Wi-Fi Hardware and Chipset Sales (World-wide 2001-2007)

1. 100 $4,500 Millions Millions $3,900 Wi-Fi Hardware $4,100 90 $4,000 86.5 Chipsets 80 74.9 $3,500 72.2 Chipset Revenues 70 Hardware Revenue $3,000 $2,900 60.2 $2,800 60 51.9 $2,500 50 $2,200 44.4 $2,000 40 33.3 $1,800 $1,500 28.8 30 20.6 18.4 $1,000 20 $575 9.6 8.8 $567 $500 10 $422 $527 $404 $230 0 $- 2001 2002 2003E 2004E 2005E 2006E Wi-Fi Hardware and Chipset Sales(World-wide2001-2007) Sources: In-Stat/MDR, December 2002 & March 2003 Kenneth R. Carter

2. WiMax: A Reality Check(Hardware and Chipset SalesWorld-wide2001-200?) Tons Tons WiMax Hardware Chipsets Lots Lots Some more Some more Some 0.0 a few Some 0.0 0.0 $0 $0 $ a tiny bit $0 0 $0 2001 2002 2003E 2004E Sooner Later Sources: OSP estimate Kenneth R. Carter

3. Choice of Licensing Regime Concerns • Market: Service Provider or Equipment • Licensing regime should offer flexibility and choice • Licensed handles relocation better • Use and User Kenneth R. Carter

4. Does the FCC Determine if WiMax will be Licensed or Unlicensed? Market Entry Rights Technology License Regime Market Petition Lobbying Rulemaking FCC Initiatives New Companies Kenneth R. Carter

5. Gov’t/Licensed Unlicensed Licensed 5400-5725 2300-2400 3300-3800 2480-2700 5725-5850 MMDS WiMax Bands Part 15C Satellite Radio Location/FWA U-NII WiMax Band Map 2000 MHz 6000 MHz Frequency (MHz) Kenneth R. Carter

6. Charting Unlicensed Devices RF Devices Part 15 Intentional Radiators Subpart C U-NII Subpart E UWB Subpart F Low Power Transmitters U-PCS Subpart D Garage Door RFIDs Spread Spectrum Motorola Canopy Cordless Phones 802.11b 802.11g 802.11a Blue- Tooth Wi-Fi HomePlug ISM Part 18 Kenneth R. Carter

7. WiMax in the Regulatory Process Allocation Policy Licensing Oversight • Modulation and emissions limits • Power limits • Interference • Tower siting • RF Safety • Identification of Users • Assignment of rights • Police Role • Band Selection • Use decisions • Network architecture Kenneth R. Carter

8. (un)Licensing Regimes for WiMax • Unlicensed • Licensed by Rule • 70/90 GHz • Station/Geographic • Operator (Ham) • Private Commons I received a license, and loss all my property rights. Kenneth R. Carter

9. Implications of Licensed and Unlicensed WiMax • Clarity of Rights and Duties • Fair Price Discrimination • Unfair Competition • Urban v. Rural Concerns Kenneth R. Carter

10. Summary • WiMax is standard, not a radio service • Ideally, the market will decide the licensing regime for WiMax • Increased flexibility for spectrum users • Transition focus from command and control to market and user • Both licensed and unlicensed spectrum access fulfill important communications roles Kenneth R. Carter

11. WISP Business Opportunities McCall, Idaho – 100 country miles north of Boise. • Small companies are significant for broadband in small and underserved markets • Low capital costs (unlicensed equipment) • Interference protection vs. license fee tradeoff • Can achieve profitability at very small scale Source: Strategic Information Services LLC Kenneth R. Carter

12. Investor Behavior Assumptions • Require Compensation for Capital • More is More • Time Value of Money • Risk & Volatility are Bad • Increased Levels of Risk Require Greater Return • Optimal Trade-off between Risk and Return (Sharpe Ratio) • Corporate Entity Manages Risks and Transaction Costs Kenneth R. Carter

13. Capital Structure • Debt - obligation to pay (principal + interest) • Tax deductible, fixed rate of return, no profit sharing • Fixed repayment schedule • Equity – interest in ownership (dividend) • Not required to pay • Not tax deductible, profit sharing • Financial Leverage • Increases expected return • Increases risk Kenneth R. Carter

14. Financing Decision • Two Questions: How Much? What Instrument? • Business Plan • Forecast revenues and costs – free cash flows • Net Present Value + or - ? • Optimal Capital Structure • Volatility of Cash Flows • Market Conditions • Management • Small Business: Debt or Internal Financing Kenneth R. Carter

15. WISP Business Opportunity • Small Companies are Significant for Broadband in Small and Underserved Markets • Internet Service can be Vital in These Markets • Emerging Platforms to get to Customers • Low Capital Costs (unlicensed equipment) • Interference Protection vs. License Fee Tradeoff • Input Pricing • Limited Resources for Securityand Best Practices • Local Zoning Ordinances, Towers Siting, and Safety Standards Issues Kenneth R. Carter

16. WISP Business Risks • Spectrum • Network performance issues • Interference issues among Part 15 devices • Enforcement against “bad neighbors” • Competition • Regulatory Change • Uncollectible Accounts Receivables Kenneth R. Carter

17. Policy Concerns • Capital Friendly Environment vs. Competition • Perverse Incentives: Moral Hazard • Regulation vs. Market Forces Kenneth R. Carter

18. WISP-Friendly FCC Practice • Building relations between Government and Industry • Government sponsored information exchanges can facilitate roll-out underserved markets • Government interaction is greatly appreciated • Increased Accessibility of FCC in Rural America • Education on rules • Greater transparency and “plain English” in proceedings • Topical Index of WISP-related Commission Items and Activities • Plain English Summaries of Commission Items • Outreach to WISPs • Increase “average Joe” comments to develop more diverse record for proceedings • Education of FCC Field Personnel to Rural WISP issues Kenneth R. Carter

19. Kenneth R. Carter Source: Tribal Digital Village

20. Odessa • Nearly 3000 square miles • Each circle is 8 miles or 15 miles in radius • Terrain issues are not factored in • I’ll eventually fill in the gaps • Gotta cover larger areas first Kenneth R. Carter Source: Odessa Office

21. Kenneth R. Carter

22. The diagram of the company’s wireless network illustrates better than any written description the magnitude of the network AMATechTelhas fully designed, installed and continues to maintain and expand. AMA TechTel offers a secure Layer 3 network with guaranteed uptime, QoS, and advanced services like VPNS. By using proven “carrier class” technology, AMA TechTel offers a quality, cost-effective wireless networking system operating on multiple bands to include 900 MHz, 2.4GHz, and 5.7GHz for last mile connections to customers. Most of the tower locations are connected within the 5GHz range. Kenneth R. Carter

23. Operation Anytown, IAPopulation 700 – Site 1 Kenneth R. Carter

24. Kenneth R. Carter Source: Connect Rio Arriba

25. Source: PDQLink Kenneth R. Carter

26. Source: PDQLink Kenneth R. Carter

27. Source: PDQLink Kenneth R. Carter

28. Source: PDQLink Kenneth R. Carter

29. Grand Haven Area Coverage Map Kenneth R. Carter

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35. Summary • WiMax is a set of standards, not a radio services. • Licensing regime should offer flexibility and choice. • Ideally, market will decide licensing regime. • Both licensed and unlicensed spectrum access indicate successful liberalization policy • Emergence of “light licenses” is likely. • The hierarchal nature of WiMax lends itself to a licensed regime, but not exclusively. Kenneth R. Carter

36. Part Two: Municipal Wireless Networks in the United States • Should municipal be permitted to offer wireless networks? If so, how should municipal wireless networks be regulated? • The promise of municipal networks includes ubiquitous, affordable broadband and new services for communities. • An elegant solution allows for municipalities to provide networks, but minimizes the negative impacts of a government’s offering communications. Kenneth R. Carter

37. http://www.phila.gov/wireless/ Municipal Wireless • Promote Open Metro-scale Wireless Connectivity • Advocate Wireless Community Networking • Provide a Forum for Wireless Networking • Recommend Policy • Develop Future Uses • Free Internet access (5 locations) • Cost: • $40,000 to $60,000/ sq. mile. • Total project for the entire city estimated $7 to $10 million. Kenneth R. Carter

38. The Good  Underserved communities Rural Inner-city Provides a competitor in other markets Public/private collaboration New & improved services The Bad  14 States considering considering laws restricting municipalities Includes Philadelphia Most municipalities are not capable of running entire network Construction OSS Billing, etc. Municipal Wireless: Pros and Cons Kenneth R. Carter

39. Issues Facing Municipal Wireless • Unfair Access to Risk Capital • Partial Privatization • First Amendment – Freedom of Speech • Federal-State Preemption • Unfair Competition Kenneth R. Carter

40. Policy Recommendations • Unfair Access to Risk Capital • Financed in whole or part by tax revenue • Trust fund to equalize cost of capital • Partial Privatization • Full separation of government entities • Impartial rulemaking and enforcement • First Amendment – Freedom of Speech • No prior restraints • Federal-State Preemption • Unfair Competition • Open networks and regulatory parity Kenneth R. Carter

41. Conclusions • Both licensed and unlicensed spectrum access fulfill important communications roles. • Transition from command and control to market and user. • More intense use of RF spectrum. • Increased flexibility and experimentation. • Experimentation  failures and successes. Kenneth R. Carter