Want Answers? Go to Church Tonight

A reminder that the Special Town Meeting is scheduled to take place this evening at 7pm at Heritage Bible Chapel.

See Connectingprinceton.com for more details.

Update: To avoid any confusion from the blog post title, tonight’s meeting is not an informational meeting. In fact, there are three articles that will be voted upon (click here for details). However, as previously noted, the Board of Selectmen voted to move to “pass over” Article #2, the borrowing article, for a town built network, when Article 2 is considered by the Town Meeting body due to the Comcast letter. That “pass over” will need to be approved.  

 

Voices of Princeton Series: John Kowaleski

In preparation for the coming events in September, I have asked several Princeton residents to provide their perspective on the upcoming vote. Here’s the fourth in this series by John Kowaleski. He focuses specifically on Comcast:   

I support inviting Comcast into Town. Yet everyone needs to better appreciate that it will not be free, it will simply shift and balkanize the costs. There is no free lunch. Be grateful that we have this choice at all and be vigilant we get the best deal. Volunteer to help in negotiations if you have the skills. After all, without Comcast, our only other viable option would be to build it ourselves.

Dear Fellow Princetonites,

If Comcast had come forth when Princeton engaged with them in 2013 or 2014 or 2015, we would not still be effectively un-served and struggling to get to a solution. Comcast would have been here already. Now Comcast still looks to be a good choice. But let us not overlook that it took $950k of the town’s money (make-ready) and $910k of the state’s money (also our money) to get their attention, and get them here to apply for a CATV franchise. (And let us not forget Mr. Dell’Erba’s persistence in email and the telephone begging them to come.)

Both dollar figures cited above are based on my understanding that the state reimbursement to the town will not happen with a Comcast CATV franchise. If this holds true, then for those who are financially motivated, let’s look closely at the numbers. Not getting reimbursed from MBI, the Town will be liable for that make ready bond as it accepts a Comcast franchise. On a six year note at 3.5% interest, the town will have to repay the $950k at an annual loan payment of just under $164k/year, which translates to about 37¢ added to the tax rate and an added $127 to an average residence in town each year. This is a 2.4% increase over the FY16 tax rate. That cost also assumes Comcast doesn’t ask for any more town ‘participation’, and it assumes that Comcast doesn’t pay the town an annual franchise fee.

These costs are known costs for Princeton having a Comcast franchise, not predicted risks. Choosing to assume these costs is perfectly legitimate.

The town building the network itself would not be put on the tax base as it would have been subscriber funded. The failure of a town network to service the bond is a possible fiscal risk, not a factual cost. And actually, the $164k/year the Town will have to commit for a Comcast deal would cover 59% of the bond service cost of a network build over the same period. Another view is that that same money could have subsidized the network at 143 subscribers below the projected the break even. Yet many seem willing to pay this to get Comcast. That is is okay and a valid choice.

So, choosing Comcast is not a bad way to go. We are knowledgeable enough to understand that in accepting them we are giving them a monopoly in town, like was done long ago for Verizon. And we understand that they are making strides to improving customer relations. Our experience will no doubt be better.

Nevertheless, there are a few things that the Town needs to understand. Unless it is in writing in a contract, it will not happen if it does not produce profit for Comcast. It will take some expert Town negotiators to come up with a fair agreement with them. Hopefully, that task will be directed by the Town Administrator. But if, in the end, the Town has no leverage, the results may be less beneficial for Princeton.

Further, the town must be vigilant subsequent to any agreement. For example, Comcast touts its help to low income families in its marketing presentations. The town must assure that those folks in town are aware of these opportunities and help them obtain them. Help your neighbors get and retain this benefit.

Also recall that all their advertised costs will not include electronics rentals, fees of all sorts and taxes. Unlike the town proposed network monthly costs, all of theirs charges may not be known until you get your bill. Ask your friends in Sterling. Or look at your Verizon bill. Don’t be surprised.

I support inviting Comcast into Town. Yet everyone needs to better appreciate that it will not be free, it will simply shift and balkanize the costs. There is no free lunch. Be grateful that we have this choice at all and be vigilant we get the best deal. Volunteer to help in negotiations if you have the skills. After all, without Comcast, our only other viable option would be to build it ourselves.

John Kowaleski
Coal Kiln Road

Special Town Meeting to be Held After All

In what seems like a description akin to a teenage romance — on again, off again, on again — the Special Town Meeting scheduled for September 13th is officially back on. Here’s the latest from connectingprinceton.com:

In short, this evening’s public information session has been cancelled and the Special Town Meeting will be held on September 13th at 7 PM at the Heritage Bible Chapel as previously posted in the Warrant.

The Board of Selectmen wish to share a number of updates on the subject of broadband.

Those updates are as follows:

1. The Board received a letter from Comcast last Friday, and yesterday evening met in public with the company and the Advisory Committee to discuss Comcast’s interest in building a network in Princeton. Following that session, the Board of Selectmen voted to initiate the a cable franchise licensing process required under state and federal law which could permit Comcast or others to propose a commercially-funded cable and broadband network.

2. Contrary to other information circulated or votes taken, our Town Counsel advises that the Special Town Meeting on September 13th should be held, given that the warrant has been posted. Accordingly, the Special Town Meeting will open at 7 PM in the Heritage Bible Chapel on Tuesday, September 13th.

3. The Board of Selectmen voted to move to “pass over” Article #2, the borrowing article, for a town built network, when Article 2 is considered by the Town Meeting body. The Advisory Committee also voted to recommend passing over this borrowing article.

4. The Board of Selectmen has cancelled the Special Town Election planned for September 22nd, to vote on the second part of the broadband article. Accordingly, a Warrant for that election has not been posted and the Town Clerk will discontinue sending absentee ballots for broadband.

5. The Information Session scheduled for Sept. 8 at the Thomas Prince School has been cancelled.

Anyone having questions may contact Nina at 978-464-2102.

A Message From Nina Nazarian
Princeton Town Administrator
Plan to be there and get involved!

Comcastic? Or Yet Another Delay? Special Town Meeting Postponed

Late breaking news from Princeton Internet MLP (via Connectingprinceton.com):

The Princeton board of selectmen has agreed to postpone both the Sept. 8 Information Session and the Sept. 13 Special Town Meeting regarding the plan to fund construction of a town-owned Internet network until an official proposal from Comcast is submitted for review and analysis by town officials.  Comcast representatives and Princeton officials will meet Sept. 7 to begin initial discussions regarding an anticipated proposal to the town for a cable television franchise, including high speed Internet service.

The board believes postponement of these two events allows time for Comcast to complete its due diligence allowing residents the opportunity to better compare the choices available and understand the risks, costs and services available. A new date for a Special Town Meeting will be set as soon as possible once a Comcast proposal has been submitted and reviewed by the appropriate town representatives.

 

 

Voices of Princeton Series: Dag Olsen

In preparation for the coming events in September, I have asked several Princeton residents to provide their perspective on the upcoming vote. Here’s the third in this series by Dag Olsen.

Fellow Princeton Residents

Everyone makes dozens, hundreds, or perhaps thousands of risk management decisions every day. These are parents, doctors, lawyers, truck drivers, and everyone else, including CEOs, town administrators and people volunteering on boards and committees. Some people have good gut instincts, shoot from the hip, and end up with decisions that only occasionally burst into flames. That is too little risk management. Others wait for every possible scrap of data, agonize over the possibilities, and end up with decisions that only occasionally aren’t completely overcome by events. That’s too much risk management.

Any town government, by law, have to be careful spending public money, so they set up boards, they study things for years and they have trouble making decisions. This is by design. Meanwhile the years pass by.

As a father of 4 kids, from a junior in high school down to a Kindergartner, I have seen these years pass by. My kids are growing up having to compete with kids with our neighbor towns at a severe handicap. This handicap is the lack of high speed internet.

The residents that needs this most does not have a voice!

For the first time, there is a chance that my oldest kid would be able to get the tools she needs before going off to college.

We as residents of Princeton now have a chance of actually making a decision.

As we study things, agonize over the choices we forget the big picture. We study the trees and forget about the forest.

We need to authorize the borrowing of up to $4.8m in order to keep the ball moving.

Give the kids of Princeton a voice on September 13th, come out and support Princeton fiber to the home now!

Dag Olsen
Houghton Road

 

Voices from Princeton Series: Harry Strock

In preparation for the events of September, I have asked several Princeton residents to provide their perspective on the upcoming vote. Here’s the second in this series by Harry Strock.

“Doing nothing to address Princeton’s broadband needs is not an option. We must act. We should do the best we can with the information we have and what we know. High participation rates mean a high probability of success. Maximum benefit to Princeton will be achieved by maximum subscriber participation. Our town’s future will be improved by residents pulling together.”

The recent “Princeton FTTH Broadband Risk and Vulnerability Analysis” addressed to the Princeton Broadband (PBMLP) and Residents of Princeton, dated June 28, 2016, “has been prepared for both decision makers and residents.” All residents are asked to decide, at the September 13 Special Town Meeting, the future of the Princeton Broadband – Fiber to the Home (PB-FTTH) project.

Business decisions, and I am a business person as well as a scientist, generally consider the balance between Risk and Reward. The above-noted risk analysis report, however, only addressed half of the risk versus reward comparison. In short, it was necessary but it is not sufficient for rational decision making. Risk is a term often used to imply bad risk, meaning the uncertainty of a financial gain and the potential for financial loss. On the other hand, rewards can be tangible—something I can put in my pocket—or intangible—something I feel. In finance, risk is associated with reward; low risk investments equate with low reward and high risk investments require higher rewards to be “rational”. Rewards from a successful PBMLP broadband network and operating business range from tangible financial returns to intangible personal satisfactions and the benefits of socioeconomic improvements to the entire Town. I have concluded that the benefits / rewards to Princeton of a successful PBMLP project significantly outweigh the risks. I will vote in support of the proposed borrowing on September 13.

The balance of this letter of support makes a general case for Princeton’s September 13 approval of the funds needed for the PBMLP fiber optic network buildout. This letter looks at the Town’s investment and future downside risk of financial loss while accepting as reality the expected overwhelming longterm benefits of a town owned and operated broadband network. I truly believe town-wide broadband is critical to Princeton’s future. I ask that residents consider broadband benefits relative to Princeton’s future, which should transcend our personal needs. The future of our Town depends on all residents pulling together. Please support broadband.

Benefits

Whether we buy a new home, invest in a retirement account or build a town-wide broadband network, we attempt to maximize the benefits of the “product” we choose to purchase relative to those which we passed over. An active ethernet fiber optic network offers the best set of benefits for Princeton for a host of complex technical reasons. Technical experts have advised the Town that an active ethernet point-to-point fiber optic network—as approved by the PBMLP—is the best value of the candidate systems considered. It is the most “future-proof” and offers the lowest downside risk due to its superior robustness and adaptability to changes in the future.

Cost

Cost is what we invest, usually dollars, in order to obtain the value or benefits we desire from the product acquired. We should not confuse purchase price with the total cost. Our cost is the sum of all the little bits and pieces plus increases over time. There is no such thing as a “no cost” fiber network for Princeton. I believe the probability that AT&T, Verizon, or Google will compete in the Princeton market is laughably low. An active ethernet fiber optic network owned and operated by Princeton represents a phenomenally attractive opportunity. It supports Princeton’s future. It can be self-financing and it will likely offer lower cost to subscribers than can profit-making telecoms. The probability of success depends on and is proportional to resident support. Voters / future subscribers will determine the rate of success. That is within our control.

The Decision

The balance of Benefits vs Cost, Value vs Price, Return on Investment vs Risk of Financial Loss, whatever you choose to label your decision making process, is typically used by all of us to weigh the pros and cons of a purchase decision. The bigger the investment the more intensive the analysis. We each do it our own way! Maximum benefit to Princeton from our fiber optic network will be achieved by maximum resident participation. The future of our Town will be determined by all residents pulling together, not by profit-making telecoms offering us a good deal. That too is within our control.

It Need Not Be Paralysis by Analysis

The risk of future financial loss by PBMLP, for whatever reason, is of primary concern. A town issued bond makes the town liable for repayment, i.e., all tax payers must pay. The PBMLP business plan is based on subscriber revenues. Subscribers alone pay for the network as long as there are enough of us to keep the project viable. While the project is viable, non-subscriber taxpayers will gain some benefit from Princeton’s broadband infrastructure, at no cost / risk, while subscribers shoulder all risk and pay for the network and its services.

Now let’s assume, at some year in the future, the project no longer has sufficient subscribers to keep it viable. I would assume, as that is happening, the PBMLP will be making business decisions and taking actions to improve competitiveness and / or revenues. It is possible that the non-subscriber taxpayer may be asked to support the PBMLP at this juncture with some amount in subsidy payments. Subscribers will still bear the bulk of risk at this point. What if eventually the PBMLP even failed, let’s say year 10 (or will it be year 15, or 8)? On failure, the balance owed would all be on the town, but how much might that be? After 15 years it certainly won’t be $4.8 million—it would more than likely be closer to $1 million. Our ultimate risk, at any time, is no more than the amount required to retire outstanding project bond(s) issued by the town, and approved by voters to finance the project. Of course the amount due will include any unpaid interest that has accrued. This outstanding amount should be very quantifiable and decline to zero or close to it in 20 years. Further, projected state mandated cash reserves for fiber replacement is expected to be in excess of remaining bond debt by year 12. Such cash reserves should significantly reduce financial risk between year 12 and 20!

Here is What I Think

  • Princeton needs broadband infrastructure NOW!
  • The network build should be a FTTH fiber optic network.
  • Princeton Broadband MLP should purchase the best value system at the best price.
    • It should be as “future-proof” as affordable in order to minimize future downside financial risk.
    • An Active Ethernet system has been recommended; I accept that recommendation.
  • Technical short cuts / patches will not be worth the costs and risks.
  • FTTH should be accessible to all residents (as limited in the STM question of 9/13).
  • Project success is directly proportional to subscription rate. High town participation will assure success.

If the town pulls together, we can assure a better future for Princeton.

Conclusion

Doing nothing to address Princeton’s broadband needs is not an option. We must act. We should do the best we can with the information we have and what we know. High participation rates mean a high probability of success. Maximum benefit to Princeton will be achieved by maximum subscriber participation. Our town’s future will be improved by residents pulling together.

Note: The fact that Sterling, Rutland and Holden cable customers have 85% internet participation rates suggests that Princeton too could expect participation above the projected 60% breakeven point. Higher participation would likely enable faster debt pay down rate or lower subscriber fees.

Voices from Princeton Series: Ned Utzig

In preparation for the events of September, I have asked several Princeton residents to provide their perspective on the upcoming vote. Here’s the first in this series by Ned Utzig.

Hello fellow Princetonites,

As a former member of the Broadband Committee, I can say with certainty that I share everyone’s frustration regarding how long it is taking to bring Broadband service to the town.  Since the Committee finished its intended work and was disbanded, I have watched with dismay as “Analysis Paralysis” within the town has caused a series of delays and distractions from the primary goal of providing service as soon as possible.

At the heart of this all appears to be the fear of undue risk, should the town decide to go ahead with the current plan to create a municipally-owned network, paid for by the subscribers.  We have seen renewed talk for instance about contracting with private companies, such as Comcast, Matrix, or Ayacht, in order to shift this risk away from the town and onto an outside entity.  

I believe that we are confusing two very different types of risk in this ongoing debate.  The first type of risk is that the network will be built, and there will not be a sufficient number of subscribers to make it viable.   For a town-built network in this event, we would likely be required to make up subscriber shortfall through town funds.   This scenario preoccupies many of the plan’s detractors due to possible tax consequences, but is it really very likely?  The mere fact that outside companies have expressed continued interest in providing at least some level of service to the town should be pretty strong evidence that they at least do not see this as a likely risk.   Our initial town survey showed a 90+ percent interest in high speed internet service, and with no viable competition for it available, the chance that there will be a low number of subscribers for such a service seems very unlikely.  The private companies know this, we should too.

So why then do we not have a long line of commercial providers at our door, ready to hook us up?  That brings us to the second type of risk, which is profitability for the investors.   Any private company that expends capital at a risk is going to expect profit in return, and in as short a time period as possible.  In today’s business world, the horizon is very short, so any private investment in town would have to pay for itself in a much shorter time period than 20 years, and with a much higher profit margin than zero.  There are many greener profit pastures these companies can graze in, so there would have to be concessions to make their numbers work for Princeton.

In order to make a ‘suitable’ profit in a very small market like us, these companies will have to cut costs, and charge higher prices.  Maybe we get a hybrid cable/fiber network that is not so future-proof.  Maybe they choose to wire only 80% of the town.  Maybe the fees are substantially higher than neighboring towns.   Maybe they will cut corners on equipment or service.  All to maximize the investment return.  

It is this second risk, the risk of the short-term profit on investment being too low or taking too long, that keeps companies from being overly eager to build a complete, state-of-the-art network here.   This type of risk is not one that the town-built approach would face.  As a town, we would build a network not to profit outside investors, but to profit ourselves.  If we provide fairly-priced,reliable, fast internet service for 20 years and do not make a dime in the process, that is great success for us as a town.  For Comcast, that would be a dismal failure.  As a town we would have the benefit of borrowing any money long-term, and would be able to roll any eventual profits back into reducing our rates, and improving our network.   Something a private company will never do.  Any and all profits from a privately run network would leave the town, never to be seen again. 

We are asking the town to invest in itself, in a way which will benefit subscribers and non-subscribers alike.  Don’t confuse the risks involved. We can invest in ourselves at a much lower risk than anyone from the outside, because our measure of success has nothing to do with making money for disinterested third parties.  Please support the Broadband vote at the upcoming special town meeting and ballot vote this September.

Sincerely,

Ned Utzig
Mirick Rd.