Town of Princeton, Mass. – June 1, 2016 – 6:00 PM
Meeting Minutes - PBMLP
6:01 PM Meeting opened with PBMLP members Stan Moss, chair, Edith Morgan, Jon Fudeman, Nina Nazarian, T.A. Nina Nazarian and Asst. Mgr. Marty Dell’Erba, John Kowaleski, Phil O’Brien, Phil Leaman and Toby Renzoni from LINX Associates, Inc.
Approve Minutes
The PBMLP voted 3-0, on a motion by Edie approve the meeting minutes of May 25th, second by Jon.
The PBMLP voted 3-0, on a motion by Stan made a motion to release the executive session meeting minutes of October 28, 2015, November 3, 2015, November 9, 2015, December 1, 2015, December 21, 2015, January 26, 2016, February 2, 2016, February 16, 2016, and February 23, 2016, Edie made second, all in favor.
Authorize any payments required
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FTTH Risk Assessment – Jon Fudeman and Public Comment
Jon began presenting the risk assessment which he has begun putting together. He asked that each member of his team stand up and introduce themselves.
- Steve Cullen - Many years with broadband, time warner cable.
- Jim O’Coin - Retail experience, bank board.
- Gary Langivan – Wachusett Systems, may years of tech support experience.
- Wayne Adams – 35 years in the high tech industry, network solutions.
- Richard Chase – Electrical Engineer, spent career in IT, semiconductor, and electronics.
- Michael Cote – Tech software and hardware.
Jon provided some introductory comments. Then began asking any members if they had any comments about risks associated with subscribers dropping off. Steve Cullen began describing that technology changes, provided an example, saying that the change in technology could reduce subscribers as options change for interested customers, saying that 1/3 could be a risk.
Jon mentioned that what he wanted to focus on first is, can we keep the customers? Wayne said that the worst case risk is that the whole thing goes down, and ran the numbers, and there is $300 per year per household. Did come across some professional organizations. Crawl, walk, run, with run being a fiber to the home.
Stan asked if Wayne knew how many successful entities there are with broadband. Wayne commented that the projects he reviewed were related to longer term plans.
Jon said that there is significant financial risk and significant cost for the self-undertaking. Very high construction cost, at $6 million, with $1,200 per hook up. Maybe residents would be interested to work with Ayacht instead. Folks who want to work from home with high tech, may require a much higher speed. Someone once said that 5G for mobile is a way off; we are going after the home market in urban areas where there are towers, etc. Bell Labs is predicting that the wholesale cost of cell phone data will be 80% reduced by 2020. When you have volunteer management, it can be a weakness if the management is not that good. Jon mentioned that is a risk factor. We do not have a business plan, we do not have a fall back plan. We do not have investor financing, or bank financing.
Fundamental reality for Princeton, is that we have a disconnect with shelf life. There should be a shorter time span for financing this project. The Washington Post says that home broadband has peaked out. More and more people are going to mobile uses.
Wayne mentioned that business models need to be dynamic and flexible as markets change. Provided an example of T-Mobile removing the use of Pandora from data caps.
Richard thanked the MLP and Broadband Committee. There are over 80 systems of these full FTTH locally owned and operated broadband networks. The financial model is very sensitive to the number of subscribers. There are several different options in the near future, but Ayacht will likely run out of backhaul in the future. Key risk is that Comcast would be a long risk option. Suggestion that the MLP put in the fiber backbone, and lease the space to the internet service provider. Richard said that his opinion is that it is a calculated risk to put in the fiber backbone, but not necessarily to the home.
Jon mentioned that he believed that bringing in the fiber to the backbone could be a good item to explore. Believes that there should be some capital from investors, that way the impacts do not come onto the town. Jon does not agree that the breakeven could be 688, since the project is financed in two portions. The actual break even, if the subscribers would take on the $1.2 million, the breakeven would be 804.
Gary said that it appears that the model of a subscriber based could be eroded by existing and emerging technologies over the next 20 years, and then the risk would be assumed by the taxpayers.
Prior to opening to questions Stan indicated that he wanted to make a few comments. He stated that we do have a business model. Currently based on state law, we are prohibited from working with private vendors. Stan mentioned that if we get 800-850 subscribers we could pay off the loan in 10-11 years, it would substantially reduce the concern about technology. Stan spoke with Wireless Tower about 3 weeks ago, they rent to Verizon, AT&T, and Sprint, $2,000 per carrier per month. If we have 3 towers with 3 carriers, that would be $18,000 per month. The debt payment for the project is estimated to be $21,000 per month. The revenue could be obtained for the debt directly through the cell towers. Stan explained that the make ready would have to be done no matter what to bring
“backbone” fiber to the Town.
Stan mentioned that he wanted to comment about the volunteer management point; that the MLP would hire a professional O&M firm, similar to Leverett.
David Hilton, Pheasant Hollow Run. The concept of fiber is going to be there, fiber is a utility, we are responsible to provide it like roads. Why is Google wiring big cities now? The risk that we are not looking at is what it does to your home values if we do not do anything. Believes that we are at a risk of $25 million on home values. What happens if 100 subscribers drop off the breakeven number of 688? John K responded that it would be $37,200, which ends up being $0.085 on the tax rate. Without fiber in town, he believes that we will lose phone service.
Jon responded that he agrees that we do need fiber in the Town. The issue of connectivity could be addressed in different ways.
Bill Dino indicated that he had a question to the MLP Board – wouldn’t it be fair to say that if some people have fiber available and others do not, that this would provide an inequity on home values in the Town?
Rod Miller said that he signed up before May 20th, but have some questions, would like some more clarity before he actually votes. How many have signed up. 480. Can we get a running total? Why is it that we are charging unequally for someone 2,700 feet from the road, would it be discriminatory if it were pursued by law? Rod suggested that everything be nailed down prior to any vote.
Karen Cruise asked if the MLP had ever considered treating this like roads, instead of water & sewer and placing the entire cost on the tax base. Stan responded that there was this analysis. Karen asked if there were any example of any towns where the town puts in the backbone and allows the cell tower to use it for backbone. Stan said yes. Karen asked what is the down side of installing fiber to the home vs. a wireless system. Michael Cote responded by saying that a wireless system is blocked by obstructions. As systems get faster years down the road, when people want 15 Mgbs, 25 Mgbs. The person sitting close to the tower, would be fine, but the person down the street would slow down the system and would actually not get a very good signal. With fiber, it is a very precise
calculation that is not influenced by other users. Wireless would be highly variable.
Mike Shore asked what the situation with Comcast is? He doesn’t agree that it go on the taxes. But would pay his own share.
Larry Greene asked if we went with the backbone on the poles is there a technology to allow residents to get higher speeds with wireless, without pulling fiber. Michael Cote responded that each customer could technically choose to get a wireless connection to the pole on their own. To find a system that best suits them. The risk with a hybrid system is that it is hard to design.
Christine Trudeau asked what the cost to run fiber down each street, but not pull fiber to each and every home. Caution that the MLP Board peel back the number between the fiber to the home vs. fiber on the street. John K. said that it would be $1 million for the laterals out of the $6 million project. Judy Dino disagreed that the $1 million in savings would make sense.
Steve Jones said he was very concerned that we do not have real numbers on paper. Would like to see a balance sheet or profit/loss sheet on this proposal. Stan said that we won’t know what the network will cost until we put it out to bid.
Cathy Conway asked what the take rate was in Leverett. Provided example of Burlington, VT was private money. It failed and now taxpayers are paying the issue. Provo, UT sold theirs to Google. The contract with Google says that it can sell it back to Google if Google fails to make it.
Janet explained that she is a realtor, gets refusal from buyers when they find out that Princeton does not have broadband. Would like to hear and learn about the new technologies. Ayacht is planning to be a fierce competitor to this broadband project.
Bill Holder said he is 100% behind the full fiber project. Where is the MLP going to go with this thing? Are you going to issue a comprehensive report before going to Town Meeting, before the request for additional funding. And strongly recommends that there is a Plan B. What do you have to do? Respectfully suggest that the Board flush out the details and publish it. Believes more people will sign up when they see how good it is.
Chris Lynch, Matrix Design Group. Described history of the discussions between Princeton and Matrix in the past. Chris indicated that Matrix will be presenting to the Board of Selectmen a revised package regarding their proposal to the Town, which would allow the Town to purchase the infrastructure.
Charlie Cary said that he wonders if the MLP is concerned that they don’t have more than 480 subscribers. Suggests a Plan B. Should we bring in an independent commission or have an independent study to have this reviewed.
Michael Cote explained that in the cases where there were failures (other areas referenced by Wayne Adams), the municipality tried to do better, but failed at it.
Steve Cullen said that there is a risk with the town providing only one option with a flat rate, when other providers are providing tiered options.
Mike Shore asked if we could get lower class of service options. Stan provided an overview of the financing, saying that the matter was not off the table.
Robin Gomy asked if there was a risk analysis done if we only kept 480 subscribers, or if we only had the attrition rate of what Ayacht has. Would you have to double to subscriber rates? Said that he believed that they all want broadband, but suggests that we mitigate the risk. Jon said that he thought that the 480 is just the beginning, thinks that what others say that when the trucks come in, the number will grow. Jon suspects that in the beginning that we will reach the breakeven, but is fearful that in the future that others will go to other satisfactory methods that work for them (wireless, etc.)
Paul Playford is paying $150 per month for DSL and Hughes net.
8:35 PM – The Board voted 3-0 to adjourn on a vote by Jon, second by Edie.
Respectfully submitted, Nina Nazarian, Town Administrator
PBMLP referenced documents or correspondence: None
Minutes Approved on July 12, 2016
Marie Auger
Administrative Assistant
Planning Department
978-464-2100
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