Frequently Asked Questions

Broadband projects for communities and for regions can be complex, involve a number of different partners, and may challenge the range of domain expertise required of the proponents. Furthermore, as described in this document, there are a number of important factors that contribute to success in achieving your goals.

As with any major project a fundamental key to success is good preparation and planning. This handbook is intended to act as a guide to enable communities to prepare themselves and to establish a plan for success. By considering all of the factors as outlined in the tools and the guides, broadband project proponents will be better equipped to achieve success by taking appropriate actions at early stages and minimizing future project risks.

Free market forces will certainly come into play through the interest and the ultimate participation of one or more competitive ISPs entering your municipality or region. Free market forces, however, are based upon the assessments of private enterprises, in this case ISPs, to forecast a reasonable return on their investment in an acceptable timeframe and to invest their limited financial and human resources where they see the greatest return.

The fact that ISPs are not currently offering sufficient (or any) broadband services in your municipality or region is a strong indication that they do not see the business justification to make that investment. By becoming a catalyst to establish broadband in your municipality in partnership with an ISP, communities have the opportunity to accelerate the deployment of broadband services rather than rely on free market forces.

Community readiness, as the term implies, is the collective set of factors that determine if a municipality is ready to undertake a broadband initiative. These factors can be defined, understood, and measured to determine a municipality’s state of readiness. There are six readiness categories described in this handbook that have been found to be essential for success: Leadership, Vision and Plan, Organizational Stability, Community Awareness, Implementation Ability, and Market Profile.

The value in explicitly assessing community readiness is to enable communities to achieve a sufficient state of preparedness prior to commencing a broadband project. The higher the readiness capability you have, the more successful the project and the long-term results will be.

These terms and their characteristics are very similar, however leaders are considered to have some degree of decision-making authority that can directly influence the project, whereas champions tend to rely on their influence to make things happen. In both cases the key characteristic in common between leaders and champions is their motivation, their desire, and their energy to influence others with clarity of vision to make things happen. Generally, good leaders are also champions.

The leadership base in any community exists in layers. Leaders may emerge through a variety of community interests: business interests, community concerns, social issues, education, etc. There is no prescription for defining who should be the leader or the champion for a broadband initiative. Typically, one or two active leaders will step forward through their own desire and motivation. Good leaders tend to be well connected and influential in the community across various sectors. Leaders act as a catalyst for change, and create and communicate a vision of what is possible. They ask questions and they promote discussion amongst community members, creating interest, energy, and motivation for action.

No, but there are some advantages and disadvantages. If the leader is not from the municipality (i.e., municipal staff or municipal council) it is important that this individual have strong affiliations and support from the government. In essence, this leader will create other leaders and champions within government to transform the broadband vision into plans and actions.

No, a single person can be considered both the leader and the champion. At least one person should be recognizable in this role. Someone who, through their influence and action, is seen as the proponent of broadband and who is willing and able to make things happen would be fulfilling both roles.

It is not essential that the broadband proponent have a depth of knowledge about broadband technologies. There should be at least a basic knowledge of what broadband is and what the benefits of broadband are to individuals, businesses, and the municipality.

There also needs to be sufficient knowledge to support the issuance of a broadband RFP, to evaluate the RFP responses, to evaluate Technical Plans and Business Plans for the project, and to negotiate effectively with the ISP. If the municipality does not currently have staff sufficiently knowledgeable in these areas they are encouraged to seek external expert advice. In some cases, it is more practical and economical to bring in experts on a short-term basis than to build an internal knowledge base that is outside of the core business of the lead organization.

If ISPs inquire but do not bid it is advised that the issuing agency follow up to understand why they were not interested. It is possible that ISPs will evaluate an area and will come to the conclusion that there is no viable business case (even with some financial support).

It may be necessary to reconsider the scope of the RFP and/or municipal financial contributions that will make the opportunity more attractive to ISPs. If that is not possible, it may also be necessary to consider options for building your own network infrastructure.

Any submission that the organization feels may warrant more in depth understanding should be discussed with the provider directly. It is possible that an ISP and the issuing agency can come to an agreement on a solution that suits all needs. Remember that ISPs need to make money (i.e. sufficient revenue to cover all costs, salaries etc. and then some profit). Some ISPs may have a set methodology that they are not willing to deviate from, while others may be willing to work with the municipality to reach a set of terms that will ensure them viability.

No, it is not advisable to proceed without a vision or a plan. The vision sets the goals that rally support and commitment for the project. If there are no leaders or champions in the municipality that can clearly define and articulate a vision it is unlikely that a broadband project will be successful. Even with a vision, to undertake a project without a plan invites unnecessary risk to the extent that the end result does not achieve the desired goals. The inclusion and the quality of the vision and plan directly contribute to the level of success achieved.

No. Any organization that can provide the organizational and implementation capacity is suitable to take the lead. The lead organization must have the capability to lead and direct the overall project in collaboration with project partners. Municipalities often take on this role due to the fact that they have a vested interest in the ongoing economic development of the municipality and the organizational capability, the experience, and the resources, both human and financial, to lead projects of this nature.

As an investor in a project/business you should understand the potential success of that business. The market profile is the key attribute that will impact the ISP’s ability to remain sustainable. Their first hurdle is raising enough capital (cash) to buy the equipment and have it installed. This is where most financial assistance is needed. Following this stage, the ISP must obtain enough customers to pay the ongoing costs.

In rural areas, we generally find that markets are much smaller than anticipated, depending on a number of factors (which can be assessed). This may create an unstable ISP, which could potentially fail or withdraw in future. It is important that both the lead organization and the ISP understand the market profile and use realistic and reasonable data and forecasts.

Broadband, like many technology projects, is capital intensive. This means that it requires a significant up-front investment, even to serve a small area. In order to be successful the ISP requires a large customer base to generate enough revenue to cover the initial investment and ongoing costs. The larger the physical area served by the network, the larger the number of potential users. Therefore, even though a larger physical area has a higher initial cost, there are a greater number of customers providing more revenue to offset those costs more quickly. This is the key attribute to creating sustainability.

Topology must be considered for two basic reasons. First, difficult terrain can present challenges for network deployment affecting costs for providing service. Second, the nature of the terrain can affect the ability of the ISP to provide service to specific customers. Topology is an important consideration for any service provider regardless of the technology they use. Ultimately, this is of importance to the municipality as far as it impacts project costs and the ability to reach and serve community members. Some examples of the potential concerns are:

• A wired provider (phone or cable) has to deal with the physical distance from their equipment and uses pole lines for service distribution in many situations. They must ensure they can access the pole lines and the equipment that is installed on them. In addition they often have to go and work on this equipment for maintenance. These technologies also have a physical distance limitation to provide service to customers. Customers who are beyond a certain measured distance (distance of the cable, not necessarily map distance) cannot receive service.
• For wireless technologies, there are different concerns. Wireless tends to require transmitting and receiving antennas to have unobstructed “line-of-sight” (radio waves travel in straight lines). Valleys and hills tend to interrupt these signals, as do tall trees. Thus, the nature of the topology can impact the required height of the transmitting (ISP tower) and the receiving (customer tower) antenna. In such cases the costs can increase dramatically to serve the same number of customers and, in addition, some customers may be required to purchase receiving towers, which are very costly.

To achieve the ultimate goals of bringing broadband into the municipality, you need to have as many people and businesses using the network as possible. This would not only benefit the ISP (i.e., paying customers), but also the municipality as community members are using broadband services for their own benefit.

Not everyone understands the value of using the Internet, broadband or otherwise. Some may not understand the value of broadband versus dial-up and why they should spend more for broadband access. Some may be intimidated by technology and computers. Some businesses do not fully appreciate the opportunities that broadband can offer to their operations. Affordable and readily accessible training will build this understanding and confidence leading to higher user subscription rates and better use of the service offered.

You need to be interested in the technology plan as it provides information that relates to cost and the ability to serve the market. As an investor, it is important to understand what your money is buying and assess if this is an adequate solution for the community’s needs, both in the short and the longer-terms. Some solutions are cheaper than others but these might come with limitations.

Although you do not always need an expert on staff, it is important to understand the differences in the technology and its limitations (all technologies have limitations) in the evaluation stage. If you do not have sufficiently knowledgeable resources to evaluate the technology plan, you should consider contracting experts to assist you through this stage.

Sustainability is the ability of the broadband network to support itself financially. Essentially, the ISP must generate enough customer revenue to cover its costs to deliver services. As a minimum, the annual revenues must meet or exceed the annual operating costs on an ongoing basis, including recovery of the initial capital investment over time.

In rural areas, where the number of customers can be low and costs can be high, reaching this point of sustainability can take time. The longer it takes to reach a point of sustainability, the greater the risk to the ISP and to the long-term success of broadband for the municipality. There are real cases where an ISP has been unable to recover costs quickly enough, causing a financial strain and withdrawal from the municipality. Thus, assessing the prospects for sustainability, and the ISP’s ability to achieve this, before building the network is essential.

There are two primary reasons you need to review the business case. First, the quality of the information and analysis provided by the ISP through the business plan is a strong indication of their level of understanding and expertise for a successful broadband implementation. Second, the financial business case will indicate the strengths and weaknesses of the plan and the long-term sustainability of the broadband network.

As an investor, you should work through this material and decide if this is a good investment based upon the plans submitted by the ISP. This does not mean you have to receive a financial return. Rather, you need to decide if your investment in this plan meets the goals it was meant to achieve. In other words, are you investing in a company that can deliver what the citizens need, at a price they can afford and with a certain assurance that they can be reached (i.e., those that want service can get it and will pay for it).

If an ISP submits a business case which you believe is unsustainable you should have a discussion to understand the potential risk factors. You should discuss what the ISP’s contingency plan is if they cannot obtain sufficient subscribers to support the network. You should also discuss the ISP’s timeline (i.e., how long obtaining enough subscribers might take) in order to determine whether or not it is reasonable.

Funding can come from a variety of places. In many instances, some funds would come from a municipality (either operations funds or reserves). Many communities view broadband as an infrastructure project for the municipality and work this into their annual budget.

Another possibility is to look for partners within the municipality, businesses, NGOs, or other organizations that can either contribute with cash or guarantee long term contracts to purchase services at a particular rate. This guarantee to purchase service generates a predictable revenue stream for the ISP and aids in offsetting some costs.

If external financing is required, it is even more important to develop a business plan with the ISP to demonstrate a solid understanding of the project and its outcome and, in particular, the ongoing sustainability of the broadband network.

In kind refers to tasks and functions that aid the project in reaching fruition other than direct financial contributions. For instance, if site preparation is required, the town’s public works department may be capable of completing the task instead of hiring a contractor and paying for it. Thus, this would not be paid for directly from a project funds as the public works staff are salaried employees simply completing work on behalf of the town. The town, however, may claim the time/cost of the effort as an in-kind cost. This enables people to increase the matching funds to the cash side without having to provide all cash or seek other partners to contribute cash. In-kind services are about leveraging existing resources in support of the project.

There is no simple answer that will address every situation. There is a strong likelihood, however, that some level of initial monetary investment will be required. For many communities without broadband, there are no ISPs willing to invest on their own. As such, some level of financial investment is required to support the initial network build.

The level of investment required, and how it contributes to the project, can vary greatly. It is most often tied to the size of the initial network and the rate at which the network can achieve sustainability. The value of in-kind contributions, however, should not be underestimated and can reduce the amount of direct financial investment required. Communities often have existing resources that can be offered in kind, such as human resources, land and building facilities, towers, etc., which can be leveraged for the project.

Partnerships imply a level of cooperation that goes far beyond the legal terms and conditions of a contract. A partnership between the project lead organization and ISP (and others) recognizes the shared goals and success that can be achieved by working together. Each partner brings their own strengths and capabilities to the relationship for mutual gain. This also means that each partner will take on a different set of roles and responsibilities for success. Formalizing the partnership is not absolutely necessary, but contributes to clear understanding of each partner’s role in the project and reduces the opportunity for misunderstanding. It also allows for other partners to be included who are not a part of other legal contracts.

Making a partnership “formal” does not mean that you enter into a “business relationship.” It is simply a way of formally defining and documenting the roles, responsibilities, and contributions of each partner so that all partners are moving in the same direction with the same understanding. Far more important to the partnership is the spirit of cooperation and the acknowledgment of shared risk for mutual gain.