Jared Mauch's Comments

There are a number of different ways one can pay for building the infrastructure that we care about. The most well known model is the Municipal one. Here you have your water and sewer delivered to you at some point (usually when your home is built) and you pay utilization fees for access.

I’ve started to look at applying the same model to building fiber to every home in Washtenaw County. Let me start with my basic premises, so you have a reference of how I’m thinking before I am destroyed in any comments.

1) There are 1647 miles of roads in the county. These do not include private roads. Most private roads are shorter, or part of a HOA (home owners association), and the cost of building to access such a network should be borne by the property owner. This distance is rarely very far, and if a large project were undertaken, these homes would likely see a significant discount as a result of existing labor and planning.

2) There are 111,536 residental homes in the “2009 WASHTENAW COUNTY PARCEL COUNT”. There are also commercial, farm and other “personal” properties that I also included in the counts. Using these brings us up to 125,455 and 139,363 total. These are important, because utility properties count in that final “Personal” property number.

3) Estimated build costs per mile. This is sometimes more complicated than it seems, as there are two primary methods of building. One is Aerial (pole-mounted) and the other involves putting conduit in the ground (direct-burial/ducted fiber). These costs range from ~$26k-95k/mile. It’s possible that costs could be higher in city centers as well, but since the majority of the county roads are local (1059 miles), I’m going to use an average cost of $60,198.14/mile. These are based on budgetary-quotes received in December 2009.

4) The fiber has a lifetime of 15 years. We should pay off the fiber over those 15 years. Figuring an interest rate of 6% seems reasonable, and a bond would pay out either annually or quarterly. I used annual for this analysis. Your figures may vary.

Now that the background information is disclosed, there’s a few important things to consider.

If you finance with public funds, there should be a public value, and non-discriminatory access given to the infrastructure. That means as much as you may hate your local incumbent Cable, Phone, or Internet provider, they will have equal access to the assets as any other business. (Unless you are funding this with your lotto proceeds, then you can do what you want with it).

This brings us to the important calculations, the actual “large” numbers.

The (average) annual tax for each property owner (including personal property) is… $73. NPR listeners will know this is less than a dollar a day! This number also comes off your Federal taxes, meaning your money stays local. Of course, the real values are higher. Over 15 years, my county would pay roughly $153.1 million dollars back to bondholders on the $99.1 million cost.

Now lets talk about the inclusion of those “real” property numbers for utilities and other business property. They have some value in utilizing data based networks to collect information about their businesses. If DTE wants to remotely monitor gas and electric meters, there is now a network upon to build. Their cost of business likely would go down, and lower electric rates would be possible as a result. Anyone that has experienced a brownout during the summer knows that electricity usage is higher during the day and early evening, the ability to monitor usage allows these outages to be minimized. Users could even opt-in for lower rates to be interrupted first. Your rates likely will not go down, but the increase may not be as high as other areas. Never again would you see that “Estimated” reading and get the shocker bill months later.

But business use is just a small component of why I’m thinking about this. It’s really about solving the last-mile issue. There was one attempt dubbed “Wireless Washtenaw” that attempted to bring internet access to all county residents. While a noble cause, it’s so far been a failure in bridging the gap. There are large swaths of even well-populated Scio Township, Lodi Township and even Manchester that have limited or no access except expensive satellite and cellular options. Both are slow and come with severe limits on usage.

Building a fiber network would make it possible to bridge these gaps where radio and last-century telephony systems can not keep up. There is a potential to increase property values through having high-speed access available throughout. The ability to start a home-based business with connections that rival those businesses have in major metropolitan areas, make distance-learning and access to the community at large are promising and worth exploring.

Even at the high-end of the model, this would be $145.13/year in increased taxes. While some people will balk at any increase in taxes, ignoring our basic communication infrastructure will reduce property values, the ability to compete in the global marketplace and allow the region to continue its slow slide.

My basic data is located here as a PDF file. The same model could clearly be applied to a cooperative as well, which is where the research started. The costs are not high, and the return is a first-class information society for all residents, schools and businesses.

EDIT 1: Reference data for Washtenaw county is here. A calculated millage rate to fund the $10.2Million would be 0.58235 for 15 years.

EDIT 2: A study from 2004 presented at the ITU by Charter talks about the costs of maintaining OSP (outside plant) for a fiber network vs coax. The cost per installed mile to operate is $85.11. The annual operations cost (emergency splicing, etc) is estimated to be 140,176.17. Service fees for right-to-use should incorporate this cost.

This entry was posted on Saturday, February 6th, 2010 at 5:09 pm and is filed under internet, politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.