The broadband industry is receiving growing attention globally as governments recognize the key role broadband plays in economy-wide recovery. The emerging Anywhere Network™ –a powerful, pervasive digital network that can connect all people, at any time, in any place–presents an opportunity to create more jobs, increase productivity across a country's workforce and develop new solutions for health care, education, transportation and energy. In the U.S., three key agencies are still sorting out how to allocate the broadband funds, and to whom, and many details remain unclear. Despite this flux, companies who seek to capitalize on the energy around broadband must understand the current state of thinking and the likely direction, nature and size of project funds being distributed throughout the world.

1. Broadband Regulation
and the Global Economy
Dianne Northfield, Director
Vince Vittore, Principal Analyst
April 28, 2009
www.yankeegroup.com
© Copyright 2009. Yankee Group Research, Inc. All rights reserved.

2. Agenda
• U.S. broadband stimulus status
• Overview of rural broadband
• Usage, adoption and technology
choices
• Mapping out the money flow
• Broadband, technology and
infrastructure funding opportunities
• Global stimulus opportunities
• Q&A
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 2
Economy

3. American Recovery and Reinvestment Act 2009
• ARRA allocates U.S.$7.2 billion to
broadband-related projects
• Award of funds should be prioritized
for rural projects and those that would
otherwise not be commercially
attractive for private operators
• The legislation is technology neutral
• There are significant funds available
in related sectors, e.g., health IT,
transportation, energy, electricity
• Priority #1 of ARRA: to preserve and
create jobs and promote economic
recovery
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 3
Economy

4. Time Frames, Some Speculative
At present, agencies are reviewing 1,400 submissions
April 8, 2009: FCC NOI on national broadband policy
April 13, 2009: Comments period closes on FCC
Prospective Timing
definitional work for NTIA
of Fund Release
May 22, 2009: FCC reports to Congress on rural
•Phase I:
broadband policy
September 2009
June 12, 2009: Agencies issue proposed rules and
Notices of Funds Availability (NOFAs) •Phase II :
June/July: Project applications December 2009
July/August: Agencies rank applications
•Phase III:
February 2010: FCC reports to Congress on national
Spring 2010
broadband policy
• NTIA must report to Congress within 90 days of
ARRA (May 17)
• Agencies must report to Congress quarterly
— Fund recipients will also have to report to agencies
quarterly
February 2011: NTIA public national broadband map
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 4
Economy

5. Poll 1
What impact do you believe the
Broadband Technologies
Opportunity Program in the U.S.
will have on your company?
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 5
Economy

6. Overview of Rural Broadband
• Rural availability and
penetration in the U.S.
traditionally is lower
than urban/suburban
markets
• Rural markets are NOT all
the same and show great
variation based on the
incumbent service providers
Source: Yankee Group Anywhere Consumer: 2008 U.S.
Penetration and Usage Survey
• Municipal models are making
a comeback as more local
governments begin to view
the availability of high-bandwidth networks as an economic development
issue
• Open access models have not succeeded in the U.S. but are getting a
second look due to some spot success in Europe
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 6
Economy

7. Rural Technology Options
• Consumption of bandwidth has
been increasing at double-digit
rates in most markets for the
past several years and is likely
to continue for the foreseeable
future
• Wireline, specifically FTTP, is
the best long-term solution, but
the business model around
rural deployments is difficult at
best
• Wireless options represent the
best alternative for near-term
Source: Akamai, The State of the Internet, Q4
solution, but could run into 2008
capacity issues in several
scenarios
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 7
Economy

8. Mapping Out the Money Flow
• Likely bias toward grants given tight time frames?
• We expect multiple small grants sub-$100 million
• Recipients of RUS funding prioritized—RLECs historically
• ARRA bias to prioritize public entities and public-private partnerships
• Potential bias toward community partnerships and municipalities
• Wholesale business models favored under some of the Act’s priorities
• Credibility in projects that take the NTIA’s 20 percent financial risk
• Both RUS and NTIA guidelines support projects providing “service to the
greatest population”
• Applicants must show that projects would not proceed without federal
funding
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Economy

9. Positioning to Win Broadband Stimulus Dollars
• While we await clarification of multiple terms and the release of NOFA’s,
projects that match to the objectives and priorities laid out in ARRA will
win more points
• The RUS and NTIA objectives, priorities and gating criteria are different
• Applicants will need to consider trade-offs as some of these priorities
are competing or in conflict
• RUS offers grants, loans and loan guarantees; NTIA offers grants only
• Projects targeted to unserved, underserved and rural areas and anchor
institutions will win more points
• Projects that can demonstrate that they are ready to go and that have
hard completion dates will be favored
• Projects must show proven benefits to the economy or society or both,
and demonstrate value for money, viability and sustainability
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 9
Economy

10. Winners and Losers in the Money Flow
Vendor Winners Vendor Losers
Access/aggregation level vendors Vendors not on the RUS approved
already on the RUS approved list list of materials won’t benefit from
of materials early release of RUS funds
Vendors able to guide applicants No clear path to revenue for
billing/OSS vendors
Wireless infrastructure/municipal
Wi-Fi vendors
Wild Cards for Vendors
Interpretation of the Buy American clause?
Potential joint ventures with service providers?
Preference for projects allowing for “multiple service providers”
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 10
Economy

11. Global Economic Stimulus and Broadband
• Global stimulus dollars add up to trillions and are growing
• Broadband is receiving growing attention globally as governments
recognize a key role for high-speed connectivity in economy-wide
recovery
• There are billions of dollars on the table for broadband projects, many of
which are focused on expanded or upgraded access in rural areas
• There are billions more in opportunities for the broadband industry in
fiscal packages targeting related sectors with a focus on technology and
IT investments
• Infrastructure spending is at the core of many national stimulus
packages
• Funding opportunities are typically “technology neutral,” meaning that all
players in the electronic communications ecosystem have opportunities
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 11
Economy

12. Billions of Dollars on the Table for Broadband Globally
Funding sources go beyond stimulus plans and show a ramping government
commitment to broadband development as part of wider economic recovery
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 12
Economy

13. Broadband Stimulus Dollars in Selected Nations
Country Funding Amount (U.S.$) Source of Funds Comments
United States 7.2 billion Economic stimulus Grants and loan programs
Germany 227 million Economic stimulus National broadband policy
commitment
Ireland 326 million Government, EU and private Underserviced area
co-financing infrastructure
Canada 183 million over 3 years 2009 budget Deployment in underserved
areas
European Commission 1.3 billion Economic stimulus Subsidies for distribution to
EU Member States
Portugal 1 billion Economic stimulus credit line FTTH
South Korea 938 million over 5 years Government Advanced networks
Finland 102 million Government FTTx
Australia 30 billion over 8 years Government National broadband network
Greece 900 million Government FTTx
Singapore 700 million Government National broadband network
Malaysia 2.2 billion Government, economic National broadband network
stimulus Broadband infrastructure
Chile 54 million Government Rural connectivity
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 13
Economy

14. Recommendations
Opportunities are short term and targeted
• Vendors and operators must immediately mobilize to identify funding and
incentive targets—broadband and cross-sector. These differ by nation
and require detailed investigation and navigation.
• Critical make-or-break decisions will revolve around:
The specification of entities eligible to seek funds
•
Project obligations
•
Open access conditions
•
Co-financing requirements
•
Project amenability to partnering opportunities
•
Fund gating criteria
•
• Maximize project proposals matched to government program objectives.
• Look to leverage and replicate successful projects.
• Think of short-term stimulus opportunities and longer-term positioning as
governments reshape national broadband policies and funding
mechanisms.
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 14
Economy

15. Poll 2
Will the stimulus packages
around the world have a positive
effect on overall connectivity?
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 15
Economy

16. Additional Resources
• Yankee Group Research Reports:
• Vendor Winners and Losers in the ARRA by Vince Vittore
• Broadband and Economic Recovery in the United States by Dianne Northfield
• Memo to President Obama: We Need Anywhere for America by Carl Howe,
Jennifer Pigg and Emily Green
• Reaping the Benefits of Broadband Stimulus Billions forthcoming by Dianne
Northfield
Download at: http://www.yankeegroup.com
• Yankee Group blog:
• Hard Times Bring Inspiration for Broadband in the U.S. by Dianne Northfield
• Unintended Consequences of the Stimulus by Vince Vittore
Read at http://blogs.yankeegroup.com
• Yankee Group podcast: Stimulus Opportunities for Broadband
• Vince Vittore discusses the U.S. stimulus provisions
Listen at:
http://blogs.yankeegroup.com/2009/03/19/podcast-stimulus-opportunities-for-broadband/
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 16
Economy

17. Thank you!
• Dianne Northfield, Director, dnorthfield@yankeegroup.com
• Vince Vittore, Principal Analyst, vvittore@yankeegroup.com
• Upcoming webinars:
• The Workforce of Tomorrow, May 27, 2009
• Fiber to the Home: Making That Business Model Work, June 30, 2009
© Copyright 2009. Yankee Group Research, Inc. All rights reserved. Broadband Regulation and the Global April 28, 2009 Page 17
Economy