presented to: alaska broadband task force

Presented to: Alaska Broadband Task Force

Open Skies Program - Next Generation by SpacenetAugust 01, 2012

© 2012 Spacenet Inc. Not for redistribution without permission. www.spacenet.com

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


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


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


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 technology5


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


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


StarBand Experience in Alaska

8

Presented to: Alaska Broadband Commission

Open Skies Program - Next Generation by SpacenetAugust 01, 2012


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


Technology Approach for 100% Broadband Coverage

11


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 Maintenance12


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)


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)


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)


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

Appendix


Starband Open Skies Alaska Promotion: In Print

Newspaper Ads, Inserts and Direct Mail

18


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

StarBand UnitsHousing Units (2010 Census) Penetration

Ambler 23 75 31%Buckland 38 98 39%Deering 14 44 32%Kiana 27 101 27%Kivalina 24 85 28%Kobuk 5 36 14%Noatak 37 114 32%Noorvik 35 153 23%Selawik 68 186 37%Shungnak 3 62 5%Total 274 954 29%

presented to: alaska broadband task force

Documents

com5starband open skies

alaska populationwireless

open skies sites

alaskaopen skies program

starband experience

alaska198 alaskan communities

managed sites1

active sites