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Broadband Authority Program and Project Update

Broadband Authority Program and Project Update. March 17, 2005. Mission and Lending Criteria. Mission— attract investment to underserved communities and encourage competition and more affordable broadband services across the state in all markets

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Broadband Authority Program and Project Update

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  1. Broadband Authority Program and Project Update March 17, 2005

  2. Mission and Lending Criteria • Mission—attractinvestment to underserved communities and encourage competition and more affordable broadband services across the state in all markets • Tool for the above—loansmade to broadband providers and grants combined with loans in limited areas (using bond sale proceeds and NO general fund dollars for this purpose) • LendingCriteria—adequate cashflow, solid business plan, sufficient borrower equity, guarantees and other security requirements as necessary March 2005

  3. Typical Loan Terms & Conditions • Terms—Seniorlender withterm loans ranging from 5 to 7 years and 12 to 24 month interest-only draw periods if necessary • Interest Rate—8 percent fixed (also have limited availability of a variable rate currently pegged at less than 5 percent) • Equity—100 percent project financing available but net equity on company balance sheet should equal 20 percent (at a minimum) of loan request. • Guarantees—Typically required but usually NOT collateralized. Operating deficit reserves and other alternatives to personal guarantees utilized on occasion March 2005

  4. MBDA is achieving its vision and making an impact $17.7 M Approved Projects $10M in Applications $10M Near-Term Applications $6-10M in likely loan applications Fiber and wireless projects in underserved areas 2nd RFP for Digital Divide Investment Program Area Served—in dark ISP Wireless PCS Broadband M-33 Access Appia Communications ACD.net ACD.net WEST SpeedNet Michigan Lightwave Merit Networks UPLink Services Inc. (seed) LDMI Lighthouse Broadband UPLink Services, Inc. OneWorld AriaLink Endless Journey Additional DDIP Applications VoEx Lucre.Net Emmet Wireless Grid 4 T2 Communications NBD Communications First Step Michwave QIC Borrower March 2005

  5. ISP Wireless • Project • $341,836 loan for the expansion of fixed wireless broadband service in seven low-to-moderate income communities • Purchase of tower antenna and customer premise equipment • Status • ISP Wireless is expanding customer base • Internet Service Provider (ISP) business since 1995 • Stable business and revenues March 2005

  6. PCS Broadband • Project • $510,000 loan for the expansion of fixed wireless broadband service in areas where small-to-medium enterprises (SMEs) are underserved • Purchase of tower antenna, routers and customer premise equipment • Status • Premise cabling company since 1992 and enterprise phone systems sales since 2000 March 2005

  7. M-33 Access • Project • Expanding contract service to community college and school districts • Refinancing of existing debt and purchase of equipment (towers, antennae, customer premise equipment) • $1.3 million loan • Status • Largest wireless broadband network grid of its kind in the US • New contract saving schools nearly $1 million and provide higher speed services Note: Illustrative only – wireless coverage does not blanket entire counties March 2005

  8. ACD.net • Project • Facilities-based carrier expands DSL service to new markets and within existing areas • Re-financing of existing debt • New financing for expansion into new markets, new fiber routes and new equipment • $1.2 million loan • Status • Expansions in mid-Michigan complete • SBC mirroring activity March 2005

  9. Project Acquisition of Quantum Connections assets and expansion of broadband service $1,681,139 loan Project will provide broadband service for business and residential customers Status Nearing completion of acquisition and transition ACD.net WEST March 2005

  10. Appia Communications • Project • $758,000 loan to Traverse City-based INSORS, Inc. (dba Appia Communications) • Expansion and upgrades of network operations centers to expand service and provide redundancy • Enhanced converged voice and data network services for small and medium-sized enterprises • Status • Currently offers service in Kalamazoo, Detroit, Traverse City, Chicago and Indianapolis • Loan expanding footprint into Lansing and Grand Rapids March 2005

  11. Project $1.5 million to finance the purchase of non-line-of-sight tower equipment and customer premise equipment and expansion in Tri-City area (Saginaw, Midland, Bay City) Status SpeedNet LLC, with headquarters in Saginaw Uses licensed 2.1 GHz, 2.5 GHz and 2.6 GHz MMDS spectrum to provide fixed wireless broadband service Currently serves the Alpena, Saginaw and Mount Pleasant areas SpeedNet March 2005

  12. Project “Dark” fiber network in Macomb County Michigan Lightwave partnered with Macomb ISD and county government on network $826,327 loan for completion and purchase of dark fiber network New network will provide high-capacity, low-cost circuits for large enterprises Status Michigan Lightwave, LLC Operates successful dark fiber network in Kalamazoo County Michigan Lightwave Project serves 25 new communities in Macomb County and extends into St. Clair and Oakland Counties March 2005

  13. Project $4.1 million loan approved Acquisition of fiber IRUs and construction of laterals to improve their backbone network Borrower Provider of high-speed data services to numerous universities and other public institutions throughout the State of Michigan Currently determining whether tax exempt financing possible Merit Networks March 2005

  14. LDMI • Project • Softswitch and broadband gateways • $5 million loan to build out IP network • Integrated voice and data services to Southeastern Lower Michigan • Expand facilities-based infrastructure • Borrower • Southfield-based Competitive Local Exchange Carrier (CLEC) • 300 Plus Michigan employees March 2005

  15. UP Link • Project • $815,000 loan requested • Purchase of tower antennae, customer premise equipment and construction of wireless tower • $50,000 Seed Loan recipient • Underserved Upper Peninsula market • MBDA Board consideration in March • Borrower • UpLink Services, Inc. • Purchased earlier this year by several Marquette investors with strong technology and finance background March 2005

  16. Lighthouse Broadband • Project • $500,000 loan for capital build-out costs to deploy Broadband Over Powerline (BPL) Initiative • CMS Partnership • Approved in February • Borrower • Shpigler Group (dba Lighthouse Broadband) • Management consulting firm for communications and technology • Operating two other BPL pilots across the country • Selected by Consumers Energy to pilot BPL initiative in Grand Ledge and likely St. Johns. March 2005

  17. MBDA current portfolio of approved projects • Total number of counties at least partially impacted by approved loans: 45 • Total number of cities impacted by approved loans once networks are built and lit: 150 • Total number of loan applications received in last 12 months: 25 • Total $ amount of approved projects: $17.7M • Total $ amount in project “pipeline” (approved, received and expected ’05 applications): $35 to $40M March 2005

  18. For More Information: • www.broadbandauthority.org March 2005

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