Too Shovel-Ready? Never!

Vermont is the most rural state in the USA, as measured by the percentage of the population that does not live in any Metropolitan Statistical Area (MSA). It also has some of the most difficult terrain for telecoms: lots of hills, narrow valleys, forest, and rock!

Given that, it may not be surprising that its telecom infrastructure is neglected by the telecom giants that service most of it (Verizon until recently and now its successor Fairpoint). As a result, it currently ranks near the bottom of all states on a number of indexes for telecom speed, quality, modernity, etc. It won some notoriety several years ago for a splashy plan to bring broadband “border to border” but the State Administration did not follow through and no progress has been made to date on that initiative.

The good news is that now a group of small Vermont towns have banded together to do what rural Americans have always done when government and corporations declined to address their common needs: build it themselves.

DIY in FTTH?
This project is unique in several respects:
• This group of towns intends to provide totally universal service by building optical fiber to every premises that currently has a copper power or telephone wire.
• It is the most rural such project in America (as far as we know).
• It is being built by a group of communities, none of which is even close to being big enough to undertake such a project on its own.

Tens of millions of other rural Americans live in similar small rural communities and are currently facing the same dilemma: acquiesce to the decay of their telecom infrastructure and with it the foundation of viable rural community life, or build what they need themselves.

East-Central Vermont Community Fiber Net (“ECFiber” for short) is a consortium of 22 small towns that covers a population of 54,000 in an area of 600 square miles with an average density of 13.6 premises per road mile. The largest “urban area” has a population of 7,900. So, if ECFiber can pull this off, it will provide a powerful model for other small rural communities to take charge of their future as they so often have had to do in the past.

Beginning in early 2008, ECFiber developed a project to bring fiber to every single premises in its area: “universal service -- no exceptions, no excuses” without any assistance from the State. This project was completely self-sustaining from the revenues of subscribers alone. A public offering of $90 million of Certificates of Participation, fully compliant with SEC requirements, was prepared by Oppenheimer Company and was on the verge of closing when Lehman Brothers collapsed and with it the entire municipal debt market.

ECFiber had to start again from scratch. Fortunately, the Stimulus Bill passed about this time and ECFiber redirected its financing efforts to that source. It was not a difficult matter to recast its Public Offering documents into an application for a BIP loan. No grants are needed by the ECFiber project and none are asked for. Vermonters generally don’t approve of free taxpayer handouts except in extreme circumstances. ECFiber is completely viable and requesting grants would be, in our view, unnecessary and, hence, improper.

In the interest of making the project completely shovel-ready (i.e., able to begin construction the day after funds are awarded), ECFiber approached a number of equipment suppliers and design/build companies about concluding contracts ahead of time. The conditions required were simple and straightforward:
• Equipment vendors had to convince us that they could supply an integrated end-to-end all-IP solution that is suitable for both universal coverage and open access.
• They had to bring the price for the entire package in under the threshold already established by the previous Public Offering business plan.
• They had to provide ancillary financing support sufficient to meet RUS requirements.

In the end, Alcatel-Lucent and Atlantic Engineering Group (AEG) were selected. Very detailed negotiations have gone on with both of these firms. These negotiations have provided a high degree of precision with respect to costs. At printing, a final contract has been concluded with AEG and one is nearing completion with Alcatel-Lucent. One result of these negotiations is a very detailed network plan and highly detailed and reliable cost estimates. A second result is the ability to begin construction literally as soon as “the money hits the bank”.

The OSP Configuration
ECFiber has chosen to deploy a “modified home-run” fiber configuration based on the experience of many of its experts at Burlington Telecom, as well as experience that has emerged elsewhere in recent years. This configuration is fully supported by both AEG and Alcatel-Lucent.

There are several key tenets to the plan:

A. Fiber will be built past every premises. All but a trivial percentage of this will be aerial construction on an estimated total of about 37,000 existing utility poles. Strands will be allocated to, and available for, every premises from the beginning -- with an average of 20% overage to allow for growth, failures, etc.

B. The fiber topology is “modified home-run.” This means every premises will have dedicated strand going to a Fiber Distribution Hub (FDH). These will consist of a limited number (approximately 10 for the entire area) of secure cinder block buildings, approximately 400 square feet, which will be powered (including back-up), lighted, and climate controlled. All electronics will be in these buildings -- there will be no cabinets or similar outdoor facilities.

The number and location of these FDH’s is constrained by two variables:

1. The maximum practical number of premises that can be homed into a single FDH (approx. 4,000+).

2. The maximum reach of G-PON lasers.

(Vendors often claim that the latter is about 30km, but our experience tells us to be very cautious on this point so our planning is based on 20km for a 1:32 splitter configuration.)

C. The FDH’s will be linked to each other and to the main Central Office/Head End (CO/HE) by redundant rings of 10Gig E carrier grade transmission gear (upgradeable to 40Gig E in due course.)

The advantages of this configuration are numerous:

1. All maintenance and repairs except for the fiber itself (which is extremely robust and needs very little attention) can take place inside a limited number of heated, lighted surroundings -- a major consideration for maintenance in general and particularly so in a harsh climate like Vermont.

2. Although the initial deployment will be G-PON access gear, this is not locked in forever. On the contrary, changing and/or upgrading electronics to later versions of G-PON or to another technology altogether is relatively simple. It can even be done at a gradual basis by changing out some, but not all, of the relevant gear in the FDHs.

3. It facilitates open access by providing a small number of benign points for access and co-location (“flexi-points” in the language of the European Union).

4. It facilitates a provision of special services to particular customers. For instance, a large customer who wishes to get dedicated point-to-point Gigabit connections can be provided such by simply bypassing the G-PON splitter for that location.

Why will it work? Because the "modified home-run universal FTTH" infrastructure that ECFiber intends to build is the most future-proof configuration currently possible and practical. The intent is to be able to leave the fiber alone for the foreseeable future and concentrate all maintenance, repairs, and technological change on a small number of secure facilities which can be easily and efficiently managed.

There is a small initial penalty to be paid in additional strand counts compared to a configuration that distributes a large number of small distribution facilities much closer to the final customers. But these are not large, and we are firmly convinced that the advantages of our configuration far outweigh these small cost differences.

The Economics of Being Shovel-Ready
Without going so deeply into the costs that proprietary information might be compromised, we can say that, in our area, the complete OSP infrastructure described above, including the G-PON access gear and the backhaul transmission systems will cost about $2,600 per passed premises, including pole make-ready. These costs are not theoretical but are based on hard practical experience of ECFiber experts plus that of AEG and Alcatel, and have been confirmed by other practical operators in the field. They are genuinely "the real deal" and contrast with a number of vague, ill-informed and inaccurate numbers that have been floating around recently (e.g., in the report of the Minnesota Broadband Committee).

Five concrete sources of data, listed below convince us (and had convinced the private capital markets until the demise of Lehman's' torpedoed such markets) that ECFiber can reliably meet all of its costs:

1. The cost of the main CO/HE: The purchase and renovation are arranged and the costs are known to a high degree of precision.

2. Additional cost of final connection of customers: only slightly more than in Burlington and other small urban FTTh networks.

3. Known costs of operations: based on actual experience in Burlington and other municipal FTTH networks.

4. Market surveys of our area.

5. Demand expectations experiences in Vermont and other municipal FTTH projects.

This data also underlie a detailed financial plan (incorporating numerous safety "cushions" ) that shows that ECFiber can service its debt and return a modest profit to the member towns which have committed to building this fundamental pillar of future economic and cultural life in our communities.

Too shovel-ready? I don't think so.

About the Author
Dr. Tim Nulty is President, ValleyFiber Inc., and the Project Director /General Manager of the ECFiber project. ValleyFiber is a division of ValleyNet, a Vermont non-profit, community-oriented telecommunications company headquartered in White River Junction (Hartford), Vermont. ValleyNet has decided to devote the large majority of its efforts and resources to bringing universal, open-access, publicly owned FTTH telecommunications, along the lines pioneered by Burlington Telecom, to as much of the rest of Vermont and New Hampshire as possible. Dr. Nulty has been hired to lead that effort. For more information, visit: www.ValleyFiber.com and www.ECFiber.net.

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