CBBC Business Plan. September 2013

Transcription

1 CBBC Business Plan September 2013

2 Columbia Basin Broadband Corporation Business Plan 2013/2018 Table of Contents 1. Executive Summary Purpose of CBBC Financial Model CBBC Network Network Electronics Partners Internet Service Providers Wireless and Underserved Areas Additional Potential Benefits Staffing High Level Work Plan Risks Appendix A CBBC Pricing Matrix... 17

3 1. Executive Summary Columbia Basin Broadband Corporation (CBBC) was formed to assist communities with enhancing their use of broadband. Its mission is, To provide connectivity to a world class open access broadband network across the Columbia Basin. As broadband is an important factor in retaining youth, attracting knowledge workers and providing economic development opportunities, CBBC was formed to provide the required infrastructure for community development purposes. CBBC s purpose is to enable open access, high speed broadband throughout the Basin, faster than what is currently available and at a reasonable cost. Its main roles will be to develop and own the network, serve as a resource to communities desiring better broadband, provide dark fibre or connections where required and manage/support the network for Basin communities. It is not CBBC s intent to provide retail ISP services, nor any telecommunication services. The CBBC network will be the transmission line or first mile, and communities can join by creating and connecting their own networks, which will be viewed as the distribution line or last mile. In a sparsely populated rural area like the Columbia Basin, success of a state of the art high-speed network will be dependent upon aggregation activities, such as consolidating a good portion of the data, support and services currently being purchased within, and outside of the Basin. For CBBC, success won t be measured by profitability, in fact the network won t break even for a considerable period of time, if ever. Success will be measured by new ideas, new ways of doing business, and superior connectivity, which will aid in attraction/retention of youth and knowledge workers. This document contains projected cash flows to connect 38 local governments/internet Service Providers (ISP s) and seven dark fibre/commercial customers. It may be the case that not all 45 potential connections are activated in this planning period (ie. not all communities may choose to participate), but the associated capital and revenue projections have been determined to establish a ceiling on the total investment (approximately $7.8 MM) and estimate the potential revenue ($700,000/year). Until such time as new revenue streams are developed, CBT will still be required to inject cash at a rate of approximately $375,000/year for operating purposes, after connecting as many of the 45 identified sites as possible. The network is 724 kilometers long, stretching from the US border near Waneta, up through Trail/Rossland to Crawford Bay, over to Cranbrook and as far north as Canal Flats and Elkford. It is a dark fibre network, controlled exclusively by CBBC and capable of delivering multiple services from multiple providers using a single strand of fibre. It will operate as an Open Access network. Service to very remote areas of the Basin are important to CBBC, and CBT, and service to these last mile areas will require quick deployment to first mile areas, and partnerships with the wireless service providers to continue to extend their service areas. A priority for CBBC is to ensure that the regional infrastructure can be the foundation to provide better rural connectivity. As such, CBBC s future progress will incorporate plans and actual construction for underserved areas once a meaningful gap analysis and fulfillment strategy, already underway, has been completed. When the strategy is complete, CBBC will determine its role and may revise this plan and seek additional funding. In summary, aggregation will be the key to the networks success. For example, local governments will have the opportunity to share services and aggregate their IT expenditures if it makes business sense for them to do so. ISP s can coordinate their spending and use one Internet gateway for multiple locations, instead of each ISP paying for multiple gateways throughout the Basin. Non-profits can share common resources to reduce costs and provide efficiencies. There will be economies of scale for entities who choose to connect to CBBC, and in turn CBBC can link to other network aggregators such as BCNET, Canarie, the Alberta SuperNet and other Open Access networks who offer multiple services to their customer base. Page / 1

4 2. Purpose of CBBC A recent study from the OECD states Canada has amongst one of the world s slowest internet speeds and highest costs around the world. Canada ranks at 23rd while Japan sits in first place with the highest speed and lowest cost 1. Despite slow speeds and high price, Canadians rank first in the world when it comes to Internet usage, spending an average of 45 hours per month online 2. Fast, reliable Internet is a service all Canadians rely upon, and CBBC was formed to drive better broadband deeper into the Columbia Basin. Broadband is an important factor in retaining youth, attracting knowledge workers and providing opportunities for Basin businesses to remain viable, within the new global Internet economy. CBBC s activities will help create a legacy of social, economic and environmental well-being, common to CBT initiatives. CBBC will enable open access, high speed broadband throughout the Basin, faster than what is currently available and at a reasonable cost. CBBC will create an Open Access network, offering multiple service providers the opportunity to provide their services via a broadband network. The network will also create the ability for local governments to collaborate by sharing information technology, which can provide cost savings for those choosing to participate. CBBC s primary purpose is to connect Basin communities with a state of the art network for community development purposes. The network will provide capabilities that will match or exceed what is available in large urban areas but will not produce a profit - due to the relatively low population in the area. It will however, be the telecommunications superhighway distributing high speed information within the Basin, and out to the world. CBBC Mission Statement CBBC Roles To provide connectivity to a world class open access broadband network across the Columbia Basin In enabling high speed 3 broadband in the Columbia Basin, CBBC has four fundamental roles: 1. developing and owning a network consisting of fibre optic cable ( backbone fibre ) and, where there is no CBBC fibre, lease Internet interconnections (collectively called the network ) that communities and ISP s can utilise either for their own use, or to enable access to high speed broadband within Basin communities; 2. serve as a resource for communities who require or desire assistance in enabling use of high speed broadband within their communities (i.e., an education resource, issuing and managing Requests for Proposals for related services, etc.) as well as regional groups who wish to coordinate access to higher speed connections within specific areas; 3. provide dark fibre and serve as the ISP for Columbia Basin Trust (CBT), Columbia Power Corporation (CPC) and where requested, local governments for their own use of the network; and, 4. own and manage the electronics necessary to operate the network. 5. work in conjunction with the various regional districts, First Nations and others to help deliver better broadband to more rural areas. This is discussed in more detail in section 8. It is not CBBC s intent to provide retail ISP services, or any telecommunication services within local government areas. Instead, CBBC s network will enable opportunities for ISPs to provide services to communities within the Basin, and begin to make service available within more rural areas as the network expands. 1 The Organization for Economic Co-operation and Development, Aug 15, Canadian Internet Registration Authority (CIRA), Jan 21, Current Speeds throughout the Columbia Basin approximate 3-20 Mbps down, Mbps up. For CBBC s purposes, high-speed connections are defined as greater than 50 Mbps up/down. Page / 2

5 CBBC s network will extend to a single gateway within a community (likely a local government facility such as city hall). Responsibility for extending the network throughout a community will rest with either the local government or the private sector. In this regard, CBBC s network may be viewed as the transmission line, or First Mile, and the extension of the network within the community may be viewed as the distribution line, or Last Mile. The key benefit of the CBBC network can be summarized as Aggregation, which can be translated as collecting all the data, services and support required for high speed connectivity by Basin communities, and placing it on a shared network to achieve economies of scale. As more entities join, CBBC s network will enable these specific opportunities: 1. higher speed Internet connections will be available for local governments own use; 2. local governments will be able to utilize CBBC s network to offer high speed Internet to residents within their area directly, or through an ISP; 3. Basin ISP s will be able to offer higher speed Internet, point to point linking of businesses among communities and the ability to connect their operations in multiple locations, but aggregate their usage through one shared Internet gateway. There will also be a second shared Internet gateway through a different Internet provider in a different location to provide full redundancy in the event of an outage from one provider; 4. local governments, especially regional districts will be able to utilize the CBBC network to connect remote operations such as fire halls, community centres and water treatment plants; 5. enhanced connectivity between communities can be used by local governments to connect to other local governments to aggregate and share technology services (i.e. , data backup and videoconferencing); 6. educational entities (such as colleges, schools and BC Net) may be able to utilize dark fibre provided by CBBC for distance learning opportunities; and 7. large corporate entities (such as CBT, CPC, Teck and Fortis) will be able to utilize dark fibre provided by CBBC to directly connect buildings and extend their corporate networks within the Basin. 8. enhanced connectivity for underserved rural areas (such as Crawford Bay, Wyndell, Yahk, etc.) 9. create opportunities for ISP s to utilize a centralized support desk and share in capital expenditures. Page / 3

6 3. Financial Model The following projected cash flows are required to create the network, and provide 45 connections throughout the Columbia Basin. Although it is uncertain when, or if all locations will be connected, this summary shows the maximum projected investment over the next five years. Major assumptions behind these projected cash flows are as follows: This is the maximum projected investment to connect 45 locations CBT capital is required to maintain a positive cash position The Total CBT Contributions ending balance of $7,879,813 will include $4.5 MM of capital investment New capital expenditures are incurred and begin being amortized on April 1 st Three ISP s serving limited areas are included, additional ISP s will create additional revenue (not included) Fibre construction is amortized over 25 years, network electronics over eight years One additional employee is added during 2014/2015 Projected expenses have minor annual variations with the exception of amortization, which is triggered by equipment purchased to connect new local governments. The major expense categories are as follows: Salaries, accounting, outside consultants are 33% Amortization is 28% Hardware and software maintenance is 14% Internet connections/bandwidth to transport data to the global Internet is 12% Outside Plant (pole rental, fibre maintenance) is 6% Page / 4

7 While CBT will have to financially support CBBC s operations for some period of time, CBBC may have further opportunities to raise revenue to offset these expenditures. Potential new revenue sources include the following: 1. Providing long term dark fibre leases to additional corporate entities to extend their networks. This may require investment above what has currently been budgeted. 2. Carrying cellular data for wireless mobility providers seeking to extend coverage throughout the Basin area. This will enable out of area providers (Rogers, Eastlink) or new entrants (WIND Mobile) to expand into our region. 3. Revenue sharing with service providers who will offer unique services to Basin residents and local governments. This will require a viable market size, which will take time to develop. 4. Sharing costs of connecting provincial government facilities (i.e. schools, BC Ambulance, Service BC offices, Ministry of Transport buildings, etc.) with the provincial government. Pricing Policy CBBC will require a pricing model that is fair and easy to explain. Rates are based upon the costs of installing and supporting connectivity, as well as creating and managing value add services. Please refer to Appendix A for a detailed pricing matrix. The pricing CBBC will extend is: Local Government Pricing: Local governments with more than 5,000 residents will pay $1,500/month. Large local governments will require more CBBC resources due to their larger network footprints, number of Internet based systems and network management equipment and resources required. Local governments with 2,000 to 5,000 residents will pay $1,250/month Local governments with less than 2,000 residents will pay $750/month Regional Districts and First Nations will pay $1,000/month, subsequent connections will be $500/month Included in the pricing is a network connection usable by all municipal employees regardless of location. Connecting premises their employees/contractors work within, is the financial responsibility of the local government. Internet usage for all the local governments will become an operational expense of CBBC s. Local governments will receive a videoconference unit Internet Service Provider Pricing: ISP s will pay $1,000/month for a single connection Additional connections will be subject to further analysis and discussions with service providers who choose to provide service in multiple communities CBBC will aggregate each ISP s Internet traffic, reducing the need for Internet connections in each area served Internet usage pricing is $20/Mbps transferred (subject to change as prices decrease frequently) Current Commitments: To date, CBBC has signed agreements to provide service to four local governments which are Trail, Revelstoke, Kaslo and the RDCK, and six additional entities which are Fortis, CPC, a provincial school network, Selkirk College, CBT and SNC. The CBBC network has been discussed with all but six local governments and many of those communities have expressed interest in joining, but will require additional time to be spent with them to fully explain the benefits/costs and the implications of switching from their current telecommunication provider. Page / 5

8 4. CBBC Network To begin, the network assets initially acquired by CBBC were 71 kilometers of fibre in the West Kootenay area that could connect seven local governments, CPC and the CBT head office. Network connections were leased from TELUS to connect two additional CBT offices and 14 kilometers of fibre was built to connect additional CPC/CBT operations. In July of 2013, CBBC concluded a fibre exchange agreement with Shaw Cablesystems to exchange unused fibre of CBBC s for unused fibre of Shaw s. This agreement allowed CBBC to extend its network a further ~600 kilometers. A map of the complete coverage area is below. Page / 6

9 Moving forward, the CBBC network will become a region wide point of connection for local governments and ISP s choosing to participate. It will be able to provide connections using physical dark fibre anywhere on the blue/red lines. The remaining local governments (green dots) choosing to participate can be connected via the incumbent telecommunication providers networks or the physical fibre network may be lengthened by building or entering additional fibre exchange agreements. The speed can be upgraded to operate at 10 Gbps in the future. The CBBC offering of high speed symmetrical circuits is appealing but must work consistently and as close to 100% of the time as possible. Construction, network electronics and the people who maintain the network, all have to be better than what is currently being provided. The network will have upstream Internet connections to Shaw and TELUS in the event the primary connection is disrupted. If the existing/swapped fibre is cut, data will be automatically re-routed to diverse and redundant connection points. In addition to better service, the CBBC network will have two competitive advantages. The first is, it will be an open access network, which means multiple service providers can offer unique services on a single fibre leading into each building. The current telecommunication networks in Canada are closed and proprietary, meaning each telecom (TELUS, Bell, Shaw & Rogers) only offer their own services. This competitive advantage will allow more and unique services to be offered across the network including services from Basin businesses. The second unique competitive advantage CBBC can facilitate/aggregate is shared application development and usage. CBBC will engage interested municipalities to jointly document the IT services they provide and then engage industry experts who can develop or recommend applications the municipalities can cost share. Sharing services among municipalities can lead to more customizable solutions as each entity pays a portion of the cost, instead of paying for their own non-shared version. This provides the opportunity for local governments, and non-profit organizations, to work together for financial gain/expense reduction. In order to make this successful, the software development community also needs to be made aware of the availability of a fibre optic network open to new applications and largely unrestrained by bandwidth. 5. Network Electronics Costs have been projected (section 3) to purchase and implement sufficient electronics to connect 45 locations. There will be redundant data centres, and network electronics will be supplied and managed for local governments in order to reduce costs for participating municipalities. The electronics are capable of delivering multiple services from multiple providers using a single strand of fibre. CBBC staff and contractors have years of experience with the existing electronics including the provision of multiple services. In summary, the network electronics CBBC has invested in will be the tool to enable an open access network, which is one of CBBC s competitive advantages. The network will utilize state of the art technology called Dense Wave Division Multiplexing (DWDM). This technology can be explained using an analogy of vehicles on a freeway. If the goal is to increase the throughput of vehicles, instead of increasing the speed of the vehicles only, applying DWDM also increases the number of lanes on the freeway, which is analogous to wavelength multiplexing. 4 The CBBC network will transfer data using DWDM technology which will make it as future proof as current technology allows, and it will be able to handle the speed and volume requirements of the Columbia Basin area. 4 For a more detailed explanation of DWDM, see the following Internet resource: Page / 7

10 6. Partners CBBC s current and proposed partners are: Existing connections: CBBC is currently providing services or dark fibre directly to existing provincial government buildings, CBT offices, its subsidiaries and several large corporate entities (CPC, SNC, Fortis and Teck) which generates revenue of about $25,000/month. These are the anchor customers and were the genesis of the network. Local governments: CBBC will wholesale network transport, provide network management equipment/service and customer premise equipment to local government networks, and help to develop shared services and last mile build technical advisory services to this customer base. CBBC has signed agreements with several municipal anchor tenants who already have, or are building municipal networks within their boundaries. Corporate entities: Where large area businesses (CPC, SNC, Fortis) do not have access to a municipal last mile connection, or require dark fibre and there is a solid business case for doing so, CBBC will work to service these large employers. CBBC will also wholesale network transport and management equipment/service to 3 rd party service providers. Internet Service Providers: CBBC will work with wired and wireless Internet service providers (WISP s) to provide higher speed services for their customers, and in places (i.e. along rural highways) they are currently unable to connect. CBBC can provide shared access to speed optimization/caching programs for the benefit of all Internet service providers. Other Service Providers: The CBBC network came into being solely based (to date) on Internet services. A wide range of other services such as data backup, videoconferencing, financial systems, GIS, telephone, television, etc. are in existence and can be provisioned on the CBBC Open Access network. Access to these types of applications will add value for Basin users and potentially create new revenue streams for CBBC and municipal fibre owners. Once the network is fully operational, CBBC staff will begin sourcing, entering into agreements with and deploying new applications from service providers who have unique services. Provincial Government: The CBBC network has 24 provincial buildings connected and earns approximately $90,000 per year providing dark fibre to schools, various ministries, and the Castlegar airport. Although provincial connectivity is supplied by TELUS, TELUS does not lease dark fibre in BC so the opportunity exists to supply a service that generally is not available from incumbents. Dark Fibre Owners: Existing large telecoms (i.e. Shaw Cablesystems) and the Regional District of East Kootenay (RDEK), own dark fibre within the Columbia Basin and the CBBC network can be extended by entering into agreements with these entities. Page / 8

11 7. Internet Service Providers Internet service providers (ISP s) operating within the Basin will have the opportunity to connect to a higher capacity service, serve new areas at a minimal cost, aggregate their Internet traffic into one connection and have their service automatically rerouted in the event of an outage by any one upstream provider. As the current Basin ISPs serve several thousand customers, this will extend the reach of the CBBC network past the small number of municipalities and provide benefit directly to Basin residents. To help Basin ISPs be successful, CBBC will work with them as follows: Promote use of existing ISPs that serve local areas: The decision of which ISP provides services on local government networks will be a local government decision, and CBBC can be an effective bridge between the local ISP and municipalities. CBBC s direction will be to encourage the use of local providers and offer training and support for local ISPs to use the CBBC network provisioning equipment. Source qualified ISPs: Some municipalities do not have a local ISP so CBBC will work with local governments to find qualified providers for those communities. 8. Wireless and Underserved Areas A number of Basin residents live in underserved areas where wireless service is the only option to remain connected. This disadvantage is further exacerbated by the low speed connections available in rural areas to Basin wireless Internet service providers. Service to these last mile areas will require a first mile network in larger centers in order to provide connectivity to the global Internet, and access to data centers for equipment which will manage the network. Just like other utilities such as sewer, water or electricity which begin in more populated areas and build out, the CBBC network will be the vehicle to provide better connectivity to the most rural areas. The current business plan includes enhancing the connectivity for the rural communities of Crawford Bay, Wyndell, Yahk, Wasa, and Elko however further work is required to complete a connectivity gap analysis documenting coverage levels, towers available, and pricing in many other rural areas of the Basin. As the CBBC network expands, sufficient connection points can be established to connect existing WISP s via fibre or wirelessly. As the diagram illustrates, CBBC feeder fibre runs past many small communities, where pockets of underserved residents are. This diagram is an example only and does not include the full length of the network. CBBC will work with the Regional Districts, First Nations and others to review the gap analysis and determine how best to enhance connectivity in the most rural communities, once a fulfillment strategy is complete. Funding for that fulfillment strategy is not included in the cash projections outlined in section 3. Page / 9

12 9. Additional Potential Benefits Shared Services: Most local governments have their own servers, data backup, hosting services, telephone switches and GIS systems. If local governments wish, they can explore the benefits of sharing systems to reduce expenditures. CBBC connections will include a videoconference unit for each local government who joins the Basin network. As few local governments engage in videoconferencing, largely because their current connectivity is prohibitive, this is perhaps the easiest technology to begin sharing and it can be used to further communicate with, and engage their residents remotely. The other shared service that will be offered is Internet Gateway where a big Internet connection is made available and it is backed up by a second gateway. Libraries: The BC Libraries Cooperative recently announced a partnership with BCNET - a non-profit shared information technology services consortium for higher education and research institutions. BC Libraries wants to connect its member libraries throughout BC to share services like e-books, as well as traditional IT services such as and content management. BC Libraries has 17 member libraries within the Basin that are mostly connected via PLNET (Public Learning Network). This represents a further opportunity to share services and connect local libraries. Research Net for Colleges: As mentioned, BCNET is a shared technology services organization that assists post-secondary institutions with services such as cloud computing, VoIP, tele-presence and disaster recovery. BC Net is part of the Canarie network that connects Universities across Canada. A connection to Canarie will enable both College of the Rockies and Selkirk College to be part of the National Research group. Rural Development Institute: CBBC has committed to supply network information to the Columbia Basin Rural Development Institute. The RDI is creating an industrial and commercial lands inventory project that will include fibre optic networks and related infrastructure assets for presentation to Basin investors. Knowledge Worker companies requiring fibre connections to operate their businesses will be made aware of which CBBC local governments have fibre networks they can connect to. This information is currently being developed by Selkirk College for CBBC s own GIS purpose of mapping all connectable properties within Basin municipalities. 10. Staffing The business will require two key roles of Chief Operating Officer and Chief Technology Officer. The risks for both roles are significant, the individuals have to possess technical skills, excel at communicating the vision and perform their roles from a community development perspective. Currently there are two dedicated individuals performing all tasks. To the extent that this continues, the business runs the risk of simply not having the physical manpower to get the job done especially given the territory that must be covered in order to bring all the necessary participants together. Significant resources are typically required to start, build, and operate a ~700 kilometer regional telecommunications network. A third role of Network Manager has been budgeted to commence in 2014 to assist with integrating the communities and service providers who join the CBBC network. CBT is currently providing administrative assistance and developing communications materials when required. This represents the minimum support required in order to move the business of CBBC ahead but at some future point, these services may need to be brought into CBBC. Although CBT s CEO and COO provide support, there are currently no funds currently being recovered from CBBC for their involvement. Page / 10

13 11. High Level Work Plan The following tables represent a three year workplan of activities. The first table represents some key activities that apply to the overall business needs of CBBC as well as some technical steps required to construct the Basin network. The remaining three tables propose a schedule in which communities will come on line and provide details around what stage each is at in the planning, construction and service provisioning. It is important to note that permit approvals from TELUS, Fortis and Highways are outside of the control of CBBC. Delays in permitting will create delays in provisioning services. The order in which communities are activated is a key dependency. Signal regeneration must occur no more than every 70 kilometers, and in a contiguous fashion. This may require construction of a Point of Presence (POP) in a community not ready to be part of the CBBC initiative, in order to reach a community that does. For example, the distance between Canal Flats and Radium will require regeneration. If Radium requests a connection a midpoint regeneration POP (i.e. Invermere) will be required, whether Invermere requests the service or not. Key communities requiring signal regeneration have been identified with a star in front of the community name. To expedite the fibre light up, the construction approach will be to work simultaneously from the ends into the middle. Following the map on page six, construction will progress from West to East (i.e. Trail to Castlegar to Nelson toward Creston) and from East to West (Sparwood to Elko to Cranbrook toward Creston) to complete the main fibre line within two years. A redundant TELUS connection between Sparwood and Trail will be installed in October 2013 to enable services in each community as construction is completed. In the third year, the focus will be Cranbrook north toward Golden. Page / 11

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18 12. Risks Departure from the Traditional Role of CBT: CBBC, like CBT, is actively engaged in community development for the benefit of local governments. While doing so it is also operating a business, which represents a departure from CBT s traditional role from providing services and funding without charge, to one of providing services for regular monthly fees. Precise and regular communications will be required to help local governments and service providers understand CBBC is taking on the role of a regional telecom, but doing so for community development purposes instead of earning a profit. CBBC will need to clearly communicate its activities to ensure local governments and service providers recognize CBBC does promote the community development aspect of CBT s mandate. Backbone Activation: Network electronics/facilities are required in 15 communities to activate the fibre optic backbone, made possible by the Shaw swap. Activating the backbone in a contiguous fashion is critical to provisioning services and providing redundancy to all communities. The business plan ensures there is adequate capital to activate the required sites, however it also assumes revenue will be generated from those same communities. If a community chooses not to connect, CBBC will not realize the revenue, but will still be required to invest the capital to regenerate the signal. Basin Support: CBBC will require local governments, ISP s and rural WISP s to support CBBC, to achieve the benefits aggregation can provide participating entities. This will require regular communications to keep partners and customers informed of the network benefits, and CBBC will need to conduct its business to attract a sufficient base of customers and work closely with them to achieve joint success. Service Providers: The success of the network is dependent on outside service providers at varying stages of operations from network management to administrative services. To the extent adequate service providers can be found and maintained at reasonable cost, there is a continuing but manageable risk to the operations of the business. Competitive Risks: The dominant players operating in the Columbia Basin and the rest of British Columbia (TELUS and Shaw) operate multi-billion dollar networks with tens of thousands of employees. It will be important for CBBC to develop a strategic relationship and a joint interest in working together with the large telecoms, as evidenced by the fibre exchange undertaken with Shaw. Permitting: Expansion of the network will normally require permits from TELUS and/or Fortis and can be subject to costly engineering studies and lengthy delays. Equipment Obsolescence: To the extent that network management equipment can be replaced as it becomes obsolete at a reasonable cost to CBBC, there is a risk of major technology changes requiring new equipment to adapt to the changes. Service Take Up: There is no guarantee that the projections for local governments connecting will be met. To the extent that targets are not met, there is always the potential for the operations of CBBC to require greater cash contributions that originally envisioned. Equipment Damage: To the extent any network equipment is damaged for whatever reason CBBC runs the risk of service outage if redundant systems are not in place to adequately meet network requirements in such an event. Page / 16

19 Appendix A CBBC Pricing Matrix 100 Mbps shared connection Subsequent connections Internet usage Videoconference unit Connection resale allowed Contract term required Connection costs Municipalities Population > 5,000 Municipalities Population 2,000-5,000 Municipalities Population <2,000 First Nations Band offices Regional District offices Educational Institutions Service Providers $1,500 $1,250 $750 $1,000 $1,000 $1,000 $1,000 N/A N/A N/A $500 $500 $500 TBD Unlimited Unlimited Unlimited Unlimited Unlimited 20 Mbps included, $20/Mbps above 20 Mbps Included Included Included Included Included Optional ($10,000 + HST) 10 Mbps included, $20/Mbps above 10 Mbps Optional ($10,000 + HST) No No No No No No Yes Five years Five years Five years Five years Five years Five years One year TBD TBD TBD TBD TBD TBD Not included TBD To Be Determined upon location Page / 17