FY 2020 ICN Annual Report

ICN Annual Report FY 2020

Annual Report FY2020

Iowa Communications Network
Providing High Speed Internet, Voice, Video, Security & Consulting Services

Letter to the Governor

November 24, 2020
The Honorable Governor Kim Reynolds
Governor, State of Iowa
State Capitol
Des Moines, Iowa 50319

Dear Governor Reynolds:

It is my pleasure to have the opportunity to submit the Fiscal Year (FY) 2020 Annual Report on behalf of the Iowa Telecommunications and Technology Commission (ITTC) overseeing the Iowa Communications Network (ICN).

In FY 2020, the ITTC and the ICN were proud to support our customers in the education, healthcare, government, and public safety sectors. This publication reviews those accomplishments, but some of the most important work is highlighted here.

  • Supporting our customers during the COVID-19 pandemic by providing valuable connectivity services which consisted of:
    • Installation of a new 10Gb Internet connection for additional VPN bandwidth needed for government teleworkers.
    • Delivering Voice support by adding call forwarding mobility features for teleworkers. Government employees working remotely have been able to continue answering their phones and providing services to Iowans.
    • Consulting with the education sector regarding telecommunications assistance.
    • Providing bandwidth increases and telecommunications support for hospitals and clinics. These increases were performed at no cost to the facility within 48 hours.
  • Partnering with the Iowa Department of Homeland Security and Emergency Management (HSEMD) to merge the existing wireline carrier network onto HSEMD’s Next Generation 911 (NG911) IP Network. By using the ICN’s network, this migration reduces the cost to HSEMD and taxpayers, as well as establishing a state-of-the-art network for NG911.
  • Completing the migration to a Voice over Internet Protocol (VoIP) platform by partnering with CenturyLink. Our VoIP platform initiative included moving over 8,000 phones for 168 authorized customers.

We also have a number of priorities we are moving forward in FY 2021 that support our customers’ broadband needs:

  • Completing a multi-year network upgrade to our core IP infrastructure, which incorporates Ethernet technology. This advancement will enable the Network to operate at 100GB, with an upgrade path of up to 200GB.
  • Developing future services (storage, compute, networking, and management) that can be layered on our IP infrastructure and provided to our users. In addition, ICN will upgrade the security features associated to the State Firewall and DDoS Mitigation services.

On behalf of the Commission and all ICN employees, we appreciate the opportunity to be of service.

Barb Kniff McCulla
Chair, Iowa Telecommunications and Technology Commission


Table of Contents

This annual report highlights agency information between July 1, 2019 - June 30, 2020.

  • Letter to the Governor
  • About the Iowa Communications Network
  • Service Options
  • Services Update
  • Agency Initiatives
  • Network Enhancements
  • Looking Ahead to Fiscal Year 2021
  • Financial Charts
  • Financial Reports
    • Fiscal Year 2021 Budget
    • Statement of Net Assets
    • Statement of Changes in Net Position

Iowa Telecommunications and Technology Commission

  • Barb Kniff McCulla, Chair
  • Robert Holz
  • Krista Wenzel
  • Timothy L. Lapointe
  • Steven Olson
  • Rob Sand, ex officio, State of Iowa Auditor
  • Annette Dunn, ex officio, Chief Information Officer

Executive Team

  • Randy Goddard, Executive Director
  • Deb Evans, Chief Financial Officer
  • Mark Johnson, Chief Operating Officer

About the Iowa Communications Network

A state-of-the-art fiber optic network providing telecommunications services to authorized users.

Services: High Speed Internet, Data, Voice, Security, Consultation

Authorized Users

Education

Locations Served:

    • 348 Public & Private K-12 locations
    • 9 Area Education Agencies (AEA) (45 sites)
    • 15 Community Colleges (30 sites)
    • Board of Regents: 3 Public Universities
    • 20 Private Colleges

    Public Safety

    Locations Served:

      • 113 Iowa Homeland Security & Emergency Management PSAP locations
        Public Safety Answering Point (PSAP) for NG911.
      • 179 Dept. of Public Safety and Homeland Security locations
      • 38 Iowa National Guard locations

      Government

      Locations Served:

      • 133 Judicial Branch locations
        Connections to all county courthouses.
      • 265 Dept. of Transportation locations
        Connections to maintenance garages, driver’s license stations, and construction offices.
      • 158 Dept. of Human Services locations
        Connections to DHS offices across the State.
      • 59 Workforce Development locations
        Connections to satellite offices
      • 231 additional State, Federal, miscellaneous government locations

      Healthcare

      Locations Served:

        • 100 Hospitals
        • 177 Clinics and other Healthcare Providers
        • ICN manages Iowa Hospital Associations’ healthcare broadband network (IRHTP).

        Committed to Providing Secure Telecom Services to Our Sectors

        education, healthcare, government, public safety


        Service Options

        Security | Data | Communications | Professional Services

        Internet

        • Speed scalability.
        • Symmetrical.
        • Network redundancy.
        • Content peering.

        Ethernet

        • Direct connection between two or more locations.
        • Point to point.
        • Aggregated.(point to multipoint)

        Voice

        • IP platform.
        • Cloud hosted environment.
        • Encryption.
        • Free long distance.

        DDoS Mitigation

        • Automatic detection.
        • Mitigate malicious activity.
        • Cleanse compromised traffic.

        State Firewall

        • State government users.
        • ICN manages network traffic, allowing it to pass through or be blocked.

        Colocation

        • Decreased maintenance costs.
        • Increased physical security.

        Structured Cabling

        • Design and install rack systems.
        • Install, extend, and troubleshoot data circuits.

        Consultation

        • Telecom support.
        • Network architecture.
        • Outside plant designs.
        • Security.
        • Wireless designs.

        Voice Conferencing

        • On-demand.
        • Leader-controlled dial out, roll call, and conference lock features.
        • Password and conference lock.

        Security

        • Firewall.
        • Incident Response & Forensic Investigation.
        • Network Assessment & Penetration Testing.

        Local Area Network (LAN)

        • Connect single building and/or multiple buildings.
        • Coverage based on number of Ethernet ports.

        Wireless LAN

        • Increased mobility.
        • Improved end user connectivity.
        • Wireless access points.

        Services Update

        Internet

        Internet Purchased by Sector:

        • Education: 150.516 Gb
        • Healthcare: 3.860 Gb
        • Government: 30.565 Gb
        • Public Safety: 7.125 Gb
        • Total Internet Purchased: 195.066 Gb

        Bandwidth Growth:
        Total Internet bandwidth growth compared to
        FY19: 145,350 / 195,066 = 34%

        Voice

        Centurylink, Managed Service Provider
        VoIP platform is hosted from a cloud environment.

        • To date, there are 168 active customer groups*, with over 8,000 employee seats activated.
          *One building can incorporate multiple customer groups.
        • The service provides relocation benefits during disaster recovery situations, no long distance or 800 expenses, and call encryption.

        Security

        Distributed Denial-of-Service (DDoS) Mitigation

        ICN has 30 customers being protected.
        During the Last 12 Months:

        • Detected 10,820 DDoS attacks on the State’s Network.
        • Longest DDoS attack was 11 hrs, 59 mins, 29 secs.
        • Largest DDoS attack was 4.38TB (Terabyte).

        Managed Firewall

        • 15 customer subscribers.

        This premier Firewall service comes with:

        • Global, Proactive Threat Library
        • Licensing & Hardware
        • Equipment Migration

        Colocation

        • Iowa Homeland Security and Emergency Management
        • Iowa Department of Transportation

        ICN Supports Customers to Combat the Spread of COVID-19

        In March 2020 when the COVID-19 pandemic first began, ICN provided telecommunications and broadband support and consultation to State agencies, the Legislative and Judicial branches of government, healthcare providers, and educational institutions. Specific support included:

        • Installed a new 10Gb Internet connection for the additional VPN bandwidth needed for government teleworkers to connect back to their network resources from remote locations.
        • Provided 15 agencies with increases in bandwidth.
        • Delivered Managed Voice service by adding Business Communicator for customers who implemented teleworking.
        • Tested and validated phones used for Emergency Activation for the Governor and her team.
        • Installed cabling and switches to support data and voice. MVS reconfiguration to support relocation of MVS phones and fax line for the Iowa Department of Public Health to Joint Forces Headquarters.
        • Increased Voice Conference Calling accounts for Judicial services.
        • Implemented 800 phone numbers.
        • Provided direct event conferencing to support 1,000+ callers.
        • Communicated with community colleges, private colleges and area education agencies regarding telecommunications assistance.
        • Provided bandwidth increases and additional telecommunications support for hospitals and clinics to provide telehealth services.

        Agency Initiatives

        FY 2020 Legislative Session Recap

        The Legislature adjourned the 2020 Session of the 88th General Assembly on Sunday, June 14.
        Iowa Telecommunications and Technology Commission (ITTC) Update:

        • Commissioner Steve Olson’s appointment to the ITTC was confirmed by the Senate on March 4, 2020.
        • Commissioner Krista Wenzel’s appointment to the ITTC was confirmed by the Senate on June 10, 2020.

        Firewall & DDoS Mitigation Appropriation:
        ICN received a $2.7M appropriation from the Governor’s original budget request for Firewall & DDoS Protection.
        This appropriation will ensure the continuation of critical cyber protection for State government agencies currently
        receiving these services at no cost.

        Contracts Exceeding $1 Million, Code of Iowa Reference

        ICN contracts entered into during FY 2020 exceeding $1 million, as required by the Code of Iowa, Section 8D.3(3)(f ).

        • None

        Students Selected for Broadband Council for 2019-2020 School Year

        Ten Iowa high school students were selected to serve on the Statewide Youth Broadband Advisory Council (SYBAC). Throughout the school year, the students met with ICN Leadership and discussed broadband in schools, cybersecurity, coding, and wireless technology.

        The following students were selected to ICN’s SYBAC for the 2019-2020 school year:

        • SYBAC students on a video callAlex Baker, Clarinda High School, Clarinda
        • Austin Grant, Boyer Valley High School, Dunlap
        • Simeon Bulk, Unity Christian High School, Orange City
        • Benjamin Danielson, Colo-Nesco High School, Colo
        • Gavin Hyde, Wapsie Valley High School, Fairbank
        • Sanora Nelson, Colo-Nesco High School, Colo
        • Emmy Richardson, Valley High School, West Des Moines
        • Caden Schweitzer, Liberty High School, North Liberty
        • Gabrielle Valencia, East Union High School, Afton
        • Blake Van Der Kamp, Prairie City Monroe High School, Monroe

        Network Enhancements in FY 2020

        Core Network Upgrade

        The ICN continued work on the network upgrade to our core IP infrastructure, which is anticipated to be completed in early 2021, and will incorporate Ethernet technology. This upgrade involves implementing and maintaining a native 100GB network, throughout the state, which is scalable up to 200GB as needed. At the state network level, the ICN will provide a highly resilient, secure, and high-capacity wide area network (WAN). This upgrade also enables the ICN to proactively manage the ever increasing bandwidth needs of our users. The upgrade will provide sufficient capacity at the core of the Network to securely carry the state’s voice, Internet and data traffic as needed, without degradation. ICN anticipates a reduction of our internal transit/transport costs.

        Homeland Security, 911 Merger

        Partnership with Iowa Homeland Security and Emergency Management (HSEMD)

        The ICN currently provides a closed secure infrastructure for 911 wireless calls. Through an RFP process the ICN was awarded a contract by Homeland Security to provide additional infrastructure and services related to HSEMD’s initiative to merge the existing wireline carrier network, consisting of all the State’s wireline providers on Homeland’s Next Generation 911 Emergency Services IP Network (ESInet).

        The ICN is also collaborating with HSEMD’s other two partners to provide a geographically redundant multi-node hosted E911 platform. The ICN is providing colocation facilities and transport services for a Hosted Public Service Answering Point (PSAP) solution. This project will result in the consolidation of equipment expenses associated with the existing 113 PSAP locations and result in a significant savings for the State.

        Healthcare Network Upgrade

        Partnership with Iowa Hospital Association (IHA)

        The ICN is working with IHA to replace legacy equipment at 191 locations for a complete network upgrade. This project enhances the redundancy to hospitals and rural clinics, along with increases in bandwidth to enable improved access to specialists and records.

        At the end of June 2020, the healthcare network equipment upgrade consisted of 71 sites with equipment installed and 139 pending orders to be completed. With COVID-19 slowing down installations at the healthcare sites, the project is on track to be completed in 2021.

        Voice Migration Completed

        In November 2019, ICN completed its migration to a Voice over Internet Protocol (VoIP) platform using CenturyLink’s Unified Communications (UC) solution. The platform migration included moving over 8,000 phones for 168 authorized customers. The public-private partnership enhanced ICN’s ability to provide Voice services to authorized customers located off the Capitol Complex.

        This VoIP service migration improved efficiencies and reduced ongoing maintenance costs by eliminating six ICN legacy voice systems. A widely used user feature is call forwarding to an alternate number for mobility. In addition, this VoIP service provides customers encryption to protect sensitive voice information, and includes long distance calling and 800 service at no additional charge. These added components provide a cost savings to our customers.


        Looking Ahead to Fiscal Year 2021

        Virtualization

        Software Defined Networking (SDN) and Network Function Virtualization (NFV) separates software from hardware. ICN’s virtualization approach will be based on a white-box application, which combines all the traditional data center elements (storage, compute, networking, and management) in a single automated platform. ICN plans to leverage services layered on top of its IP infrastructure to be flexible and adapt to the needs of our customers.

        Financial Charts

        Operating and Capital Asset Revenues

        The “Operating and Capital Asset Revenues” graph shows ICN generated over $32M in revenues from billed services to authorized users. The ICN did not request or receive appropriated funds from the State for fiscal year 2020.

          Universal
        Service Fund
        Education State
        Government
        Other Total
        FY 2016 $4,471,949 $9,939,929 $16,162,016 $3,344,192 $33,918,086
        FY 2017 $4,532,817 $ 9,674,883 $16,305,531 $2,605,545 $33,118,776
        FY 2018 $5,252,068 $9,090,572 $15,220,623 $1,496,454 $31,059,717
        FY 2019 $3,616,764 $8,715,674 $16,145,668 $2,870,761 $31,348,867
        FY 2020 $3,539,516 $8,466,059 $18,246,013 $1,967,437 $32,305,510

        Payments by Vendor Type

        The “Payments by Vendor Type” graph shows how the revenue generated is used in supporting the network.

          FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
        Telecom Companies $8,398,578 $7,097,209 $8,355,385 $10,064,393 $9,175,640.39
        Network Maintenance $6,088,732 $7,629,745 $8,675,366 $8,859,873 $8,385,736.09
        Other Vendors $687,608 $1,128,297 $2,123,021 $1,469,505 $1,438,490.48
        State Agencies $2,881,345 $800,448 $788,256 $774,997 $679,667.46
        Equipment $2,183,774 $9,266,967 $2,170,412 $2,840,374 $485,118.31
        Contractors $3,165,691 $2,940,278 $3,696,908 $2,269,210 $2,649,484.58
        Customers $11,172 $4,952 $29,191 $561,534 $1,033,627.24
        Utilities & Gas $118,703 $125,323 $152,960 $186,037 $68,063.64
        Federal Agencies $65 $111,803 $204,668 $299,653 $396,429.35
        E911 Payments $52,600 $48,530 $36,859 $36,904 $4,013.46

        The largest ICN expenses in FY20 were the network maintenance and payments to vendor telecommunication companies supplying voice, data transport, and Internet services. Payment for the cost of the “last-mile” connections that are leased from telecommunications companies is directed back to Iowa’s private sector providers. Expenses to outside vendors only. Excludes payroll and employee reimbursements.

        ICN’s financial statements are shown using Generally Accepted Accounting Principles (GAAP). As a government entity in a fee-for-service environment, ICN uses accrual accounting with a measurement focus emphasizing the matching of revenues with costs of services including depreciation of assets such as network equipment and fiber. Most other State of Iowa agencies use the modified accrual accounting method with a measurement focus emphasizing control and accountability over the raising and spending of public monies.


        Fiscal Year 2020 Financial Information

        Operating Budget Proposal & Capital Plan For Fiscal Year Ending June 30, 2021

        REVENUE FY 2020 through
        June 30, 2020
        Projected Actuals
        FY 2020
        Budget
        FY 2021
        Budget Proposal
        Voice Revenue $8,016,525 $7,437,345 $7,370,030
        Video Revenue 136,973 146,391 -
        Transport Revenue 14,400,024 14,910,130 15,086,412
        Internet Revenue 6,669,952 5,398,531 6,538,400
        Security Revenue 350,686 362,980 520,114
        Colocation Revenue 157,577 336,912 154,636
        Outside Plant Build Out/Maintenance Revenue 1,209,293 1,950,847 1,853,052
        Network Professional Services Revenue 22,228 148,294 134,000
        Interest Revenue 173,064 152,300 153,000
        Other Revenue 20,279 8,765 12,265
        GROSS REVENUES $31,156,601 $30,852,495 $31,821,909
        DIRECT EXPENSES      
        Voice Direct Expense $5,010,704 $4,336,633 $5,236,692
        Video Direct Expenses 114,001 117,304 -
        Transport Expenses 4,986,251 5,693,110 5,605,206
        Internet Expenses 489,286 411,977 560,413
        Security Expenses 307,323 368,634 335,068
        Colocation Expenses - 29,228 -
        Outside Plant Build Out Expenses 404,670 804,000 483,304
        Network Professional Services Expenses 12,534 108,095 74,050
        TOTAL DIRECT EXPENSES $11,324,769 $11,868,981 $12,294,733
        GROSS MARGIN $19,831,832 $18,983,514 $19,527,176
        OPERATING EXPENSES      
        System Maintenance and Technical Support $6,484,316 $6,998,695 $6,164,666
        Outside Plant Maintenance Expenses 2,040,427 1,466,016 2,222,254
        Operating Professional Fees 341,154 509,408 218,775
        Other Operating Expenses 579,383 756,375 560,006
        TOTAL OPERATING EXPENSES $9,445,280 $9,730,494 $9,165,701
        NET MARGIN $10,386,552 $9,253,020 $10,361,475
        GENERAL AND ADMINISTRATIVE      
        Personnel Services $9,663,865 $9,648,426 $9,358,179
        Travel 98,533 93,444 102,644
        Other General & Administrative Expenses 964,059 1,035,228 930,392
        Professional Fees 267,699 70,200 133,340
        TOTAL G, S, and A EXPENSES $10,994,156 $10,847,298 $10,524,555
        NET CASH (DEFICIT) from OPERATIONS ($607,604) ($1,594,278) ($163,080)
        CAPITAL BUDGET      
        Capital Expenditures $426,779 $682,914 $1,263,000
        NET EQUIPMENT PURCHASES $426,779 $682,914 $1,263,000
        NET CASH (DEFICIT)  ($1,034,383) ($2,277,192) ($1,426,080)
               

        Balance Sheet (Statement of Net Assets) for the Thirteen Months Ending June 30, 2020

        ASSETS Fiscal Year 2020 Fiscal Year 2019 Amount %
        Cash & Cash Equivalents $7,431,911.61 $6,439,664.00 $992,247.61 15.41%
        Accounts Receivable 3,876,506.86 4,189,264.20 (312,757.34) (7.47%)
        Interest Receivable 15,192.97 43,532.64 (28,339.67) (65.10%)
        Inventory 1,359,325.18 1,483,158.78 (123,833.60) (8.35%)
        Prepaid Expenses 706,044.66 1,082,818.22 (376,773.56) (34.80%)
        Total Current Assets 13,388,981.28 13,238,437.84 150,543.44 1.14%
        Fixed Assets (Net) 11,628,304.53 14,732,261.06 (3,103,956.53) (21.07%)
        Total Deferred Outflows of Resources 1,500,945.18 1,902,064.18 (401,119.00) (21.09%)
        TOTAL ASSETS $26,518,230.99 $29,872,763.08 ($3,354,532.09) (11.23%)
        LIABILITIES        
        Accounts Payable & Accruals 3,340,769.86 2,602,206.08 738,563.78 28.38%
        Sick Leave Incentive Program - Retirees 6,185.00 12,372.00 (6,187.00) (50.01%)
        Unearned Revenue 1,766,265.40 2,039,345.68 (273,080.28) (13.39%)
        Short-Term Compensated Absences 761,803.99 900,119.05 (138,315.06) (15.37%)
        Sick Leave Incentive Program - Employees 101,820.83 114,250.91 (12,430.08) (10.88%)
        Other Post-Employment Benefits 44,858.30 882,000.00 (837,141.70) (94.91%)
        Total Current Liabilities 6,021,703.38 6,550,293.72 (528,590.34) (8.07%)
        LT Sick Leave Incentive Program - Retirees 21,103.00 17,986.00 3,117.00 17.33%
        Long-Term Compensated Absences 177,397.48 0.00 177,397.48 0.00%
        LT Sick Leave Incentive Program - Employees 575,675.46 599,530.10 (23,854.64) (3.98%)
        Accrued Sick Leave 68,895.93 73,482.85 (4,586.92) (6.24%)
        Other Post-Employment Benefits 822,141.70 0.00 822,141.70 0.00%
        Net Pension Liabilities 5,432,060.00 6,273,124.00 (841,064.00) (13.41%)
        Total Deferred Inflows of Resources 1,268,259.45 534,614.41 733,645.04 137.23%
        Total Long-Term Liabilities 8,365,533.02 7,498,737.36 866,795.66 11.56%
        TOTAL LIABILITIES 14,387,236.40 14,049,031.08 338,205.32 2.41%
        FUND EQUITY        
        Retained Earnings 12,130,994.59 15,823,732.00 (3,692,737.41) (23.34%)
        TOTAL FUND EQUITY 12,130,994.59 15,823,732.00 (3,692,737.41) (23.34%)
        TOTAL LIABILITIES & FUND EQUITY $26,518,230.99 $29,872,763.08 ($3,354,532.09) (11.23%)

        Statement of Changes in Net Position for the Twelve Months Ending Tuesday, June 30, 2020

          June Fiscal Year 2020 June Fiscal Year 2019 Increase (Decrease) Amount Increase (Decrease) Percent
        OPERATING REVENUES        
        Sales, rents & services $32,219,025 $31,578,021 $641,004 2.03%
        TOTAL OPERATING REVENUES 32,219,025 31,578,021 641,004 2.03%
        OPERATING EXPENSES        
        General & Administrative 10,843,183 10,898,528 (55,344) (0.51%)
        Depreciation 3,155,516 3,363,278 (207,762) (6.18%)
        Direct 14,217,063 12,896,300 1,320,763 10.24%
        Operations 7,808,506 10,648,458 (2,839,952) (26.67%)
        TOTAL OPERATING EXPENSES 36,024,268 37,806,565 (1,782,296) (4.71%)
        OPERATING INCOME (LOSS) (3,805,244) (6,228,544) 2,423,300 (38.91%)
        NET NON-OPERATING REVENUES (EXPENSES)        
        Interest Income 112,506 172,760 (60,254) (34.88%)
        NET NON-OPERATING REVENUES 112,506 172,760 (60,254) (34.88%)
        INCOME (LOSS) BEFORE CONTRIBUTIONS & TRANSFERS (3,692,737) (6,055,784) 2,363,047 (39.02%)
        Transfers out        
        CHANGE IN NET POSITION (3,692,737) (6,055,784) 2,363,047 (39.02%)
        NET POSITION - JULY 1 15,823,732 21,879,516 (6,055,784) (27.68%)
        NET POSITION - JUNE 30 12,130,995 15,823,732 (3,692,737) (23.34%)

        This report is used as an internal cash management tool and is not based on full accrual accounting. It includes only revenues from operating activities plus some revenue from non-operating activities that are deposited in operating cash such as interest income. It does not contain any non-cash expenses such as depreciation. All revenues and expenses from appropriated monies and grant awards have been excluded.


        Annual Report FY 2020 Back Page

        Iowa Communications Network
        Grimes State Office Building
        400 East 14th Street, Des Moines, Iowa 50319
        icn.iowa.gov

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