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Presented to: Alaska Broadband Task Force

Presented to: Alaska Broadband Task Force. Open Skies Program - Next Generation by Spacenet. August 01, 2012. Agenda . Spacenet Overview Satellite Broadband for Rural America StarBand Open Skies Overview StarBand Presence and Experience in Alaska Open Skies Program – Next Generation

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Presented to: Alaska Broadband Task Force

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  1. Presented to: Alaska Broadband Task Force Open Skies Program - Next Generation by Spacenet August 01, 2012

  2. Agenda • Spacenet Overview • Satellite Broadband for Rural America • StarBand Open Skies Overview • StarBand Presence and Experience in Alaska • Open Skies Program – Next Generation • Next Steps and Q&A 2

  3. Our Passion • Managed Network Services Provider • Design, Implement and Manage Data, Voice and Video Networks • Tailored Managed Network Services to Meet Customer’s Precise Needs • Access, Security • Full Lifecycle Solutions • Value-Added Services • Technology-Neutral Approach • Satellite, Broadband, MPLS, DSL/Cable, 3G/4G • Serve 4 Primary Markets • Enterprise (Large, Multi-site Business Networks) • Government (Public Safety, Emergency Management Agencies) • Industrial (Oil & Gas, Utilities) • Small Office/Home Office (StarBand High-speed Internet) 3

  4. Our Network • Nationwide MPLS & Satellite Network • 130,000+ managed sites • 1.5Gbps of B/W across multiple satellites • 60,000+ Broadband circuits provisioned • On-Site Field Services 4

  5. Satellite Broadband • Ubiquitous Communications Delivers Broadband Virtually Everywhere, Irrespective of Distance • Established Technology that Can Deliver Broadband Instantaneously (No need for build-out) • Measurable Commodity (i.e.: TRUE Cost of Delivery is Exactly Known) • Scalable and Reconfigurable • New Generation Satellite can deliver 10x the speed of current technology 5

  6. StarBand Open Skies Alaska • $100M Set Aside for Satellite in Broadband Initiative Program (BIP) • Funded by American Recovery and Reinvestment Act • Administered by Rural Utility Service (RUS) of USA • Spacenet Awarded $6.2M for Alaska – handled by StarBand • Allows for ~4200 Households in Alaska • Grant Expires September 2013 6

  7. StarBand Presence in Alaska • History • StarBand was the First Company to Offer 2-way Broadband Satellite Internet Solution in 2000 • First Customer Installed in Alaska in 2001 • 3,028 Active Sites in Alaska • 198 Alaskan Communities Currently Served • Over 40 Dealers and Installers • Open Skies Accomplishments To Date • 2,074 Open Skies Sites in Alaska To Date • 141 Alaskan Communities • ~$1M Contributed to State Economy through June 30, 2012 • Installation, Commissions, Shipping, Advertising 7

  8. StarBand Experience in Alaska 8

  9. Presented to: Alaska Broadband Commission Open Skies Program - Next Generation by Spacenet August 01, 2012

  10. Technology Approach for 100% Broadband Coverage • Tiered Strategy • Terrestrial (Fiber/DSL) Coverage for ~70% of Alaska Population • Wireless - Last Mile to Reach Additional 10-20% • Satellite-Only Economic Option to Reach last 10-20% • 20K Households in Villages with Density of < 300 Households • Estimated 30K households (10%) in Areas Covered by Terrestrial, but Beyond the Last Mile Reach • Similar Model to Australian Next Generation Broadband Network Strategy • Alaska Has Significantly Higher Percentage of Isolated Population, but Similar Tiers of Cost Analysis Would Apply 10

  11. Technology Approach for 100% Broadband Coverage 11

  12. Satellite Economic Models and Considerations (ROM) • High-Throughput Satellites (HTS) Typically Provide 100Gbps Capacity • Via Multiple Spot Beams and Earth Station Gateways • Typical Spot Beam Capacity ~ 250Mbps – 1Gbps: • Approx. Number of Spot Beams for Alaska = 8-16 • Approx. Number of Gateways for Alaska = 1 – 2 • Total Capacity for Alaska= 4Gbps – 8Gbps • Support 10/3 Mbps Service to 50K Subscribers • ~$400M per HTA Satellite to Serve 500k subs = $800 Satellite Capital Cost per Subscriber • For 50k Alaska Subscribers, Est. Cost is $40M • Alaska Gateways Estimate: $10M • ~$500 CPE Cost • For 50k Alaska Subscribers, Est. Cost is $25M • TOTAL for 50k Subscribers Capital Cost Estimate: • $75M Capital Cost • $1500/Subscriber Capital Cost • New Technology Designed to Allow for Self-installation and Maintenance 12

  13. Satellite Economic Model (Cont.) • User Populations: Different Needs and Abilities to Pay (Overall Solution Can be Profitable) • Alaskan Rural Residents • Need Coverage to Bridge Digital Divide, but Cost is Significant Factor • Alaskan Tourism Industry • Remote Lodges and Destinations Need Coverage to Satisfy High- end Customers • Commercial Interests • Mining/Oil & Gas/Pipeline Customers Require High Reliability, 100% Coverage • First Responders • Significant Bandwidth Available for Critical Situations with No Restrictions on Location (13)

  14. Satellite Economic Model (Cont.) • Ownership/Division Models • State Could Purchase Partial Satellite • Partnering with Another Party Interested in CONUS Coverage • State Could Agree to Long-term Lease on Partial Satellite • State Could Purchase Entire Satellite • Distribution Options • State Could Provide Service Directly to Residents and Commercial Interests • State Could Wholesale Service to Multiple Providers (Australia Model) (14)

  15. Satellite Economic Model (cont.) • ROI for the State: • Assume a wholesale model of $15/sub/month charged to the ISP • Assume the ISP charges market rates of $40-$50/sub/month • Assume 50k subscribers • Total Revenue/Month to the State • $750k/month • ROI for a $75M investment: 8.33 years, IRR 9% • Typical life of a Satellite: 15 years (15)

  16. Conclusions • Goal of High Speed Broadband to ALL Residents in Alaska is an Absolute Paradigm Shift • Tiered Approach is Most Practical Way to Achieve Goal • Fiber to the Home in Densely populated Areas • Fiber to the City mixed with DSL/Cable/Wireless for the Last Mile • Next Gen. Satellite for Rural, Last Mile Fill-in, and Emergency Response • Next Generation Satellite Costs will Allow for 8-10x the User Experience at Lower Costs than Current Satellite Technology • Commercial Satellite Providers have not seen Alaska as economically viable and will not focus on it without the influence of the State • Spacenet, and it’s parent Gilat, are Uniquely Qualified to Provide Alaska the Experience and Technology to Realize the Next Generation Satellite Option 16

  17. Appendix

  18. Starband Open Skies Alaska Promotion: In Print Newspaper Ads, Inserts and Direct Mail 18

  19. StarBand Case Study: Northwest Arctic Borough • Centered out of Kotzebue (not eligible) • Significant Penetration: 50-60 % Considered Saturated • Keys to Success • In Region Support • Long-time Dealer has Mentored Village Specialists • Positive Word-of-Mouth • Impacts • Facilitates Small Businesses • Inventory Management, Sales • Enables Inter-village Communication • Via Facebook, email • Teacher Satisfaction 19

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