Part -1 : Comparative Study of National Broadband Initiatives - Perspectives For Discussion Only

1. Executive Summary : 6 Points

2. National Broadband Models - Preliminary Comparisons ( US 2008 , Australia ,US 1997, UK)

3. Managerial - Execution KPIs & Value Metric Governance KPIs for NBN Rollout / Model Selection

4. NBN Models –Operating Structure , Competition , Investment & Go To Market

5. Capturing Capital Efficiency & Operating Synergies : Network Sharing + Outsourcing

6. IP Bandwidth Pricing Trends : 10 – 15 % Compounded Annual Decline

7. NBN Margin Killer - Compare NBN BW Pricing with Competitions BW Pricing

8. Telecom Operators CapEx / OpEx Ratio ( Preliminary Information )

9. Australian NBN – Faulty Model Selection & Failure Execution Model with Lack of Demand – Case Discussion

10. US Recovery & Reinvestment Act 2008 – “Broadband Injection & Velocity through Demand Triggers ”

a) 350 Million USD for NBN Governance , Adaption & Demand Generation Administration

b) Generating Demand using Horizontal Regulatory Frameworks and Vertical Government Agencies

c) 6 US Govt Agencies “Triggering and Driving ” Demand and Organization Accountability

Safe Harbor :

The document is for discussion only . There is no any form of commitment from either party on any of the revenue and commercial subject matter agreements based on the slides The projections are high level estimate based on rule of

thumb estimates of the individual consultant derived from publically available information . It is strongly advised that validate the numbers by a independent professional consultant before making any form of commitment and investment

decisions .

WORK IN PROGRSS DRAFT

Executive Summary :

Single Agency & 100 % Govt Funding

100 % CapEx funded & Single agency drieb NBN rolloutwould result in to failures and result into UnexpectedCost & Time Overruns , US has been trying broadnandrollout from 1997 .. Still learning from failures andcourse correcting it as they move on

Lack of SLA & Market BW Economics

Lack of End to End SLAs Ownerships with Customer &Services Centric SLAs and Not linked with the marketbased Bandwidth economics would result intouncompetitive and unviable for National BroadbandInvestment in for taking -off

Lack of End User Demand & Adaption

Lack of end user applications demands & scenarios /demand priorities , NBN Investments would result into valueerosion with out adequately used . People may not see thebenefit of Govt Projects as competition would take off duringthe Time Lag .

“Cellular Structure” ,Demand Driven , Viability Gap Funding linked with Market Economics

Non - Successful Initiatives

State / Rural Local – OpEx Subsidy

Monthly Recurring subsidy (Viability Gap Funding ) tomarket players on Cost Per Connection (CPC) based onthe targeted rural profile using Local Players / Cable /ILEC. State & Rural Locations can Co- invite with NOFNfor Fiber Sharing & Fiber Rollout Tenders

SLA with Marked Linked BW Pricing

End to End SLAs with Fiber and IP Network SharingAgreements at the Access and Point of Interconnect withBW Capacity based procurement ( $ per GBPS ) marketlinked pricing would ensure the program investmentviability for longer term

Demand Driven Broadband Adoptions

Identify , Scan , Call for Targeted Broadband Opportunityprograms in Healthcare , Education , State GovernmentInitiatives which can be qualified for Funding & OpExSubsidizing for faster adoption of the Broadband

For Discussion Only

1 2 3

1 2 3

Case studies & references in last slides

Managerial - Execution KPIs & Value Metric Governance KPIs for NBN Rollout / Model Selection

Managerial & Execution KPI

Rollout KPI Adaption KPI

Rollout Velocity(PoP/ KM / Week )

CAPEX per Connection CCPC

Cost Per POP

BW Speed at 1:1

BW Scalability Factor at POP

OPEX Per Connection OPC

Subscriber Activations

Cost Per Mbps

Number of G - Subscribers

Average Subscriber Usage /Week(Mbps )

Subscriber Usage Duration /Week

Subscriber Video Traffic /Week

Subscriber Data Traffic /Week

Number of Private Subscribers

Average P Subscriber Usage /Week

Subscriber Activation Lag Duration

KPI – 2nd Order Ratios

Roll Out Velocity to CPC Ratio (CPC – Cost Per Connection)

Rollout Velocity to G -Subscribers Activation Rate

Rollout Velocity to P-Subscribers Activation Rate

Rollout Velocity to Cost Per Mbps ( BW Economics)

User Traffic Growth % at G- Subscriber

User Traffic Growth % at P- Subscriber

# of Services Consumed G- Subscriber

# of Services Consumed at P-Subscriber

Value Metrics & Governance KPI

Benchmark or compare Rollout Costs / Efficiency with AirTel, Tata ,Cable operators and Local fiber providers KPIs

G –Subscribers : Government User Subscribers P- Subscriber : Private User Subscribers

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 4

US Economic Recovery Act (2008) Rural Broadband Program ,

Australia NBN ( 90 Billion USD )

National Telecom 1997 –Evaluation of US State Broadband

Networks

BDUK 2015

Funding Model

Recurring Subsidy Viability Gap Funding

Grants & Low Interest Loan Programs

Fully Funded CPAEX and OA&M Investment

Design Build Finance Operate / Build Own

Operate

Procumbent & Operating

Model

Local ( Cable / National ILEC) Operators to be

Selected on open biding for Last Mile / Fiber Connect

National Operators to be Enrolled and onboarding to Sell NBN and Integrated as

part of the NBN AU

Telecom Operators to be selected for SBN Delivery for

State for Rate Card Based System

Telecom Operators Competitive Bidding of PPP

Concession Agreement

Zero Risk for the 100 % Outcome Based

Payment + Market Linked Pricing

Very High Risk . Very High Demand Risk

Minimal RiskZero Demand Risk

Moderate+ Demand Risk

Investment Risks

Government

NBN Models – US 2008 , Australia , US 1997 (SBN) , UK BD2015

Large Scale End User Adaption

Immediate and Intense BW Demand due to Services

Adaption

Non Existent or Very Slow .. Non Takers . Project

Completion Lags drives new Players

Immediate and Predictable Demand / Rate Card

Slow - Unpredictable Market Driven

RolloutVelocity

( POP /KM/Week)

Faster Slow - Very Slow Moderate Moderate

For Discussion Only

Design Build Finance Operate / Build Own

Operate

Compare – Contrast : Australian Vs US NBN 2008 Model

Demand Driven Rollout & Cellular Execution Structure based State Local /Community

Subscription Subsidy (Cost Per Connection

Viability Gap Funding )

Demand Driven Broadband Opportunity Funding based

Single Monolithic Agency Executing Massive Scale

Project

Fully Funded (45 Bn USD ) Massive Scale Project

Carries huge risks

Lack of compelling end user demand or services priority

for BW Demand

Integrate Broadband Rollout Cycle with end use Adoption cycle for better Investment recovery and meaningful Impact

Australian NBN : Supply Driven CapEx Funded By Single Agency

US NBN 2008 : Demand Driven + Subsidy / Grants based + Large Number “Local” Operators

For Discussion Only

1. > 60 % Cost Overruns2. >40 % Time Overruns3. Low Adoption < 20 %4. Lack of Predicable Demand 5. Unviable Cost / Mbps

1. Highly Demand Driven2. Faster Adaption3. Viable Cost / Mbps 4. Low Time overruns 5. Low Time overruns

2 Case References 12 Case Studies8 Case Studies

5 Case References1 Case References2 Case References 1 Case References

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 6

Service Competition

Model

SingleProvider

Model

NetworkUtility Model

Network Competition

Model

Access, Servicesand Content

Deconstructing National Broadband Rollout Models – by Network Layers Vs Operating Model Vs Competition

US Economic Recovery Act (2008) Rural Broadband

Program

Australia NBN ( 90 Billion USD )

National Telecom (Broadband) Act 1997 – State

Broadband Networks

BDUK 2015

For Discussion Only

Market Driven ,Competition & Local Job Creating

Sustainable model driven by Demand and Local Priorities .

Zero Investment Risk

Not linked with Market or No Competition

No Linkage to Services Priorities and High Risk

Project

Market Driven ,Competition & Local Job Creating

Sustainable model driven by Demand . Most Suitable for

States ..

Fixed Contracted Services Local Job Creating

Sustainable model driven by Demand . Most Suitable for

States ..

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 7

Capturing Capital Efficiency & Operating Savings : Network Sharing + Outsourcing

Need to construct right India NBN Model keeping Rollout Velocity & Value Metrics

For Discussion Only

National Telecom Operators are highly integrated units of Micro / Small Local Operators Entities

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 8

Telecom Operators CapEx / OpEx Ratio ( Preliminary Information )

Typically Telecom CapEx to OpEx would be between 20 – 30 % to 80 % - 70 % in 8 Yr Operating Cycle

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 9

IP Bandwidth Pricing Trends : 10 % – 15 % Compounded Annul Decline Rate For Discussion Only

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 10

NBN Margin Killer - Compare NBN BW Pricing with Competitions BW Pricing

BW Prices falling 10-15 % Year to year ..However OpEx Increasing 10 % year results into significant margin erosion to operators /NBN

For Discussion Only

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 11

Australian NBN – Faulty Model Selection and Failure Execution Model For Discussion Only

Single Monolithic Agency Executing Massive Scale

Project

Fully Funded (48000 Cr) Massive Scale Project

Carries huge risks

Lack of compelling end user demand or services priority

for BW Demand

1. > 60 % Cost Overruns2. >40 % Time Overruns3. Low Adoption < 20 %4. Lack of Predicable Demand 5. Unviable Cost / Mbps

“This model is unsustainable in the long term and not in the

interests of the consumers who ultimately fund the cost of the

services under any model, and typically face higher costs

where competition is reduced”

http://www.communications.gov.au/__data/assets/pdf_file/0020/243902/Telecommunications_Regulatory_and_Structural_Reform_Paper_-_11_December_....pdf

http://www.pc.gov.au/__data/assets/pdf_file/0003/137280/infrastructure-volume1.pdf

“There are many examples of inadequate project selection that have

led to costly outcomes for users and taxpayers. These include

electricity networks and desalination plants in some states. An

Australian Government example is the decision to proceed with the

National Broadband Network without doing a thorough

analysis of its costs and benefits.”

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 12

Telecom Operating Model : Roles / Structure

The Rise and Fall of Australia’s $44 Billion Broadband Project Why Australia decided to abort an ambitious fiber-to-the-home plan For Discussion Only

Australian NBN Issues & Challenges : Case References For Discussion Only

NBN Australia Project Viability Failures For Discussion Only

US Recovery & Reinvestment Act 2008 – “Broadband Injection & Insertions through Demand Generation”

Demand Driven Rollout Cellular Structure based State / Local / Community

Subscription Subsidy (Cost Per Connection

Viability Gap Funding )

End User Demand Driven Broadband Opportunity Funding

1. Highly Demand Driven2. Faster Adaption3. Viable Cost / Mbps 4. Low Time overruns 5. Low Time overruns

For Discussion Only

Subsidizing Subscription Fees : Principle Success Factor for Rural Broadband Penetration

The program, known as Connect America, is thelargest portion of the $8 billion Universal ServiceFund, which pays for a variety of efforts toprovide telecommunications links to schools,low-income families and others.

1

In April, the F.C.C. approved a second phase ofoverhaul for the plan that would expand themoney available for rural broadband. Consumerspay into the fund through fees tacked onto theirmonthly home telephone and cellular telephonebills.

2

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 18

Rural Broadband Initiative and Connect America: 350 Million USD for Immediate Adaption Governance & Demand Generation

For Discussion Only

Unlike Australian NBN , US Concurrently triggeringdemand for BW using various tracks linking with UserAdaption / High Impact Projects with BroadbandConsumption Opportunities

Six US Govt agencies continuously “trigger “ or drivedemand for broadband and BW consumption usingvarious tracks and funding programs and invitecompetitive bidding from Cable / Local / ILECs forSubscription Subsidy / Grants

FCC in conjunction with various Regulatory Authoritieshave created Broadband Adaption Regulation

A 350 Million USD Broadband Governance Programcreated with Zip Code Level Governance Intelligence withlinking Local issues and priorities for BW Delivery andDeployment

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 19

Broadband Grants Program Website for Broadband Opportunities Funding Program 1/2 For Discussion Only

6 Different US Agencies Triggering & Injecting Demand Broadband For Discussion Only

For Discussion Only

Demand Driven NBN Broadband Rollout : 7.5 Billion USD Fiber to School Program For Discussion Only

Rollouts 100 % aligned with “Rural Services Priorities” – Lack of Clear Customer Demand breeds Zero Accountability

Lessons Learned

a) Rural Services priorities drives the bandwidth demand and fulfillment

b) Lack of having a definite Customer Need / Local Need Broadband programs were accountability elusive in implementation and operations

c) Clear Accountability for performance is driven from definite Customer / Local issues .. Not reverse

Case References for Case Discussions

https://apps.fcc.gov/edocs_public/attachmatch/DOC-291012A1.pdfhttp://www.broadbandforamerica.com/category/topic/rural-broadbandhttp://www.ntia.doc.gov/blog/2013/ntia-explores-broadband-availability-new-report-serieshttp://en.wikipedia.org/wiki/Broadband_mapping_in_the_United_States

References

Cisco Confidential© 2010 Cisco and/or its affiliates. All rights reserved. 26

Service Competition

Model

SingleProvider

Model

NetworkUtility Model

Network Competition

Model

High-Level Description : OpCo provides equal access non-discriminatory wholesale broadband services to RSPs

OpCo builds and operates active network

Leases passive infrastructure from utility or orchestrated PPP

OpCo (single entity) provides retail broadband access and services/content

OpCo builds and operates both active and passive network

Usually highly regulated to ensure that the OpCo delivers the services vision

No competition at customer level

OpCo provides equal access non-discriminatory wholesale broadband services to RSPs

OpCo builds and operates both active and passive network layers

Retail service providers build their own content/services and compete for customers

Government, City or PPP deploys and manages the passive infrastructure

Multiple OpCo’s are granted equal access to this infrastructure

OpCo’s all deploy separate access networks and compete for customers

Access, Servicesand Content

Active Network (Backboneand Access)

Passive Network (Ducts, Dark Fiber)

OpCo

Utility or Orchestrated PPP

RSP RSP RSP

OpCo(Single Entity)

OpCo

Utility or PPP

Deconstructing National Broadband Rollout Models – by Network Layers Vs Operating Model Vs Competition

RSP RSP RSP

OpCoOpCo OpCo

US Economic Recovery Act (2008) Rural Broadband

Program

Australia NBN ( 90 Billion USD )

National Telecom (Broadband) Act 1997 – State

Broadband Networks

BDUK 2015

For Discussion Only