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 ID: 650470
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May 30, 2014
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 AuthoritySlide2
2Acknowledgement
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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 2014Slide3
3The Plan
Fewer words; more action!Slide4
4
Revisit Strategy4
Weaknesses
Capital Constraints
Needs of Major Users being servedUnserved MarketsInexperience
Threats
Incumbents?
Community Expectations
Market ChangesEmerging Technology
Opportunities
Growing Markets
Additional Stimuli
Receptive Markets
Collaboration w/ other
Regional Initiatives
Strengths
Shared Understanding
Existing Assets
Capabilities
Massive ROW
Demographics
Market AcceptanceSlide5
5
Revisit StrategySlide6
Revisit Strategy
6
products/services
Return
Cost and Risk
Switched Services
Rights of Way
and Facilities
Dark Fiber
Point to Point
Risk/Return Profile
of Telecom industry
Risk/Return Profile
of RVBA entering
Telecom industry
Hosted Applications
Lit Fiber
Infrastructure
BusinessSlide7
Addressable MarketTotal retail telecommunications market for the Authority is about $600 million annually
Our competitive space, the addressable market is about $100 MillionOf that, the high potential market is about $8 million7
YearSlide8
8Vertical Markets
The RVBA is an unknown and unproved entityTo the telecommunications community we are similar to vaporwareTo 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:Industrial and business parks
Important collocation centersSchools (opportunistically)Slide9
9Approach
Identified 94 priority sites16 business parks6 Important collocation areas (1 site coincident with bus park)73 schools
Identify a single business need – nowStart network design at the nearest carrier collocation point to access the known demandBuild the network to reach the business parks and collocation centers
Opportunistically, pass schools where practicalUtilize the existing facilities at Salem Electric Department for our principal Network POPSlide10
Segment 18 Miles
CollocationEast Park – MBC / CitizensBusiness ParksEast ParkJack Smith Industrial Park
Valley Gateway Bus ParkRoanoke Center -Ind./Tech.Statesman Industrial ParkSchoolsBonsack
Lucy AddisonRoanoke City Schools Admin building
10Slide11
Segment 211
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 TerraceSlide12
Segment 312
13.5 Miles
Collocation
AEP Telecom
COX / MBCInterconnect with Salem Electric Fiber
Business Parks
Roanoke City Center
V.A.
Medi
cal Center
Schools
Hurt Park
East Salem
Glen CoveSlide13
Segment 413
6.5 Miles
Collocation
Salem Electric
Fiber
Salem Data Center
Business Parks
Valley Tech Park
Roanoke County Center for Research & Technology
Schools
N/ASlide14
Segment 514
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 CollegeSlide15
Segment 615
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 CollegeSlide16
16Network PlanSlide17
17Capital 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 operationsWe 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 yearsThe CAPEX estimate will be refined after design and permittingSlide18
EBITDA18
Project Attractiveness: IRR = 4%Slide19
Capital Requirements19Slide20
Model for OperationOperate the Broadband Authority as an independent entity, hosted by the Water Authority
Similar skill-setsRVBA will benefit greatly by associationNegotiate a shared-services agreementOpportunistically deploy telecom conduit with wet utilitiesContract out Network Operations Host the Broadband Authority POP in Salem Electric’s data center Negotiate a fiber lease with Salem Electric
20Slide21
Important ActivitiesEngage legal counsel to provide support for regulatory issues – do we need certification?
Begin the process of Engineering and Permitting the networkDevelop RFP for furnish and installation of networkHire the General ManagerBegin to build a brand identityExecute necessary pole attachment and ROW agreementsExplore fiber lease and fiber swap opportunities to avoid overbuilding
21Slide22
Project Time Lines22