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Next Generation Network Plan Pct ae 6 V 1.2.1.4 Costs and FI*nancm'g Considerations Based on CTCs experience with other municipal fiber optic construction proj,ects, and our meetings and surveys within NSCC, CTC estimat6s, the cost of constructing a, fber optic backbone ring and connecting the 108 sites to be $6 million plus $1.9 million for the electronics. It may be possible to reduce the fiber construction costs by as much as 510 percent by leasing dark fiber from willing entities. 5 L) The key way to understaDd the value of communit,y-owned fiber is to comparle its financed cost to the alternatives, Assamincy the cities financed the icols�t of'building the -network (financincr the fiber over 20 years and the electronics over five years)- the annual L principal and interest (P&I) payment would be $898,000, In addition to the P&I payment., we estimate the annual operations and maintenance costs at $237,0010 per year. This results in an average cost per month of $880 for each of the selected sites (see, Table Z7? 7, Section 8). By comparison, comparable fuDctionality over leased circuits, would cost, far more than that amount if the cities were forced by technological and/or regulatory change to replace the I-Net with leased services. Qwest's Metro Giptical bthemet offers n i gn capacity, o ut the lease costs are often prohibitive. For example, Metro Optical Ethernet monthly lease fees rancye from $726 for 5 Mbps to $5,595 for I Gbps., 6 Z:) Assuming cormnon indus try Pri . im4 for 10 Mbps and 1,000 Mbps private Ethierneti the C " proposed NGN would cost $1.9 million per year, ad nil U177 if leased from Qlwest — compared to a one-time constructioncost of less than $8 million (including both fiber and networkin 0 or equipment) to build the entire community-own N ied GN., We therefore estimate that the cost of fiber construction would, be recouped in two years-- based on comparable lease expenditures that would be incurred in the absence of the, I- Net--while providing enhanced user comynunications capabilities. At the same time,, the fiber NGN would scale with the * needs, with no additional costs for fiber. , If the cities are able to negotiate lease of dark fibie.T from third party providers, the fiber construction costs can be reduced by as much as 50 percent and the payback peri'lold would shrink proportionally 7 5 To better understand the potential of leasing dark fiber, NSCC issued a requiest-for-inforrDatilon (RFI) to identified carriers in the region. Although only two respondemts indicated the ability or interest to provide dark fiber, we suspect are more options exist. CTC's experience suggests that potential dark, fibler providers will not surface uwil NSCC makes a cornnuitment to build or to acquire additional fiber connectivity. 6 Lease fees listed are for a 60 month contract. Shorter contracts are available, but at a higher price. Section 7.1.5 and Appendix G provide additional detail. 7 e�% LiCC -_5CCti0D9 for additional details. all text and diagrams Q CTC 20,07'