University of Pennsylvania CTIC Conference May 6-7, 2010 Presented by Paul Dauby, VP/COO

Network Management Topics Who in the world is PSC? Managing Fixed Unlicensed Wireless Network/s Managing FTTP, DSL and Rural Healthcare Networks (Ethernet) P2P and OTT Video- Middle Mile /Transit Fears and Comments

PSC Located in Southwest Indiana Serving parts of six counties: Perry Spencer Dubois Pike Warrick Crawford

Perry Spencer Rural Telephone Cooperative Service Area 569 square miles lines per square mile 1,967 Route Miles (318 fiber) 2.98 subscribers per route mile 5,860 access lines 2,769 DSL lines DSL Broadband available to 100% of our customers Verizon Service Area ATT Service Area ATT Service Area

PSC – Deregulated Subsidiary Service in Dubois, Spencer and Perry Counties 2515 Fixed Wireless Broadband Internet Access Customers on unlicensed 900 MHz, 2.4 GHz, 5.3 GHz, 5.8 GHz Spectrum and 3.65 GHz WiMax. 560 FTTH CLEC Customers Long Distance Customers. 25 R-Net Customers – Regional 10 Gig Native Ethernet Transport- 48 Ports

Density- Rural vs Urban Dereg area -population – Approximately 80,512 Area – 1,222 square miles. Population of Washington, D.C. 249,220 Area – 61 square miles. PSC’s ILEC Serving area of 569 Square miles 5,860 Access Lines- 2,769 DSL lines. ILEC FTTP RUS Project -Engineering Estimate is $50M Financial Analysis –can’t afford but $29M. We need Broadband USF.

PSC’s Wireless Network Why and How We Manage The Network

PSC Wireless Network PPPoE Aggregation PPPoE Aggregation Service Control Engine Service Control Engine CORE Router CORE Router P2P Rate Limiting 10 sessions -25kbps/session Middle Mile Redundant Fiber Backhaul RF 5.8 GHz or 5.3 GHz Backhaul Internet PSC Wireless Network PSC Wireless Network 2 nd mile

Early versions of 900 MHz and 2.4 GHz are lean on DATA TRANSFER RATE (Through-put) <2Mbps. Data Transfer Rates of other Spectrum: VL Mbps 3.65 GHz ( WiMax) -12 Mbps 4G- 12 Mbps VL 5.8 GHz 30 Mbps VL 5.3 GHz –30Mbps P2P and OTT can easily overcome the Access Point Through-Put because of sustained packet flow. Currently we rate limit P2P. Shared Networks Like Fixed Wireless Have Inherent Restraints

Shared Networks Like Fixed Wireless Have Inherent Restraints All users deserve their fair share of the Shared Network. Businesses are affected as well as Residential. How do the Cellular Providers handle it? My daughter Vanessa pays $39.95 for 250 Mbytes of downloading. Small monthly usage cap!! Whose goal does this meet?

PSC’s Wireline Networks

PSC GPON FTTP STB ONT Router Web & Servers SOHO Router Doing PPPoE PC doing PPPoE Internet PPPoE Aggregation Video Network Voice Switch GR 303 Local REC IPTV SDV Voice Smart Grid ? Internet Dedicated Customers Dedicated Customer VLAN, DOES NOT require PPPoE Connection Broadband Data VLAN, Requires PPPoE Connection Video VLAN Voice VLAN Smart Grid - How is this done? GigE NetworkOLT 32 split GPON Fiber #1

PSC GPON FTTP STB ONT Router Web & Servers SOHO Router Doing PPPoE PC doing PPPoE Internet PPPoE Aggregation Video Network Voice Switch GR 303 Local REC IPTV SDV Voice Smart Grid ? Internet Dedicated Customers Dedicated Customer VLAN, DOES NOT require PPPoE Connection Broadband Data VLAN, Requires PPPoE Connection Video VLAN Voice VLAN Smart Grid- How is this done? GigE NetworkOLT Fiber #2 32 split GPON

PSC GPON FTTP STB ONT Router Web & Servers SOHO Router Doing PPPoE PC doing PPPoE Internet PPPoE Aggregation Video Network Voice Switch GR 303 today Local REC IPTV SDV Voice Smart Grid Internet Dedicated Customers Dedicated Customer VLAN, DOES NOT require PPPoE Connection Broadband Data VLAN, Requires PPPoE Connection Video VLAN Voice VLAN Smart Grid- How is this done? GigE NetworkOLT 32 split GPON Fiber #3

100 Mbps $50-60/Mbps approx/depends Core Router Layer 3 TLS Service Layer 2 Town “A” 1 GB 10 GB Other Provider Locations/Cities TLS Service Layer 2 Town “B” 20 Mbps Internet Access 100 Mbps TLS (Data) Note: Health Care facilities all share 100Mbps 100 Mbps TLS Location #2 Associated Health Care Urgent Care (connects to the Hospital) Internet 10 GB Ethernet Transport Health Care Broadband Access Hospital Ethernet Switch Location #1 One Fiber

PSC-DSL (ILEC) PPPoE Aggregation Video Network Voice Switch Local REC Dedicated Customers Core Router Ethernet Switch Central Office Terminal CDT Remote DSL Term Remote DSL Term Remote DSL Term STB PC doing PPPoE Internet IPTV Voice Internet Last Mile Gig E Gig E Video & Internet, Voice Gig E OC-48 2 nd MileMiddle Mile Copper DSL Modem Filter PVCs GR303 (POS) (1 of 3 Solutions)

PSC’s DSL ATM from the DSLAM to the customer’s Modem. ATM PVCs are used instead of VLANs as in FTTP. DSL modem separates the services: -ITPV - Internet Access Copper loop delivers the dial tone. IPTV consumes the capacity of the DSL circuit.

PSC’s DSL Not all customers qualify for PSC’s IPTV service (Last mile is too long). DSL leverages existing infrastructure but is limited on capacity (data transfer rate). Delivering HD content, DVR and Set Top Box counts are issues. Efficiency is a MUST

Competition -Rural vs. Urban Middle Mile (Transit Cost) PSC’s Cost Per Mbit for Internet Backbone is at least 2 times the cost in Indianapolis!!! Others in the Midwest are paying 4 times the cost that PSC pays to Indianapolis or to our competitor. And here comes more Video!! (OTT) ouch! Can Rural Economic Development really happen with the above odds?

Impact of Middle Mile- IPTV/OTT IPTV Basic & Broadcast OTT VIDEO 8 2Mbps Programming Cost $30 Selling Price $33 Backbone Cost for Data Transferred $65.60 Revenue $0 Difference$3.00/month Per customer Difference-$65.60 per Customer Backbone costs were converted to cost per Gigabyte. The idea taken from Dr. David Clark’s written Statement at the FCC public hearing on network management February 25, How do we recover this monthly recurring cost- unlike voice we purchase the Middle Mile Capacity. Together we must find a way!

Why PSC doesn’t rate limit P2P on Wireline Net Neutrality Proposed Principles (Fear). We Respect the points made in the FCC Principles (Non Discrimination) but we must be efficient too- work is needed. Today The Network’s Robust Enough (Pre OTT- Cost of the Middle Mile and 2 nd Mile is masked out).

Why PSC doesn’t rate limit on Wireline Last Mile is not shared. Cost to setup management software is not easy or commercially available even though some says it is (To Do It Right). Integration to the billing system is a big deal- I heard recently $40,000 for a small company. Can small providers afford this?

Net Neutrality Principles potentially threatens the right to manage and provision our networks so all stakeholders benefit. Not being able to abide by the Net Neutrality Principles effectively and entirely. Fear the lack of appropriate Broadband USF funding and compensation for the provider’s network. Providers network costs are rising quickly. Over The Top Video (OTT) making a huge impact on the middle mile (transit) and 2 nd mile cost because of increased through-put consumption. Fears and Comments

Fear Rural America being left to a 2 nd rate Broadband wasteland. Economic Development requires a robust broadband network which wireless cannot deliver- many reasons. Fear that we’ll fail as a nation to become #1 in Broadband Robustness and adaptation. Converting Rural Companies from Rate of Return to Price Cap? Forcing us to offer unrestricted bandwidth will force us to offer no Bandwidth. Fears and Comments

Thanks! Paul Dauby VP/COO