May 30, 2014 Roanoke Valley Broadband Authority Phase II Report – DRAFT Business Plan © Copyright 2014. This PowerPoint is incomplete without the accompanying.

May 30, 2014

Blue Ridge Advisory Services Group

B R A S G

Roanoke Valley Broadband Authority

Phase II Report – DRAFT Business Plan

© Copyright 2014. This PowerPoint is incomplete without the accompanying presentation and management discussion. It may not be copied or stored without permission of the

Roanoke Valley Broadband Authority

© All Rights Reserved 2014


B R A S G

2

Acknowledgement

2

This business plan was developed by Blue Ridge Advisory Services Group, Inc. The plan

was developed under the guidance and support of the Roanoke Valley-Alleghany Regional

Commission. Specific recognition is conveyed to Mr. Matt Miller, Director of Information

Services.

The business plan leveraged and built upon the work previously prepared for the

Roanoke Valley Broadband Authority by other consulting firms.© Copyright 2014



B R A S G

3

The Plan

Fewer words; more action!



B R A S G

4

Revisit Strategy

4

Weaknesses• Capital Constraints• Needs of Major Users

being served• Unserved Markets• Inexperience

Threats• Incumbents?• Community

Expectations• Market Changes• Emerging Technology

Opportunities• Growing Markets• Additional Stimuli• Receptive Markets• Collaboration w/ other

Regional Initiatives

Strengths• Shared Understanding• Existing Assets • Capabilities• Massive ROW• Demographics• Market Acceptance



B R A S G

5

Revisit Strategy



B R A S G Revisit Strategy

6

products

/services

Return

Cost and Risk

Switched Services

Rights of Wayand Facilities

Dark Fiber

Point to Point

Risk/Return Profileof Telecom industryRisk/Return Profile

of RVBA entering Telecom industry

Hosted Applications

Lit Fiber

InfrastructureBusiness



B R A S G

7

Addressable Market

Total retail telecommunications market for the Authority is about $600 million annually

Our competitive space, the addressable market is about $100 Million

Of that, the high potential market is about $8 million

Year



B R A S G

8

Vertical Markets

The RVBA is an unknown and unproved entity

To the telecommunications community we are similar to vaporware

To the community of potential customers we present great risk

We must establish our credibility as a carrier-class operator

We recommend focusing on three vertical markets -- for starters:1. Industrial and business parks2. Important collocation centers3. Schools (opportunistically)



B R A S G

9

Approach

Identified 94 priority sites 16 business parks 6 Important collocation areas (1 site coincident with bus park) 73 schools

Identify a single business need – now

Start network design at the nearest carrier collocation point to access the known demand

Build the network to reach the business parks and collocation centers

Opportunistically, pass schools where practical

Utilize the existing facilities at Salem Electric Department for our principal Network POP



B R A S G Segment 1

8 Miles

Collocation• East Park – MBC / Citizens

• Business Parks East Park Jack Smith Industrial Park Valley Gateway Bus Park Roanoke Center -Ind./Tech. Statesman Industrial Park

• Schools Bonsack Lucy Addison Roanoke City Schools Admin

building

10



B R A S G Segment 2

11

16 Miles

Collocation• N/A

• Business Parks Vista Corp Park Hollins University Valley Point Bus Park North County Bus Center

• Schools Read Mountain Cloverdale Burlington Northside High Northside Middle Round Hill Lincoln Terrace



B R A S G Segment 3

12

13.5 Miles

Collocation• AEP Telecom• COX / MBC• Interconnect with Salem

Electric Fiber

• Business Parks

• Roanoke City Center

• V.A. Medical Center

• Schools• Hurt Park• East Salem• Glen Cove



B R A S G Segment 4

13

6.5 Miles

Collocation• Salem Electric Fiber• Salem Data Center

• Business Parks Valley Tech Park Roanoke County Center for

Research & Technology

• Schools N/A



B R A S G Segment 5

14

11 Miles

Collocation• Blue Ridge TV

• Business Parks

• Tanglewood Executive Park

• Carilion Riverside Medical Research

• Lewis Gale Hospital

• Schools Oak Grove Fishburn Park Virginia Western

Community College



B R A S G Segment 6

15

5.6 Miles

Collocation• Blue Ridge TV

• Business Parks

• Advance Auto Data Center

• Vinton Business Center

• Schools Fallon Park W.E. Cundiff Virginia Western

Community College



B R A S G

16

Network Plan



B R A S G

17

Capital Requirements

17

Initial Network Plan is 61 miles, expanding to 90 miles by year 3

Capital requirements will be approximately $7.2 million

Additional $1 million will be required to supplement negative cash flow over the first six years of operations

We will explore fiber swaps and fiber leases where it is more cost effective than building

The Authority should plan for an initial contribution of $ 8.2 million over the first six years

The CAPEX estimate will be refined after design and permitting



B R A S G EBITDA

18Project Attractiveness: IRR = 4%



B R A S G Capital Requirements

19



B R A S G Model for Operation

Operate the Broadband Authority as an independent entity, hosted by the Water Authority Similar skill-sets RVBA will benefit greatly by association Negotiate a shared-services agreement

Opportunistically deploy telecom conduit with wet utilities

Contract out Network Operations

Host the Broadband Authority POP in Salem Electric’s data center

Negotiate a fiber lease with Salem Electric

20



B R A S G Important Activities

Engage legal counsel to provide support for regulatory issues – do we need certification?

Begin the process of Engineering and Permitting the network

Develop RFP for furnish and installation of network

Hire the General Manager

Begin to build a brand identity

Execute necessary pole attachment and ROW agreements

Explore fiber lease and fiber swap opportunities to avoid overbuilding

21



B R A S G Project Time Lines

22

May 30, 2014 Roanoke Valley Broadband Authority Phase II Report – DRAFT Business Plan © Copyright 2014. This PowerPoint is incomplete without the accompanying.

Documents

schools u

u additional

years u

collocation centers

vaporware u

practical u

approach u

network plan slide