Frequently Asked Questions

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Frequently Asked Questions: Fiber to the Home
Questions fielded from Dec. 2014 commission meeting

What can fiber broadband do for our community?
See "What Can Fiber Broadband Do For Your Community", Broadband Communities Fall 2013.

When did the City begin installing fiber optics?
We installed our first fiber optics in 1984 to support the municipal utility operations. Since that time, we have expanded our network to anchor institutions and commercial businesses.

What broadband infrastructure does the City currently have?
We are a leader in the State of Kansas regarding the deployment of municipal-owned broadband infrastructure. We operate:
What studies have been completed on Fiber to the Home?
We have gone through multiple fiber optic studies and community engagement efforts, including:
1996 A community technology committee was formed

2002 “Cost-Benefit Analysis: Advanced Communications Services” by Virchow Krause & Company

2003 “City of Chanute Fiber Optic Utility Business Plan” by Sega Inc.

2005 Public Square “High Performing Local Government” community strategic plan adopted, led by Terry Woodberry- “build and expand fiber optic project” was established as a primary goal

2006 “Market Research, Competitive Assessment, and Product Planning” by Uptown Services

2010 Business Plan by Atlantic Engineering

2011 Fiber-to-the-Home community campaign and proposal submitted to Google, Inc. Chanute is ranked the number one city for community support, as measured by Fiber for All (see chart below)

2011 Economic Development Strategic Plan- Technology was identified as a key community strength for economic development. This plan resulted in the creation of the Chanute Regional Development Authority

2012 Updated Business Plan by Atlantic Engineering

2013 Business Plan by Alcatel-Lucent

2013 “Market telephone survey” by SDS

2013 “Fiber to the Premise/AMI business plan” by The Motive Group

What are the costs/benefits of a Fiber to the Home project?
The benefits to utility customers are:
  • Better access to your own utility consumption information, giving you the ability to lower your utility bills
  • Prepay reduces/eliminates security deposits and write offs
  • Improved customer service
  • Shorter outage durations; Cost efficiency improvements from reduced system loss
  • Ultra-high-speed Internet access, highest quality video/TV, and telephone services
  • Fiber optic speed and reliability; Keeps your money in the community
  • Opportunities for advancements in community health, education, public safety, and economic development initiatives
  • Investments in the community
  • Quality of life
  • Retaining youth in our community
  • Higher paying jobs
  • Increased home-based businesses
  • Increased innovation
  • Potential broadband access for all
The costs are:
  • Up to a $19 million investment of borrowed money, to be repaid by fiber customers
  • As with most new businesses/investments, there will be a period of time before the business achieves a positive income. It is projected that the income from fiber customers will be positive within seven years and the loan (bond) will be paid off within 20 years. Ultimately, the income and expenses will be determined by how many people choose to subscribe to the service.
Will my house be connected to the Fiber?
Yes, Chanute intends to deploy fiber to the premise of virtually every electric customer to support its meter upgrades and utility operation. For those who choose not to allow the upgraded meters to be installed, there may be an opt-out fee in order to recover the costs of continued labor to read and support outdated meters.

How will Fiber to the Home locations are selected?
All premises with electric meters will be connected to the network to support utility operations. This fiber connection could still let the utility customer opt-out of the meter change for a fee.

What will this cost the consumer?
The costs for the different services available over the network have not been finalized; they will be competitive with current service providers.

How will security deposits be affected?
The planned network will offer customers the opportunity to prepay for utility services. Those opting to prepay for services will be able to reduce or potentially eliminate deposits for their utility services.

How will my life be changed in a positive way?
There will be positive benefits to utility customers because of the improved access to utility information. Those residents that choose to purchase internet services will enjoy access to ultra-fast Internet access, high quality video and telephone services over Chanute’s modern fiber infrastructure. Deployment of the fiber network is part of ongoing economic development and community revitalization efforts by the City and community leaders that will benefit all Chanute community residents. If, however, Chanute residents choose not to purchase internet access or other telecommunications or video services from the City, then their lives may be impacted very little. Several communities have seen the incumbent telephone and cable TV companies lower their rates as a reaction to an available alternative in the community. So even if you don’t participate on Chanute’s network, you may see direct benefits in the form of lower costs from your current provider.

How many jobs will be created?
That is a difficult question to answer with definitive answers. We have already been contacted by companies interested in potentially locating their businesses in Chanute. We don’t have specific information on how many existing jobs have been saved in the community or will be saved by having access a fiber network in Chanute. We are currently writing a grant application to the Economic Development Administration (EDA) to help fund a benchmarking study that will gather baseline data so we can assess the social, economic, and other outcomes of the project.

How will this affect the low income consumers?
Low income consumers will have the opportunity make better informed utility consumption decisions and benefit from competitively priced alternatives for telecommunications services they may currently purchase from other providers.

Does this help the level of poverty in our city?
That is the expectation. The network will provide the opportunity to improve access to educational resources and is expected to be a key factor in economic development and community revitalization in Chanute to create jobs within the community and provide additional opportunities for reducing poverty in the City.

How will this affect small businesses?
Small businesses in Chanute will benefit from access to a broader range of telecommunications services and ultra-high-speed Internet access. Small businesses that choose not to purchase services over the City’s fiber network may benefit from competition by incumbent providers.

Will the current cost for a small business to access the fiber optic network change?

With the proposed build out of the fiber network, the cost of broadband services for small businesses will be competitive to those currently available in Chanute.

The current costs for access to Chanute’s fiber optic network were based on the costs of access to a T-1 that many small businesses in Chanute were paying when the services were offered. Those costs provided access to dramatically faster broadband services available over Chanute’s fiber network than the approximate 1.5 Mbps services purchased from alternative providers operating in Chanute. The costs of dedicated services from the City in most cases were lower than, faster, and more bandwidth than those offered for comparable services by other providers. The costs for broadband access on a dollar per Megabit of service available are much more reasonable than those of a dedicated T-1 available from other providers.

Does this create competition for CableOne?
We certainly hope so. CableOne moved their offices out of our community and our cable payments leave town. The Chanute fiber network will offer an alternative to the existing telecommunications services available to our utility customers.

Is there a business plan?
The business plan is pending review by the City Manager. A business plan model has been developed and the feasibility is being studied by staff and consultants. The business plan presentation was given to fiber optic customers, community leaders, anchor institutions, and citizens who have been involved in community technology committees. It was also presented on Nov. 25, 2013 during the regular public Chanute city commission meeting and aired on Chanute Channel

Where can I get a copy of the business plan?
There are several ways to obtain Fiber to the Home project information:
  1. City Commission Meetings: Attend regularly scheduled City Commisison meetings on the 2nd and 4th Monday of each month at 7:00 p.m. in the city Commission Room at the Memorial Building at 101 S. Lincoln Ave., Chanute, KS 66720 or watch the televised meetings on Chanute Channel 4. Watch the city commission meeting minutes and videos.
  2. Webpage: Research the Fiber to the Home Project webpage. It includes links to information about our current network, reports, and Frequently Asked Questions.
  3. Blog: Visit the Fiber the Home Project blog.
  4. Open Records Request: If you cannot find the information you are looking for, please submit an open records request, and we will respond within three working days.
  5. Subscribe to calendar and meeting notices.
The business model presentation can be viewed on the City’s website.

What are the 5 most important laws that regulate this activity?
We will comply with all relevant laws and regulations, so it is difficult to state which 5 might be most important. Here are five (5) that will have an impact:
1. Federal universal service regulations will require Chanute, just like all other telecommunications providers, to collect fees for certain services provided to network customers.
2. The State of Kansas will require Chanute to collect sales taxes on the services provided to network customers.
3. The network will be required to make contributions in lieu of taxes to the City’s General Fund as a requirement from the Chanute City Commission for services provided to network customers.
4. As an Internet Service Provider, Chanute will be required to comply with the Computer Assistance to Law Enforcement Agencies (CALEA) regulations.
5. Chanute must obtain Kansas Corporation Commission (KCC) and Federal Communications Commission (FCC) approval to offer certain telephone related services.

Will the city government control offensive content?
There are federal guidelines from the FCC regarding permissible content that balance the rights of society and the First Amendment rights of the citizens. Chanute will not censor the Internet or video content, but the set-top boxes will allow customers to restrict access to programming.

Who will pay for the smart meters?
Chanute’s municipal utility customers may see a nominal meter charge on their monthly utility bill.

How will this affect landlords who have several properties?
Access to consumer services that require alteration to properties would continue to be controlled by agreements between landlords and tenants.

How will this affect local housing complexes?
Access to consumer services that require alteration to properties would continue to be controlled by agreements between landlords and tenants.

How will revenue be generated and when?
Revenue will be generated through the sales of services to consumers. The business model achieves sustaining, positive cash flows in 7 years with bonds being repaid within 20 years of initial operation. The General Fund will see revenue benefits immediately.

What is the risk of failure and benefit of success?
Just as Electric was to Chanute 110 years ago, Fiber to the Home is a long-term investment in the community that is expected to be an asset to the community for generations. The cost basis included in the network feasibility analysis is considered very conservative and the revenue producing take rates for the sales of services are much lower than what has been achieved in other, similarly situated communities.

What if the city loses money on this project?
The business case is considered conservative by many industry experts. However, if the income is inadequate, there are many potential alternatives financing the City’s debts related to the fiber to the premise project. Those alternatives could potentially include restructuring debt, sale of the infrastructure, or enhanced marketing efforts to increase network revenues before utility rates might increase.

Does our community really understand moving forward with a $20 million project?
The community has expressed its desired to build a community fiber network for many years. The Public Square Communities strategic planning process identified technology as a key goal. The economic development planning process also identified technology as a key trait. Chanute’s anchor institutions and major businesses support moving forward with the fiber project. Chanute had the highest per capita support to construct Google’s fiber network in Chanute than any other of the over 1,100 communities competing for that fiber network.

Do we have full understanding of what it means and is the information completely available?
Knowledge helps lead us to success. The full benefits of the existence of an ultra-high-speed broadband fiber network in Chanute are currently impossible to predict. Similar to the decisions over 110 years ago by a different Chanute City Commission to create a municipal electric utility, the full benefits to the citizens were unknown.

What is the maximum debt allowed in our city?
There is no legal limit on the overall debt allowed in the City. Debt can come from various sources such as Revenue Bonds, General Obligation (G.O.) Bonds, Lease Purchase, etc. Chanute retains Bond Counsel to provide guidance to the City on the various funding alternatives for all major projects of the City.

What is the total debt of the project?
The business case presented to the City Commission included some fairly complex financing mechanisms to minimize the financing costs. The total indebtedness in the business case presented for the project is estimated to peak at approximately $16.4 million and would be completely repaid within 20 years after initial operation of the network.

What are the annual payments on debt that come from the general fund budget?
None. All debt payments will come from a utility fund budget.