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HomeMy WebLinkAbout4 Broadband Business Plan Agenda Item #; Memorandum To: Board of Directors From: Peter Holzmeister Date: May 11, 2001 Broadband business plan a) At the last meeting we discussed the status of the Braodband business plan. We reported on the trip to Glasgow, Kentucky. We talked about visiting Ashland, Oregon and Alameda, California. Plans for those visits are progressing. We were asked to prepare a modified pro forma reflecting the postponement of telepony services. Attached is that revised pro forma. b) We would like to proceed to the next step. We need to secure the services of a design engineer and we need to begin to arrange for financing. With the Board's approval, we will bring to the next meeting proposals for engineering and financing. BROADBAND BUSINESS UNIT Assum tions Launch Date of Broadband Business Unit-July 1,2002 COP Interest Rate-6% In-Lieu-Of-Franchise Fees to be paid to Tom of Truckee,Nevada and Placer Counties @ 5%of Gross Cable Television Revenues Staffing Levels BBU to Provide- Cable Television,High Speed Internet,Business to Business Ethernet Connectivity BBU to be sole ISP for first year,with platform available to Local,Regional,National ISP's thereafter Staffing to include;BBU Manager,2 Customer Service Re s,2 Technicians Homes passed Yr.i 1 Yr.2 1Yr.3 Yr4 Yr5 Yr6 Yr7 Yr8 r9 Yr10 9,480 0,104 10,057 10,359 10,670 10,990 11,320 11,659 12 Y,009 12,369 Cable Penetration 35.0% 30.0% 38.0% 38.0% 40.0% 40.0% 45.0% 45.0% 50.0% 50.0% Cable Subs 1,659 2,929 3,822 3,936 4,268 4,396 5,094 5,247 6,004 6,185 Increase 1,270 892 115 331 128 698 153 758 180 Basic Rev./Monthly Cost 29.95 29.95 29.95 33.95 33.95 33.95 37.95 37.95 37.95 37.95 No.of Channels offered 60 60 60 65 65 65 70 70 70 70 Digital Tier Penetration 10.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60 0% Digital Tier Subs 166 586 955 1,181 1,494 1,758 2,292 2,623 3,302 3,711 Digital Tier RevJMonthly Cost 10.00 10.00 10.25 10.51 10.77 11.04 11.31 11.60 11.89 12.18 Premium Penetration 20.0% 20.5% 21.0% 21.5% 22.1% 22.6% 23.2% 23.8% 244% 250% Premium Subs 332 601 803 848 942 995 1,181 1,247 1,463 1,545 Premium RevJMonlhly Cost 10.00 10.25 10.51 10.77 11.04 11.31 11.60 11.89 12.18 12,49 PPV Buys Per Month 1.00 1.00 1.02 1.04 1.06 1.08 1.10 1.13 1.15 1.17 PPV Rev./Cost Per Movie 2.95 2.95 3.02 3.10 3.18 3.26 3.34 3.42 3.51 3.69 Cable TV Equipment Rental Charge 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 Cable Installation Charge 24.95 24.95 24.96 24.95 24.95 24.95 24.95 24.95 24.95 24.95 Billing 0.40 0.42 0.44 0.46 0.49 0.51 0.54 0.56 0,59 0.62 ISP Penetration 10.0% 20.0% 25.0% 30.0% 30.0% 35.0% 35A% 35.0% 40.0% 40.0% ISP Subs;TDPUD 474 ISP Subs;Platform 0 1953 2514 3108 3201 3846 3962 4081 4804 4948 ISP Rev, 24,95 15.00 15.00 15.00 15.00 15,00 15.00 15.00 15.00 15.00 ISP Equipment Rental Charge 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 moo Total Buildings Passed-Ethernet 192 196 200 204 208 212 216 221 225 229 Building Penetration-Ethernet 50.0% 51.0% 52.0% 53.1% 54.1% 55.2% 56.3% ST4% 58.6% 59.8% No.of Buildings Entered-Ethernet 96 100 104 108 112 117 122 127 132 137 Demand Per Building-Ethernet 60.0% 63.0% 66.2% 69.5% 72.9% 76.6% 80.4% 84,4% 88.6% 93.1% Ethernet Subs 29 63 69 75 82 90 98 107 117 128 Ethernet Rev,/Month Cost 550.00 550.00 550.00 550.00 550.00 550.00 550.00 550.00 550,00 550,00 Advertising Revenue/Sub 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 Telephony Subs 0 0 0 0 0 0 0 0 0 O Telephony Rev. 0 0 0 0 0 0 0 0 p p During 1st four years of operation facility rent and GM salary%waived. Cost of Project,including all Financing Costs(est.$450,000),Risk Mitigation(est.$1.5 million),and loss during first two years of operation($1 million)estimated to be$11,700,000 Pole Make Ready costs to be distributed between Broadband and Electric Business Units at 30%-70%split Connection to"W W W"to begin as"TA",to"T-3",to fiber to POP SCADA Services saving to Electric and Water Business Units-$122,000 annually. Draft Proforma 4-May 2001.xis Program Year 2002 20031 20G41 20051 20061 20071 20081 20091 20101 2011 Revenue SCADA(savings to Electric&Water Units) 122,000.00 122,000.00 122,000.00 122,000,00 122,000.00 122,000.00 122,000.00 122,000.00 122,000.00 122.000.00 ISP;TDPUD Operated 141,915.60 ISP;Platform(open access) 0.00 351,518.40 452,579,94 559,388.81 576,170.47 692,364.85 713,135,79 734,529.87 864,646.59 890,585,98 Cable Television;Basic 596,244.60 1,052,797.61 1,373,549.95 1,603,705.55 1,738,754.44 1,790,917.07 2,319,728.86 2,389,320.73 2,734,444.83 2,816,478,18 Cable Television;Digital 19,908.00 70,303.68 117,519.92 148,885.99 193,035.91 232,911.62 311,212.68 365,069.77 471,071.83 542,546.27 Cable Television;Premium 39,816.00 73,862.80 101,244.88 109,561.52 124,801.38 135,053.03 164,415.15 177,920.82 213,928.79 231,501.70 Cable Television;PPV 5,872.86 20,739.59 35,361.75 45,695.79 60,431.12 74,372.76 101,363.16 121,282.72 159,628.47 187,525.43 Business Ethernet 190,080.00 415,294.39 453,675.89 495,604.62 541,408.40 591,445,36 646,106.74 705,819.93 771,051.81 842,312.42 Telephony 0 0 0 0 0 0 0 0 0 0 Equipment Rental;Cable Television 19,908.00 70.303.68 114,653.58 141,711.83 179,253.04 211,006.43 275,066.66 314,798.51 396,296,35 445,292.99 Equipment Rental;ISP 56,880.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 Cable Installation 41,392.05 31,694.48 22,267.03 2,860.61 8,270.67 3,194.55 17,411.60 3,812.73 18,908.31 4,494.36 Advertising 59,724.00 105,455.52 137,584,30 141,711.83 153,645.46 158,254.82 183,377.78 188,879A1 216,161.65 222,646.50 In-Lieu-of-Franchise Fees 33,092.07 60,885.18 81,383.82 95,392.44 105,851.14 111,662.72 144,835.99 152,679.70 178,953.70 188,902.58 Gross Revenue 1,293,741.11 2,313,970.15 2,930,437.25 3,371,126.55 3,697,770.89 4,011,520.49 4.853.818.43 5,123,434.18 5,968,138,62 6,305,383.83 Less;Bad Debt and Collections 12,937.41 23,139.70 29,304.37 33,711.27 36,977.71 40,115.20 48,538.18 51,234.34 59,681.39 63,053.84 Total Revenue 1,280,803.70 2,290,830.45 2,901,132.88 3,337,415.28 3,660,793,18 3,971,405,28 4,805,280.25 5,072,199.84 5,908,457.24 6,242,329.99 Expenditures Programming;Basic 238,497.84 421,119.04 549,419.98 641,482.22 695,501.78 716,366.83 927,891.54 955,728.29 1,093,777.93 1,126,591.27 Programming;Premium 21,898.80 40,624.54 55,684.69 60,258.84 68,640.76 74,279.17 90,428.33 97,856.45 117,660.83 127,325.93 Programming;PPV 3,876.09 13,688.13 23,338.75 30,159.22 39,884.54 49,086.02 66,899.69 80,046.59 105,354.79 123,766.78 In-Lieu-of-Franchise Fees 33,092.07 60,885.18 81,383.82 95.392.44 105.851.14 111,662.72 144,835.99 152,679.70 178,953.70 188,902,58 '.. Sales and Marketing 100,000.00 35,000.00 35,000,00 35,000.00 35,000.00 35,000.00 35,000.00 35,000,00 35,000.00 35,000.00 Access to W W W 30,000.00 120,000.00 120,000.00 120,000.00 120,000.00 120,000.00 120,000.00 120,000.00 120,000.00 120,000,00 Operations Facility Rent 0.00 0.00 0.00 0.00 382,500.00 382,500.00 382,500.00 382,500.00 382,500.00 382,500.00 Transportation Overhead 42,054.27 86,631.80 89,230.75 91,907.68 94,664.91 97,504.85 100,430.00 103,442.90 106,546.19 109,742.57 '.. Administrative Overhead 2,913.01 6,000.80 6,180.82 6,366.25 7,080.68 7,816.55 8,574A9 9,355.17 10,159.27 10,987.50 Plant Maintenance 20,000.00 20,000,00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000,00 20,000.00 Plant Maintenance Personnel 132,080.00 272,084.80 280,247.34 288,654.76 297.314.41 306,233.84 315,420.85 324,883.48 334,629,98 344 668,88 '.. Utilities(electric,inter,telco) 9,000.00 18,000.00 18,000.00 18,000.00 18,000,00 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 '.. Expensed Installation Costs 124,425.00 95,274.00 66,934.96 8,599.02 24,861.72 9,602.84 52,339.49 11,461.11 56,838.62 13,510.10 '.. General&Administration Management and Staff 57,076.50 117,577,59 121,104.92 124,738.07 162,470.21 201,334.31 241,364.34 282,595.27 325,063.13 368,805.03 Employee Benefits(All) 127,831.96 263,333,84 271,233.86 279,370.87 310,722,44 343,014.56 376.275.44 410,534.14 445,820.61 482,165,67 Subscriber Billing 7,963.20 14,763.77 20,224,89 21,873.22 24,900.94 26,930.36 32,765.83 35,436.25 42,582.56 46.053.04 Other Operating Expenses 950,708.75 1,584,983,50 1,757,984.80 1,841,802.59 2,407,393.53 2,519,332.06 2,932,726.00 3,039,519.37 3,392,887.62 3,518,019.36 Operating Income 330,094.95 705,846.94 1,143,148.08 1,495,612.69 1,253,399,65 1,452,073.23 1,872,554.25 2,032,680.47 2,515,569.62 2,724,310.63 Principle&Interest 1,020,000.00 1,020,000.00 1,020,000.00 1,020,000.00 1,020,000.00 1,020,000.00 1,020,000.00 1,020,000.00 1,020,000.00 1,020,000.00 Technology Reserve Fund 500,00atio 500,000.00 500,000.00 500,000.00 Total Expenses 1,970,708.75 2,604,983.50 2,777,984.80 2,861,802.59 3,427,393,53 3,539,332.06 3,952,726,00 4,059,519.37 4,412,887.62 4,538,019.36 Net Income -689,905.05 -314,1 3.06 123,148.08 475,612.69 233,399,65 432,073.23 352,554.25 512,680.47 995,569.62 1,204,310.63 Draft Proforma 4-May 2001.x1s