How is the Project Funded?

The project has been fully funded and paid for by the founding members. Each of the three entities that made up the founders group had plans for individual fiber projects to meet their connectivity needs. After the City of Goshen held an open meeting to discuss the fiber needs of the community, the founding group through a cooperative arrangement, consolidated their individual plans into a larger, citywide project.

Thru this process, the design of the individual projects were optimized. When combined with existing fiber assets owned by GCS and NPT, the cooperative group was able to build a much larger network with additional economic benefits.

Plans are being finalized for the network to be managed by NPT, an operating utility. The monies paid by the CoG and GCS have been converted to pre-paid Indefeasible Right of Use (IRU) agreements that provide fiber connectivity for these public entities for 99 years.

Fiber capacity that exists beyond the needs of CoG and GCS was purchased by NPT/QC, and will be used for their business needs. Significant fiber capacity beyond the needs of the founders was also included in the project, and will be made marketed to business users.

Revenues from the sale of fiber will be distributed to the founders on a pro-rata basis, thereby allowing them to recover their initial costs of the project. This kind of funding is very common for projects that are expected to generate revenue, such as municipal parking garages.

New subscribers that purchase the fiber for their own use will pay down the original investment principal, and other operating costs. There will not be any additional cash outlay by GCS or CoG. Their original 'investment' was part of their budgeting process to meet their internal needs.

The benefit to the community thru the formation of the fiber cooperative, the merger of three separate projects all combined to allow the construction of a citywide network. This unique set of circumstances is a testament to the effectiveness of the Goshen Community to get things done.

How much did it cost?
Each of the founding members paid no more than the approved budget for their individual projects. By combining these projects, there were significant savings and efficiencies.

All remaining costs including cable attachments to utility poles, increased sizes for all of the fiber optic cable, the use of certain fiber assets already in place, etc, were paid by NPT/QC.

What factors contribute to the financial success of the project?

The following factors determine the success or failure of the project:

Because the project was funded via the approved budgets of the founding members, the project has been completed and is operational. There was little"uncertainty" or risk to any of the founding members. The cooperative arrangement of the whole produced a sum greater than the individual pieces.

The measure of success will be the sale of fiber connectivity to additional business entities, which will allow the founders to use the sale of surplus capacity to fund the ongoing maintenance and operation of the citywide fiber network.

The founding members are committed to a competitively neutral, open process for the sale of fiber connectivity that provides economic growth and advancement for all of Goshen.

There are a number of risks that could cause the project to fail, or would significantly delay its ability to generate revenue:

• Response by competitors - it is difficult to say what current operators will do in response to the announcement of this project, or if any response is required. Neither Verizon or Comcast has indicated an interest in providing fiber connectivity or coverage to areas such as the Goshen area with fiber. Their entry into the market could diminish demand for the sale of IRU's for the founding members.
  
  
• Time over-run - a delay in bringing up the network could affect the revenue stream. This is not a likely downside, as the network is providing service (or is in a ready state to provide service) to the founding members today.
  
  
• Execution risk - Mismanagement by NPT could result in the collapse of the sale of capacity based IRUs.
  
  
• Insufficient revenues to pay operating expenses - As the operational management of the fiber network NPT/QC is responsible to provide certain operational expenses related to the protection of the fiber asset, restoration of the usability of the fiber, utility pole attachment fees, and certain other costs. If NPT/QC (on behalf of the founding members) are not able to attract new users, if they are unable to sell additional IRU's that contribute to the operating expenses, then the costs of maintenance will be
  borne by NPT/QC.