway 101. Design
Joint Trench;
Bridge/freeway
crossing
City of San Luis Obispo Broadband Plan 106
1000539-
02 Islay, Henry, Sierra
Way
Wastewater pipe replacements
at Islay, Henry, and Sierra Way. Planning Joint Trench
1000539-
06 Morro, Mill, Santa
Rosa
Wastewater pipe replacements
at Morro, Mill, and Santa Rosa. Planning Joint Trench
1000539
San Jose, Ramona,
Monte Vista,
California
Wastewater pipe replacements
at San Jose, Ramona, Monte
Vista, and California.
Planning Joint Trench
1000539
Taft, Hathaway,
Phillips, Buena Vista,
Loomis
Wastewater pipe replacements
at Taft, Hathaway, Phillips, Buena
Vista, and Loomis.
Planning Joint Trench
1000093 Serrano, Bressi, Dana
Pipe replacement
Wastewater pipe replacements
at Serrano, Bressi, and Dana Planning Joint Trench
1000037 South St. Median
Landscaping
Irrigation system to support
future landscape plantings in the
medians on South Street.
Design
Connect City
Assets; Joint
Trench
90346 Pavement areas 2024 - Pavement Areas 8 & 9
Local and Collector Streets Planning Joint Trench
91610 Higuera St. Widening,
Bridge St. to Elks
Widen the segment of South
Higuera Street between Bridge
Street and Elks Lane and
improve on-street bikeways.
Design Joint Trench
91610 Higuera St. Widening,
Fontana to Chumash
Widen the segment of South
Higuera Street between Bridge
Street and Elks Lane and
improve on-street bikeways.
Design Joint Trench
91613 Prado Road
Interchange
Connect Prado Road and Dalidio
as an overpass over 101 with on
and off ramps
Planning
Joint Trench;
Bridge/freeway
crossing
1000052
Buchon-Santa Rosa
Intersection
improvements
Reduction of flooding issues
updating the curb ramps and
providing a high visibility
crosswalk.
Design Joint Trench
91503 California and Taft
Roundabout
Installation of a roundabout at
the intersection of California &
Taft
Design
Joint Trench;
Bridge/freeway
crossing
91293
Railroad Crossing
Upgrade California
and Foothill
Railroad crossing Planning
Joint Trench;
Bridge/freeway
crossing
City of San Luis Obispo Broadband Plan 107
91252 /
91203
Prado Road Bridge &
Road widening
Widen the bridge across San Luis
Obispo Creek and the
intersection at Prado and South
Higuera.
Design
Joint Trench;
Bridge/freeway
crossing
1000029 Chorro Bridge
Replacement Replace Chorro Bridge Planning Bridge/freeway crossing 1000031-
08 Laguna Lake Golf
Course Replacement of irrigation system Design
Connect City
Assets;
Wireless/Wi-Fi
connectivity
1000057A Laguna Lake
Improvements
Development of Parks with
recreation amenities at Laguna
Lake.
Planning
Connect City
Assets;
Wireless/Wi-Fi
connectivity
1000512 Downtown zig zag
lighting
Upgrade the downtown
overhead "zig-zag" lighting Design Wireless/Wi-Fi connectivity 1000535
EV Infrastructure
Upgrades behind the
meter
Construct electric vehicle
infrastructure for electric transit
buses.
Design Wireless/Wi-Fi
connectivity
1000155 Downtown Renewal
Installation and removal of
parklets and sidewalk dining
areas, activation of Mission
Plaza, and temporary street
modifications
Design
Connect City
Assets;
Wireless/Wi-Fi
connectivity
90435-2 Cultural Arts District
Parking Structure
Install a new parking structure at
the Palm/Nipomo intersection Design
Connect City
Assets;
Wireless/Wi-Fi
connectivity
100530 SH Line and Pump &
Bioassay Test
Expand the distribution system
for recycled water for irrigation Planning Connect City Assets 1000053 Bus Wash
Replacement
Water Conservation focused
replacement Design Connect City Assets
1000502 RRST Preliminary
Engineering
Continue the Railroad Safety
Trail (Tiburon to Orcutt). Planning Wireless/Wi-Fi connectivity 1000057 Orcutt Area/Righetti
Ranch Parks
Development of Parks with
recreation amenities at Trail
Junction.
Design
Connect City
Assets;
Wireless/Wi-Fi
connectivity
City of San Luis Obispo Broadband Plan 108
1000513 Parks & Rec EV
charging station
Electric vehicle charging stations
at the Parks and Recreation
Department
Planning Connect City
Assets
1000528
Recycled Water
Broad St. Tank Farm
to Aerovista
Install critical infrastructure
needed to serve the East Airport
Annexation
Design Connect City
Assets
91368 Reservoir 2
Replacement Replacement of Reservoir #2 Planning Connect City Assets 99653
Treatment Major
Facilities
Maintenance
Replace failing components of
the Water Treatment Plant. Planning Connect City Assets 1000541
Water Treatment
Plant, power storage
units
New power storage units for use
during PG&E power outages. Planning Connect City Assets 1000550
WWRF and
Wastewater
Collection Shop
Re-purpose existing building
areas Planning
Connect City
Assets;
Wireless/Wi-Fi
connectivity
1000542 WTP Cityworks
Integration
Replace failing components of
the Water Treatment Plant. Planning Connect City Assets 990 Palm City Hall
Remodel
Remodel City Hall downstairs
office space Planning
Connect City
Assets;
Wireless/Wi-Fi
connectivity
91365 Public Safety Center Improve the Police Department Facility site. Design
Connect City
Assets;
Wireless/Wi-Fi
connectivity
ATTACHMENT C - DEFINITIONS
Definitions are offered below to ensure a common understanding of the terms being used in the report.
A. "Broadband" commonly refers to high-speed Internet access that is always on and faster than traditional dial-up access. The Federal Communications Commission currently classifies high-speed Internet access as anything that meets or exceeds 25 Megabits (Mbps) downstream and 3 Mbps upstream. The California Public Utilities Commission (CPUC) is working on updating that definition to 100 Mbps downstream and 100 Mbps upstream (for reference, 100 Mbps allows for approximately 4-6 people to run 7-10 devices for school, work, and other uses at an appropriate speed for those uses). The City will adopt the CPUC definition of broadband for the purposes of our plan, as grant funding will be tied to meeting that definition.
B. "Third-party fiber" is fiber-optic cable infrastructure owned by an entity other than the City.
C. A "backbone ring" commonly refers to a fiber-optic network built in a ring shape, so a disruption at any part of the network does not disrupt the entire network.
D. "Dark fiber" is a fiber-optic cable that is currently unused.
E. A "service drop" or "lateral" connects the backbone ring to an individual service location.
F. "Retail broadband" means any broadband service provided to the public at a charge.
G. An "Internet Service Provider (ISP)" is an entity that provides Internet service to end-user customers. Some common examples in the City are Charter, AT&T, and Astound Broadband.
H. "Conduit" is an empty pipe, generally buried underground, through which fiberoptic cables can be run.
I. "Hybrid Fiber-Coaxial (HFC) architecture" is a telecommunications industry term for a broadband network that combines optical fiber and coaxial cable. It has been commonly employed globally by cable television operators since the early 1990s.
J. "DOCSIS (Data Over Cable Service Interface Specification)" is an international telecommunications standard that permits the addition of high-bandwidth data transfer to an existing cable television (CATV) system. Many cable television
operators use it to provide cable Internet access over their existing hybrid fibercoaxial (HFC) infrastructure.
K. "XGS-PON" is an updated standard for Passive Optical Networks (PON) that can support higher-speed 10 Gbps symmetrical data transfer and is part of the family of standards known as Gigabit-capable PON, or G-PON.
L. "Fixed wireless access (FWA)" is a 5G or 4G LTE wireless technology that enables fixed broadband access using radio frequencies instead of cables.
M. "Wireless Internet Service Provider (WISP)" is an Internet service provider with a network based on wireless networking. Technology may include commonplace Wi-Fi wireless mesh networking or proprietary equipment designed to operate over open 900 MHz, 2.4 GHz, 4.9, 5, 24, and 60 GHz bands or licensed frequencies in the UHF band (including the MMDS frequency band), LMDS, and other bands from 6 GHz to 80 GHz.
N. "Affordable Connectivity Program (ACP)" is a United States governmentsponsored program that aims to provide wireless Internet for low-income households.
O. "Software-Defined Wide-Area Networks (SD-WAN)" is a wide-area network that uses software-defined network technology, such as communicating over the Internet using encrypted overlay tunnels destined for internal organization locations.
P. "Optical Line Terminators (OLT)" are devices that serve as the service provider endpoint of a passive optical network.
Q. "Fiber Distribution Hubs (FDHs)" are enclosures that connect fiber optic cables and passive optical splitters in the outside plant segment of the network.
R. "Network Access Point (NAP)" is a major point where internet service providers (ISPs) can connect with one another in peering arrangements.
Focus Group Invitee Lists
City staff has worked to identify appropriate stakeholders for these focused meetings based on input from numerous City departments, including the Office of Diversity, Equity and Inclusion, to ensure outreach to underserved and underrepresented groups.
Real Estate and Land Use
City of San Luis Obispo MIG
Stone Park Capital Hodge Company
MFI Design People's Self-Help Housing
Stalwork Construction MW Architects
In Balance Green Consulting Hubbard Development Consulting Wallace Group NKT Commercial
Oasis Associates Covelop Collaborative Development
Richardson Properties Rademaker Design
J.W. Design & Construction Kovesdi Consulting
Madonna Properties Dettmer Architecture
CRSA Architecture Rossi Enterprises
Ambient Communities Above Grade Engineering
RRM Design Southpaw Sign Company
CCB Montage Development
Garcia Architechture and Design Peck Planning
AuzCo Developments Paragon Architects
Transitions Mental Health Association Astound Broadband Ten Over Studio Trust Automation
Cannon Corporation Vivian Hanover Ventures
Copeland Properties Jamestown
The Law Office of Marshall E. Ochylski Peak WiFi
Quaglino Enterprises Pacific Coast Broadband Consortium Housing Authority San Luis Obispo
Community and Non-Profit Organizations
AAPI SLO COunty Literacy for Life Organization
Central Coast Coalition for Undocumented
Student Success
Long Term Care Ombudsman Services of San
Luis Obispo County
Diversity Coalition SLO County Lumina Alliance
GALA Pride and Diversity Center Meals That Connect
Independent Living Resource Center, INC One Cool Earth
Jewish Community Center Federation Peace Academy of the Science and Arts Latino Outreach Council People's Self-Help Housing Corporation Promotoras Restorative Partners
RACE Matters SLO San Luis Obispo Children's Museum
Undocu Support San Luis Obispo Climate Coalition
United Way of San Luis Obispo County
San Luis Obispo Committee for Education on
Alcoholism, dba "MiddleHouse"
Cal Poly Student Diversity and Belonging San Luis Obispo Legal Assistance Foundation 5Cities Homeless Coalition Senior Volunteer Services
Access Support Network Shower the People
Big Brothers Big Sisters of San Luis Obispo
County SLO International Film Festival
CAPSLO - Child Care Resource Connection
(CCRC) SLO Noor Foundation
City Farm SLO SLO Partners
Community Action Partnership of San Luis
Obispo County, Inc SLO Rep. Theater
Community Counseling Center (CCC) of San Luis
Obispo Smart Share Housing Solutions, Inc
Court Appointed Special Advocates of San Luis
Obispo County, Inc
The San Luis Obispo Child Development
Resource Center
Cuesta College Foundation Tolosa Children's Dental Center Festival Mozaic Transitions Mental Health Association
Food Bank Coalition of San Luis Obispo County The Link Family Resource Center Hospice of San Luis Obispo County Center for Family Strengthening (CFS) Jack's Helping Hand, Inc Housing Authority San Luis Obispo (HASLO)
Business and Industry
SLO Chamber of Commerce
RACE Matters SLO
Tourism BID
Promotional Coordination Committee
REACH
Downtown SLO Business Association
SLO Economic Development Dept.
SOFTEC
Trust Automation
Cal Poly CIE
Cal Poly Business Park
Transportation and Health
SLO Utilities Dept
PG&E
Charter/Spectrum
AT&T
Astound/Digital West
SLO Public Works
SLO Engineering
SLO Transportation Team
County Public Works
SLO Transit
RTA - Regional Transit Authority
SLO COG
Peak WiFi
Education and Social Services
Cal Poly
Cuesta College
San Luis Coastal Unified School District
SLO County Social Services
SLO County Public Health
SLO County Behavioral Health
CenCal Health