1. RefNo | Commercial in confidence HSB for Donegal ENGAGE 12 Feb 2013 Pat Kidney

2. RefNo | Commercial in confidence Confidentiality notice This document and the information contained herein are strictly private and confidential, and are solely for the use of ENGAGE Copyright © 2013. The information contained herein is the property of Analysys Mason Limited and is provided on condition that it will not be reproduced, copied, lent or disclosed, directly or indirectly, nor used for any purpose other than that for which it was specifically furnished 2

3. RefNo | Commercial in confidence Trends in the Irish market Mobile and FWA broadband services have become a major feature of Irelands broadband market Fixed broadband speeds have increased from their previously low level Service bundling and closer integration of fixed and mobile services are increasingly prominent features of the market All mobile operators are engaged in network sharing multi-band spectrum auction in 2012 has raised EUR 854m 140 MHz of prime sub-2GHz spectrum The 2.3 GHz and 3.5GHz spectrum bands has potential to further enhance competition and capacity for wireless broadband National Broadband plan has earmaked EUR175m for broadband 3

4. RefNo | Commercial in confidence In the 2016 – 2018, a mix of technologies is expected in the Irish telecoms market… LTE, DOCSIS3.0, and VDSL to green areas (55% pop.) LTE and ADSL2 to blue areas (35% pop.) Only LTE in red areas (10% pop.) Final 10%Rural 55-90%Urban 55% VDSL ADSL LTE DOCSIS3.0 UPC will have DOCSIS3.0 in urban areas, but may not reach 55% of pop. In urban areas LTE will have fibre backhaul to ensure high performance In rural and remote areas the LTE will have microwave backhaul to reduce cost, at the expense of performance Eircom will use VDSL for high speed broadband, and will maintain its existing ADSL services outside urban areas

5. RefNo | Commercial in confidence A comprehensive NGA solution may use FTTH, FTTC, cable, wireless and other technologies Scenario 1: Fibre and wireless Scenario 2: Cable, fibre and wireless Scenario 3: VDSL and wireless Cost of deployment by scenario NationwideUp to 90%NSS FTTH/GPON FTTC Wireless LTE Cable NationwideUp to 90%NSS FTTC Wireless LTE NationwideUp to 90%NSS FTTH/GPON FTTC Wireless LTE Source: Analysys Mason

6. RefNo | Commercial in confidence The National Broadband Scheme brought basic broadband to unserved areas of Donegal 6 Source: DCENR, H3GI Target areaActual coverage

7. RefNo | Commercial in confidence NGA is likely to be delivered through a variety of fixed and wireless technologies NGA consists of many networks – including FTTH/FTTC, cable, and 4G – but how much of each should be built and where? 7 A combination of extending the reach of fibre, plus additional wireless sites will be required to satisfy our work and social needs Fibre networksWireless networks Rely on direct physical connections to the subscriber – capital expenditure generally increases in areas where access distances are greater (typically rural areas) Low-frequency spectrum from the Digital Dividend could extend the reach of LTE base stations and consequently reduce the capital costs of providing next-generation wireless broadband in rural areas FTTC and FTTH networks require the installation of new fibre links from the local exchange directly to, or closer to, the subscriber. Optimal duct re-use can help reduce costs In addition to wireless infrastructure costs, spectrum fees can be expensive. To support next generation access speeds many base stations may also require high-capacity fibre backhaul links

8. RefNo | Commercial in confidence 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% UrbanRuralVery rural Proportion of dig costs for FTTH to premise from DP to DP from cabinet to cabinet from exchange Why? ….dig costs make up around 65% of total FTTH costs Final drop ~50m Route out of exchange ~2km ~300m The part of the route closest to the distribution point (DP) represents the highest proportion of costs Breakdown of costs of civil works for FTTH Source: Analysys Mason

9. RefNo | Commercial in confidence We have analysed each measure from an individual cost–benefit perspective … 9 Source: Analysys Mason Performs most strongly in a cost–benefit analysis, but may have limited impact in developed markets Reduction to cable damage could lead to significant benefits

10. RefNo | Commercial in confidence 5 investment models… 10 Choice of investment model 5 models Bottom-up Private design build and operate Public outsourcing Joint venture Public design build and operate Group of end users oversee the contract to build and operate their own local network Managing Authority provides a grant to private sector to assist in deployment of new network Single contract for construction and operation of network, but public sector retains ownership and some control Ownership of the network is split between the public and private sector Public sector owns and operates a network without any private sector assistance

11. RefNo | Commercial in confidence 11 ModelAdvantagesDisadvantagesRecommended use Bottom upLong term, non- profit view Focuses demand Localised deployments Differing technologies Targeting localised areas Leveraging small scale funding Private DBOLarger scale Low public burden Funding threshold Limited control Sufficient funding to attract operators Effective transferral of risk Public outsourcing Public financial stability with private expertise Greater control Reduced benefit to private sector Additional bureaucracy Requirement for on-going control More conservative operators Joint VentureRisk sharingPotential conflicts of interest Public/private interests closely aligned Public DBOPublic organisation has full control Size and scope limited by public expertise Requirement for absolute control Inspirational investment Summary of pros and cons of investment models Choice of investment model Each investment model has its place

12. RefNo | Commercial in confidence The focus is on delivering benefit to users Socio economic benefit must be managed alongside project sustainability to deliver long term benefits Long term control by public sector can protect end user benefit, however the private operators can bring invaluable expertise Sustainability is critical as socio-economic benefits will take time The bottom up model may suit small scale fibre projects Long term non-profit view of end users suits the fibre business case, but this may be difficult to leverage on a large scale Open and non-discriminatory access to infrastructure supports effective competition 12

13. RefNo | Commercial in confidence Contact details 13 Pat Kidney Senior Manager Pat.kidney@analysysmason.com Analysys Mason Limited Suite 242, The Capel Building Mary's Abbey Dublin 7, Ireland Tel: +353 1 602 4755 Fax: +353 1 602 4777 www.analysysmason.com Registered in Ireland IR304061