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<br />Consulting Services Agreement between City of San Leandro and Magellan Advisors 07/17/2017 <br />for Fiber-Optics Master Plan Exhibit A – Page 6 of 10 <br /> Wholesale dark fiber and/or services in partnership with telecommunications providers; <br /> Expanded retail services to a range of customer segments, which may include residential; <br /> Partnership models with existing broadband providers or other public utilities in the region; <br /> Others to be determined. <br />Magellan will evaluate the current financial and budgetary environment for the network. We believe that <br />San Leandro’s decision-making process for a network expansion needs to include financial analysis of the <br />proposed hardware solution and the operational costs that San Leandro will incur in deploying the selected <br />solution. These operational costs include more than equipment service contracts; the selected solution will <br />have financial impacts across many aspects of San Leandro’s operations. We want to make sure these are <br />evaluated so the City understands all financial impacts to the organization. <br /> <br />Once documentation is complete, we propose to analyze current and future needs for San Leandro and the <br />Lit San Leandro network. Magellan proposes that we ask and answer the following key questions in the <br />needs assessment: <br /> <br /> What are the long-term needs of San Leandro’s current customers including types of service, <br />bandwidth scalability, performance, and reliability? <br /> Can San Leandro expand its service offerings to attract new customer segments? If so, what <br />customer segments are anticipated and what services will these customers require? <br /> Are San Leandro’s products and services competitive in the market and how can the expanded <br />network create competitive advantages for San Leandro to expand its customer base in the <br />community? <br /> What is the current environment in metropolitan area networking that San Leandro should consider <br />for improve competitiveness and meet current and future customer needs? <br /> How is the network currently managed and what operational goals does San Leandro want to <br />achieve in expansion of its network? <br /> <br />Financial Planning and Our Broadband Financial Model <br />Magellan proposes using our Broadband Financial Sustainability Model to ensure that San Leandro has a <br />full understanding of the business and financial sustainability of various broadband initiatives. Using these <br />tools will allow San Leandro to evaluate different business models and make informed decisions on which <br />are most adequate for the City and community – including environments that require no funding. <br /> <br />Our financial models have been specifically developed for broadband utilities and are very similar to electric <br />utility rate studies. Our models are widely used tools to model feasibility and financial performance for over <br />50 municipal broadband providers. Magellan’s financial modeling tools have been utilized to plan and <br />manage broadband network investments for over $500 Million in broadband projects nationwide, including <br />$250 Million in Broadband Stimulus investments under the NTIA BTOP grant program. <br /> <br />Using our financial tools, we suggest using the following process to conduct the business model analysis <br />and make recommendations. We would propose using a 10-year period to analyze the project: <br /> <br />1. Develop the cost model for the network, including one-time and ongoing capital expenditures to <br />build the network. <br />522