Opportunities in the Rural Wireless Sector

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1 Indiana Technology and Broadband Association Annual Convention June 2-4, 2015 French Lick, IN Opportunities in the Rural Wireless Sector Daryl Atley Zakov

2 Agenda Introductions and Background Rural Partnerships (Big Four) Wireless Broadband Offerings to Meet Industry Needs (Mobile, Fixed, M2M, etc ) 600 MHz Spectrum and the Broadcast Incentive Auction MVNOs WiFi Calling and Google Fi

3 Bennet & Bennet, PLLC Background: Bennet & Bennet, PLLC is a full service communications and technology law firm assisting a diverse list of clients on both commercial and regulatory matters, including representation before the Federal Communications Commission, state public utility commissions, Congress and the federal courts. Bennet & Bennet provides counsel to facilities-based wireless and wireline carriers, broadcasters, MVNOs, MVNEs, equipment manufacturers, cloud-networking and SaaS providers, M2M/IOTs operators, public and private universities, educational institutions and government entities of all sizes. Presenter: Daryl Atley Zakov

4 Rural Partnerships (with the Big Four Nationwide Carriers)

5 Partnerships with AT&T & Verizon AT&T and Verizon (Twin Bells) have spectrum throughout the U.S. Twin Bells Rarely Rely on Partner Roaming Coverage Major Exceptions: Where they historically lack 850 MHz Licenses AT&T covers 99% of Americans with 3G or better. Verizon covers 96% of Americans with 3G or better. Twin Bells have deployed LTE to nearly entire footprint (including Indiana) and VoLTE is next. Verizon LRA Program: The LTE In Rural America (LRA) program just reached five years in operation. Very standardized. Introduced in May 2010; Covers about 2.6 million people in areas totaling more than 100,000 square miles; 21 rural wireless carriers participate in the program. Of those, 19 have launched LTE networks. Verizon provides technical support and resources to help a rural wireless company build out its own 4G LTE network. AT&T Strategic Agreements Come in variety of sizes and shapes. Much more bespoke than Verizon LRA Program

6 Partnerships with Sprint & T-Mobile and T-Mobile: Marketplace late starters launched using PCS spectrum in the 1990s. Use AWS, Lower 700 MHz, SMR 800 MHz and BRS now; rely much more heavily on roaming partner coverage in Rural America, often AT&T and Verizon. Partnering with Access to purchase. Demonstrating lower costs vs. their own without assistance. and T-Mobile typically requires: and T-Mobile spectrum-of-choice via lease or and T-Mobile building it on Rural Roaming Preferred Provider Program: 16 of 30 rural LTE roaming partners have launched LTE service.

7 Wireless Broadband Offerings to Meet Industry Needs

8 Wireless Broadband Offerings to Meet Industry Needs Fixed Wireless Service: Fixed wireless data services can be deployed to extremely remote areas that cannot be economically served via fiber optic-based products. This can dramatically improve the quality of service that the most remote rural customers can currently access satellite and dial-up. Mobile Wireless Service: In addition to serving retail-based end users, mobile wireless service is critical to meeting industrial needs. Businesses can leverage machine-to-machine (M2M) and other data-only applications in agriculture, energy, and fleet management. Small Cells: A cost-effective solution for targeted rural coverage. Put coverage in areas where a big, costly footprint from macro sites is not necessary. Put coverage where people (and sometimes animals) actually go! Embraces M2M deployment.

9 Mobile Wireless Service and Agricultural Applications As of 2014, there were 58,200 farm operations in Indiana. These operations cover 14,700,000 acres. Center Pivot Irrigation (CPI) systems rely on wireless networks for improved efficiency. Wireless access allows systems to track progress, shut down or start pumps, link with weather and other mobile apps to help farmers make decisions, and send alert messages regarding power failures or mobility issues. Livestock operations also rely heavily on wireless access. Connectivity between barns, trucks, mills, and plants is crucial. M2M connectivity is necessary to remotely monitor temperature and humidity, water pressure and power, and feed/water levels.

10 Small Cell Case Study: Aeris/Leica Leica Geosystems is a measurement and positioning company. They needed a secure and reliable farming solution for auto-steering and precision agriculture in even the most remote parts of the United States. Aeris provides 24/7 access to large-carrier footprint using out-of-the-box equipment/devices. Low-cost; high productivity.

11 Small Cell Case Study: Aeris/Leica Incorporates M2M services using localized broadband in rural, agricultural markets. Precision GPS for tractors planting, irrigation and harvesting. Customized agri-business M2M solutions.

12 Mobile Wireless Service and the Energy Industry Indiana has seen significant growth in the wind energy industry since By 2014, there were 1,031 wind turbines in the state. In its latest projection of U.S. wind energy needs, the U.S. Department of Energy says only five other states are in line to boost their wind power sectors as much as Indiana. Wind farms use M2M for remote monitoring, equipment repair and service, and emergency shut-downs. M2M capabilities also allow turbines to be redirected to best capture available wind energy. Wireless technology is necessary to maintain wind farm connectivity, which benefits all Americans not just those living in rural markets.

13 600 MHz Spectrum and the Broadcast Incentive Auction

14 600 MHz Spectrum and the Broadcast Incentive Auction Important in Rural Areas: Low-band (below 1 GHz) spectrum is particularly valuable because it increases the reach of mobile networks over long distances at far less cost (fewer towers) than spectrum above 1 GHz. AT&T and Verizon control over 74% of low band spectrum in US (700 MHz/Cellular 850 MHz). Auction Planned for Early 2016: Considered the last chance to secure low-band spectrum at auction. Three Inter-Related Parts: Reverse Auction: Broadcasters will offer to voluntarily relinquish some or all of their spectrum usage rights in exchange for payment; Repacking: The FCC will reorganize or repack the broadcast TV spectrum so that the television stations that remain on the air post- Incentive Auction occupy a smaller portion of the UHF band; Forward Auction: The FCC will license the reclaimed 600 MHz spectrum to wireless carriers and other interested parties.

15 600 MHz Band Plan The repurposed 600 MHz spectrum will be licensed in 5x5 MHz paired uplink and downlink blocks by Partial Economic Area (PEA). Will use Down from 51 plan - uplink is above the downlink. Uplink band will begin at Channel 51 (698 MHz), followed by an 11 MHz duplex gap, and the downlink band. The specific band plan used will depend on the amount of broadcast spectrum cleared in the reverse auction.

16 PEAs Explained PEAs are a new geographic license area created specifically for the 600 MHz auction. Subdivision of Economic Areas (EA) based on Cellular Market Area (CMA) boundaries. FCC initially proposed using 176 EAs. FCC wanted: Sufficient geographic granularity; A manageable number of licenses; and License areas to nest within larger areas like Major Economic Areas (52) and Regional Economic Areas (12). Large carriers favored using large (even nationwide) licenses, small carriers favored using small license sizes like the 734 CMAs. Rural carrier advocates later submitted a revised, joint PEA proposal (with 416 areas) that was adopted.

17 PEA Breakdown Obviously, PEA lines do not fit nicely within State Lines. Some fringe PEAs will include counties in neighboring States.

18 FCC PEA # County Name 3 Porter 3 Lake 3 La Porte FCC PEA # County Name 31 Marion 31 Boone 31 Hamilton 31 Hendricks 31 Johnson 31 Madison 31 Delaware FCC PEA # County Name 51 Scott 51 Jefferson 51 Floyd 51 Clark FCC PEA # County Name 127 Vanderburgh 127 Daviess 127 Gibson 127 Martin 127 Perry 127 Pike 127 Spencer 127 Dubois 127 Warrick 127 Posey 127 Knox PEA Breakdown FCC PEA # County Name 58 Fountain 58 Greene 58 Howard 58 Lawrence 58 White 58 Clay 58 Vigo 58 Warren 58 Parke 58 Tipton 58 Carroll 58 Putnam 58 Vermillion 58 Sullivan 58 Clinton 58 Benton 58 Owen 58 Cass 58 Miami 58 Monroe 58 Montgomery 58 Morgan 58 Orange 58 Tippecanoe FCC PEA # County Name 64 Elkhart 64 Starke 64 St. Joseph 64 Pulaski 64 Marshall 64 Lagrange 64 Fulton 64 Kosciusko FCC PEA # County Name 83 Steuben 83 De Kalb 83 Blackford 83 Noble 83 Jay 83 Grant 83 Whitley 83 Wabash 83 Wells 83 Huntington 83 Adams 83 Allen FCC PEA # County Name 118 Wayne 118 Randolph 118 Bartholomew 118 Brown 118 Decatur 118 Fayette 118 Hancock 118 Henry 118 Jennings 118 Rush 118 Union 118 Shelby 118 Jackson FCC PEA # County Name 162 Washington 162 Harrison 162 Crawford 321 Ripley 321 Ohio 321 Dearborn 321 Franklin 321 Switzerland 353 Jasper 353 Newton

19 PEAs Across State Lines 51 Oldham KY 51 Shelby KY 51 Jefferson KY 51 Henry KY 51 Carroll KY 51 Bullitt KY 51 Trimble KY 58 Clark IL 64 St. Joseph MI 64 Cass MI 64 Berrien MI 162 Breckinridge KY 162 Spencer KY 162 Meade KY 162 Larue KY 162 Nelson KY 162 Hardin KY 162 Grayson KY 162 Washington KY 162 Marion KY 353 Iroquois IL

20 Post-Auction Transition and Buildout License Period: Requirements Initial 12-year term (to accommodate 39-month broadcast transition). Subsequent 10-year renewal terms. Licensed under Part 27 of FCC s rules (like the 700 MHz band). Transition: 600 MHz licensees may commence operations at varying times during and after the 39-month transition period, depending on when spectrum becomes available and licensees deployment plans. Build Out Requirements: Interim: Must cover 40% of PEA population within 6 years of license grant (not from the date the 600 MHz band is cleared). Final: Must cover 75% of PEA population by end of 12-year term. Failure to meet the interim requirement will reduce the license term and final requirement by two years (10, rather than 12). Failure to meet the final requirement will result in automatic license termination.

21 Incentive Auction Parting Thoughts If your organization is considering participation it is important that you discuss your options with counsel now. The Incentive Auction will be the most complicated auction the Commission has ever held and it is rapidly approaching. Items for additional research and consideration include: Anticipating likely Incentive Auction participants; Joint bidding arrangements; Taking advantage of reserve spectrum; Bidding credit eligibility Timing: Commission expected to adopt Auction Procedures PN in late summer/early fall. We anticipate that applications will be accepted from prospective bidders in the fall. Auction is currently planned for early 2016.

22 MVNO Marketplace

23 MVNO Marketplace MVNOs operate on the terrestrial cellular networks of the Big 4 Nationwide Carriers. Segment led by America Movil s Tracfone, which is the largest MVNO by subscriber count, but there are literally hundreds of other MVNO carriers in the US. MVNOs provide for targeted penetration into underdeveloped demographic subscriber bases, or, wireless retail reach for brand affinity. What does this mean? Rural carriers can provide mobile services as part of a Triple Play or Quadruple Play package. Pricing is VERY competitive and does not include the deep capital costs, especially if many or all of the Big 4 already cover your marketplace. Creates stickiness and loyalty. But Rural Carriers must still win out on the other offerings (e.g., Customer Care, Broadband speeds, etc ).

24 MVNOs: Consumer Satisfaction Recently released American Customer Satisfaction Index shows America Movil had higher customer satisfaction rating than all of the Big 4 MNOs. Category for all Others (including US Cellular, Cspire, ntelos and other rural carriers) scored 79 out of 100 (up from 78 in 2014). Verizon dropped from 75 in 2014 to 71. AT&T and T-Mobile tied at 70, both up marginally from Sprint sank from 68 last year to 65 this year. Important to note that Wireless Carriers (MNOs and MVNOs) beat out Wireline ISPs, Cable and Satellite Providers (as well as Insurance Companies, Airlines and Social Media Websites. Food for thought as a Small/Rural Service Provider look to enter into the wireless ecosystem.

25 WiFi Calling and Google s Project Fi

26 What is WiFi Calling? It allows voice calls to be made directly from your mobile device using a WiFi router (Internet connection) instead of terrestrial cellular network connection. Skype and WhatsApp and other VoIP OTT Applications do this, but they are not integrated into device and subscription plans. Currently and T-Mobile are the only US carriers offering this feature. T-Mobile usage is unlimited outside of your rate plan, including from some 120 countries. deducts usage from your rate plan. Most but not all devices will support WiFi Calling. AT&T says it will launch later in No firm word yet from Verizon.

27 What is Google Fi? Officially Announced in April 2015 during Mobile World Congress. Concept: It is a retail mobile play by Google relying primarily on WiFi Hotspots (whether residential, consumer, commercial or entreprise) and secondarily on the terrestrial cellular networks of and T-Mobile. Absolutely requires use of flagship Nexus 6 (Android) device and a special Fi SIM card. Core Pricing: $20/month for Unlimited Voice and Texting. Additional Pricing: $10 per 1 GB for data. Other Tethering is OK. Roaming is OK. Credit issued for unused data and pro-rated for going over (no lump charges). Summary: Great for consumers. Rural Carriers will not benefit without direct relationship with and/or T- Mobile.

28 QUESTIONS? BENNETLAW.COM RURALSPECTRUMSCANNER.COM

29 Daryl Atley Zakov Managing Attorney Bennet & Bennet, PLLC

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