3. Funding - Community Area Network Development
"Show me the money!"
Here comes the interesting part: funding. Prepare for a bit of sticker shock, my friend. In the "self construction" world of fiber, a general rule of thumb is $30,000/mile through a cornfield up to $100,000/mile under a river. Stick with me here, however, because when all is said and done, the typical ROI (return on investment) in these projects is less than 5 years. Beginning in 2016, schools and libraries will be allowed to apply 50% - 90% E-Rate discounts to most of this stuff. Your healthcare friends also have similar opportunities. By now, you probably have some other interesting thoughts brewing about potential costs savings and existing infrastructure that may be used to accomplish your goals.
Today, most Community Area Network projects are funded by the community anchor institution(s) that receive the greatest benefit from the project, often with support from secondary stakeholders. Members each determine individually their own return on investment on a project and their own contribution, in a process that involves invitations for partnerships and negotiations. Often, one member’s need turns into another’s opportunity. That's a polite way of saying, "Hospitals typically have large needs and large budgets whereas libraries have lesser needs and lesser budgets." See also - this is very important - a well functioning community area network often finds creative ways to distribute both the wealth and the work. Hospital administrators might be willing to write the big check whereas the library administrator might be willing to invest his or her time into becoming the community spokesperson for the project. The city/county might waive the right-of-way fees if the school district pays for the initial study. It's called collaboration.
Since E-rate's establishment two decades ago, school technology needs have evolved greatly while the program itself remained unchanged. In a series of change orders in 2014, the Federal Communications Commission (FCC) overhauled E-rate. Of the multiple changes, perhaps the most significant was prioritization of support for fiber connectivity to all schools. Now is the time for school districts to take advantage of the changes and consider upgrading to long-term network solutions to meet future connectivity goals.
At a high level: the new 2016 school year E-rate rules have "equalized" the treatment of lit, dark and self-construction options for fiber. Equal amounts of funding are available for each of these options, provided applicants can show that they are the best option for their specific situation.
While most school districts purchase lit fiber services directly from a service provider, dark fiber services have proven to be a cost-effective solution for a significant number of districts. The FCC now recognizes dark fiber as a cost effective viable option for some districts and has enacted changes to E-rate to level the playing field between lit and dark fiber.
In previous years, when a school district opted to lease lit fiber, the modulating electronics necessary to light the fiber were considered a "Category One" service, making the school likely to receive E-rate funding. Schools that leased dark fiber, on the other hand, did not get Category One funding support for their modulating electronics, and thus often had to front the cost for the equipment themselves. E-rate also limited dark fiber special construction costs, only paying up to the applicant’s property line. These distinctions strongly discouraged districts from choosing dark fiber, even if it was the more financially shrewd option.
The 2014 E-rate order reversed this discrepancy. E-rate will now pay special construction costs beyond an applicant’s property line. And while the cost of modulating electronics can be insignificant for some districts, for those that require a more complex network infrastructure, this new funding opportunity will make a huge impact. Recognizing that equalizing the two fiber types will "expand options for applicants and likely reduce costs," the FCC also highlighted several cases where dark fiber investment has proven to be incredibly successful. The order lauded Georgia’s statewide research and education network, which leveraged dark fiber to increase broadband connectivity to school districts from 3 Mbps to 100 Mbps per school, while reducing the cost per Mbps by 96%. Even if dark fiber proves not to be the best option for a particular school district, the opportunity to evaluate and consider it as a potential alternative is clearly of value to schools.
Investment in fiber self-construction will soon be considered a fundable option, especially for schools that have previously received little to no bids to their Form 470 submissions. Beginning in funding year 2016, self-construction will become eligible for E-rate funding, providing that it is demonstrated as the most cost-effective solution to obtain high-speed broadband. In providing this new avenue for self-construction, the benefit of service provider competition will likely develop with added pressure on providers to increase availability and affordability. While it may not work for all, exploring the self-construction solution could be a scalable and economical option for some districts.
The purpose of the Healthcare Connect Fund is to expand HCP access to broadband services, particularly in rural areas, and to encourage the formation of state and regional broadband networks linking health care providers. The Healthcare Connect Fund provides support for high-capacity broadband connectivity to eligible health care providers (HCPs) and encourages the formation of state and regional broadband HCP networks. Under the program, eligible rural HCPs, and those non-rural HCPs that are members of a consortium that has a majority rural HCP sites, can receive a 65 percent discount from the fund on all eligible expenses. HCPs are required to contribute the remaining 35 percent to participate in the program. HCPs can use the Healthcare Connect Fund to purchase services and equipment, as well as construct their own broadband infrastructure where it is shown to be the most cost effective option.
CINC is a consortium. Each member is invested and acts together with other members to provide ongoing maintenance for a shared infrastructure that meets each member’s needs. This infrastructure enables member organizations to provide exponentially greater and more dependable service at substantially less cost to their respective stakeholders and customers. This CINC community area network model generates a technical and fiscal synergy to create value greater than the sum of its members. CINC projects are funded by the institutions that receive the greatest project benefit. This capitalizing process may involve a lead member with support from others. Members individually determine their own return on investment in order to justify a project investment. This process involves partnership invitations, negotiations, and allows each CINC member to evaluate their own interest and make a proposal to their own governing board. Projects may be incrementally completed in phases. Collaboration allows one member’s need to become another’s opportunity. Because organizations have different fiscal years, CINC is able to complete projects with exceptional agility.