4G World – Show me the Money – 4G Implementations

1. 4G World – Show me the Money – 4G Implementations This document is confidential and is intended solely for the use and information of the client to whom it is addressed. Presented by Randall P Muench February 3, 2011 314-578-0957 ( m )

2. Show me the Money in 4G investment • The key – there is a driver for growth • Technology makes it better and the user agrees - 1B to 3.5B subscribers in 3.5 Years • Conversion from wired to wireless • Data traffic volume from mobile devices growing by more than 10X per year • Broadband video will drive 80% of mobile traffic • Just as importantly, growth figures continue to be too low! • Cisco predicts 149% worldwide mobile data traffic growth for 2010 and it comes in at 159% • Nobody (except maybe Apple) predicted they’d sell what they sold in 4Q

3. Is this a good investment? …. Or “what is the chance this is a repeat of the CLEC industry in 1998 (and the crash in 2001…) • Much of the investment is by the big competitors which lends credibility • ILECs & MSOs • New entrants like Lightsquared & Clearwire with big plans to over choice • Minimal Regulatory uncertainty • CLEC regulatory environment shifted to favoring the incumbents • Demand is leading the investment • Less instances of “build it and they will come…”

4. Who is CFN Services

5. CFN Services Value and Managed Services for Mobile Initiatives • CFN offers a unique blend of experience, proprietary network knowledge, tools and methodologies, refined and proven through the first 4G deployments in the US. • Experience: Lead technical team experienced in iDEN, GSM, CDMA, WiMax, and LTE technologies; Ethernet and TDM backhaul over fiber, copper, and microwave. • People: Our technical staff have been instrumental in all aspects of wireless network planning, design, deployment, optimization, and operations • Processes & tools: CFN Services have developed proven methodologies and best in class tools which integrate RAN design, Backhaul Design, and Site Acquisition processes in a seamless manner delivering game – changing time to market advantages. • Network Knowledge: CFN Services is unique in its proprietary backhaul planning tool called FiberSource, an integrated database of existing fiber infrastructure, cost data, and structures suitable for wireless deployment. In 2010, CFN will support 6 of the 9 largest Wireless providers (by capital spend)

6. State of the Mobile Environment Double the number of connections in 2 yrs -1B mobile broadband connections by 2012 Source: Pyramid Research

7. CFN probably looked at 100,000 towers for Carriers last year There’s an exciting eco-system underway to drive this Will the Carriers keep up with the deployment demand… 4G Services Infrastructure Devices Applications …. And they are pulling each other up the improvement curve

8. This eco-system is just an “adolescent” in the demand curve…. By adolescent, I mean… • It keeps asking for more • It’s never enough • You can and should expect some surprises! • A steady focus should get you where you want to be…

9. This eco-system is just an “adolescent” in the demand curve…. • Applications: • Not just apps, but video & recent announcements for mobile payments • Devices: • The rush to tablet plus video & business applications for tablets • Innovation in handheld devices • Apple and Microsoft getting into the Living Room • Infrastructure • Build out of Microwave & Fiber to the tower • 4G Equipment • Relentless improvement in Equipment from the top vendors • New competition with Europe & Far East experience and competency

10. Let’s bring this back to ROI considerations … Where is the business case the most profitable? • Tier 1 markets • The business case is already made • 50% of the towers or will have fiber, significant customer count, diversified revenue stream between customer types • Multiple providers rolling out service and customers are upgrading • Tier 2 / 3 markets • The business case will be met • Need some additional investment in fiber / MW infrastructure but that is coming • Small & rural markets • Difficult business case • Near the highway, near the remote city • If a small ILEC or cable company has fiber investment

11. How does a provider plan the 4G network for positive ROI? Old Design Paradigm – had less variables 1. Planned the RF 2. Initiated Site Acquisition 3. Iterated around the variables 4. Contacted the ILEC to install a T1 or 2

12. How do we invest to keep ahead of the demand curve? Old Design Paradigm – had less variables 1. Planned the RF 2. Initiated Site Acquisition 3. Iterated around the variables 4. Contacted the ILEC to install a T1 or 2 New Design Paradigm – • How do you plan to upgrade the network when a critical supply chain element…. Backhaul – • May be in place, may not be in place • And what is the effect of that uncertainty on your design process?

13. How do we invest to keep ahead of the demand curve? New Paradigm – upgrade the network when a critical supply chain element may be in place or may not be in place…. Fiber Penetration Estimates • Dense Urban Areas: 70% - 100% Penetration • Suburban Areas: 50% - 70% Penetration • Rural Areas: 0% - 50% Penetration • Widely varying availability depending on location & ILEC, MSO, Alt Access Vendor, Utility And if not: How will you get it there and how much will it cost? And how fast can you do it? If you iterate in the old paradigm, it will take even longer…because of additional variables

14. Automation - Proper Ecosystem Drives a Success- Based Approach • Fast Track Processes • Speed to market • Highly iterative • Volume - centric • Quality Assurance Processes • Design accuracy • Targeted service areas, “fill-in” • Performance - centric FiberSource ® • Search Rings • Site Visits • Alternate Site Studies • Network redesign analysis • Network Prelim. Design Assessment • Existing structures • MLA sites • Wireless Carriers • Fiber Infrastructure • On-Net facilities • Carrier-Neutral facilities • Target “anchor” site candidate list • Morphology Classification • Drive Testing • Post-processing • Model Calibration • Model Database • Network Prelim. Design Assessment • Antenna Azimuth and tilts • Cell parameter settings • Frequency Plans • Network C/I and Ecio plots • RF Design • Propagation Plots • Link budget assessments • Site acquisition target list • Site Level Tracker • Site Configurations • Leasing, Zoning • Mapping and data collateral • Testimonials • Site Justification

15. Plan the RAN and the backhaul options simultaneously • Planning the RAN and Backhaul together reduces lifecycle costs • Use Fibersource to identify the potential sites • Planning the RAN sites with a view towards fiber availability is critical • Failure to plan appropriately leads to high fiber and thus backhaul costs

16. Use Fibersource to quickly identify the backhaul options

17. Optimize the fiber hubs vs the required sites

18. Optimize the network between fiber and Microwave

19. Financial Analysis • Actual Customer completed in 2010 with CIC, a microwave partner • Key Assumptions: • Fiber sites / Hub sites • 50 mg IP MRR at $1100/ 100 mg at approx $1350 • < $2k per site NRC for fixed network • Microwave Sites • $34k - $35k microwave cost per site • $1,150/mo cost for lease and maintenance per microwave site

20. 3 Models tested – Sensitivity Analysis

21. Cumulative Cashflows Analysis

22. Sensitivity Analysis • Fiber provided by ILECs: • Traditional pricing model compared to alternative access providers • Alternate providers can’t price irrationally – they have a business case to make and a different investment model to meet • Sensitivity in the prior business case? • Remember at original rates, Backhaul Design #1 had the best NPV at $256k • If monthly recurring fixed network costs dropped by 10%: Backhaul design # 1- 105 fiber sites $256k grows to $1.6M NPV Backhaul design # 3 - 356 fiber sites - $ ($316k) grows to $ 2.3M NPV • Therefore: Each market and each design needs to have payback calculations at the tower level Regional differences and negotiated contracts have a significant impact

23. Some Opportunities and Hazards in building these scalable networks …. • 4G networks will payback BECAUSE OF CUSTOMER DEMAND with the growth over the next 5 years of mobile use and video traffic • There is still a lot of headroom in building mobile backhaul networks: • Of 250,000 towers, less than 100,000 have been built to • Many “built” towers were built for a single provider – but the average tower has > 1 provider on it. • Fiber / Microwave mix will change • Current solution will change depending on the rate of bandwidth growth/user • How much longer for Microwave? As bandwidth requirements explode, another round of investment to upgrade lower bandwidth microwave towers or convert those sites to fiber? • The 2008-09 investments will require capacity augments sooner rather than later!

24. CFN Services – Managed Backhaul Solutionsemail – randy.muench@cfnservices.com • Experience • Participation in all the major 3G and 4G planning • Unified, proactive management • Managed Service Solution History • Solution Flexibility • Customized Solutions • Hybrid solutions: Copper, Ethernet and Microwave Building the foundation of tomorrow’s networks today • Turn-Key Solutions • Planning, Design, and Implementation • Full Service management, monitoring and notifications • Owner’s Economics