MCNC
&
The North Carolina
Golden LEAF Rural Broadband Initiative
Joe Freddoso
President and CEO
MCNC
June 4, 2010
Speed
Agenda
 MCNC is about Community
 Framing the North Carolina Broadband
House
 Broadband Recovery Funds
 MCNC Proposals
 Round 1
 Round 2
Why have a state network?
 The bandwidth
 Growth in demand in intrastate traffic
 Critical applications hosted in-State
 High bandwidth research use
 Aggregate demand for access
 The Community
 Benchmark
 Innovate
 Learn
MCNC
 1980 – Non-profit Research Institute
 Attract research $’s and Jobs
 1984 – Concert Network
 Education networking
 1999 – Sale of Cronos
 Benefits to the State
 MCNC Endowment
 2010 Operator of NCREN
 The Education Network
 3 million users
 eLearning Commission
MCNC Operates NCREN
North Carolina Research and Education Network
5
Red – IRU’d Fiber
Blue and Carolina Blue – Leased Bandwidth
7/28/2017
Example of Community
 North Carolina Governor Bev Perdue
Example of backbone value
Dr. Bob Blouin – Dean UNC –Chapel Hill
School of Pharmacy
Framing the Broadband House
 One stated goal of the 1996 Telecommunications
Act is to ensure that consumers “in rural, insular,
and high-cost areas, should have access to
telecommunications and information services . . .
at rates that are reasonably comparable to rates
charged for similar services in urban areas” (U.S.
Congress 1996, §254 (b) (3)).
 Communities with new access to broadband
experienced 6.4 percent higher employment
growth - on average than before they had
broadband.
Where Jobs Come From, The Role of Innovation, Investment, and
Infrastructure in Economic and Job Growth. By Jessica Milano,
February 2010.
Framing the Broadband House
Broadband access is not a panacea but it is:
 Equity of Education across K20
 Modern healthcare
 Economic development
 Civic participation
 A flexible infrastructure that can be leveraged by
citizens for the benefit of health, education,
prosperity and civic engagement
 Less expensive to deploy than past generations
Why the Middle Mile?
“Middle-mile infrastructure is essential for bringing
broadband to communities that were previously
isolated or had only rudimentary connections. By
lowering the cost of last-mile connections,
investments in the middle mile allow Internet
service providers to enter the market and build
connections to homes and business…”
White House National Economic Council, 12/2009
Federal Stimulus
 ARRA provides $7.2B to enhance broadband access
 $4.5 B to Commerce BTOP
 $2.7 B to Agriculture RUS
 Why did MCNC apply?
 Build on an existing asset – not build from scratch
 Leasing bandwidth in rural areas no longer feasible
 Equity of education
 No dark fiber made available
 Underserved consumers
 A chance to contribute outside the norm
Economic Distress in North Carolina
Economic Condition
Both Income and Unemployment Criteria
Not Economically Distressed
Economically Distressed
Data Source: BEA and BLS
U.S. Department of Transportation
Federal Highway Administration
According to 42 U.S.C. 3161, Economically Distressed Areas (EDAs) are areas
where the unemployment is 1% or more above the national average or the per
capita income is 80% or less than the national average.
The EDA map is updated quarterly. Last Updated 02/05/10.
http://hepgis.fhwa.dot.gov/hepgis_v2/GeneralInfo/Map.aspx
Data Sources include: (1) 2007 Per Capita Income, Bureau of Economic Analysis, (2) 24-Month
Average Unemployment Rates Jan. 2008 - Dec. 2009, Bureau of Labor Statistics
MCNC Route BTOP Round One
Possible MCNC Route BTOP Round Two
Round 1 – MCNC Application
 $28.2M request, $11.7M match
 Uses no State Funds
 $7.7M From MCNC Endowment
 $4M From Bandwidth Wholesaler PalmettoNet
 37 Rural Counties – 24 fully or partially
underserved
 Private partner reaches last mile consumers
 Round 1 Results: MCNC Won
Round 1 Cost Avoidance
Projected Use
Lease
Ownership IRU
Permanent
$85,360,000
$23,839,000
Providers would not
allow
$39,900,000
(Capital, O&M
and refresh)
* Round 1 Award – Covered $28.7M of the capital
Middle Mile Build
Underserved
Total:
Underserved
Partial:
Beaufort
Carteret
Bladen
Craven
Columbus
Johnston
Davie
Onslow
Edgecombe
Pender
Greene
Robeson
Harnett
Buncombe
Jackson
Catawba
McDowell
Cleveland
Polk
Haywood
Rutherford
Iredell
Transylvania
Lincoln
Round 2: Proposal
 $111M for 1100+ Miles of fiber
 $33M to meet 30% match
 Golden LEAF Foundation an early partner
 4 Underserved areas remain




Northeast
North Central
Northwest
South Central
 Direct fiber to community anchor institutions
 Community Colleges and Libraries
 $2M to sustain (O&M and Refresh)
 Already committed
Round 2: Community Anchor Institutions
Challenges
 Commercial viability lacking
 Fiber is not as valuable to private sector
 Direct Fiber to Community Anchor Institutions
 Sustainability of public part of the network
 MCNC existing customer base
 Reporting requirements of Federal Government
 ROI not as simple as round 1
 MCNC endowment not a source for round 2
 30% match
Round 2 Service providers - $4M in value
expected
 Northeast and North Central
 CenturyLink short term lease
 Northwest
 ERC broadband – Denied round 1 (No match)
 Blue Ridge Electric – Fiber Swap
 Graham and Jackson County – Eastern Band of
the Cherokee and Drake Industries $500K
 South Central
 Zayo Bandwidth and DukeNet - $3M in value
combined
Local involvement
 Cannot contribute match
 Letter of support
 Help to identify Community Anchor Institutions
 Direct connect to fiber
 Priority types
 Community Colleges
 Libraries
 Main Public Safety Centers
Final Message
The project is important in high unemployment areas for the
immediate economic impact of jobs created by the project, and
the future high speed infrastructure the program would
establish as the foundation of high speed internet growth in
North Carolina. MCNC has created an application that has
great impact to North Carolina, fulfills the goals of BTOP, and
takes advantage of this once-in-a-generation opportunity to
make an historic expansion of North Carolina’s fiber
infrastructure. MCNC has effectively run NCREN for more
than 25 years and is an experienced handler of private and
federal grant awards. MCNC has made every effort to enlist
public and private partners in each geographic area of the 69county project.
Governor Bev Perdue, May 4, 2010