SR 03-01-2016 3B
City Council
Report
City Council Meeting: March 1, 2016
Agenda Item: 3.B
To: Mayor and City Council
From: Jory Wolf, Chief Information Officer, Information Systems Department,
Broadband
Subject: Digital Inclusion Broadband Pilot Program Subscription Rates
Recommended Action
Staff recommends that the City Council:
1. Adopt the attached Resolution to establish monthly subscription rates for the
.
Authorize the City Manager to waive proposed installation and subscription rates
2.
to Affordable Housing Providers, for the sole purpose of the City to deliver public
broadband service to Community Rooms, located within affordable Multi-Housing
developments with no less than 25% of its total units qualified as affordable units
onsite, whereby Community Rooms are designated as common area rooms
utilized for tenant child development services, educational purposes, career
Agency.
3. Authorize budget changes as outlined in the Financial Impacts and Budget
Actions section of this report.
Executive Summary
The City of Santa Monica adopted a Telecommunications Master Plan in 1998 to
enhance quality of life, economic vitality, and delivery of government services through
the strategic use of telecommunications technologies and infrastructure. In accordance
with the Master Plan, the City has built a Municipal Fiber Network, CityNet. CityNet
delivers voice, video, and data communications to City facilities; offers dark and lit fiber
services to businesses; and provides free public Wi-Fi in over 36 City Wi-Fi hot zones
located in public open spaces throughout the City. In October 2015, Council approved
$175,000 in construction funding for a proof of concept Digital Inclusion Broadband Pilot
Program (Broadband Pilot) to provide fiber optic services to 10 Santa Monica affordable
housing properties to address the digital divide for low income housing residents. City
staff has conducted research on network equipment, residential fiber optic installation
techniques, and operational management to design and propose a citywide Gigabit
broadband offering to residents of Multi-Dwelling buildings. Currently, staff is
conducting a feasibility analysis and must obtain subscriber testing data for feedback on
service performance, to establish rates to attain cost recovery, and to develop a budget
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for resource planning purposes.
City staff proposes to establish subscription rates for delivery of services to residential
buildings in order to recover the costs of providing the service, and to obtain service
data for individual housing units to be used for the feasibility analysis. The proposed
subscription rates are as follows:
General Rates Discounted Rates for Utility Public
Assistance Program Participants
Services Monthly One-time Services Monthly One-time
Subscription Installation Fee Subscription Installation Fee
1 Gigabit $69.00 $69.00 1 Gigabit $48.00 $48.00
10 Gigabit $360.00 $360.00 10 Gigabit $252.00 $252.00
Staff also proposes that subscription and installation services be offered at no cost to
Affordable Housing Providers, for the sole purpose of the City to deliver public
broadband service to Community Rooms, located within affordable Multi-Housing
developments with no less than 25% of its total units qualified as affordable units onsite,
whereby Community Rooms are designated as common area rooms utilized for tenant
child development services, educational purposes, career development, and other
Staff estimates that the
Broadband Pilot subscriptions to individual housing units will generate $15,000 in
revenues for fiscal year 2016-17. The revenue estimate is based upon the completion
of 24 service installations to individual housing units in FY2016-17 with existing staff
and budget.
Background
The City of Santa Monica adopted a Telecommunications Master Plan in 1998 to
enhance quality of life, economic vitality, and delivery of government services through
the strategic use of telecommunications technologies and infrastructure. In accordance
with the Master Plan, the City has built a Municipal Fiber Network, CityNet, to enhance
delivery of government services, improve performance and lower costs of
telecommunications services for City facilities and businesses, and to spur economic
growth.
On April 25, 2006 (Attachment A), Council authorized the City Manager to negotiate and
execute dark fiber lease agreements with Google Inc. and other interested parties
r lease offering continues to
experience a steady demand from large corporations in the technology, health and
entertainment industries.
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On June 22, 2010 (Attachment B), Council authorized the City Manager to negotiate
and execute a Lit Fiber agreement with Ocean Ave LLC and other interested parties
requesting lit fiber service. The City introduced Lit Fiber service to businesses during
an economic period marked by an influx of tech startups launching and expanding in
Santa Monica. With dedicated broadband speeds ranging from 100 Megabits per
second to 100 Gigabits per second, new tech ventures obtained affordable and globally
competitive broadband speeds from their early startup stage to their Initial Public
Offering (IPO).
With the prior success of
identified among a list of shovel-ready projects initiated to support the Strategic
Priorities established by Council on August 23, 2015 (Attachment C). The lack of
broadband access, adoption, and affordability have contributed to the digital divide
affecting low-income families. With the goals of offering affordable 1 Gigabit broadband
access to over 400 affordable housing units, the Broadband Pilot supports the City
Council strategic initiatives for maintaining an inclusive and diverse community, and
enabling a life-long learning community. Council approved funding for these shovel-
ready projects on October 27, 2015 (Attachment D). The Broadband Pilot was
appropriated $175,000 in funding for construction costs to extend the fiber optic network
into 10 affordable housing buildings and network equipment costs to enable broadband
service delivery from the telecommunication room of each building.
With the primary goal of closing the Digital Divide, the Broadband Pilot will be used to
conduct analysis on the operational resources required to scale broadband service
delivery to all affordable housing developments. The Broadband Pilot will also assess
the feasibility of introducing a citywide residential Gigabit broadband service by testing
service performance under a variety of service and installation conditions. The
affordable housing buildings included in the Broadband Pilot vary in their existing
telecommunications infrastructure, building age and architecture, offering an opportunity
for staff to test several interior infrastructure and cabling installations that could be
applied to additional affordable housing buildings and multi-dwelling buildings citywide.
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The feasibility analysis requires subscriber testing data to be used for feedback on
service performance, to establish rates to attain cost recovery, and to develop a budget
for resource planning purposes. Staff proposes to establish subscriber rates for
abit Broadband offering in their individual housing
units.
Discussion
CityNet has served as an effective economic development tool to support the local
business community with globally competitive broadband speeds at an affordable cost.
The broadband initiative has continued to innovate and adopt the latest technologies to
ensure broadband services are considered globally competitive by capacity, speed, and
customer service. CityNet currently offers Gigabit broadband only to businesses
located in commercial buildings. Residents have requested the City provide Gigabit
(ILEC) or local phone company, and cable carrier do not offer such residential services.
Globally, the Organization for Economic Co-operation and Development (OECD)
compares broadband statistics for more economically developed countries. The OECD
th
ranked the United States 30 out of 34 in affordability, for fixed-broadband prices per
megabit per second (Mbps) of advertised speed. The U.S. rate of $0.59 (USD) per
st
Mbps is far more costly than Japan, ranked 1 in affordability with a rate of $0.02 (USD)
th
per Mbps, Korea ranked 11 with a rate of $0.22 (USD) per Mbps, and Canada ranked
th
18 with a rate of $0.30 (USD) per Mbps. The United States also ranked low in terms of
broadband speed, sharing the bottom ranking of 24th with ten other countries for 0% of
their populations subscribing to broadband speeds faster than 100Mbps. Korea ranked
st
1 in speed tier comparisons, with over 34% of their inhabitants subscribing to
broadband speeds greater than 100Mbps, while Japan has over 19% of their population
subscribing to broadband speeds greater than 100Mbps.
In 2010, Google launched their Google Fiber competition to offer one U.S. city, Gigabit
broadband to highlight the consumer demand for globally competitive broadband, and
the benefits of Gigabit broadband to a community. More than 1,100 cities across the
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U.S., including Santa Monica, applied to be the first
cities, municipalities such as Chattanooga, Tennessee and Lafayette, Louisiana have
launched Gigabit initiatives and adopted rates similar to Google Fiber.
The Digital Divide in the U.S. highlights economic disparities prevalent in broadband
access and adoption. The Pew Research Center estimates that 40% of U.S.
households with school age children and incomes below $25,000 do not have high
speed broadband at home. The 2014 Field Poll by Field Research Corporation reported
in California, 47% of households earning annual incomes less than $20,000 do not have
access to the internet at home. The Field Poll also found that in households with
broadband access other than a smartphone, parents were 84% likely to use the internet
homework and grades. Lack of broadband at home can create disadvantages to
residents requiring broadband for education, job application searches, health
information, news, communicating online and through social media.
eliminating the digital divide between low income and higher income wage earners, and
eliminating the gap in broadband affordability and speed between the United States and
the other more economically developed countries, as measured by the OECD. The
proposed broadband pilot subscription services of 1,000 Mbps and 10,000 Mbps, would
globally rank among the highest speed tier (>100 Mbps), and proposed broadband
nd
general rates would rank 2 in affordability by megabits per second at $0.07 per Mbps
for 1,000Mbps and $0.04 per Mbps at 10,000Mbps.
Broadband Pilot Subscription General Rates
Staff proposes to establish subscription rates for Broadband Pilot services, to recover
the costs of providing the service, test service performance, and obtain operational data
related to individual housing unit service delivery. The proposed general subscription
rates are as follows:
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General Rates
Services Monthly One-time
Subscription Installation Fee
1 Gigabit Broadband $69.00 $69.00
10 Gigabit Broadband $360.00 $360.00
The proposed general rates are competitive with U.S. Gigabit broadband market rates.
The unbundled rates for early adopters of residential Gigabit broadband service include
Google Fiber ($70.00/month), City of Chattanooga, Tennessee ($69.95/month), and
City of Lafayette, Louisiana ($109.95/month). Rates for residential broadband service
greater than 1 Gigabit speeds are varied, and are currently not offered by Google Fiber.
Lafayette offers 2 Gigabit service for $299.99 per month with a 4 year contract term,
and Chattanooga recently offered 10 Gigabit service for $299.99 per month. In Santa
Monica, the local phone company and cable company do not offer 1 Gigabit residential
service at this time. Proposed rates account for variances in cost of living, Santa
ng Wage and Minimum Wage Ordinances, among the comparison cities.
of customer dedicated network equipment, broadband, and fiber asset during testing.
The general rates would apply to households requesting subscription to the Broadband
Pilot, yet do not qualify for the California Utility Public Assistance Programs required to
obtain discounted rates.
Broadband Pilot Subscription - Discounted Rates
To effectively support broadband adoption among communities that are historically
underserved in terms of high speed broadband access, staff has identified existing
California utility rate reductions for households meeting specific income thresholds. The
utility public assistance programs and discounts are as follows:
California Utility Public Assistance Programs
Utility Program Discount
Southern California Edison (electric) CARE 20%
Southern California Edison (electric) FERA 30%
Southern California Gas (gas) CARE 20%
Santa Monica Water Department (water) CARE 20%
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Staff proposes discounting the broadband subscription rate by 30% for residents
currently participating in any California Utility Public Assistance Program, including the
California Alternate Rates for Energy (CARE) program offered by Southern California
Edison, Southern California Gas, or the Santa Monica Water Department; and the
Family Electric Rate Assistance (FERA) programs offered by Southern California
Edison. To qualify for the discounted rate, subscribers would be required to provide
documentation verifying active status in either the CARE or FERA programs.
The proposed discounted subscription rates are as follows:
Discounted Rates for California Utility Public Assistance Program Participants
Services Discounted Monthly
Discounted One-
Subscription
time Installation Fee
1 Gigabit Broadband $48.00 $48.00
10 Gigabit Broadband $252.00 $252.00
Waiver of Installation and Subscription Rates
With the goal of closing the digital divide, staff proposes that subscription and
installation services be offered at no cost to Affordable Housing Providers, for the sole
purpose of the City to deliver public broadband service to Community Rooms, located
within affordable Multi-Housing developments with no less than 25% of its total units
qualified as affordable units onsite, whereby Community Rooms are designated as
common area rooms utilized for tenant child development services, educational
purposes, career development, and other activities specified by the C
Housing Agency. Currently, Community Rooms in Broadband Pilot buildings have
internet speeds of 3 Mbps or less, and service has proved inadequate to support web-
based basic computer training to a classroom of adult tenants, afterschool homework
assistance for K-12 students, and more advanced digital literacy programs. The City
will provide the network equipment, hardware, and software to deliver a fixed-wired
Gigabit Broadband connection, and install at least one computer desktop per
Community Room. The City will enable Wi-Fi service within the Community Room, for
Housing Agency, within the Community Room.
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Terms of Use
As a residential Broadband Pilot, th
business-class, 24/7 network support offered to business customers, would increase
service costs beyond a marketable consumer rate. During the Broadband Pilot, the City
will not provide any service warranty, express or implied, and customers may opt out of
the pilot services by not renewing their monthly subscription and returning City
equipment. Furthermore, available broadband speeds indicate the maximum data
transfer rate offered by the network device, but does not guarantee broadband speeds
will be equivalent to maximum broadband speeds. Network support and response
of normal business hours at City Hall. At the conclusion of the pilot, staff will evaluate
the additional resources and staff required to offer any service level assurances (SLAs)
for broadband subscriptions to residential customers.Staff estimates that the
Broadband Pilot subscriptions to individual housing units will generate $15,000 in
revenues for fiscal year 2016-17. The revenue estimate is based upon the completion of
24 service installations to individual housing units in FY2016-17 with existing staff and
budget.
Financial Impacts and Budget Actions
The Digital Inclusion Broadband Pilot is anticipated to generate revenues of $15,000 for
FY 2016-17. A revenue budget will be established at account 01248.407783 to reflect
the implementation of this program. Funds for the Digital Inclusion Pilot Program
construction in the amount of $175,000 are available in the FY2015-16 Strategic
Projects account number SC015201.589000.
Prepared By:
Gary Carter, Community Broadband Manager
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Approved Forwarded to Council
Attachments:
A. April 25, 2006 Staff Report (web link)
B. June 22, 2010 Staff Report (web link)
C. August 23, 2015 Staff Report (web link)
D. October 27 ,2015 Staff Report (web link)
E. Digital Inclusion Broadband Resolution
F. Written comments
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Add to 3-B
03/01/16
councilmtgitems
From:Council Mailbox
Sent:Tuesday, March 01, 2016 12:06 PM
To:Tony Vazquez; Ted Winterer; Pam OConnor; Sue Himmelrich; Gleam Davis; Terry OÔDay;
Kevin McKeown Fwd
Cc:councilmtgitems
Subject:FW: Comments on Digital Inclusion Broadband Pilot Program
Attachments:Letter RE Digital Inclusion Pilot.pdf
Council
Pleaseseetheattachedletterre:broadbandpilotprogram.
Clerk
AddtoforƷƚƓźŭŷƷƭmeeting.
Thanks,
Stephanie
CƩƚƒʹErinSchlitts\[mailto:erin@communitycorp.org\]
{ĻƓƷʹMonday,February29,20169:42AM
ƚʹCouncilMailbox<Council.Mailbox@SMGOV.NET>
/ĭʹGaryCarter<Gary.Carter@SMGOV.NET>;JoryWolf<Jory.Wolf@SMGOV.NET>;SarahLetts
<sarah@communitycorp.org>
{ǒĬƆĻĭƷʹCommentsonDigitalInclusionBroadbandPilotProgram
Mayor Vazquez and members of the City Council,
Please find attached a letter that outlines our support for the Digital Inclusion Broadband Pilot
Program, Item 3.B on the March 1, 2016 meeting agenda.
Thank you for your time and consideration.
Best,
Erin Schlitts
Project Manager
Community Corporation of Santa Monica
1423 2nd Street, Santa Monica, CA 90401
erin@communitycorp.org | O:310-394-8487 x102 | C:310-466-3022
| F: 310-975-6626
1
Add to 3-B
03/01/16
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