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
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
B R A S G
3
The Plan
Fewer words; more action!
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
B R A S G
5
Revisit Strategy
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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)
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
B R A S G
16
Network Plan
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
B R A S G EBITDA
18Project Attractiveness: IRR = 4%
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
B R A S G Capital Requirements
19
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
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
© All Rights Reserved 2014
Blue Ridge Advisory Services Group
B R A S G Project Time Lines
22