Figuring out Community Return on Public Investment in Broadband
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2018 Blandin Broadband Conference
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Figuring out Community Return on Public Investment in Broadband
- 1. Grasp potential of ROI Quantifying the need and the potential
- 2. What are we going to do? • Calculate potential community ROI • Calculate potential increase in community-wide real estate • Compare to your neighbors • Know what’s going on in your community • Bonus: Calculate government revenue and health care cost savings
- 3. “A households with broadband reaps $1,850 in economic benefits per year” Ohio State University Swank Program What does this mean for the community as a whole?
- 4. How many households have broadband? • How many households in your county? _________ https://www.census.gov/quickfa cts/fact/table/mn/PST045217 • What percentage has access to broadband now? ________ https://mn.gov/deed/assets/cou nty-wireline-only_tcm1045- 255859.pdf Households X . = Served
- 5. How many households don’t have broadband? • How many households in your county? _________ https://www.census.gov/quickfa cts/fact/table/mn/PST045217 • How many have broadband? Households - = Served Unserved
- 6. What’s the value? Current value to the community… Potential value to the community… UnservedServed X $1850 X $1850 == Value Added Value Potential
- 7. How to frame it… • Households with broadband reap $1,850 in economic benefits annually • In my community that means a total of $__________ annually • In my community that means that better broadband could increase community benefit to $__________ annually • Compare this to community investment Value Added Value Potential
- 8. “Fiber-delivered Internet boosts home values by up to 3.1 percent” FTTH Council study What does this mean for real estate value in the community as a whole?
- 9. Median value of local homes? • Median value of housing unit _________ https://www.census.gov/quickfa cts/fact/table/mn/PST045217 • 3 x ________ = 100 • + Home Value New Value Home Value Increased Value Home Value Increased Value
- 10. What’s the value? Current value to the community… Potential value to the community… UnservedServed X X == Value Added Value Potential New Value New Value
- 11. How to frame it… • Households with broadband see an increase in value of 3 percent • In my community, we have seen an increase in community wide home values of $______________ • My community has the potential to increase total home values by $_____ • Compare this to community investment Value Added Value Potential
- 12. Compare to your neighbors • How do you rank for 2022 goals? https://wp.me/p3if7-4Fq • How do you rank for 2026 goals? https://wp.me/p3if7-4HC • How did you rank in 2017? https://wp.me/p3if7-49p • How did you rank in 2016? https://wp.me/p3if7-3GK • Find your more recent county profile • What to look for? • Is your rank improving? • Are you improving at 25/3 and not 100/20? • The most recent county profile will give you an idea of what is happening in your county.
- 13. Bonus equation • 27 percent of community benefits will be government revenue and health care cost savings https://wp.me/p3if7-4HI • $1,850 x total households x 27 _____________________ ________ x 100
Editor's Notes
- Today we are going to quantify the impact of broadband in your community to help you persuade community leaders, investments and your neighbors to appreciate the value and perhaps to open the door to public investment. I learned how helpful it was to have some of these “back of the envelope” calculations while attending a community broadband meeting in Sunrise Township. They were talking about partnering with CenturyLink for a state grant. The project was about $2.5 million; state would pay half; the community was looking at bonding for match. It was a hot night in a crowded room when suddenly someone pointed out that with the bonding they were going to do – it would mean an extra $100 tax for people who got better broadband, Once the funding was framed like that it was almost a non-issue. People knew they would recoup that cost quickly and easily. So we’re hoping to give you folks some fodder to put financial investments and ROI is perspective for your community. We will do that by looking: How much the community will increase economic benefit once they get broadband Increased home values – at a community level See how you compare to neighboring counties What’s going on in your community And government/health care savings Details on Sunrise: The project has an estimated price tag at $2.39 million. What Sunrise Township needs to do is create a subordinate service district (SSD) which is territory where CenturyLink can service customers, and these parcels would pay for their internet infrastructure….minus the state grant assistance. The grant is for $1.07 million or approximately half the cost to install broadband Internet fiber infrastructure. Sunrise would takeout debt to help the project happen and the debt is placed on tax rolls of parcels in the SSD. Any broadband subscription costs go on top of that, explained Sunrise Chair Carl ‘Pete’ Johnson. It has not been determined yet if the debt would be paid off over 10 years or 15 years. https://blandinonbroadband.org/2017/01/22/more-info-on-sunrise-township-centurylink-border-to-border-project/
- This is a statistic created by Ohio State University and used by friends/scholars in Purdue. If anything, this is a conservative number. We’ve seen numbers as high as $11,000 per year – but those tends to be urban-focused (they include how much you would make driving/using Uber or amount you can save on rent by shopping around online) and perhaps optimistic. This number is based on more conservative items – such as time saved not driving, work from home potential.. This number alone may be persuasive to community members. Compared to that $100/year that Sunrise will pay for community investment in broadband it’s nothing.
- We are going to spend the next few slides doing math – mostly because I miss math so much from my days back in school. Actually some of you may need less hand holding AND the spreadsheet created by Mary Magnuson will certainly help but we thought it might help to really walk through at least one of this formulas. We are going to start with home many households in your community have broadband and how many don’t. Hoping that may of you have a computer or phone where you can look some numbers for your community. We’ll start with how many households in your county and a visit to the census website. You can get it from the PPT and/or I’ve cheated and put the PPT on the Blandin on Broadband blog already. Click and look up your population. (While you’re there you might write down median house value too - it may seem superfluous now but it may come up.) NOTE: We’re using county because we can get stats at county level. You can use another locality – although getting the percentage served is the tricky number. We have that by county. SO put the number of households in the pink box OR on the spreadsheet in box B,4 Now we’ll be look at what percentage have broadband. You can visit the OBD site to get that info – or we have a few maps around. But that into decimal format multiple that by households and we’ll get the number of served households. You just put the decimal into the blue box (or B, 7) and the spreadsheet will do the hard part.
- We are talk through this slide – but the short answer is we’re figuring out the unserved population – the spreadsheet also figures this out for us. Or we take the red box from the previous slide and subtract the green box to get the number of unserved households.
- And now to get the value communitywide value. We simply multiple the number served by 1850 to get the current value of broadband in the community We multiple the number unserved by 1850 to get the potential increase in value of broadband in the community It’s important to note that this is increase per household only. We’re not looking at businesses. We’re not assuming any home-based businesses. This is just one piece of the puzzle. AND this is an annual number. We used this number when looking at 5 Minnesota communities last year and found that communities often recouple public investment within the first year of having broadband. NOW this doesn’t mean the provider clears a profit it means that every household sees an increase in economic benefits.
- Here are some ways you can frame the facts and numbers. And the idea is to compare it to any community investment you might be discussing. It’s difficult for a provider to make an investment like this – because again the economic benefits do not come directly to the provider BUT the community does benefit. It’s just a matter of how to balance the business case for the provider with the business case for the community. That is where cooperatives have a distinct advantage.
- Next up – more math but easier equations. What is the increase in home values in the community. We’ve learned in many communities that the value of real isn’t really incremental – people will buy homes with broadband and won’t buy homes that don’t have access. BUT the FTTH Council has quantified the difference at 3.1 percent.
- So more math. You may remember we suggested that you track the median value of a home in your community – if you have it, you can plug it right in here. We can multiple the number by .3 to get the increased value. Add that value to the original value and we have the new media value.
- Another aspect is the knowing what your neighbors have. It’s like living in a good neighborhood – you want your neighbors to take care of their yards for your property values. BUT you don’t want to have the biggest fixer-upper on the block. If everyone around you has good broadband and you don’t, you will have a more difficult time attracting and retaining people are businesses. So know where you stand. The links here will take you to various charts that help you figure that out. There is also a link to the recently published county profiles – that will give you an idea of what has been happening. In some ways – these numbers that you’re calculating are a counter to the feasibility studies you may be looking at generally the feasibility studies will look at what it takes to get broadband to your area. These numbers help you assess what the benefits will be in terms of how much public investment makes sense.