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Next Gene>-ationNetwark Plan Page 6 1.2.1.4 Costs and Financing Considerations Based on CTC's experience with other municipal fiber optic construction projects, and our meetings and surveys within NSCC, CTC estimates the cost of constructing a fiber optic backbone ring and connecting the 108 sites to be $6 million p��s $1.9 million for the electronics. It may be possible to reduce the fiber construction costs by as much as 50 percent by leasing dark fiber from willing entities.' The key way to understand the value of community-owned fiber is to compare its financed cost to �he alteinatives. Assuming the cities financed the cost of building the z�etwe�z-�C (financing the fiber over 20 years and the electronics over five years); the annual principal and interest (P&I} payment would be $898,000. In addition to the P&� payment, we estimate the annual operations and maintenance costs at $237,000 per year. This z-esu�ts in an average cost per month of $880 for each of the selected sites (see Table 7, Section 8). By co�nparzson, comparable functionality over leased circuits would cost far more than that amount if the cities were forced by technological ancilo� regulatory change to replace the I-Net with leased services. Qwest's Metro Gptical Ethernet offers high capacity, but the lease costs are often prohibitive. For example, Metro Optical Ethemet monthly lease fees range from $726 for 5 Mbps to $5,595 for 1 G}�+�s.�' Assuming common industry pricing for IO Mbps and 1,000 Mbps private Ethemet, the proposed NGN would cost $1.9 million per year, ad infr�iit�urrz if leased from Qwest — compared to a one-time construction cost of less than $8 million (including both fiber and networking equipment) to build the entire community-owned NGN. 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 �- Net--while providing enhanced user communications capabilities. At the same time, the fiber NGN would scale with the jurisdictions' needs, with no additional costs for fiber. If the cities are able to negotiate lease of dark fiber from third party providers, the fiber construction costs can be reduced by as much as 50 percent and the payback period would shrink r�rc,},�r, � i v i7 �I �y.' � To better understand the potential of leasing dark fiber, NSCC issued a request-for-information (RPi) to identified ca€riers in the region. Although only two respondents indicated the ability or interest to provide dark fiber, we suspect many more options exist. CTC's experience suggests that potential dark fiber . � providers will not sut-t'ace until NSCC makes a commitment to build or to acquire additional fiber connectivity. � ¢ Lease fees listed are for a 60 �ton� contract. Sharter contracts are available, hut at a higher price. Section 7.1.5 and Appendix G provide additional detail. 7 See Section 9 for additional details. all text and diagraFris �} CTC 2007