Burlington Telecom's FTTH System - VLCT — Home: Vermont League of ...

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Burlington Telecom's FTTH System - VLCT — Home: Vermont League of ...

  1. 2. CITY OF BURLINGTON & BURLINGTON TELECOM <ul><li>BACKGROUND </li></ul><ul><li>PHASE I - CITY NETWORK </li></ul><ul><li>PHASE II – FIBER TO THE BUSINESS, FTTB </li></ul><ul><li>PHASE III – FIBER TO THE HOME, FTTH </li></ul><ul><li>CURRENT INITIATIVES </li></ul><ul><li>CHECKLIST </li></ul>
  2. 3. Burlington Telecom Background <ul><li>Located in Burlington, VT. </li></ul><ul><li>Burlington is a municipal of approximately 18,000 Homes and 2500 Businesses. </li></ul><ul><li>In 1997, Burlington citizens voted for a municipal fiber network, but the City needed to change its municipal charter. </li></ul><ul><li>Driven primarily by citizens wanting an alternative to Adelphia (now Comcast) . </li></ul>
  3. 4. <ul><li>In 1999, Burlington’s municipal electric company (BED) partnered with Aptus Networks to build a city wide fiber to the home network. </li></ul><ul><li>On March 7, 2000 Burlington voted to change the charter and approved $6.1 million in revenue bonds. It was subsequently approved at the State level. </li></ul>
  4. 5. <ul><li>Then the dot-com bubble burst and investors began to shy away from telecom projects. </li></ul><ul><li>On April 8 th , 2001 both the City and Aptus missed their deadlines to raise initial funds. </li></ul><ul><li>Facing an uncertain future the City changed its approach and hired experienced telecom professionals. </li></ul><ul><li>In 2002, Burlington Telecom (BT) was formed and a three phase plan was developed to fully wire the City of Burlington. </li></ul>
  5. 6. Who is Burlington Telecom? <ul><li>A Department of the City of Burlington. </li></ul><ul><li>60+ years of operational experience in the telecommunications industry. </li></ul><ul><li>Employees previous experience - New York Telephone, Verizon Wireless, Independent Phone Companies, CLEC, ISPs and power utility. </li></ul><ul><li>Previous FTTx overbuild experience. </li></ul><ul><li>Capital investment and financial modeling experience. </li></ul><ul><li>Secured $14M USDA/RUS Loan. </li></ul>
  6. 7. Phase I City Network <ul><li>Phase I: Connected 38 Government offices with LAN, internet, and voice services on a 16.5 mile fiber-optic network at a price tag of $2 million. </li></ul><ul><li>City of Burlington issued a bid for funding. KOCH Financial Corp won the bid and the City entered into municipal capital lease arrangement. </li></ul>
  7. 8. <ul><li>The City contracted for wholesale voice services with TelCove, a PA-based CLEC. </li></ul><ul><li>Burlington switched its nearly 1,000 City Verizon lines over to a BT/TelCove network at a cost savings of 35%. </li></ul><ul><li>Total estimated savings for the City was $150,000 per year. </li></ul><ul><li>At the end of Phase I, the city was able to terminate multiple internet contracts and issue a single bid for internet access for the entire city. </li></ul>
  8. 9. City of Burlington Fiber Hub
  9. 10. <ul><li>No backing from the General Fund (Taxpayers) or City Assets. </li></ul><ul><li>The City will own the network at the end of the payment schedule of 15 years. </li></ul>Phase II FTTB Network
  10. 11. <ul><li>In 2004, the Phase II buildout added a few, carefully selected large businesses to the network. State Vt. Dept. of Health, Community Health Center of Burlington, Burlington Housing Authority. </li></ul><ul><li>BT utilized fiber deployed in the Phase I build and only incurred an incremental cost of hookup. </li></ul><ul><li>This was successful because BT already had an anchor tenant – ITSELF!! (1000 lines and internet bandwidth). </li></ul>
  11. 12. Planning for Phase III What should the network design be??? Broadband Test…. <ul><li>If the connection cannot provide consumers access to carrier class voice, two way high-speed data, and high definition video services over the same connection, then it is not a true Broadband connection… </li></ul>
  12. 13. A brief summary of technology… <ul><li>xDSL </li></ul><ul><li>HFC </li></ul><ul><li>Wireless </li></ul><ul><li>BPL </li></ul><ul><li>FTTx </li></ul>
  13. 14. xDSL <ul><li>DSL (Digital Subscriber Line or Loop) – A phone company’s answer to Broadband. </li></ul><ul><li>Many varieties – Most common is ADSL </li></ul><ul><ul><li>ADSL - Asymmetrical – provides higher downstream speed and lower upstream. </li></ul></ul><ul><ul><li>VDSL2 – Latest DSL innovation – Symmetrical High Bandwidth - Severe distance limitation – Need fiber optics into each neighborhood. </li></ul></ul><ul><li>All DSL uses copper telephone wire. </li></ul><ul><ul><li>Service quality easily impacted by environmental factors. </li></ul></ul><ul><ul><li>Poor or no service on older cable plant. </li></ul></ul>
  14. 15. HFC <ul><li>HFC (Hybrid Fiber-Coaxial) – A Cable Company’s answer to Broadband. </li></ul><ul><li>Modern digital cable television systems use fiber transport from the video/data source to an optical node located in a neighborhood. Coaxial cable runs from the node to the customer. </li></ul><ul><li>DOCSIS (Data Over Cable Service Interface Specification) data and internet access. </li></ul><ul><ul><li>Current version is 2.X with a maximum bandwidth is 40 Mbps down and 30 Mpbs up. </li></ul></ul><ul><ul><li>Bandwidth is shared amongst customers in the same geographic area. </li></ul></ul><ul><ul><li>This creates QoS (quality of service) issues and bandwidth cannot be guaranteed. </li></ul></ul><ul><ul><li>As with other metallic cable, coax is susceptible to interference thus degrading service. </li></ul></ul>
  15. 16. Wireless <ul><li>Uses radio waves (RF) as its carrier to link the subscriber. </li></ul><ul><ul><ul><li>Great potential for interference. </li></ul></ul></ul><ul><ul><ul><li>Antenna needed. </li></ul></ul></ul><ul><li>May use licensed or unlicensed frequencies. </li></ul><ul><ul><li>WiFi utilizes an unlicensed frequency and can easily be disrupted. </li></ul></ul><ul><ul><li>Coverage distance is very limited. </li></ul></ul><ul><li>Dependable coverage is difficult if not impossible within certain terrains. </li></ul><ul><ul><li>Hills, trees, buildings and other line of site obstructions can limit availability. </li></ul></ul>
  16. 17. BPL <ul><li>BPL – Broadband over PowerLine </li></ul><ul><ul><li>BPL uses electrical distribution lines, overhead or underground. </li></ul></ul><ul><ul><li>Requires modifying the power grids with specialized equipment. </li></ul></ul><ul><ul><li>Only works on low and medium voltage side of grid, requires fiber optic cable to feed. </li></ul></ul><ul><ul><li>Limited bandwidth capability. </li></ul></ul><ul><ul><li>Still requires a large fiber investment. </li></ul></ul>
  17. 18. The BPL Controversy <ul><li>The Controversy – Radio Interference </li></ul><ul><ul><li>Power lines are not designed to prevent radiation of RF energy. </li></ul></ul><ul><ul><li>BPL is an interference source for all radio services using this frequency range. </li></ul></ul><ul><ul><li>Radio operators have petitioned the FCC to intervene. </li></ul></ul>
  18. 19. FTTx <ul><li>Fiber-To-The-Home/Premise (“FTTx”) – BT’s answer to broadband. </li></ul><ul><li>FTTx is the only architecture that can deliver all of today's services, while retaining the capability to quickly and easily deploy emerging applications and services. </li></ul><ul><li>Unmatched reliability. </li></ul><ul><li>Proven flexibility to accommodate rapid changes in service delivery demands. </li></ul><ul><li>Unparalleled bandwidth scaling. </li></ul><ul><li>Fiber is future proof by eliminating the need for costly plant upgrades and enhancements in support of new applications. </li></ul><ul><li>Price points are competitive with copper, reaffirming that fiber is the obvious choice for new construction. </li></ul>
  19. 20. How Fast is Fiber
  20. 21. <ul><li>Network Design Plan </li></ul><ul><ul><li>Next Generation Technology </li></ul></ul><ul><ul><ul><li>Limitless, Future-Proof Fiber </li></ul></ul></ul><ul><ul><ul><li>Next Generation Telephone Switch with tried-true analog service </li></ul></ul></ul><ul><ul><ul><li>IPTV unlimited channel capacity </li></ul></ul></ul><ul><ul><ul><li>Incumbents – Compete with Verizon & Comcast using gear that meets today's service requirements while leveraging better technology and customer focus. </li></ul></ul></ul>
  21. 22. <ul><li>Strategy </li></ul><ul><ul><li>Select and Build the cornerstone – The Fiber Optic Cable Infrastructure. </li></ul></ul><ul><ul><li>Build the system with a fiscally disciplined approach. </li></ul></ul><ul><ul><li>Support the initial deployment of the fiber and all other network assets with a sustainable customer base. </li></ul></ul><ul><ul><li>Make a long term commitment to the community by constructing a quality network with superior services and unmatched customer service. </li></ul></ul>
  22. 23. Independent Industry Analysts Agree “ The Passive Optical Network (PON) Fiber-to-the-Home (FTTH) architecture selected offers substantial future-proofing, and the team is familiar with and has considered important design and deployment trade-offs and options. Wireless technologies are likely to complement fiber in some situations . . . but they cannot rival fiber’s capacity and longevity.” Dr. Marvin Sirbu, Carnegie Mellow University, Dr. William Lehr, Associate at Massachusetts Institute of Technology, and Ms. Sharon Gillet, Associate at Massachusetts Institute of Technology. “ I have reviewed the technical plan to deliver service and have a high degree of confidence that the plan is the right one, the equipment selected is correct, and most importantly the people in charge of these decisions are very talented and capable.” Jeff Allen, CEO of Third Rail. Review of FTTx deployed in Burlington, VT
  23. 24. Phase III FTTH Network <ul><li>Due diligence, BT hired Osborne Associates of Burlington, VT to conduct a market survey to determine receptivity to a city-owned telecommunications network.  Questions involving pricing, usage and satisfaction of current providers were also asked.  The market survey provided BT with invaluable direction as the business plan was being written. </li></ul><ul><li>In Nov. 2004, after the demonstrated success of Phase I and Phase II, KOCH Financial agreed to provide the $20 million for phase III with another 15 year repayment schedule. </li></ul>
  24. 25. <ul><li>The City had it’s certificates to carry voice and internet traffic. The “ challenge” came when it applied for its Certificate of Public Good (CPG) to carry video. </li></ul><ul><li>Adelphia (Comcast) challenged BT in State court on its ability to provide this service as well as cross-subsidies from other City departments and City Hall. </li></ul>“ The Challenge”
  25. 26. Adelphia Legal Challenge <ul><li>Result: BT successfully defended its position after 8 months of testimony and was granted its CPG to distribute CATV. </li></ul><ul><li>Adelphia could not prove our “lack of expertise.” Actually BT knew more about IPTV than they did. Also they could not prove any cross-subsidies from other City entities. </li></ul><ul><li>How did BT win the cross subsidy argument? </li></ul>
  26. 27. <ul><li>BT acted as a private corporation – a complete overbuilder!! </li></ul><ul><li>BT applied for all the appropriate certificates. </li></ul><ul><li>BT applied for pole attachments as a licensee. Even though Burlington Electric Department (city owned power utility) was joint owner of all the poles. </li></ul>Adelphia Legal Challenge
  27. 28. <ul><li>BT completed make ready rides (pole inspections) with Burlington Electric, Verizon and Adelphia. </li></ul><ul><li>BT paid for all make ready work to prepare the pole for our attachments. </li></ul><ul><li>BT has paid for all its dig permits through the Department of Public Works. </li></ul>Adelphia Legal Challenge
  28. 29. Network Construction Started OSP Construction Spring 2005 Main Hub (Central Office) Renovation Inside and Out (7/11/05)
  29. 30. Network Reliability Back-up power systems meeting current telecom standards
  30. 31. Next Generation Switch Traditional “POTS” service or VoIP or BOTH. Analog POTS, T1 PRI, VoIP
  31. 32. IPTV Headend 180+ video channels, VOD and 45 digital music channels via MPEG-2. “virtual unlimited channel capacity”
  32. 33. GPON Access & SONET Industry standard and accepted technology meeting FITL, Telcordia, and ITU requirements.
  33. 34. Fiber Rich 120% Fiber Capacity in City 1x32 Splits and large aggregation points give BT 100% utilization on GPON gear.
  34. 35. As of January 2006 <ul><li>BT completes CATV headend. </li></ul><ul><li>BT secures content contracts with approximately 100 providers. </li></ul><ul><li>72% of the content contracts are aggregated through National Cable Television Coop (NCTC). </li></ul><ul><li>IPTV created issues with content providers due to their perception of the lack of security of transmission of the signal. </li></ul><ul><li>BT transmits over a closed fiber optic system, but we still had to provide them with assurance of encryption. </li></ul>
  35. 36. <ul><li>February, 2006 BT rolls out tripleplay services available to approximately 1800 residents. Residents also have doubleplay and single play choices. </li></ul><ul><li>August, 2007 BT hits 2000 subs. </li></ul><ul><li>February, 2008 BT has overbuilt approximately 150 distribution fiber miles with services available to 15,400 residential homes and 1200 businesses. </li></ul>Service Rollout
  36. 37. Accomplishments to date Built a FTTH Network from the ground up! <ul><ul><li>Turned-up Next Gen Switch and trunks with both TDM and VoIP capabilities. </li></ul></ul><ul><ul><li>Turned-up IPTV headend with 180+ video and 45 digital music channels, VOD. Managed all DRM (digital rights management) and encryption issues. </li></ul></ul><ul><ul><li>Built an ISP with diverse carriers. </li></ul></ul><ul><ul><li>Established 3 node OC-48 ring between Verizon CO, City hub, and BT CO. </li></ul></ul><ul><ul><li>Established 2 node SONET ring to serve the New North End (2 nd town) </li></ul></ul><ul><ul><li>Negotiated over 5500 pole attachments. </li></ul></ul><ul><ul><li>Built past 15,411 homes with fiber. </li></ul></ul><ul><ul><li>Provide services to over 2800 customers via GPON. </li></ul></ul><ul><ul><li>Provide service to Burlington International Airport and it tenants. </li></ul></ul>
  37. 38. Current Initiatives <ul><li>HD and DVR Rollout Spring’08. </li></ul><ul><li>Increase Commercial Sales Efforts. </li></ul><ul><li>Reassess Business Plan, focusing on Cost of Goods Sold, Margin Analysis, and the development of better sales metrics. </li></ul><ul><li>Increase focus on improving our Customer Services Group to ensure customer retention and up-selling. </li></ul><ul><li>Improve our installation Quality Assurance Program. </li></ul><ul><li>Improve data acquisition during the installation and repair process to increase operational efficiencies. </li></ul>
  38. 40. Burlington Telecom’s New Bundles
  39. 41. FTTX Checklist Engineering and Construction <ul><li>Know your Municipal turf and demographics. Build in the most dense areas to start. </li></ul><ul><li>Do not abandon the basic engineering principles (i.e. Customer Serving Areas). </li></ul><ul><li>Layout and plan realistic Make-Ready Schedules. The other utilities have their own timelines. </li></ul><ul><li>Stay disciplined, plan the work and work the plan!!! </li></ul><ul><li>BE HUMBLE – It is best to follow the rules of construction as one deals with other utilities and not claim you are the Municipal and we can do what we want (i.e. pole attachments). They will slow you down!! </li></ul>
  40. 42. FTTX Checklist Regulatory and Legal <ul><li>Know your Local and State regulations. </li></ul><ul><li>Know your competitors – Cable, Voice and Internet. They will come after you. Remember you are a public entity swimming in traditionally “private” shark infested waters!! </li></ul><ul><li>Video - understand DRM (digital rights management) and encryption requirements, and the costs associated with acquisition. </li></ul><ul><li>Content acquisition and management. Know how your network design and contracts with carriers can affect content acquisition. </li></ul>
  41. 43. FTTX Checklist Human Resources <ul><li>Do not outsource the core design and build of your network. </li></ul><ul><li>It is estimated that BT has saved approximately 30% in costs over the length of the project by bringing the expertise in house. </li></ul><ul><li>Have an aggressive sales program while at the same time managing the customer expectations during the build. At the beginning revenue is always trying to catch up to capital expenditures. </li></ul><ul><li>Regulatory and Legal issues can consume a lot of man hours. Identify who will be doing this and the cost. </li></ul>
  42. 44. FTTX Checklist Overall <ul><li>Need to have an appetite for a large Capital program. Usually a 5 to 7 year Return On Investment. </li></ul><ul><li>What is the contingency plan to increase revenue and/or capital if there is a shortfall? Do you know your Cost of Goods Sold, Churn, and Margins on your service offerings? </li></ul><ul><li>Remember the Fiber Cable is the largest part of your CapEx program but most important…size your cables for future demand. Electronics come and go – the fiber will be there for the next 100 years. </li></ul><ul><li>Build the network in incremental, fiscally disciplined phases. Is the schedule realistic based on your Make-Ready work. </li></ul><ul><li>Build the right capacity the first time!!!! </li></ul>
  43. 45. THANK YOU! www.burlingtontelecom.com

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