HOW TO BUILD A TRIBAL TELCO The Nuts & Bolts Tribal Telecom 2013 February 11,

AGENDA I. To ILEC or To CLEC II. To Wireline or To Wireless III. To Build or To Buy IV. How To Negotiate with the ILEC V. Broadcast Services VI. How to Position the Telco Enterprise with the Community VII. Jobs VIII. Funding Resources 2

TO ILEC OR TO CLEC ILEC – Incumbent Local Exchange Company The company currently providing voice and data telephone service to the Community. CLEC – Competitive Local Exchange Company An alternative provider of voice and data telephone service to the ILEC. 3

TO ILEC OR TO CLEC (CONT.) If no current telephone service is available to the Community, consider obtaining Eligible Telecommunications Carrier (ETC) status from the FCC or State PUC/PSC. Being an ETC is becoming the ILEC, or Incumbent Telephone Exchange Carrier. ETC status has merits as you receive Federal subsidy income from: NECA – National Exchange Carriers Association USF – Universal Service Fund 4

TO ILEC OR TO CLEC (CONT.) Becoming a CLEC is quick, easy and inexpensive. Requires a tariff and application filing with Community Council if restricted to the Community only. Requires a tariff and application filing with state PUC/PSC if CLEC serves off the Community. Legal representation can assist with either process. Competitively and strategically positions the Community over the current service provider. 5

TO ILEC OR TO CLEC (CONT.) The benefits of a Tribal CLEC: Allows you to bypass the current service provider. Allows you to aggregate Community traffic/usage. Allows you to build your own network. Allows you to build a state-of-the-art network. Leverages negotiations to buy plant from ILEC. Strengthens position for plant evaluation. Leverages the Community to pay for member services. 6

TO ILEC OR TO CLEC If CLEC, take all the business from the ILEC. Leverage Tribal unity. Once all business is taken from ILEC, move to become an Eligible Telecommunications Carrier (ETC). ETC Status is granted by the FCC or state PUC/PSC. ETC status allows you to recover plant investment through Federal subsidy programs. 7

TO WIRELINE OR TO WIRELESS Optimum is to use both technologies when possible. Both technologies are recoverable when an ETC. Wireless is cheaper and faster to deploy. Wireline is most secure and reliable. Wireline is more expensive and takes longer to deploy. 8

TO WIRELINE OR TO WIRELESS If a checker board Community, wireless is likely most optimal. If a contiguous Community, use wire/fiber optics for bulk transport and commercial applications (hospital, gaming, govt., schools, etc.), and use wireless for remote, expensive areas to access, to overcome barriers (terrain, cultural, etc.) and for sparsely populated locations. 9

TO WIRELINE OR TO WIRELESS Wire = fiber optics Benefits of Fiber Optics are: Future Proof – unlimited bandwidth. Faster Data Rates – copper carries 6 phone calls; fiber carries 2.5 million phone calls. Cost – lower to maintain & repair; multiple service platform. Reliability – fast and easy to repair. Efficiency – phone, video, data, TV, etc. Property Values – adds estimated $5,000 to property. Quality of Life- endless number of service applications. 10

TO WIRELINE OR TO WIRELESS Only use licensed wireless spectrum. Wireless spectrum is available from the FCC quickly and inexpensively. Wireless access lines cost roughly $500 to build. Wireline access lines cost roughly $5,000 to build. Wireless spectrum to use: 8-15 mghz (?) All Wireless transmissions transit over a wireline network structure. The public switched telephone network is by far a wireline based network. 11

TO BUILD OR TO BUY Build your network or buy your network from the existing service provider? Buying is faster and allows immediate ETC status. Building a network takes longer and can be expensive. Negotiate a fair market value or price – easier said than done. Build your network as a CLEC and bypass the current service provider. 12

TO BUILD OR TO BUY Negotiating the purchase of existing plant from the current service provider has pitfalls to avoid: Long negotiation lead time causes delay Condition of current plant (old, poorly maintained, out dated/copper, etc.) Maintenance of current plant (is it in good condition?) Price of current plant (what is fair market value?) 13

NEGOTIATING WITH THE ILEC ILEC asking price is often over valued or inflated. Condition of ILEC plant is often poorly maintained. Existing ILEC plant is often out of date. Leverage Tribal Unity – strength in numbers. Threaten to establish a CLEC and bypass. Leverage Tribal Sovereignty – remove the ILEC from the Community. Get a third party opinion on everything; value, price, plant condition, etc. 14

NEGOTIATING WITH THE ILEC Take up the issue of purchasing the plant from the ILEC with both State and Federal regulatory authorities. Take the issue to a legal forum – sovereignty over our own lands. Congressional approach – trust relationship should require telecommunications obligations. 15

BROADCAST SERVICES Build a transmission tower centrally located to the service territory. On it, Place and Integrate: Regular or Low Power AM/FM Broadcast Radio Regular or Low Power Television Broadcast Wireless Last Mile Loop Wireless Middle Mile Transmission Cellular Service – Lease Tower Space or Provision 16

HOW TO POSITION WITH COMMUNITY The enterprise can be a co-operative. Incorporate the enterprise by the Community. The enterprise can be a non-profit corporation. The enterprise can be a for-profit corporation. Articles of Incorporation created by Council. Bylaws created by Council. Grant First Right of Refusal to the enterprise. 17

HOW TO POSITION WITH THE COMMUNITY Quarterly updates to Council – total transparency. Membership with NTCA, NCAI, etc. Tribal Engagement requirements. Financial Statement Audit requirements: Tribal Public Federal Government (FCC OIG) 18

JOBS ILEC provides a few more jobs than a CLEC. The use of wireline technology provides more jobs than the use of wireless technology. Building a network provides more jobs and teaches more craft than does purchasing existing plant from the current service provider. 19

FUNDING RESOURCES Federal Grants - various kinds Traditional resource is USDA RUS Federal loan with ultra low interest rate May be difficult to obtain in todays market The secret sauce recipe: Contact the GRTI Board of Directors Personal contact is Mr. Anthony Newkirk, Chairman: ; 20

CLOSING Questions? Thank you! Bruce Holdridge