broadband provision paper.v2a.160510 - spruce...

Fibre Optic Broadband Provisioning Discussion paper

Prepared for

Economic and Business Development The City of Spruce Grove

Prepared by Craig Dobson, Taylor Warwick Consulting Limited John Graham, e.Commerce Services

May 10, 2016

Economic and Business Development Fibre Optic Provision Discussion Paper

Taylor Warwick Consulting / e.Commerce Services 2016 05 10 ii

Executive Summary Because of the Internet and related technologies, the world is now transitioning to more complex economic systems built around knowledge.1 The most significant impacts of this unfolding transition relate to economic innovation, productivity, and societal organization. As a foundational cornerstone of these emerging systems of wealth creation, access to information and communications technology (ICT) has

become critical to sustainable economic development in virtually every commun-‐ity and society on the planet.

Recognizing both the opportunity and challenge associated with facilitating advanced fibre optic-‐based broadband infrastructure and services within their community, the City of Spruce Grove commissioned the development of this discussion paper, in essence a document with which to begin a conversation. Given that all four Spruce Grove-‐based private companies interviewed in support of this work in 2014 remain constrained by the existing ICT infra-‐

structure, the conversation could not be more timely. The value of ICT was noted in the City’s five year strategic plan. This year’s plan (2016) calls for an assessment of Spruce Grove’s broadband needs from an economic development perspective and the development of a strategy with which to move forward.

Depending on the priority the City gives to broadband, options ranging from leaving well enough alone, to accelerating existing internal fibre-‐based infrastructure plans, to negotiating with the incumbents, or to perhaps taking a more do-‐it-‐yourself approach, are available for consideration – and details on these appear at the end of this report. While recommendations are indeed premature, evaluating the alternatives and then developing an overall strategy to provide context and direction upon which selected options can be coordinated and executed is almost always a good place to start.

Preface This document is not intended as a Fibre Optic Broadband Strategy and should only be viewed as a document to stimulate discussion and identify high level options that the City may wish to pursue.

This work builds on the original analysis was conducted in 2014 by Taylor Warwick Consulting in partnership with e.Commerce Services Ltd. as objective and independent parties. Neither are agents of the City.

1 Toffler, A&H; Revolutionary Wealth; Knopf; 2006-‐04-‐25.


Taylor Warwick Consulting / e.Commerce Services 2016 05 10 iii

Table of Contents Executive Summary ...................................................................................................................................... ii Preface .......................................................................................................................................................... ii Introduction ................................................................................................................................................. 1 Landscape Issues .......................................................................................................................................... 1

Context .................................................................................................................................................... 1 A Techno-‐Economic Framework .............................................................................................................. 2 Political .................................................................................................................................................... 3 Economic Development .......................................................................................................................... 4 Broadband as Utility Infrastructure ......................................................................................................... 7 Technology .............................................................................................................................................. 7 Application Trends ................................................................................................................................... 8 Intelligent Communities / Smart Cities ................................................................................................. 11

Local ICT Infrastructure .............................................................................................................................. 12 Wireline Services ................................................................................................................................... 12 Mobility Services ................................................................................................................................... 14 Shaw Go WiFi ........................................................................................................................................ 14 Fixed Wireless Providers ....................................................................................................................... 15 Local Government / Public Broadband Initiatives ................................................................................. 15 Private Broadband Initiatives ................................................................................................................ 19

Local Business Requirements – Interviews from 2014 .............................................................................. 20 Overview ............................................................................................................................................... 20 Local Business #1 ................................................................................................................................... 20 Local Business #2 ................................................................................................................................... 21 Local Business #3 ................................................................................................................................... 22 Local Business #4 ................................................................................................................................... 22

Regional Competitive Advantage – As of 2014 .......................................................................................... 23 Desired State .............................................................................................................................................. 24 Options ...................................................................................................................................................... 25

Develop a Broadband Services Strategic Plan ....................................................................................... 25 Embed Fibre Network Requirements in the City’s Planning Process .................................................... 25 Accelerate Currently Planned Infrastructure Deployment .................................................................... 25 Leverage the Municipal Approval Process ............................................................................................ 26 Work with the Carriers and Seek their Investment ............................................................................... 26 Subsidize a Private Partner .................................................................................................................... 27 Develop a Community Fibre Network ................................................................................................... 27

Concluding Remarks .................................................................................................................................. 29 Acronyms ................................................................................................................................................... 30 Appendix – Spruce Grove Subdivisions ...................................................................................................... 31

Taylor Warwick Consulting / e.Commerce Services 2016 05 10 1

Fibre Optic Broadband Provision Discussion Paper

Introduction

This discussion paper focuses on the need for, and potential of, fibre optic-‐based broadband networks and services provisioning in Spruce Grove. The City of Spruce Grove wishes to better understand trends in fibre optic use and examine whether Spruce Grove’s future competitiveness may be impacted by fibre infrastructure availability. The paper should help set the stage for and begin informed discussions on the potential and the available options and trade-‐offs associated with enabling and/or provisioning enhanced fibre optic broadband networks and services within the City, whether that be leaving well enough alone, negotiating with the incumbents, or perhaps taking a more proactive do-‐it-‐yourself (DIY) approach.

Landscape Issues

Context The wealth of nations is changing. While prior centuries were dominated by nations with superior industrial or agricultural capabilities, the innovation age rewards new competencies and strengths. Knowledge – ideas and the people who generate them – is the new coin of the realm. Innovative capacity is the key driver of future economic prosperity… Our ability to remain a global technology (and thereby economic) leader will depend upon a variety of factors including our ability to maintain a world-‐class information infrastructure.

With respect to this last point – maintaining a world-‐class information infrastructure – there may be no element more critical today than ubiquitous and affordable high-‐speed Internet – broadband. The deployment and usage of broadband networks will significantly impact the global competitiveness of nations and businesses in the 21st Century.2

In their book, Revolutionary Wealth, the Toffler’s argue that the impact of the information and communications technology (ICT) revolution is much deeper than commonly appreciated as it underlies a change in our system of wealth. Specifically, the world is in the process of transitioning to its third wealth system ever – from Agrarian (based on land/agriculture) to Industrial (based on machines) to Knowledge (based on ideas).

2 Understanding Broadband Demand; US Office of Technology Policy; 2002 11.

In the old economy, building a billion-dollar fortune required decades of hard work, a powerful host country, thousands of workers, and thousands of storefronts. Today, a kid with a smart idea, a couple of friends, and some luck can make a lot of money… very quickly. – Juan Enriquez


Taylor Warwick Consulting Limited / e.Commerce Services 2016 05 10 2

With a change in the wealth system, what made communities successful in the 20th century no longer works today. We are moving from a world in which scalable efficiency generated the most value to one in which scalable peer learning does.3 The most significant impacts of this unfolding transition relate to economic innovation and productivity and societal organization. As a foundational cornerstone of these emerging systems of wealth creation, access to ICT has become critical to sustainable economic development in virtually every community and society on the planet.

A Techno-‐Economic Framework Over the past three hundred years, the robust links between innovation, technical and institutional change, and economic development have played out in the first four techno-‐economic revolutions outlined in the table below and are currently playing out in the fifth – the Age of Information Technology and Telecommunications.4

1771 The ‘Industrial Revolution’ (machines, factories, and canals) 1829 Age of Steam, Coal, Iron, and Railways 1875 Age of Steel and Heavy Engineering (electrical, chemical, civil, naval) 1908 Age of the Automobile, Oil, Petrochemicals, and Mass Production 1971 Age of Information Technology and Telecommunications 20?? Age of Biotech, Bioelectronics, Nanotech, and new materials?

Each technological revolution lasts between 40 and 60 years and propagates through two strikingly different stages. As illustrated in the figure, events in the first stage are driven by investment capital, market experi-‐ments, and entrepreneurs. The resulting maelstrom of activity eventually reaches a climax and ends in a stock market crash.

Industrial/production capital then comes to the table and finances the reasoned deployment of the underlying infrastructure required to enable the full economic and social potential of the new paradigm. In this second stage, innovation

3 John Hagel III; The Shift Index; 2009 07. 4 Prof. Perez, Cisco CUD Conference, 080221

Agrarian' Industrial' Knowledge'



occurs across all economic sectors and the social benefits become widespread. As the commercial benefits take hold, the collective interests of the populace at large become part of the equation and state capital comes to table to complete the deployment in commercially unattractive areas.

The congruency here with the development of the Internet and the underlying enabling broadband infrastructure is striking. The crash took place in 2001 and now, some 13 years later, the true benefits of the ICT revolution are impacting every sector of the economy. The positive externalities are becoming self-‐evident and governments are stepping in to ensure near ubiquitous deployment. Aligning these events with this timeline indicates that we are about 60% of the way through the ICT revolution.

Political To date, neither the federal nor provincial governments have yet placed the emphasis on technology policy to address broadband to the extent evident internationally. Indeed, Michael Geist suggests that Ottawa’s recent 2016 budget inclusion of an additional $6M in funding for digital infrastructure for the 2016-‐17 period may signal the end of a Canadian Digital Strategy5.

Dating to the era of single purpose (copper for telephony and coaxial cable for cable-‐television) networks, underlying the Federal Government’s mandate to its regulatory agency, the Canadian Radio-‐Television and Telecommunication Commission (CRTC) is a policy of facilities-‐based competition. Under this regime, competing broadcast or telecommunication companies must own the networks over which their services are provided. Given todays fibre networks can carry any digital media one can imagine, this is equivalent to requiring that each car manufacturer (Honda, GM, …) own the road system over which their cars travel. Under this regime, the bigger cities would likely end up with multiple systems of roads, while the smaller centres would go without. Long ago, communities realized that by providing one road system for all to use, competition in vehicle production would flourish, and the benefits to the community would be many.

Analogously, many European companies have moved from facilities-‐based competition in the ICT space to one of services-‐based competition in which a single broadband network is deployed as a utility in each community and any company interested in providing services over it, is welcome to do so. Competition has flourished and in many com-‐munities, over thirty service providers compete with a wide range of services. Under a services-‐based competition model in which communities provide utility fibre infrastructure for all to use (like roads), communities are only competing with private enterprise if they choose to enter the services space as well. In pursuing this type of model, community options range from offering access to passive (conduit, dark fibre) or lit fibre networks and outsourcing or contracting for services (Internet, telephone,

5 http://www.michaelgeist.ca/2016/03/budget-‐2016-‐is-‐it-‐the-‐end-‐of-‐a-‐canadian-‐digital-‐strategy/



television), to providing both the network and services themselves6.

Economic Development The deep fundamental economic, environmental, and social changes enabled by the Internet have been well documented and are recognized by Spruce Grove. Indeed, broadband initiatives have the potential to dramatically and positively impact the fabric of life throughout a community by offering exceptional network services; learn-‐in-‐place, work-‐in-‐place, and age-‐in-‐place opportunities for all generations; innovation and diversification in every economic sector; and positioning a city’s brand as dynamic, progressive, and relevant to the future.

So what is broadband? To many, including the Federal Government, broadband is simply the next step above dial-‐up services in which you move from having to dial up and establish a connection to the Internet every time you wish to check email or surf – and then hang-‐up afterwards, to an always-‐on service that is permanently connected to the Internet. Whereas dial-‐up connections had bandwidths up to 56 kb/s, initially deployed always-‐on services typically sported bandwidths of 1.5 to 5 Mb/s in the downstream (Internet to client) direction and 0.2 – 0.5 Mb/s in the upstream or reverse direction. This provisioning of asymmetric bandwidth was intended to accommodate web-‐surfing and the downloading of software, files, music, and video versus more symmetric communication services such as video conferencing or the uploading of client files.

The step-‐change from dial-‐up to these always-‐on services was and is significant. Though by today’s standards, these always-‐on services are relatively low in bandwidth, they remain widespread and were sufficient to facilitate many of the productivity gains realized in the commercial sectors. Having been around the longest, they provide the basis on which many of the economic impact statistics quoted today were developed. According to these statistics, some 2.7% of GDP in Canada is attributable to the Internet (2009) and 75% of the Internet’s impact arises from productivity impacts in traditional (non-‐ICT) industries.7

The impact on businesses that these statistics represent is profound. According to Fred Harmon:8

Internet facilitates the move from an industrial to a knowledge-‐based society, from a society based on physical effort to one based on mental effort, and from reliance on limited material resources to dependence on virtually unlimited intangible resources.

Not only does this enable the acceleration of change, it fundamentally changes the parameters of

6 Once services competition develops, these communities may provide access on an open basis in which all service providers are welcome to connect. Today, competitive service providers are few and far between. 7Pélissié du Rausas, Matthieu, et al; Internet Matters: The Net’s sweeping impact on growth, jobs, and prosperity; McKinsey Global Institute; 2011 05. 8 Harmon, Fred; Business 2010: Positioning Your Company and Yourself in a Rapidly Changing World; Kiplinger Books; 2001



business.

Consider the Creative Coast initiative (TCCi) comparison in the previous table. According to this comparison:

• TCCi created over 200 jobs in the knowledge sector with only $1M. • Daimler-‐Chrysler’s $320M auto manufacturing plant created 3,000 jobs, meaning each job cost

over 20 times more to create than a job in the knowledge sector. • A dollar invested to create a knowledge job yielded 23 times more real wages.

While the table-‐stakes to partake in, and benefit from, these changes is always-‐on access to the Internet platform, in today’s world, symmetry and bandwidth matter too – and the higher the speed/bandwidth, the better. Access, so to speak, has not been created equal and in a very fundamental way, not only does bandwidth matter, as shown in the table below, it matters a lot. Given current application and usage trends to be covered later, to attract business, minimum access bandwidths of 100 Mb/s (up and down) are typically required.9

Note that this survey was completed in 2010 and indicated that to be competitive, minimum speeds of 100 Mb/s would be required by 2013. It’s now 2016 and the fastest upstream bandwidth available in Spruce Grove, is still only 10 Mb/s.

According to a more recent Ericsson study10, the economic impact of bandwidth upgrades spread throughout the economy via direct, indirect, and induced effects as shown in the figure below.

9 Settles, Craig; Broadband and Economic Development: The Real Deal; Broadband Properties; 2010-‐11/12. 10 Ericsson, Arthur D Little. & Chalmers University of Technology; Analyzing the Effects of Broadband on GDP; 2013.

!

Speeds&Needed&by&2013&to:& 2–4&Mb/s&

10–12&Mb/s&

20–25&Mb/s&

100–120&Mb/s&

500&Mb/s&

1&Gb/s&

100+&Mb/s&

Attract!business! 17!(8%)! 26!(12%)! 30!(13%)! 43!(19%)! 33!(15%)! 77!(34%)! 68%!

Retain!business! 13!(6%)! 35!(16%)! 50!(22%)! 57!(25%)! 33!(15%)! 37!(16%)! 56%!

Make!business!more!competitive! 12!(5%)! 29!(13%)! 53!(23%)! 55!(24%)! 33!(15%)! 44!(19%)! 58%!

Revive!business!districts! 13!(6%)! 34!(15%)! 50!(23%)! 53!(24%)! 34!(15%)! 38!(17%)! 56%!

Revive!communities! 14!(6%)! 40!(18%)! 47!(21%)! 55!(25%)! 27!(12%)! 37!(17%)! 52%!

Improve!training! 14!(6%)! 33!(15%)! 48!(22%)! 54!(24%)! 40!(18%)! 33!(15%)! 57%!

!



The benefits of faster broadband can be categorized as:

• Economic effects, including increased innovation and productivity in business • Social effects, including better access to services and improved healthcare • Environmental effects, including more efficient energy consumption

Impacts include:

Quantifying these off-‐balance-‐sheet benefits is difficult, but according to the detailed Ericsson study, doubling broadband speeds for an economy can add 0.3 percent to GDP growth.11

In a study by Stephen Ross, the 1,500-‐plus US counties in the top half of their states in terms of access to at least 25 Mb/s broadband enjoyed 10 times the percentage population growth of the bottom half. The bottom 10 percent in each state, in aggregate, actually lost population.12

Returning to the Ericsson study, upgrading from 0.5 Mb/s to 4 Mb/s in OECD countries increases income by around US$322 per month, and gaining 4 Mb/s of broadband increases household income by US$2,100 per year. Faster broadband speed:

• boosts personal productivity and allows for more flexible work arrangements; • opens up possibilities for more advanced home-‐based businesses as a replacement, or

complement to, an ordinary job; and • enables people to be more informed, better educated and socially and culturally enriched –

ultimately leading to a faster career path.

According to recent surveys, fibre-‐to-‐the-‐home (FTTH) communities realize significant economic benefit:13

• 11% of FTTH users have a home-‐based business averaging CDN$10,700 in estimated incremental income from outside the community. Assuming 50% take-‐rates, these activities increase community revenue by an average of CDN$0.59 million per 1,000 homes passed.

11 Ericsson, Arthur D Little. & Chalmers University of Technology; Socioeconomic Effects of Broadband SpeeSocioeconomic Effects of Broadband Speed; 2013 09. 12 Ross, Stephen; Bad Broadband Equals Low Population Growth; BBC; 1411/12. 13 Render, Michael; FTTH and Economic Impact; RVA LLC; Broadband Summit, 2013 04.



• FTTH drives as many as 65 new traditional jobs per 1,000 homes passed when leveraged. At a more conservative 25 new jobs per 1,000 homes passed and CDN$49,000/worker/year in wages, this means $1.2 million in new income to the community per 1,000 homes passed.

• In total, FTTH therefore increases aggregate household income by $1.79 million per 1,000 homes passed.

Closer to home, when asked if Olds had seen an increase in business attraction over the past year due to the availability of Gb/s O-‐Net services, Mitch Thomson, Executive Director of the Olds Institute for Community & Regional Development (OICRD) – the economic development organization behind the fibre initiative – replied:

‘Yes absolutely, we perhaps could have been better prepared to capitalize on interest. Our lack of serviced available land has hindered some. We are fielding lots of interest.’

Broadband as Utility Infrastructure While the far reaching positive benefits of roads, water, power, and gas are accepted to the extent that the associated infrastructure is deployed without the need for return on investment or business case calculations, the fibre optic cabling required for broadband enablement is not – even though, as shown in the next chart, fibre is the least expensive to deploy.14 Though difficult to quantitatively capture and include in an associated business case or plan, these off-‐balance sheet items should be noted. Indeed, positive externalities15 associated with adequate broadband connectivity and services infrastructure will occur in areas such as education, health, agriculture, tourism, resource monitoring and management, emergency services, government, improved prospects for employment, and regional economic development. When a targeted benefits study was completed for communities in the Wood Buffalo region, the benefits more than justified the cost differential from a fixed wireless to a full fibre deployment.16

Technology According to the Fiber-‐to-‐the-‐Home (FTTH) Council:17

So much data zips around the world today in commerce, education, entertainment and personal communication that copper wires and radio waves could carry only a fraction of it. Because fiber optic cable has so much capacity, it now forms the backbone of the Internet, cable TV networks, telephone (including

14 WOWC; Regional Broadband Feasibility Study; WOWC-‐02-‐12; 2013 08 / Taylor Warwick Consulting 15 Externalities relate to side effects or consequences of industrial or commercial activities that affect other parties without this being reflected in the prices or costs of the goods or services involved. [Wikipedia] 16 Dobson, Craig; The True Economics of Broadband – A Benefits Analysis; Taylor Warwick Consulting Limited; 2013 09 29. 17Broadband Communities; What Fiber Broadband Can Do For Your Community; 10th Edition; Fibre to the Home Council; Americas Fall, 2014

!"!!!!

!50,000!!

!100,000!!

!150,000!!

!200,000!!

!250,000!!

!300,000!!

!350,000!!

!400,000!!

!450,000!!

!500,000!!

Paved!Road! Gravel!Road!with!Dust!Control!

Water!Main! Electrical!Pole!Line!

Gas!Main! Fibre!OpFc!Cable!

Cost%per%km%

Compara,ve%Costs%to%Deploy%Infrastructure%in%New%Developments%



cellular) networks, private business networks and even data center networks. Without fiber optic cable, none of these systems would work.

FTTH offers far more bandwidth, reliability, flexibility, security and longer economic life than alternative technologies, even though its price is comparable. On average, it is slightly more expensive to build, but it is far less expensive to operate and maintain than copper.

As fibre optic cable can theoretically support bandwidths up 2,800 Gb/s18, its capacity is in essence, unlimited. Once deployed, scaling bandwidth simply requires upgrades to the opto-‐electronics attached to it.

Relative to wireless technologies, both on a cost and bandwidth basis, there is no comparison. In a sample design for a 200 mi2 rural area in Chamberlain, S.D., Vantage Point Consulting found that whereas the least expensive wireless deployment came in at $370 per Mb/s per client, fibre came in at US$7 – and fibre scales (capacity and reach can be expanded with minimal cost), but wireless does not.19 In this comparison, the wireless network was designed to support 4 Mb/s per client whereas the fibre network could support 1 Gb/s.

Application Trends Smart phone subscribership is growing twice as fast as Internet (20% versus 10% annually) and at a compound annual growth rate (CAGR) of 52%, tablet shipments are going through the roof. These growth rates together with the growth in mobile video usage are resulting in mobile data traffic increases of nearly 81% per year. As 80% of mobile data is received via Wi-‐Fi connections to fixed networks (OECD) and 100% of backbone mobile traffic is carried over landline networks, the demand for the higher bandwidth connectivity available from fibre is increasing.

According to the Cisco Visual Networking Forecast, the number of networked devices in Canada will increase from 167 to 313 million over the 2013 to 2018 period.20 Internet video traffic is increasing at a CAGR of 28%. The high definition (HD) component of this will increase from 44.9% to 60.1% while the Ultra-‐HD

18 Bandwidth estimate assumes 256 QAM at λ =1.55 µm 19 Thompson, L., et al; Comparing Wired and Wireless Broadband; Broadband Communities; 2015 05/06. 20 Cisco; Cisco Visual Networking Index: Forecast and Methodology, 2013-‐2017; Cisco; 2014

64 kb/s Phone Line

128 kb/s (ISDN)

600 kb/s 3 Mb/s

1.544 Mb/s: (T1)

20 Mb/s

3.7 Mb/s

100 Mb/s 10 Gb/s

TELUS / Bell

Shaw / Rogers

Fixed Wireless (per subscriber)

Community Networks – Fibre

True / Big Broadband

Not to Scale 10 Gb/s: Closer to

scale



component will increase from 0.1% to 10.4%. On a per household basis, the average Internet user generated traffic will increase 152% – some 20%/yr over the five year period.

Phones for a Six Year-‐old

Circa 1965 Circa 1990 Circa 2015

The 313 million device estimate above translates to over eight networked devices per person in Canada and partially results from the proliferation of sensors and the linking of the Internet to the physical environment for purposes of monitoring, automation, and intelligence. Together these trends are leading to the development of the so-‐called Internet of Things or the Internet of Everything (IoE). According to Cisco, some 50 billon smart objects will be connected by 2020 and enable everything from smart power, transportation, water, and other systems, to the Smart City depicted in the figure below.21 Globally, the network value of the IoE is estimated to hit CDN$15.6 trillion by 2022.22

Cloud computing is the delivery of computing resources as a service, whereby processing power, software, storage, information, and related services are provided over a network by a third party utility service

21 Gartner Group poster: The Intelligent City of the Future. 22 Elfrink, W.; The Internet of Everything – Connecting the Unconnected; Cisco; 2013-‐09-‐11.



provider similar to the way in which power is delivered over the electrical grid.23 Cloud computing allows firms to lease storage and processing capacity from others, rather than buy and maintain their own internal servers and data centres. Outsourcing computing services reduces costs, helps keep software up-‐to-‐date, and encourages collaboration. IDC estimates that big companies spent $100 billion on cloud computing services in 2014. As prices come down and security fears are addressed, this number will likely grow significantly.

Whereas access to Internet services has traditionally been provided on an asymmetric basis in which downstream (to the client) bandwidths significantly exceeded upstream (from the client) capabilities so as to enable the consumption of content, cloud computing requires symmetric bandwidth and fibre. Though video streaming services – YouTube and Netflix in particular – typically dominate both overall and aggregate down-‐stream bandwidth requirements, business services, partly due to cloud requirements, dominate upstream requirements. These results are supported by the strong response from local business in Olds to the upstream bandwidth potential offered by O-‐Net. As business related services such as remote backup move into the consumer space – say, for example, to back up home computer-‐based photo libraries – upstream requirements on the consumer side will likely increase as well.

In summary, the evolution of applications and bandwidth demands over time are summarized in the chart below.24 The initial always-‐on services appear in the grey square, current applications in the blue square, and current largely unmet demands for significant bandwidth appear in the red square. Skynet refers to the self-‐aware artificial intelligence system which features centrally in the Terminator franchise and serves as the franchise's main antagonist – perhaps not the best example of where we might want things to go.

23 http://en.wikipedia.org/wiki/Cloud_computing 24 Western Ontario’s Wardens Caucus (WOWC); Regional Broadband Feasibility Study; WOWC-‐02-‐12; 2013 08 / Taylor Warwick Consulting



Intelligent Communities / Smart Cities Established as a nonprofit policy research organization in 1999, the Intelligent Community Forum (ICF) focuses on the economic effects of broadband together with community-‐based best practices, and invites communities to compete for an annual Intelligent Community Award. Intelligent Communities turn to technology not just to save money or make things work better: they create high-‐quality employment, increase citizen participation and make themselves great places to live, work, start a business, and prosper.25

Over the past few years, Parkland County and Lethbridge have actively pursued Intelligent Community status. Last October, the ICF recognized Lethbridge as a top 21 ICF community.

Whereas the ICF embraces the effects of ICT as an enabling technology to improve the quality of life for a community’s citizens, the more recently coined Smart City concept is

significantly more encompassing, and thus less focused, in scope – both in terms of the underlying enabling technologies and in terms of the impacts sought. Popularized by the original IBM Smarter Cities 2010 Challenge, Wikipedia defines a Smart City as:

A smart city is an urban development vision to integrate multiple ICT solutions in a secure fashion to manage a city’s assets – the city’s assets include, but not limited to, local departments information systems, schools, libraries, transportation systems, hospitals, power plants, water supply networks, waste management, law enforcement, and other community services. The goal of building a smart city is to improve quality of life by using technology to

improve the efficiency of services and meet residents’ needs. ICT allows city officials to interact directly with the community and the city infrastructure and to monitor what is happening in the city, how the city is evolving, and how to enable a better quality of life. Through the use of sensors integrated with real-‐time monitoring systems, data are collected from citizens and objects -‐ then processed and analyzed. The information and knowledge gathered are keys to tackling inefficiency.26

25 http://www.intelligentcommunity.org 26 https://en.wikipedia.org/wiki/Smart_city



Open data, or the ability for all municipal stakeholders to be able to access and analyze the many data sets created via the underlying connectivity and sensor systems being established to enable a city to be smart is therefore a key enabling technology for the Smart City concept. Open data initiatives are underway in Calgary, Edmonton, Lethbridge, and St. Albert. St. Albert is focused on becoming a Smart City and in 2014 established the Smart City Alliance focused on developing the cross-‐sector collaboration needed to support Alberta communities in their quests to become ‘Smart’. Spruce Grove could become a member of the Smart City Alliance and information is available at: https://smartcityalliance.ca

Local ICT Infrastructure

Wireline Services Comparative wired ICT infrastructure and services and pricing available throughout the Calgary to Edmonton region are summarized in the table below. According to the table, broadband services and rates are competitive with those available both within the region and in the larger centres. Discussions with both City officials and members of the business community, however, indicate that these services are only available in certain areas within Spruce Grove and that from a business perspective, the upstream rates are insufficient. To get around this, one of the businesses (#2) interviewed in 2014 relocated its core data centre to Parkland County and currently serves its offices with five cable modem services which, together, provide upstream bandwidths approaching 25 Mb/s. Hence, while the individual $90/month cable modem rates are competitive, the aggregation of five together at $450/month for upload bandwidths or 25 Mb/s is not.

Broadband Service Availability

Cost Cost Cost Cost$/mo Down Up $/mo Down Up $/mo Down Up $/mo Down Up

Calgary,(Edmonton,(AlbertaResidential

Option/1 55.00/////// 1.5/to/6 up/to/1 53.00/////// up/to/5 up/to/0.5Option/2 58.00/////// 3/to/15 up/to/1 63.00/////// up/to/15 up/to/0.5Option/3 63.00/////// 5/to/25 up/to/5 73.00/////// up/to/30 up/to/5Option/4 78.00/////// 20/to/50 up/to/10 93.00/////// up/to/60 up/to/6Option/5/</limited 88.00/////// 70/to/100 Up/to/20 123.00///// up/to/120 up/to/10

BusinessOption/1 55.95/////// 6 1 54.95/////// up/to/5 up/to/0.5Option/2 60.00/////// up/to/15 up/to/1 64.95/////// up/to/20 up/to/1.5Option/3 85.95/////// up/to/25 up/to/5 84.95/////// up/to/30 up/to/2.5Option/4 109.95///// up/to/60 up/to/6Option/5 259.95///// up/to/120 up/to/10

Olds,(AlbertaResidential

Option/1 55.00/////// 1.5/to/6 up/to/1 53.00/////// up/to/5 up/to/0.5 90.00/////// 50 50Option/2 58.00/////// 3/to/15 up/to/1 63.00/////// up/to/15 up/to/0.5 100.00///// 100 100Option/3 73.00/////// up/to/30 up/to/5 120.00///// 1,000 1,000Option/4 93.00/////// up/to/60 up/to/6Option/5 123.00///// up/to/120 up/to/10

BusinessOption/1 55.95/////// 6 1 54.95/////// up/to/5 up/to/0.5 99.00/////// 100 3Option/2 60.00/////// up/to/15 up/to/1 64.95/////// up/to/20 up/to/1.5 148.00///// 110 10Option/3 84.95/////// up/to/30 up/to/2.5 198.00///// 115 15Option/4 109.95///// up/to/60 up/to/6 na 100 100Option/5 259.95///// up/to/120 up/to/10 na 1,000 1,000

Wireline(ProvidersTELUS((copper) Shaw((coaxial(cable) Axia((fibre) OGNet((fibre)

Bandwidth/</Mb/s Bandwidth/</Mb/s Bandwidth/</Mb/s Bandwidth/</Mb/s

(includes/1/business/voice/line)



Broadband Service Availability (continued)

As can be seen in the Subdivision map appearing in the Appendix, Highway 16A separates Spruce Grove into north and south components. On the north side, lie the City centre and residential, commercial, and retail communities. On the south side lie the CN Railway tracks and industrial parks. Properties located north of the

Cost Cost Cost Cost

$/mo Down Up $/mo Down Up $/mo Down Up $/mo Down Up

Sherwood(Park,(AlbertaResidential

Option/1 55.00/////// 1.5/to/6 up/to/1 53.00/////// up/to/5 up/to/0.5

Option/2 58.00/////// 3/to/15 up/to/1 63.00/////// up/to/15 up/to/0.5

Option/3 63.00/////// 5/to/25 up/to/5 73.00/////// up/to/30 up/to/5


Option/5 123.00///// up/to/120 up/to/10

BusinessOption/1 55.95/////// 6 1 54.95/////// up/to/5 up/to/0.5

Option/2 60.00/////// up/to/15 up/to/1 64.95/////// up/to/20 up/to/1.5


Option/4 109.95///// up/to/60 up/to/6

Option/5 259.95///// up/to/120 up/to/10

Spruce(Grove,(Alberta Partial/coverage

ResidentialOption/1 55.00/////// 1.5/to/6 up/to/1 53.00/////// up/to/5 up/to/0.5




Option/5 123.00///// up/to/120 up/to/10




Option/4 109.95///// up/to/60 up/to/6

Option/5 259.95///// up/to/120 up/to/10

St.(Albert,(Alberta Partial/coverage





Option/5 123.00///// up/to/120 up/to/10




Option/4 109.95///// up/to/60 up/to/6

Option/5 259.95///// up/to/120 up/to/10

Stony(Plain,(Alberta Partial/coverage





Option/5 123.00///// up/to/120 up/to/10




Option/4 109.95///// up/to/60 up/to/6

Option/5 259.95///// up/to/120 up/to/10

Vulcan,(Nanton,(Nobleford,(AlbertaResidential

Option/1 55.00/////// 1.5/to/6 up/to/1 69.00/////// 25 25

Option/2 58.00/////// 3/to/15 up/to/1 89.00/////// 50 50

Option/3 109.00///// 100 100

Option/4

Option/5

BusinessOption/1 55.95/////// 6 1 119.00///// 25 25

Option/2 60.00/////// up/to/15 up/to/1 229.00///// 50 50

Option/3 329.00///// 100 100

Option/4 699.00///// 1,000 1,000

Option/5

Wireline(ProvidersTELUS((copper) Shaw((coaxial(cable) Axia((fibre) OINet((fibre)

Bandwidth/H/Mb/s Bandwidth/H/Mb/s Bandwidth/H/Mb/s Bandwidth/H/Mb/s



rail line have access to traditional TELUS and Shaw services as well as a variety of wireless offerings. TELUS fibre is evident in the City centre area. Though Bell has fibre infrastructure with the City to support the Alberta SuperNet, it does not otherwise provide services. The properties located south of the CN railway line, on the other hand, have no fibre optic access and are limited to either wireless or copper-‐based services. Competition there is limited and services are quoted on an expensive, custom build basis. Due to the presence of the tracks, any business located south of the tracks is looking at a capital build of at least $100,000 to obtain a fibre connection.

The Alberta SuperNet consists of the Bell operated Base Area Network (BAN) serving Alberta cities such as Spruce Grove, and the Axia operated Extended Area Network (EAN) covering the rest of the province. As the SuperNet is operated on an open access basis (its services are available to all service providers), to preclude any conflicts of interest, neither company can offer retail services such as Internet within their SuperNet footprint. As the SuperNet contract is currently up for renewal, the provincial government is evaluating the alternatives available to go forward.

Mobility Services From a mobility perspective, Spruce Grove is well served in that 4G LTE services are available throughout the region from TELUS, Bell, and Rogers. These networks provide peak download speeds of 75Mb/s with average expected speeds in the 12-‐25 Mb/s range.

Shaw Go WiFi In a category of its own, Shaw offers its Go WiFi services to its client base in Spruce Grove. Guest access to this network is planned. Current coverage is limited and is shown by the blue dots in the figure below.



Fixed Wireless Providers To minimize provider costs, wireless services are typically provided using what’s termed point-‐to-‐multipoint (PMP) equipment. In this configuration a ‘host’ tower transmits and receives signals to a specified area containing the client base. Each client has dedicated reception equipment that homes on the host tower. All users in that area share the host signal.

Higher-‐end business services may use dedicated point-‐to-‐point (PTP) systems that are typically engineered to deliver higher quality, higher bandwidth services. Pricing is installation specific and depends on the service parameters and equipment selected.

Wireless services depend on access to spectrum and available spectrum comes in two flavours – licensed and unlicensed. Licensed spectrum tends to be expensive as it’s managed and only available to authorized service providers. This eliminates interference issues and increases the quality of the services provided. Within Spruce Grove, XplorNet (which acquired Platinum Communications) and CCI operate in licensed bands. XplorNet offers up to 25/1 Mb/s business Internet for $109.99 and CCI Wireless offers 10/1 Mb/s service for $89.99/mo.

The remaining three wireless Internet service providers (WISPs) utilize shared unlicensed spectrum to deliver services over PMP links. From a wireless perspective, Spruce Grove is therefore ‘overserved’ as interference issues arising from these providers tends to limit service quality. WISPs serving Spruce Grove are Broadband Surfer, Tera-‐Byte (which also operates AirSurfer and Hotlinks), and Wildrose.

Each WISP service’s set is standard across the regions it serves. For comparison to wireline services, Tera-‐Byte services and pricing appears below.

Local Government / Public Broadband Initiatives27 Over the past several years, broadband conversations in the Province have shifted from ‘Why is this important?’ to “Given this is critical civic infrastructure, how and when can we make it happen?.” In general, the “How” is via the provisioning of fibre based infrastructure where possible on a utility basis. “When”

27 Taylor Warwick is/was the primary consultant in all of the listed projects except for the City of Calgary, Lethbridge, Parkland County (and related fixed wireless initiatives), Strathcona County, St. Albert, and Kainaiwa Nation initiatives.



depends on financing in relation to other civic priorities. Over the past year, both the AUMA and the AAMDC have passed resolutions relating to providing member support for enhancing broadband services throughout their communities.

As well, there is a growing recognition of the importance of multi-‐community scale. Indeed, the sharing of resources and expertise from dense to less dense areas enables a broader deployment of fibre in the areas to be served. Earlier this year, the Alberta Government introduced a new grants program aimed at facilitating planning level broadband studies at the regional scale. Under the program, matching grants of up to $20 000 are made available to interested Regional Economic Development Alliances (REDAs). Applications are due by September 30, 2016 and the work must be completed within a year.

Regional Initiatives

Alberta SouthWest Regional Alliance

The Alberta SouthWest Regional Alliance initiated the first regional broadband strategy encompassing the member municipal districts of Pincher Creek, Cardston, Willow Creek, Crowsnest Pass, Ranchland, and Waterton together with the Towns of Claresholm, Fort Macleod, Granum, Nanton, Pincher Creek, and Stavely, and the Villages of Cowley, Glenwood, and Hill Spring. Perhaps partly as a result of their focus on helping individual members move forward, versus a more encompassing regional focus, a number of the members subsequently elected to move forward on their own – with the unintended consequence of perhaps limiting a more regional approach.

Calgary Regional Partnership (CRP)

Being the first to take advantage of the new Alberta grants program, the CRP is developing a regional broadband plan encompassing the 3 cities, 12 towns, 5 villages, and 4 counties within their region. The work is proceeding in three phases – the development of a background briefing document, the development of a set of municipal opportunities, and then a rollup to a set of regional opportunities and potential initiatives.

Regional Municipality of Wood Buffalo (RMWB)

Both the RMWB and the Oil Sands Leadership Initiative (OSLI) developed plans for fibre deployment to rural communities outside of Fort McMurray. Unfortunately, OSLI was dissolved in 2014 and the subsequent RMWB work with the IBI group was discontinued after the last municipal election.

County Initiatives

Clearwater County

Clearwater County followed up their initial fixed wireless study with the development of a regional fibre feasibility study under the tagline ‘Stronger Together Communications’ to see how much of the county fibre could be made available to. The study included both the Town of Rocky Mountain House and the Village of Caroline.

Cardston County

Cardston County surveyed its residential premises and, based on a 36% return rate, found that 77% wanted something done and 57% were willing to provide financial support. Planning work is underway.



Parkland County, Lac Ste. Anne, and others – Fixed Wireless

Fixed wireless initiatives, most of which are following the deployment model developed for Parkland County in 2008, are underway in more than half a dozen MDs. In that model, the Municipal District or County funds, either directly or through grants, the construction of robust towers with antenna space, power, rack space, and backhaul connections in rural areas that WISPs can rent space on/in. This reduces their capital cost and thereby enables them to provide broader-‐band Internet services to rural areas that would not otherwise be economical for WISPs to serve. Tower space is also available to mobility providers and first responders.

Since its initial 2008 study, some 20 towers have been deployed in Parkland County. More recently, Parkland has updated and expanded the County’s policy and Land Use Bylaw provisions for communication towers. If approved, the new policies will require developers to install conduit in industrial subdivisions and serviced multi-‐lot country residential subdivisions as a condition of the development agreement for subdivision approval.

As the fixed wireless initiative is for rural areas and not applicable to Spruce Grove, the most interesting aspect here is that the tower infrastructure initiative was always part of a larger, Intelligent Community play in which culture of use and community enablement played a central role. Both are a significant component of every successful broadband initiative.

Municipal Initiatives

Calgary

Last September, the City of Calgary adopted a dark fibre strategy based on the argument that facilitating Internet-‐based services is only one of six networks requiring connectivity in the City and that providing the required connectivity for all networks is the City’s responsibility, particularly as space in their rights-‐of-‐way is limited and the City does not wish to have their streets continually dug up. From the City’s perspective, connectivity to some 230 remote offices, 450 traffic controllers, dozens of lift stations, and a multitude of transit and bus stations, traffic and security cameras, and so on is required.28 A presentation outlining the City of Calgary’s approach can be viewed at:

https://youtu.be/dQMzkz6oaqg

Though the dark fibre approach makes sense for larger centres and there are now three such efforts underway in Canada – Coquitlam, New Westminster, and most recently Campbell River – it is less applicable to smaller centres as those markets are not likely large enough to support more than one provider lighting up the network – in which case the first provider in gains a de facto monopoly. If the community lights it, then they can ensure competition in services.

Lethbridge

Following the ICF framework shown earlier, under the IntelligentYQL banner, Lethbridge initiated their quest to become an Intelligent Community in 2014. Led by a partnership between their internal IT and Economic Development departments, a twenty person community-‐wide steering committee was established. Using the Integral Strategy Roadmap methodology and extensive community engagement, an elaborate Master Plan was created and details can are available at www.intelligenctYQL.ca. Lethbridge is now focused on developing integrated connectivity and open data strategies.

28 A video presentation on their strategy is available at: https://youtu.be/dQMzkz6oaqg



Olds

After a dozen years of work developing a full-‐service triple-‐play (voice, Internet, and television) fibre initiative to every home and business in Olds, over the summer of 2013, Olds became the first and only local community in Canada to provide Gb/s services throughout its community.29 The triple-‐play services portfolio is now available to any community in Western Canada that deploys a local lit fibre network.

Strathcona County

In 2014, Strathcona County issued a request for an Urban Fiber Feasibility study to evaluate the potential for County owned fibre optic connections to residences and businesses within Strathcona County’s urban services area. The contract was awarded to US-‐based Magellan Advisors and the work has since been completed.30 To date, no follow-‐up work has proceeded.

St. Albert

St. Albert initiated a Smart City initiative a few years ago and, with Cisco, hosted a Smart City symposium in September, 2014. They then founded a Smart City Alliance mentioned earlier. There are four parts to their multi-‐pronged ‘Smart’ approach:

The key Master Plan objectives are:

• Generate opportunities for efficiencies • Support economic differentiation, attraction and diversification • Improve asset management and service delivery • Foster culture of innovation, and testing (a “living lab”) • Use data and analytics to make better decisions

Priority areas are: Economy, Mobility, Governance, Living, People, and the Environment. To date, over 20 strategies and 75 action items have been identified. The draft Master Plan has been completed and will be released for comment in May.

Sundre

In the spring of 2015, Sundre initiated the development of a fibre-‐to-‐the-‐premise (FTTP) Strategy and Business Plan. Their intent is to enhance broadband service available throughout both the town and the adjacent industrial area at minimal cost to the town. The study will wrap up this spring.

29 Chung, Emily; Small Alberta town gets massive 1,000 Mb/s broadband boost; CBC News; 130719. 30 The results presentation to Council is available at: http://brian.brianbotterill.com/urban-‐fiber-‐consultant-‐presentation.pdf

Master Planning

(Charting the Course)

Priority Projects

(Laying the Foundation)

Stakeholder Engagement

(Ensuring Alignment)

Collaboration & Outreach

(Working with Others)



Waterton

Leveraging a Shared Services Canada project to upgrade water facilities throughout the Waterton townsite, the town deployed fibre to every premise in Waterton and now provides a rich set of both fibre and wi-‐fi based Internet services throughout the town and campsite. Services will be upgraded to triple-‐play services (Internet, Telephone, and Television) from O-‐Net once the TELUS backhaul link to Calgary is upgraded early this summer (2016).

First Nations’ Initiatives

Kainaiwa

As exemplified by the Initiative undertaken by the Kainai Nation in southern Alberta, communities undertaking a do-‐it-‐yourself approach directly benefit from both the alignment between their broadband objectives and the interests of their communities as well as from the financial benefits that no longer flow to the shareholders of the incumbent service organizations. With respect to the Kainaiwa Fibre Network, the Blood Tribe claims to have repaid deployment expenses in five years and reduced their telecom expenditures from $50k to $7k per month – an annual savings of $516k that can be reinvested into the community.

Private Broadband Initiatives

Axia

In return for access to a Town’s rights-‐of-‐way, Axia is offering to deploy fibre infrastructure throughout the town and provide residential and business Internet connectivity at rates up to 100 and 1000 Mb/s, respectively, should 30% of the addressable premises in the community show interest in these services. Offers are contingent on due diligence by Axia and Axia may or may not agree to ‘fibre’ any individual community.

While merits of an essentially hassle-‐free and free, FTTP infrastructure are self-‐evident, the offer is neither without cost nor risk. All revenues from the network would accrue to Axia’s shareholders and once deployed, Axia would have monopoly control over critical civic infrastructure. No infrastructure would be deployed into the surrounding MD or county and the network would not be open in the traditional sense of the term.

To date, Axia has deployed fibre in Vulcan, Nanton, and Nobleford. Communities such as Raymond, Glenwood, Pincher Creek. And Carstairs have approached Axia but have not yet received go/no-‐go decisions. Communities such as Black Diamond and Turner Valley in the Calgary region have opted to delay decisions relative to Axia until a regional study (the CRP study in their case) has been completed.

Bell Canada

Bell Canada has recently shown renewed interest in providing broadband services in Alberta.

CCI Wireless

Though currently solely a wireless ISP, CCI is looking to develop 50/50 private-‐public partnership arrangements to deploy fibre in communities such as Caroline.

TELUS

Until 2015, TELUS was actively signing up communities interested in obtaining upgraded TELUS Internet services. The details remain confidential, but Ponoka, Innisfail, Drayton Valley, Didsbury, and likely a few others signed up. While TELUS did deploy fibre in at least Innisfail and Didsbury, they did not then offer those



communities any services over and above what they offered elsewhere. Those who thought they would be receiving Gb/s services like those available in Olds were disappointed.

Seemingly in contrast to these initiatives, TELUS has since withdrawn developer support for infrastructure of any kind in new subdivisions. Based on this, it is likely that the above program has been discontinued.

Over the next six years, TELUS plans to spend $1 billion to deploy fibre throughout Edmonton.

Local Business Requirements – Interviews from 2014

Overview To determine whether any local unmet business ICT requirements exist in Spruce Grove, meetings were held with representatives from four local businesses. Though Business #4 did not provide details of their current services, the services being used by the other three, as well as by the City itself, are summarized in Table 3.

Table 3: Local Business Services

Two businesses were sufficiently unhappy with their services that they obtained custom quotes to upgrade to fibre-‐based services. Given the excessive rates quoted, Business #2 has relocated its primary data infrastructure to Parkland and has plans to move out of Spruce Grove altogether. Given services to Business #1 are inhibiting their US corporate reporting requirements and operations, Business #2 may elect to leave Spruce Grove as well. As shown in Table 1, potential relocation options include Olds, the larger centres, and Vulcan.

Local Business #1 Located in Diamond Industrial – Area 24 on the Subdivision map appearing in the Appendix.

Business #1 is a private company that developed a new product for the oil and gas sector. Though the company’s corporate office was initially located in Spruce Grove, this company has since gone public, opened six US offices, and moved its corporate office to the US. Twenty-‐eight of its 100 employee payroll still work in Spruce Grove.

As the company trades on the NASDAQ, it is required to comply with US financial reporting standards. The following are excerpts from a KPMG report on understanding US Publicly Traded Companies telecommunication requirements.

The Sarbanes-‐Oxley Act was passed in 2002 and changed the face of corporate governance. Any publicly traded US company must assess the effectiveness of their internal control over financial reporting (ICOFR). (Publicly traded Canadian Corporations have very similar compliance requirements as described below.)

Cost Cost Cost Cost$ Down Up $/mo Down Up $/mo Down Up $/mo Down Up

Current'Services:Primary2data2line2/mo 7502* 10.0222222222 13002** up2to2500 up2to225 26022222222222 5.0222222222222 3.0222222222222 3,0002222222 40.0222222222

Secondary2data2line2/mo 20022222222222 1.6222222222222 0.2222222222222 872222222222222 up2to225 up2to25

Quote'to'upgrade'to'fibre 160,000222 40,00022222*2Wireless2service;2**252cable2modem2services

Business'1 Business'2 Business'3 City'of'Spruce'GroveBandwidth2K2Mb/s Bandwidth2K2Mb/s Bandwidth2K2Mb/s Bandwidth2K2Mb/s



Section 302 requires CEO’s and CFO’s to sign off on the accuracy of their financial statements, obligating them to accept personal liability for those statements. Section 404 requires a company to submit quarterly and annual ‘internal control reports’ which attest to a company’s use of a proven control framework for accurate and timely financial reporting and disclosures. The Act imposed new demands on two corporate roles in particular – the CEO/CFO executive and the IT Manager. The CEO/CFO must be supremely confident that things are exactly as written. The company IT Managers must ensure current and legacy systems are fully documented and catalogued.

Information technology (IT) systems or applications generally are included in the scope of Section 404. Because IT applications often support the initiation, authorization, recording, processing, and reporting of financial transactions, IT controls may represent an integral part of ICOFR. Financial reporting applications are often supported by many ancillary, or feeder, applications that provide critical financial data, and companies may rely on a large number of applications to meet their objectives.

Since the passage of this Act, IT managers faced with improved corporate governance requirements took the step of ensuring their data centers and remote server rooms had two separate telecom entrances with different service providers.

Business #1 relies on a fixed wireless 10 Mb/s primary service and a dial-‐up infrastructure for redundancy. The company generates 1 GB of new data per business day and has ongoing storage requirements in the 1 TB range. For off-‐site back-‐up, an assigned employee takes a backup data tape home each night. The US corporate head office has a 100 Mb/s service through an ISP that accesses their corporate office data center over a municipally owned fibre network. The Corporate head office is now asking the Spruce Grove office to acquire a similar 100 Mb/s fibre-‐based service.

The local cable company and telecom incumbent provided very similar onetime fibre connection cost estimates to Business #1. The onetime connection cost is the equivalent of 3% of the company’s annual earnings. Business #1’s leadership will not spend that amount of money for a onetime fibre connection fee and may relocate to an area where 100 Mb/s services are readily available at competitive rates.

Local Business #2 Located in Hilldowns – Area 14 on the Subdivision map appearing in the Appendix.

Business #2 is a Spruce Grove headquartered company with telecom savvy leadership. While this company originally had a data center in Spruce Grove, increasing requirements for broadband data connectivity necessitated the move of their primary data services operations to an outside business center with the required telecommunication services. While Business #2 currently has less than ten highly skilled e-‐commerce services focused employees, the number is expected to grow in-‐line with the firm’s substantially increasing revenue. Business #2’s data transport requirements are quadrupling each year.

Unfortunately, while Bell Canada could potentially quote and provide fibre based services to Business #2 given they already have a 48 fibre strand fibre cable terminated in the building for SuperNet services, they are precluded from doing so due the requirements of the SuperNet contract. On the other hand, they are not precluded from offering backhaul connection services that a third party could use to provide services to



Business #2. The silliness of this is evident in the photo.31 The SuperNet fibre termination box is evident on the left and conduit leading directly to Business #2’s offices is available a mere 2 feet away – one of the vertical grey conduits in the lower right of the picture. Should a fibre service have been available to Business #2, Business #2 would have kept its data center operations in Spruce Grove.

Business #2 also requested quotes for a fibre connection from TELUS and Shaw. Quotes were received but were not in line with the expectations of Business #2 as a data-‐centered services company. A business decision was then made to move its data service operations to another community. The quotes received for one-‐time connection fees were consistent in magnitude with the quote received by Business #1.

Though the main data centre operation has been relocated, development efforts have so far been retained at their Spruce Grove location and both wireless and coaxial based infrastructure has been deployed to service it. More specifically, Business (#2) currently serves its offices with five cable modem services which, together, provide (expensive) upstream bandwidths approaching 25 Mb/s.

Business #2 suggests that most business owners and business leaders in Spruce Grove are not aware of the varied and sophisticated level of telecommunications services being made available to commercial, industrial and home based businesses in communities outside Spruce Grove.

Local Business #3 Located in City Centre – Area 17 on the Subdivision map appearing in the Appendix.

Business #3 provides 3D design programs to national level home building supply retailers across Canada. Headquartered in Spruce Grove, Business #3 employs seventeen people throughout Canada. Though potential expansion options include hosting the software on servers provided by its larger retail users and cloud-‐based services, the owner and operations manager have concerns about maintaining overall security and are somewhat unfamiliar with these approaches and the associated telecommunications requirements. Current connectivity is via Shaw.

The company is at a cross roads and wonders if they should proceed in a more expeditious fashion to offer the hosted and cloud based services for its clients. Business #3 does have the ability to grow but there is a sense that business is good today and to radically change services and grow the business could cause more consternation than it’s worth. As well, there was a desire to keep company headquartered in Spruce Grove as that’s where the owner resides.

Local Business #4 Located in City Centre – Area 17 on the Subdivision map appearing in the Appendix.

Business #4 has 75 staff located in offices throughout North America – 35 are located in Spruce Grove. Business #4 transfers complex design files throughout its organization to support its engineering service consulting portfolio. As their services are proving to be attractive to several industry sectors, they are in growth mode and are expanding across the continent. Business #4 operates a virtual private network that allows staff to work from both their client locations and residences. The corporate database is currently about 750 GB and some 100 -‐ 300 MB per night must be backed up.

While the business is indeed operating, limitations in available data services abound. For example:

• Due to the large file sizes involved, downloads to client and home locations can take hours. • Nightly data backups often do not complete – they take too long.

31 Image courtesy of Cheryl Schultz.



• Video conferencing used for internal and external consultations is poor and the connections are often dropped.

Business #4 has neither a centralized data center nor dedicated IT staff – it relies on individuals within the corporation to meet the business’s ICT needs.

From an outsider’s perspective, the inefficiencies and business risk associated with these issues are both significant and impact growth. As their CEO recently relocated to Calgary and is seeing first hand the impact of the superior telecom services available there, changes may be coming.

Regional Competitive Advantage – As of 2014

The occupational mix of Spruce Grove’s labour force as of 2013 is shown in the chart below. Though ICT usage permeates commercial and business enterprises across all sectors, higher bandwidth service availability is more likely to attract knowledge intensive enterprises than those in the sales, services, trades, transportation, and related sectors. As of 2013, close to 50% of the local workforce falls in to the latter categories.

Though the City of Spruce Grove is home to a number of knowledge-‐based businesses, as evidenced by those interviewed during this work, their growth prospects, and indeed their overall success, are fundamentally limited by the lack of suitable ICT infrastructure. Though admittedly a small sample, of the four documented, by this time next year, two will have left. Given the ICT services available in both Acheson and Edmonton, the businesses do not have to move far – just past the City’s border.

More detailed statistics are needed to present a more definitive picture but it seems likely that more capable, competitively priced broadband infrastructure would not only enable Spruce Grove to keep the two businesses mentioned above, but to also gradually change the occupational mix and become home to a larger percentage of higher paid, knowledge focused workers.

As the number of Canadian communities electing to facilitate the deployment of fibre to date remains small, there is an opportunity for Spruce Grove to gain a differential advantage by positioning to be ahead of

11%#

19%#

5%#

6%#

7%#2%#

22%#

23%#

3%# 2%#

Management#

Business,#Finance,#&#Administra<on#

Natural#&#Applied#Sciences#&#Related#

Health#

Social#Science,#Educa<on,#Gov't,#and#

Religion#

Art,#Culture,#Recrea<on,#&#Sport#

Sales#&#Services#

Trades,#Transport#&#Equipment#Operators,#

&#Related#

Primary#Industry#(unique)#

Processing,#Manufacturing,#&#U<li<es#

(unique)#



the curve. That such an initiative could be successful is evidenced by Olds. Indeed, with its full-‐service fibre initiative, Olds is now playing catch-‐up with respect to meeting demand for serviced commercial land. Options the City of Spruce Grove may wish to explore will be detailed later in this document.

Desired State

In establishing a Desired State, the question of how much bandwidth a city requires comes up. Given the demands for bandwidth continue to increase exponentially, the question is to some extent unanswerable. However, with fibre, an answer is not required as once the fibre infrastructure is in place, capacity can be inexpensively scaled to meet whatever bandwidths are required. Today’s fibre capacity is only limited by the capability of the opto-‐electronics used to move data through the fibre. As current opto-‐electronics supports 10 Gb/s per premise, it’s unlikely communities will be capacity limited any time within the next ten years. Once they are, all communities need to do is replace the opto-‐electronics with the then current generation – much as businesses used to upgrade their computers every couple of years. Opto-‐electronics represent only about 15% of the initial network deployment costs.

Given this, over the next decade, perhaps the City of Spruce Grove would like to facilitate the deployment of infrastructure to support a fully scalable broadband network and make access available to every home and business in the City. Market-‐wise, the infrastructure would be available on an open access basis to all service providers interested in serving City businesses and residents. Whereas the City does not wish to interfere with private enterprise in the services marketplace, it will entertain options relative to facilitating the underlying utility infrastructure, whether that be the provisioning of empty ducts, ducts and dark fibre, or a lit open-‐access fibre infrastructure – options which will be elaborated on below.

2019 – Three Years Out

With a concerted and focused effort, fibre services to City-‐based business centres at rates up to 1 Gb/s together with City-‐wide wi-‐fi services in excess of 10 Mb/s per user will be available.

2021 – Five Years Out

Full fibre to the premise services will be available to every home and business in the City.

2031 – Fifteen Years Out

Deployment costs have been repaid and all net revenues from the enhanced utility fibre network have become available for investment into the community.



Options

Develop a Broadband Services Strategic Plan City’s such as Spruce Grove have many options available to facilitate enhanced broadband infrastructure deployment within their environs. Indeed, their options range from simply accelerating planned internal fibre initiatives such as those currently on the books in Spruce Grove, to negotiating with the incumbents and potentially subsidizing private operators, to do-‐it-‐yourself initiatives as exemplified by O-‐Net in Olds and Q-‐Net in Coquitlam. Understanding these options, together with the benefit, cost, potential payback, and risk trade-‐offs associated with each is fundamental to reaching enlightened consensus on the best path for the community overall. Even moving forward on the easy options such as accelerating currently existing plans will benefit from the context such a plan will bring.

Embed Fibre Network Requirements in the City’s Planning Process City Council has an excellent set of existing plans as well as a planning documentation structure that could facilitate discussion and decisions on fibre-‐based broadband services. City Council sets direction through its vision and policies and has already included technology in the 2015 – 2035 Strategic plan. Specifically:

“Technology and Accessibility

We will embrace technology to make municipal government more effective and efficient, while also allowing the business and residential community to take advantage of new technology solutions.

It will be important to ensure we are using technology effectively in our own operations and that residents and businesses can keep current with emerging opportunities.

Generally, governments don't directly provide these technologies for their residents and businesses, but they often create the conditions for them to occur. Our responsibility is to help identify and understand new value-‐added technology solutions as they emerge and that, wherever possible, our businesses can stay at the forefront of competitiveness and our citizens are current with connectivity.”

This plan also recognized economic development strategies were needed to focus on strengthening existing business and attracting new ones in a way that all businesses benefit.

As well, in its 2014 – 2017 Strategic Plan City Council states that “The City of Spruce Grove will continue to improve the effectiveness of how it delivers its services, promoting improvements and efficiencies in delivering services to the community and in the internal operations of the City itself.”

Spruce Grove’s 2016 Corporate Plan calls for an initiative to assess its broadband requirements from an economic development perspective and to then develop a strategy with which to move forward.

Accelerate Currently Planned Infrastructure Deployment The IT department has tabled plans for a fibre connection to their Public Works facility as well as to enable a fibre ring a within the next 3 to 5 years. Other than increasing data capacity, fibre ring architectures enable facilities redundancy. Whereas with the City’s current hub and spoke architecture, if a fibre is cut, services are lost, with ring architectures, should the ring be cut, traffic can simply be rerouted around the ring in the other direction. A potential ring appears in the chart on the next page.



In light of the issues raised by local businesses, the City is could consider moving their planned fibre projects ahead. To maximize the benefit, any such plans should be coordinated with the broadband strategy to be developed.

Leverage the Municipal Approval Process A consideration the City of Spruce Grove Organization could undertake is a Development Approval Process review where broadband services becomes an important component to be incorporated into municipal approval processes and other planning documents.

For example, here are three simple things to consider:

• Including fibre conduit in Spruce Grove residential developer agreements. • Develop a policy and business case for including installation of fibre conduit as part of applicable

and appropriate Spruce Grove infrastructure projects, such as road (re)construction and water / wastewater projects.

• Adopt an inside wiring standard. It doesn’t make any sense for a house builder to use Cat 3 wire when fibre is available at the curb.

While education and advocacy, as well as municipal processes, can assist in driving broadband service improvement strategies forward, ultimately the success of the strategy depends on realizing investments from both private and public sector stakeholders in the Spruce Grove’s connectivity.

Work with the Carriers and Seek their Investment Over the past few years, both TELUS and Axia have both been interested in and indeed installing FTTP networks in communities throughout Alberta. Though TELUS’ interest is waning, indeed, they’ve now withdrawn developer support for new developments, Axia’s interest has increased.

Could&also&consider&traffic&management&

Poten3al&City&sites&for&connec3on&

Conceptual&Conduit&Ring&Route&



Strategically, the business incentive for TELUS to upgrade infrastructure in smaller centres is minimal based on the incremental revenue available to them and, that aside, TELUS seems to view local fibre initiatives as threats to their business model and therefore boycotts the use of community infrastructure, even though it is very much superior to their own. Now that the CRTC has ruled that incumbents must share fibre access infrastructure with other providers,32 TELUS interest in deploying fibre in smaller centres such as Spruce Grove has likely decreased even further. Unless their strategy changes, TELUS’ future in the smaller centres seems limited.

On the other hand, in return for access to a community’s rights-‐of-‐way, Axia is now offering to deploy fibre infrastructure throughout the community and offer Internet services at up to 1 Gb/s should 30% of the addressable premises in the town show interest in Axia’s services. The offer was contingent on due diligence by Axia and towns such as Pincher Creek and Raymond are currently waiting for the results. Currently, Axia fibre has been installed in Vulcan, Nanton, and Nobleford.

While merits of an essentially hassle-‐free and free, fibre infrastructure are self-‐evident, the offer is neither without cost nor risk. All revenues from the network would accrue to Axia’s shareholders and once deployed, Axia would have monopoly control over critical civic infrastructure. No infrastructure would be deployed into the surrounding MD and the network would not be open in the traditional sense of the term.

Subsidize a Private Partner The traditional market driven, private sector led business model is not providing Spruce Grove with the infrastructure they desire due to a lack of financial incentives. By directly subsidizing a private operator, Spruce Grove could provide that operator with adequate incentive. Such approaches, however, tend to be expensive, and do not provide any level of control over the infrastructure that is then deployed.

Develop a Community Fibre Network Given the lack of interest from the incumbent telecom and cable operators, the City of Spruce Grove may wish to consider establishing their own community fibre network. Indeed, with an appropriate and sustainable business model, the City could establish, either on its own or in partnership, a fibre-‐based community broadband network and operate it as a fourth utility. As proven by deployments throughout Europe and the Far East, utility infrastructure could enable the City to provide competitive service providers equal access to unmatched symmetric bandwidth capabilities and thereby enable the delivery of a variety of novel community-‐based intelligent community services (as well as entertainment services such as HD-‐TV) to its residents and businesses.

Should Spruce Grove wish to consider this option, a number of the more common business model, financing, and governance options available to help make it happen appear below. An evaluation of these options would be part of the Strategic study suggested earlier.

32 CRTC; Telecom Regulatory Policy CRTC 2015-‐326; 15-‐07-‐22



Business Model Funding Governance

• Wholesale: dark or lit • Retail: open or closed

and with or without service partners

• Co-‐operative • Utility/Power • Municipal owned • Customer owned • Gov’t grants • PPP • Private • Hybrid

• Co-‐operative • Municipality • Not-‐for-‐profit • Private

Communities evaluating the provisioning of utility broadband infrastructure typically assume the business structure appearing in the figure below.

In essence, the community deploys the passive aerial/buried fibre infrastructure that at least passes every home and business in the community. They then arrange to light the network and connect the now functional network to an Internet Exchange facility in Calgary (YYCIX in the figure, but Edmonton options exist) where it can then interconnect with various service providers or with the global Internet.

Operations breaks into two parts. Triple-‐play services and back-‐office support (billing, client service representatives, help desk support, network monitoring, and so on) are assumed to be provided by the service provider. Local marketing, sales, administration, and on-‐site installation and maintenance services are typically provided locally, via either operational capabilities to be established or outsourced arrangements.



Concluding Remarks

While on the surface, ICT services within Spruce Grove appear competitive, from a business perspective, they are not uniformly available and appear to be insufficient to support current data intensive knowledge-‐based industry requirements, international data reporting requirements, or the cloud-‐based computing platforms on which small and medium businesses increasingly depend. Individual business growth is being limited to the extent that some businesses are closing up shop and relocating to areas where more capable ICT infrastructure is readily available at more affordable rates. Indeed, current service levels will not be competitive against a TELUS-‐led fibre network to be deployed throughout Edmonton.

Through research undertaken by the CRTC and interviews with both City staff and various Spruce Grove private sector firms, it seems Spruce Grove has not consistently identified broadband services as a community priority. Presumably, as with most communities in Canada, Spruce Grove has relied on the private telecommunication service sector to provide the required connectivity and services for the benefit of their citizens and businesses. Unlike traditional voice services, Internet services are provided solely on a competitive basis. Hence, unless the incumbent providers see a positive business case for providing fibre-‐based state of the art services in a community, they don’t – leaving Cities like Spruce Grove to fend for themselves. Even when the incumbents do have a case to upgrade infrastructure, there remains an agency issue at play. Specifically, the metered bandwidth services required to cover deployment costs and satisfy their shareholders is at odds with the inexpensive unmetered high bandwidth services communities require to enable economic development.

Each community that has identified broadband services as important to their continued economic development and well-‐being has had a different embryonic beginning and approach. Key proponents range from highly motivated local government staff members to interested citizens and Council mandated groups. Every community seems to have had a different broadband services champion. While the majority of communities take the path of least resistance – such as simply subsidizing a private enterprise (and sometimes the first one to come to the table) – with the guidance of the local broadband services champion(s), more successful communities pushed existing envelopes, educated themselves, did cost/benefit analyses, analyzed a variety of options, endorsed infrastructure plans, and found a sustainable balance between ensuring suitable infrastructure while maintaining market forces to the largest extent possible.

As outlined in the previous sections, many options are available and while some may initially seem daunting, help is readily available, and building on the trailblazing efforts in communities such as Olds and Coquitlam, much can now be accomplished in less time, with less risk, and with more impact than ever before. In closing, consider the following video from the OICRD:

http://youtu.be/Uc_plnE3W5U In it, Olds specifically offers to share their experience and expertise with any community interested in enabling state-‐of-‐the art fibre-‐based services within their communities.



Acronyms

BAN base area network CAGR compound annual growth rate CDN$ Canadian dollars CEO, CFO Chief Executive Officer, Chief Financial Officer CRP Calgary Regional Partnership CRTC Canadian Radio-‐television and Telecommunications Commission DIY do-‐it-‐yourself EAN extended area network FTTH, FTTP fibre to the home; premise GB gigabyte, where 1 B = 8 bits (b) Gb/s gigabits (109 bIts) per second (1000 Mb/s) GDP gross domestic product HD high definition ICOFR internal control over financial reporting ICF Intelligent Community Forum ICT information and communications technology IoE Internet of Everything ISP Internet service provider IT information technology λ wavelength Mb/s megabits (106 bits) per second µm micron, micro-‐meter; 10-‐6m MD Municipal District OECD Organization for Economic Co-‐operation and Development OICRD Olds Institute for Community & Regional Development OSLI Oil Sands Leadership Initiative QAM quadrature amplitude modulation PMP point-‐to-‐multipoint PTP point-‐to-‐point RMWB Rural Municipality of Wood Buffalo TB Terabyte where 1 TB = 1012 B or 1000 GB TCCi The Creative Coast Initiative US United States (of America) WISP wireless ISP yr year



Appendix – Spruce Grove Subdivisions33

33 Planning & Infrastructure, City of Spruce Grove; Address Map; 2012 07.

broadband provision paper.v2a.160510 - spruce...

Documents