This document discusses creative partnership models for cooperative broadband. It presents options for municipalities and rural electric cooperatives (REC) to partner with existing broadband providers rather than building networks alone. Models range from a municipality doing everything itself to full partnerships. Hybrid models propose forming a new joint business entity with shared costs, revenues, and ownership between the partners. The document outlines considerations and potential pros and cons of different partnership structures and roles. It provides examples of factors that contribute to successful and unsuccessful partnerships.

1. Creative Partnerships in
Cooperative Broadband
October 22, 2020

2. Jacki Miskimins
Director of Marketing
605-995-1784
Jacki.Miskimins@vantagepnt.com
Today’s Team
Kristy Szabo
Director of Consulting
605-995-1786
Kristy.Szabo@vantagepnt.com
Kevin Kloehn
VP of Customer Relations
414-801-1424
Kevin.Kloehn@vantagepnt.com

3. First Step
What is the problem we need to solve?
 Limited broadband provider options?
 Limited broadband speeds?
 Unaffordable?
 Unreliable service?
 Universal coverage?

4. Partnership Models

5. Models - Do It All or Partnership Service Options
 Do It Yourself (DIY)
- Utilize your infrastructure, back office systems, staff and capital (hire staff, vendors,
consultants where needed) – Full ownership
 Partnerships
- Partner with local or national providers to leverage their existing fiber
infrastructure, voice, data, video, back office systems and networking knowledge
 Hybrid
- Find a balance – leverage your resources where you can and partner when needed
- Look to where you can partner with local providers for certain aspects

6. Partnership Overview
No “one size fits all” solution
- What role do you want to have?
- What role should the Lessee / Provider have?

7. Partnership - Overview
Muni / REC:
- Own Mainline Fiber
- Own Fiber Drops
- Lease Fiber to Provider
Lessee / Provider will:
- Provide Electronics & Customer
Premise Equipment (CPE)
- Provide All Services to
Customers

8. Partnership - Overview
Muni - REC

9. Partnership – Overview
 Revenues
- Muni / REC will receive from the service provider
- Lease revenue (based on locations passed or served?)
- Possible percentage of revenue sharing
- Service provider will receive
- All end user / member revenues

10. Partnership – Pros / Cons
 Pros
- Minimizes Risk (Assuming Reliable Provider)
- Reduced Operational Costs
- Minimizes Legal/Regulatory Obligation
 Cons
- Poor Service Could Harm Reputation
- Little/No Control over Quality
- Responsible for Majority of CapEx
- Little or No Sharing of Revenue from Profitable Services

11. Partnership –

12. Partnership – Hybrid - Overview
 Partnership with established provider
- Each partner with unique strengths
 Form New Business Entity
- Equal partners (50%/50%); or
- Maintain control (60%/40%)
 All costs and revenues shared proportionally
- CapEx and OpEx
- End user / member service revenues

13. Partnership – Hybrid - Overview
Muni - REC

14. Partnership – Hybrid - Overview
 Operating Cost Obligations shared between Muni / REC / Service Provider
- Staffing
- Service Costs
- Network Equipment Costs
- Customer Service Costs
- Corporate Costs (G&A)
- Taxes This Photo by Unknown Author is licensed under CC BY-SA-NC

15. Partnership – Hybrid – Pros/Cons
 Pros
- New Entity
- Partner shares risk and reward
- New Entity Could be Co-Branded
- Maximize Name Recognition
- Smaller Investment / Potentially Higher Return
 Cons
- Increased Complexity in Business Structure
- Concerns on Holding Majority Ownership
- Increased Regulatory Responsibilities

16. Hybrid –

17. What Partnerships Are Working
 Good, strong strategic partners, bring value to the partnership,
execute defined business plans
 Share common goals and meeting those goals
 Good communications
 Fulfilling well defined partnership agreement
 Sharing rewards of the plan and success
 Flexible, modify partnership plans and goals as required

18. What Partnerships Are NOT Working
 Weak strategic partners, not bringing value to the partnership, poor
customer service, poor planning and execution of defined business plans
 Do NOT share common goals or are not meeting goals agreed to and set
 Poor communications – Lack of respect for partners
 Poorly defined partnership/operation agreement or weak execution of
 Failure to share rewards of the plan and success
 Not flexible, not adaptable to competitive/technical/regulatory/financial
challenges – refusal to modify partnership plans and goals when required

19. Questions?