SPHOA broadband initiative Report to board October 28, 2014 Norm Zimlich and Angela Saxe

Agenda Case for broadband Two broadband installation scenarios Three financing scenarios Next steps Appendix

The case for broadband Safety benefits (aka saving lives) 700 MHz communication network for emergency responders Dynamic grid control for power management (redundancy, trouble-shooting, re-direction in outages) Continuous fiber phone service during power outages (24 hour duration) Solid fiber backbone for microcells (better cellphone performance inside homes with microcells) Other benefits Faster internet speeds, up to 100 Mbps service vs a maximum of 8 Mbps Approximate $5,000 increase in property value System management capabilities for RO and water systems Cost effective phone and internet plans are competitive with CenturyLink Q: What if we do nothing? A: Cross your fingers that there are no emergencies and expect to revisit broadband in a couple years.

From OPALCO-IN-Business-Plan- Exec-Summary-web OPALCO-IN-Business-Plan- Exec-Summary-web

Middle mile: two installation scenarios OPALCO planSPHOA proposed plan 94 properties / 84% of members112 properties / 100% of members Category # of SP properties $200,514 ($2,133 / property)$253,241 ($2,261 / property)Cost at $12.50/ft. 14,883 ft.19,095 ft.Trench feet (fiber) MM antenna, emergency deviceEquipment MM antenna, emergency device

Middle mile: three financing scenarios Scenarios 1 and 2 assume a 10-year 5% loan for 112 properties 2 $1.5K Incentive on MM1 OPALCO Plan 3 Private financing SPHOA assesses MM, uses $1,500 incentive (x 112) SPHOA assesses full MM Interested homeowners form fiber consortium (SPF) to finance Advantages All SPHOA homes benefit from MM Lower assessment cost = better chance of passing assessment Members choose when/if they cover LM costs SPHOA does not cover varying member LM costs Incentive decreases amount SPHOA borrows from the bank Disadvantages Members pay LM out of pocket Advantages All SPHOA homes benefit from MM Members benefit from $1,500 incentive for LM Members choose when/if they cover LM costs SPHOA does not cover varying member LM costs Disadvantages SPHOA takes on bigger loan Assessment cost may be too high to pass No incentive applied to MM Advantages No assessment Disadvantages Complicated OPALCO must allow SPF to charge for hookups SPHOA must agree to collect for later hookups (lien authority) SPHOA pays SPF for water plant hookups & safety installations If only 40 people participate, average MM and LM cost will be $8,240/member initially, less the $1,500 incentive (being paid back incrementally as people change their minds) Total assessed: $85,232 Dues increase: $97/year Total assessed: $253,241 Dues increase: $288/year Total assessed: $0 Dues increase: $0

Next steps Determine go-forward broadband implementation strategy Solidify final MM implementation costs Address board action items Provide final proposal bundle to SPHOA board SPHOA board to vote at next meeting in November If SPHOA board approves an assessment, prepare communications and voting materials for membership

Appendix

Terms OPALCO Fiber-Optic Trunk Line (OPALCO's 100 mile dynamic grid control backbone) “Middle Mile” Fiber Common or shared fiber line in a community “Last Mile” Fiber Broadband fiber to individual subscriber

SPHOA survey – 40 respondents

From OPALCO-IN-Business-Plan- Exec-Summary-web OPALCO-IN-Business-Plan- Exec-Summary-web

Island Network Rates Keep pre-existing land-line number Use existing land-line phones and house phone wiring Local service assistance and trouble- shooting Free domestic (US) calling Free answering service/ messages Free call-forwarding Highly competitive long-distance rates Additional phone numbers available (e.g., second or fax line) Highly reliable fiber line with OPALCO mainland connections (no CenturyLink cable) Continuous service during power outages Voice service ($15) includes: