Maximizing Municipal Partnerships for Rural Broadband Success

1. Making Public/Private Partnerships Work for You—and Your Revenue Stream3/26/2012

2. U-reka Broadband Ventures • Boutique Consulting Firm focused on facilitating next-generation broadband deployment in rural areas • Directly raised $36 million in ARRA Broadband Stimulus funds • Participated in another $100 million in funded projects providing Engineering, Operations and Environmental review expertise • www.u-rekabroadband.com

3. What is the opportunity? • As consolidation happens at the Tier 1 and Tier 2 level many of these companies lack the resources or interest to improve service in rural communities • Cable Television companies still only remain interested in serving denser communities (Doughnut Hole) • Cities and Counties (municipalities) are becoming increasingly frustrated at the lack of communication and commitment to their communities • Cities and Counties are looking for options to remain competitive in the global marketplace

4. What do Municipalities have to Contribute? • Passion for their community • Local Champion • Desire to see their community remain relevant • Ties to their community • Economic Development • Education • Healthcare • Public Safety • Financial Resources • Bonding Authority • Other in-kind financial benefits

5. What are Municipalities looking for? • Expertise • Many rural Municipalities are not interested in becoming the phone company, ISP or video provider • Trusted Partner • Someone who has a local reputation • Neighboring Service Provides can fill that need • An Exit • Not necessarily interested in owning an asset for 30 years that they do not understand • Continue to be responsible to their constituents (Do not want to end up in a financial hole)

6. Role of Service Providers • Bring Operational Expertise • Provide Backbone Services • Often leveraging existing network assets • Can speed time to market • Sales and Marketing Expertise • Financial Expertise • Access to additional funding sources • USF • RUS

7. What is a “Typical” Process? “There is no Typical Process, Each is Different” • Municipality engages a Consultant • That “can speak the language” of both parties • Municipality creates Momentum • Community Meetings • Meets with Existing Providers • Meets with Potential Provider Partners (often looking to share cost of feasibility study dollars) • Secure dollars to move forward with a Feasibility Study

8. Process Continued • Feasibility Study Completed (includes): • Market Study • Anchor Institution/Shareholder meetings • Engineering Study • Operational Study • Financial Modeling • Suggestions for Moving Forward • Sharing of Feasibility Study information with Leaders and the Community • Municipality and Service Provider begin Negotiation of Working Relationship and Funding

9. Project Success Example • Farmers Mutual Telephone and Lac qui Parle County • Went Through Process to Secure $9.6 million in ARRA Project Funding • Project Video

10. Intangibles of Working with Municipalities • Very Creative-come up with new ideas to get out there and help you grow the customer base • Economic Development Benefits-Service Provider becomes an integral part of any business retention or attraction efforts • Long-term Partners-they are not going anywhere soon!

11. Lac Qui Parle Project Statistics

12. Main Benefits LAC QUI PARLE COUNTY FARMERS MUTUAL TELEPHONE Expand territory and customer base – which reduces operational costs per customer. • Economic Development – Fiber-To-The-Premise (FTTP) throughout the county

13. Partner Contributions • Farmers Mutual Telephone Company was recipient of stimulus funds of $4,826,478 Loan and $4,826,478 Grant for this project • Lac qui Parle County will contribute funds as needed to repay debt on cash flow basis • Farmers Mutual Telephone Company will build out project and operate the business.

14. For Additional Information John Schultz Booth 37 Exhibit Hall 651 967-7196 jschultz@u-rekabroadband.com www.u-rekabroadband.com