The City of Seattle today released the City of Seattle Fiber-to-the-Premises Feasibility Study, a feasibility study originally commissioned in December 2014 as part of Mayor Ed Murray’s three-part broadband internet strategy.
“Broadband internet service is a necessity in the 21st century but many Seattle residents don’t have equal access,” said Michael Mattmiller, Chief Technology Officer for the City of Seattle. “This report builds on past studies and take a comprehensive look at whether the City could provide universal broadband service in today’s landscape that is affordable, competitive and equally accessible to everyone.”
In the study, the consultant examined the feasibility of a municipal broadband delivery model, focusing on:
- Reviewing the financial feasibility of constructing and operating a municipal broadband network in Seattle;
- Evaluating the services and applications that are most likely to be utilized over a high-capacity data network; and
- Analyzing current market conditions to gauge consumer interest in a broadband service and the current offerings in the market place.
Less than estimated in previous studies, the report estimates a fiber-to-the-premises (FTTP) build out to cost $480 – $665 million. To cover these costs, market penetration at monthly service charge of $75 would need to exceed 40 percent, one of the highest take rates achieved by any other municipal broadband utility in the country.
Additional findings include:
- The study found that the most feasible approach to constructing and operating a successful municipal broadband utility would be through a joint venture, where the City would work with a partner to create a service that allows the City to maintain its status as a technology leader and provide equity to the public.
- The study looked into the impacts that service price changes, even as minimal as $5, would make on customer subscriber rate and city finances. With a smaller customer base or prices below a $75 monthly charge, financials deteriorate quickly and the City is exposed to significant potential losses. With a proposed service price increase of just $10, raising it to $85 per month, the study found customer interest fell significantly, also exposing the city to substantial risk.
- Incumbents and competitors are moving into the market, offering high-speed and gigabit service to increasing number of customers.
- More than 80 percent of respondents indicated that internet is an essential service, while 30 percent indicated that it is affordable.
Mayor Murray unveiled his three-step broadband approach in June 2014, which he has worked on continuously in that time to reduce regulatory barriers, explore public/private partnerships and examine municipal broadband. Read more here.
The City’s broadband study was performed by CTC Technology & Energy, an independent communications and engineering consulting firm with more than 25 years of experience. CTC was paid $180,000 to complete the study.