connect america fund - education for operators by ted osborn, wisp partners

FCC Connect America Fund

Rural Operator Opportunities

Phase II Auction $2.15Bn$215mm Subsidy Funding for 10 years

for building rural broadband___________________________________________

Ted Osborn, WISP Partners, Inc.

303.817.5732 | [email protected]___________________________________________

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FCC Connect America Fund (CAF)

AGENDA …to provide an education for CAF opportunities under the Auction

Background Presenter background Executive Briefing on the CAF proceeding

The Auction Where the subsidy is available Eligibility Rules and Bid Qualifications How to Proceed

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FCC Connect America FundPresenter Background – Ted Osborn

20 years of business process re-engineering work, starting at IBM

2002: Researched Fixed Wireless as an alternate to Cable and DSL services

2003: Founded AirWave Access a WISP in Colorado

2005: Merged with Mesa Networks

2008: Merged our team members, 130 towers and 7,500 customers with

JAB Wireless (a.k.a. Rise Broadband)

2008: Formed WISP Partners to advise on rural broadband development

2014: CAF RBE Project Manager winning $16.9mm in five states

Current: Strategy and Corporate Development advisor for rural broadband

WISP Partners - building rural broadbandAdvisory services | Business | Technical | Regulatory

Ted Osborn | 303.817.5732 | [email protected] 3

FCC Offers to Price Capped Carriers

Source: FCC 4

Price Cap’s Aggressive Acceptance

Source: FCC 5

Remaining Subsidy… was $175mm / yr.

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Remaining Subsidy was… $175mm / yr.

In May, the FCC added an additional $40mm in annual subsidy - all states but AK

Source: WISP Partners Analysis Based on FCC Data

WEST MO CA NV OK WY CO KS NM

ANNUAL 36,438,268 55,366 287,602 26,194,511 8,354,250 426,530 336,238 3,883,590

EAST DE FL MD MA NJ NY

ANNUAL 970,518 703,988 6,909,137 4,419,168 1,314,651 28,410,892

EAST NC PA RI VA D.C.

ANNUAL 30,184 3,270,820 166,061 29,144,142 30,451

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FCC Connect America Fund

The Auction

Where the subsidy is available Eligibility Rules and Bid Qualifications How to Proceed

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Auction – now… $2.15Bn over 10 years

Source: FCC August, 2016 (preliminary map showing gold areas have remaining subsidy – actual locations WILL vary)9

Where is the money?

WISP Partners analysis of FCC data published August 10, 2016

State Reserve Amount Locations State Reserve Amount Locations

AL 7,582,914$ 15,282 MT 9,307,580$ 7,312 AR 18,310,903$ 26,550 NC 2,351,516$ 7,234 AZ 15,380,985$ 11,139 ND 3,694,185$ 3,477 CA 72,342,251$ 88,096 NE 21,319,496$ 16,808 CT 378,833$ 862 NH 762,821$ 1,360 CO 25,689,065$ 28,802 NJ 1,716,172$ 3,675 DC 31,692$ 114 NM 16,033,097$ 18,502 DE 1,201,949$ 4,275 NV 17,079,055$ 20,706 FL 9,656,758$ 21,139 NY 29,956,175$ 76,580 GA 11,464,020$ 22,428 OH 14,610,674$ 33,152 HI 1,168,445$ 805 OK 66,686,357$ 112,511 IA 32,136,300$ 34,672 OR 23,423,828$ 24,204 ID 25,500,335$ 31,780 PA 37,399,786$ 88,898 Il 92,204,012$ 105,460 RI 182,569$ 573 IN 19,145,236$ 48,414 SC 2,143,998$ 3,584 KS 32,266,415$ 30,526 SD 4,366,399$ 4,589 KY 4,486,634$ 11,320 TN 4,701,381$ 13,010 LA 6,332,018$ 8,705 TX 64,780,798$ 100,050 MA 4,281,935$ 12,060 UT 6,045,243$ 5,505 MD 7,275,381$ 20,108 VA 33,878,672$ 98,736 ME 4,351,142$ 3,698 VT 519,953$ 1,128 MI 13,772,931$ 35,115 WA 26,465,143$ 32,595 MN 28,611,828$ 30,724 WI 14,198,179$ 17,373 MO 73,460,689$ 112,836 WV 31,896,473$ 52,736 MS 9,969,373$ 18,116 WY 23,127,086$ 24,840

Total Reserve Price

Total locations CAF BudgetCoverage

Budget/Reserve

9,736,486,808$ 1,492,164 2,150,000,000$ 22.1%

Actual Locations and Reserve Amounts are Subject to Change 10

California | $72,342,251 Annual Reserve

Actual locations WILL vary

Census Block Data

State: CACensus Block: 060490004002023

Locations: 20Reserve Price: $35,064 per Year

Eligibility – Broadband & Voice

Source: FCC Report & Order, May 26, 2016

2014 Broadband Experiment Now - The Phase II Auction

$100mm subsidy over 10 years $2.15Bn subsidy over 10 years

3 years audited financials required 1 year audited financials within 6 months following notice of award

LoC covering the total amount for 10 yrs. LoC reduced as the network is built

100 largest banks ~3,600 Weiss rated banks at B-, plus CoBank

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The Rules - Bid Performance Tiers

Source: FCC Report & Order May 26, 2016

Buildout Year 3 Year 4 Year 5 Year 6

Completion 40% 60% 80% 100%

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…How to Proceed?

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Read the May 26 R&O. Review the August 10 CAM -43

Refine Areas of Interest – create mapping polygons to capture underlying FCC metadata on Locations under Subsidy. Assess actual addressable market.

What network will you build? Work with your supply chain to qualify spectrum availability, infrastructure capacities and costs for broadband and voice, establish banking commitments to prepare standby LOCs, identify support needs for P.E. network design stamps, ETC designations, and financial audit requirements.

Design the Network to meet your chosen Speed Tier requirements. Modify your final Census Block Groups/Tracts to assure your ability to meet performance criteria.

Develop the Business Model to understand all costs, build timelines, penetration and ARPU assumptions. Project cash flow results. Determine your bid strategy.

WISP Partners Profile

Ted Osborn, WISP Partners303.817.5732 | [email protected]

WISP Partners is a boutique consultancy with an assembly of multi-platform Internet experts

We are broadband executives, geo-spatial experts, professional engineers, lawyers,financial analysts, and bankers. We are strategists and FCC advocates, …our passion is building rural broadband

We have guided our clients to secure BTOP Grants, RUS grant & loan programs, andConnect America Fund competitions to win 11 of 12 bids for $16.9mm across 5 states

Our clients are Carriers, Rural Telco’s, WISPs, Communities, Research / Private Equity Firms

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WISP Partners Consulting Services

Ted Osborn, WISP Partners303.817.5732 | [email protected]

Business Technical Legal

Strategy Development Network Assessments Bid Placements

Business Case Modeling Feasibility Assessments Regulatory

Letters of Credit Network Design & Maps Spectrum Leases

Working with Bid Participants on CAF

Step 1: Virtual consult to assess your fit for CAF

Step 2: Provide rapid analysis to assess business potential & strategy

Step 3: Engage per service category or through WP’s turn-key project management

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