APPLIED COMMUNICATIONS Lessons Learned from Rural Broadband Initiatives

Lesson One Success doesn’t happen overnight.

Case Study - Grant County  Grant County Public Utility District installed fiber backbone between substation. Fiber to the home roll-out began in  Initial slow take rate below projections  Quincy, WA - Population = 5,300  In 2006 – Microsoft, Yahoo and Intuit announced plans for data centers. (Fiber + Low Power Costs)  “One Tiny Town Become Internet Age Power Point” (Wall Street Journal – 3/7/07)  1000 new workers = Housing Shortage

DIFFUSION CURVE Rural Telecon “98”

Lesson Two “The power to transform will play out unevenly and in stages.” (Business Week 3/26/01)

THE STATS  broadbandproperties.com 2004 = 200,000 homes passed by fiber = 4 million 2008 = 10 million 2011 = 64 million  Muni-Wireless public wireless networks/hotspots 2005 = = = 415

PEW INTERNET PROJECT In % of all adult Americans had broadband connections. Only 31% of homes in rural areas had broadband. High Cost + Low income = Lower Penetration Rates Geraldine, MT = $59 for 1.5 mg DSL

Lesson Three One size doesn’t fit all.

Applications – Fiber or HFC  Load Management for Electric Utilities (Fiber)  Home Automation (FTTP)  Cable TV – Video Conferencing

Applications - Wireless Public Safety – Mobile applications for Police & Fire Public Works/City Inspectors Mobile applications Free Internet (Wi-Fi)

Lesson Four “You can’t have always get what you want.” Source: Mick Jagger

Marshfield, WI – Case Study  Charter Cable – Regional Fiber Backbone, Fiber to Clinic & other businesses in town  Verizon – DSL, Fiber Sonet-Ring  Poor service in rural areas  No fiber in industrial parks on town’s edge  No Wi-Fi hot spots

HIGH PRIORITYLOW PRIORITY HIGH COSTProceed Only If Strategy Ranks High on Other Factors Do Not Proceed LOW COSTProceedFind a Partner to Undertake Strategy

Evaluation Measures  Cost-Benefit  Economic Development  Public Support  Financial Liability  Commitment

Lesson Five Metcalfs Law – “The Value of a network grows with the number of users.”

Take Rates  Take rates ranged from 20% - 80%. Averaged around %.  Cable take rates have been higher than Internet  Marketing surveys generally indicate higher interest level than actual take rate  Takes several years to penetrate market  Competitors might enter market (Applied Communications – Public Broadband Database)

Lesson Six There is no such thing as a 100% success rate in business or in telecommunications.

Business Plan  Select Appropriate Business Model  ROI – 5, 10, 15 years?  Risk Analysis  Marketing  Financing – Grants, fees, bonds, recapture, …

Lesson Seven Planning can be a catalyst for action.

 Marshfield, WI – DSL for Hewitt  Douglas, WY – Cable Modems  Sandpoint, ID – RFP for services spurs Qwest  Havre, MT – County Commissioners allow co-location

Lesson Eight Don’t get trapped by paralysis analysis.

Strategies  Find a niche  Pilot project before full deployment  Phase in, deploy to areas of high demand to generate revenue  Decrease risks – Partner, pre-lease, piggy back on other projects

For More Information Kate McMahon Applied Communications (406)