Making Public/Private Partnerships Work for You—and Your Revenue

Stream3/26/2012

U-reka Broadband Ventures

• Boutique Consulting Firm focused on facilitating next-generation broadband deployment in rural areas

• Directly raised $36 million in ARRA Broadband Stimulus funds

• Participated in another $100 million in funded projects providing Engineering, Operations and Environmental review expertise

• www.u-rekabroadband.com

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What is the opportunity?• As consolidation happens at the Tier 1 and Tier 2 level

many of these companies lack the resources or interest to improve service in rural communities

• Cable Television companies still only remain interested in serving denser communities (Doughnut Hole)

• Cities and Counties (municipalities) are becoming increasingly frustrated at the lack of communication and commitment to their communities

• Cities and Counties are looking for options to remain competitive in the global marketplace

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What do Municipalities have to Contribute?

• Passion for their community– Local Champion– Desire to see their community remain relevant

• Ties to their community– Economic Development– Education– Healthcare– Public Safety

• Financial Resources– Bonding Authority– Other in-kind financial benefits

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What are Municipalities looking for?

• Expertise– Many rural Municipalities are not interested in

becoming the phone company, ISP or video provider• Trusted Partner– Someone who has a local reputation– Neighboring Service Provides can fill that need

• An Exit– Not necessarily interested in owning an asset for 30

years that they do not understand– Continue to be responsible to their constituents (Do

not want to end up in a financial hole)

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Role of Service Providers

• Bring Operational Expertise • Provide Backbone Services– Often leveraging existing network assets– Can speed time to market

• Sales and Marketing Expertise• Financial Expertise• Access to additional funding sources– USF – RUS

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What is a “Typical” Process?

“There is no Typical Process, Each is Different”• Municipality engages a Consultant– That “can speak the language” of both parties

• Municipality creates Momentum– Community Meetings– Meets with Existing Providers– Meets with Potential Provider Partners (often looking

to share cost of feasibility study dollars)– Secure dollars to move forward with a Feasibility

Study

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Process Continued• Feasibility Study Completed (includes):– Market Study– Anchor Institution/Shareholder meetings– Engineering Study– Operational Study– Financial Modeling– Suggestions for Moving Forward

• Sharing of Feasibility Study information with Leaders and the Community

• Municipality and Service Provider begin Negotiation of Working Relationship and Funding

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Project Success Example

• Farmers Mutual Telephone and Lac qui Parle County

• Went Through Process to Secure $9.6 million in ARRA Project Funding

• Project Video

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Intangibles of Working with Municipalities

• Very Creative-come up with new ideas to get out there and help you grow the customer base

• Economic Development Benefits-Service Provider becomes an integral part of any business retention or attraction efforts

• Long-term Partners-they are not going anywhere soon!

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Lac Qui Parle Project Statistics

Fiber Miles 374

Square Miles 339

Buildings Passed 1738

*Critical Community Facilities 12

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Main Benefits

LAC QUI PARLE COUNTY• Economic Development – Fiber-To-The-Premise (FTTP)

throughout the county

FARMERS MUTUAL TELEPHONE

• Expand territory and customer base – which reduces operational costs per customer.

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Partner Contributions

• Farmers Mutual Telephone Company was recipient of stimulus funds of $4,826,478 Loan and $4,826,478 Grant for this project

• Lac qui Parle County will contribute funds as needed to repay debt on cash flow basis

• Farmers Mutual Telephone Company will build out project and operate the business.

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For Additional Information

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John SchultzBooth 37 Exhibit Hall

651 967-7196jschultz@u-rekabroadband.com

www.u-rekabroadband.com