James Salter, President

Lessons for CommunitiesIsen – “Salter, you got anything for us?”

Salter – “No”Isen – “Good, Come share that with us”

James Salter, President

1st FTTH Build – Began in 2001Borough of Kutztown, PA (3,000 Homes)

32nd FTTH Build – 2012Google Fiber, Kansas City (More than 3,000

Homes)

Our FTTH Footprint

Up to now, I’ve only had 4 Ideas, and I’m not sure any were original?

1. The Demand for Bandwidth Will Not End

2. Fiber is the only answer to bandwidth3. If a Community believes they need

bandwidth, they should build it themselves

4. Open Access won’t work in US model

My 5th Idea….

1. US is 15% built with FTTH2. US should be 100% built with FTTH3. Electric Utilities should build, or at

worst partner, on the remaining 85%

Why Electric Utilities?1. Don’t believe Major ILEC’s nor MSO’s

will significantly ramp FTTH builds – wireless is king

2. Biggest hurdle to FTTH build is access to ROW – electric utilities own 80% of easements in US

Our FTTH Footprint

Why Electric Utilities?1. Don’t believe Major ILEC’s nor MSO’s

will significantly ramp FTTH builds – wireless is king

2. Biggest hurdle to FTTH build is access to ROW – electric utilities own 80% of easements in US

3. Second biggest hurdle to FTTH is recovering cost in lower density areas – electric utilities can significantly close that financial gap IF they ACTUALLY implement REAL SmartGrid

Utility Capital Investment Per Customer…...

$2,500

$3,140

$2,620

$10,500

$14,100 $13,470

What is total investment in Electric system?

Generation = $7,500/Customer

Transmission = $1,500/Customer

Distribution = $3,500/Customer

TOTAL INVESTMENT = $12,500 PER CUSTOMEROr $1,750,000,000,000 !!!

Total Generation Capacity in USA – 900,000 MW

Average Generation Needed in USA – 450,000 MW (50% Load Factor)

Typical Daily Residential Usage - Summer

Midnigh

t t...

8:00 A

M

10:00

AM

Noon

2:00 P

M

4:00 P

M

6:00 P

M

8:00 P

M

10:00

PM

0

1

2

3

4

5

6

7

2

33.5 3.7

4.14.5

4.85.2 5.3

5.86.2

5.7 5.75

4.7

3.73

2

Residential Usage 24 Hours

KW

Dem

and

Base Generation @ 2 cents/KWH

Intermediate Generation @ 5 cents/KWH

Peak Generation @ 10 cents/KWH

Cost of New Generation?

Coal

Nuclear

Hydro

Wind/Solar

Smart Grid**

0 2000 4000 6000 8000 1000012000

3000

4000

2500

11000

1785

Approximate New Generation Cost by Type

Cost per KW

Dollars per KW of New Generation

Why aren’t Electric Utilities with me on this?

1. They don’t have any regulatory incentive to do real SmartGrid – they get a return for a new coal plant, they don’t get a return for technologies that avoid a new coal plant - We must change politics of regulation

2. They don’t believe you need big data requirements to do SmartGrid – We must show them they are shortsighted – Ask Chattanooga

3. They don’t want to be in the retail telecom business and they don’t want to partner with anybody – We must convince them that cyber security and common infrastructure aren’t mutually exclusive