to: fispa board of directors from: att dsl committee subject: motion to approve 22-state business...

To: FISPA Board of Directors

From: ATT DSL Committee

Subject: Motion to Approve 22-State Business DSL Program

Date: February 15, 2013

Exhibit A to March 7, 2013 Special Board Meeting

ATT DSL Committee

Sam @ Seimitsu

Richard @ Technology Solutions

Greg @

Ron @ ACS/Globalvision

Cliff @ Computer Sales & Service

Dean @ Igloo

Richard @

Kooi @ Kampung

Faisal @ Snappy DSL

Milt @ Net2Atlanta

Bill @ VPNtranet

Gabe @ Computer Technologies

Andrea @ Digital Agent


Why

•Last Mile Access to Small- and Medium-sized businesses

•T1 Replacement

•Deliver bundled services• Data and Voice• Data and managed services• Custom bundles leveraging

•Backup

•Expand FISPA’s value to potential members in 22 states


Process

2012

June ATT presented to Board

August Membership Webinar

August Membership wiki & posts to [email protected] listserv

November Membership webinar & ATT negotiations

December Agreement tendered to FISPA

2013

February Committee proposal to Board

March Board approval

Q1-13 Launch


mailto:[email protected]

What

• Naked/Dry Loop DSL called “Business DSL” by ATT

• Layer 3 (routed)

• IP DSLAMs (aka U-verse)

• 22-States (plus some Out of Region - Covad)

• ADSL (also includes IP IDSL, multiple IP IDSL/SDSL of little interest)

• Discounts 9 – 22% (50% on equipment) to FISPA

• Net Discounts 6 – 19% to Members after FISPA Fees

• Term Agreement: 36 months

• Term DSL: 12 months

• Member Billing/Payment Relationship is Direct with ATT (no FISPA rebill)


Discounts - Pricing

Type of Purchased Equipment Price Discount Percentage+++ADSL Modem or ADSL Router $100 50%IDSL/SDSL Router $450 0.0%Broadband Modem/Router $100 50%

Maximum Bandwidth* (Downstream /Upstream)

Broadband Dynamic IP

Monthly PriceDiscount+++ FISPA Cost Member Cost Net Discount

to Member

Up to 768 Kbps / Up to 384 Kbps $45.00 22.22% $35.00 $36.40 19%

Up to 1.5 Mbps / Up to 384 Kbps – single static IP N/A N/A N/A N/A

Up to 1.5 Mbps / Up to 384 Kbps** $50.00 20.00% $40.00 $41.60 17%



Up to 12Mbps / Up to 1Mbps $70.00 14.29% $60.00 $62.40 11%

Up to 18M / Up to 1.5Mbps $100.00 10.00% $90.00 $93.60 6%

Up to 24M / Up to 3Mbps $110.00 9.09% $100.00 $104.00 5%

FISPA Markup 4%


Risk #1of 2250 total sites (not subscribers) required by the end of 36 months (term begins with first order <to be confirmed>) or FISPA will be billed for the discounts received.

Quoted term from Agreement“Discounts are set forth in Rates and Charges Tables below. If the Customer does not meet its Site Commitment by the Site Commitment Date specified above, Customer shall not be eligible for any further discounts specified in this Pricing Schedule and AT&T reserves the right to bill Customer retroactively for all the Discounts received hereunder.”

Sample Numbers No sites = No Risk

225 sites @ 3 years @ 75/year (no ramp) = $54,000-$76,500*



*Higher number includes discount on equipment*Exhibit A to March 7, 2013 Special Board Meeting

Risk #2 of 2

• Non-paying members• DSL was the highest risk, poorest paying program FISPA has

ever administered• December 2008 average DSL member was165 days past due• August 2009 average DSL member was 97 days past due (6M

implementation)• December 2011 average DSL member was under 60 days past

due• Traditionally, the ISP industry has an overall 15% default rate

(leasing companies assessment/rate factor element)


Forecast (1/31/13)

Most Likely Forecast shows that 250 sites will be ordered during year 2; Best Case in year 1

Most Likely Best CaseY1 Y2 Y3

M1 25 50 100 100 200 250M2 1 5 10 10 15 25M3 25 25 25 33 33 33M4 99 20 20 120 20 20M5 24 24 24 36 36 36M6 24 24 24 36 36 36M7

Total 198 148 203 335 340 400346 549 675 1075


Risk Assessment

•Risk #1 (Commitment) does not appear to be a large factor (10%)•Risk #2 (non-paying) FISPA appears to manage to a lower than industry average default rate and because this is a layer 3 program subscribers can more easily be transferred (7.5%)

Recommendation: Create a program and creates a minimum income to FISPA => (17.5%) of the maximum risk.

225 subs @ 3 years @ 75/year (no monthly ramp) = $54,000-$76,500 requires Risk Pool of $13,400 (17.5% of $76,500).


Risk Pool Funding

Recommendation: Risk Pool of $13,400 required.

Most Likely Forecast generates FISPA fees of $20,248 by the end of the 2nd year.

Risk Pool matches Forecast

Most Likely Sites

Y1 Y2 Y3

M1 25 50 100

M2 1 5 10

M3 25 25 25

M4 99 20 20

M5 24 24 24

M6 24 24 24

M7

Total 198 148 203

346 549

Set Up Fees $600 $500 $500

Total Fees $ 7,569.56 $ 12,679.13 $ 19,824.69

$20,248.70 $ 40,073.39


Program Proposal for Approval

• Member must be in ‘Great’ standing (zero days past due) to participate or continue to order• Members at 60 days past due may have their subscribers

moved or terminated• Member must have a Special Price Agreement on file with FISPA• Program requires pre-payment or a credit card on file to pay all fees

to FISPA• Order form B-X will include all items in this proposal• DSL Program Fees paid into FISPA general income fund (which

contributes to Bad Debt account)• $100 One-time fee• Recurring 4% of each members monthly current invoice

amount, billed monthly• Recurring fee may be subsequently evaluated by the then-

current Board of Directors (increase/decrease, terms)• FISPA makes operating profit by exceeding forecast


Reference Documents

• ATT Business DSL Internet Service Wholesale Pricing Schedule (The Agreement)

• ATT Business Service Guide for ATT Business DSL Internet Service

• ATT Business DSL Internet Service Agreement (Expectations Document)

• FISPA Special Price Agreement 1015007• ATT FISPA 22-State DSL spreadsheet (show

calculations used in this proposal)


Motion

A motion was made by Jason and seconded by Brian Y. that the ATT 22-State Business DSL program as presented by the ATT DSL committee via power point presentation on the 7th day of March, 2013 be approved. The motion passed (6 aye, 2 nay, 2 absent) with Clay and Dane as nays and Greg absent.
