PRIME COMPANIES INC' LMDS CASE STUDY FOR PENNSYLVANIA

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PRIME COMPANIES INC.LMDS CASE STUDY FOR
PENNSYLVANIA

• BROADBAND WIRELESS
• WORLD FORUM
• FEB 19-21, 2001
• SAN FRANCISCO, CA

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PRESENTED BY

• NORBERT J. LIMA
• PRESIDENT AND CEO
• PRIME COMPANIES INCORPORATED

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History

• Prime Companies participated in the 1999 LMDS
  Auction.
• Prime Companies was successful in acquiring 8
  LMDS A licenses.
• Geographically speaking, these licenses range
  from Western Pennsylvania going in a northerly
  direction all the way into New York state.

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Goal

• Strategic and cost effective deployment of LMDS
  services in the secondary markets in Pennsylvania
  and subsequently New York.
• Serve the underserved markets!

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The Challenges of Getting Started

• IMPLEMENTATION STRATEGY
• Think in Diminutive Mode- buildings were small-
  Max 6 stories.
• UNDERSTAND THE MARKETS MARKETING STUDIES
• Which market to deploy first?
• Which markets have tallest buildings?
• Which markets have broadband/DSL?

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Challenges of Getting Started

• Due Diligence
• Whats customers perceived needs?
• Understand customers level of internet and
  e-commerce knowledge.
• What manufacturer is able to deliver?
• What technology TDM or FDM
• Dynamic Bandwidth Allocation.
• Is equipment available now- or is it vaporware?
• Evaluate hardware Pricing! (Both base station and
  CPE)

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Challenges Continued

• Site Lease Negotiations (This is not N.Y.C.!)
• Base station locations
• Building-top CPE locations
• Ordering Services
• Bandwidth from Local Providers-not much
  competition!
• Is DS3 available or only T1s?

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Customer Base

• Not 70 story building, not 20 story buildings-
  Best Case, 6 Stories- Not a large number of
  customers in any one building!
• Unlike Metropolitan Areas , education is a must-
  in secondary markets a 56K modem is A Screaming
  Speed
• Educate what speed means
• What bandwidth means

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Customer Base Continued

• How can people benefit?
• What is e-commerce and the impact on their
  business?
• EDUCATE, EDUCATE, EDUCATE!
• Your customers are business only. In the
  secondary markets we need to capture all business
  and residences in the future.

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Equipment Prices and the Economic Impact

• Need more competition!
• Need more buyers!
• All this will drive the price down
• Why price needs to be cheaper-More Price
  Effective!
• Most business buildings have one to four tenants,
  and CPE costs are too high!

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Equipment Prices Continued

• In 1 to 2 tenant buildings we dont need min.
  2-10BT LAN connections and two T1s-
• Maximum from one ODU/CPE 16-10BT-Much too much!
• Less capacity with better price- more business
  customers and capture residential market equals
  rapid deployment!
• Maximize Repeater design
• Optimum penetration with least amount of
  infrastructure

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Equipment PricesContinued

• Must develop standards particularly in the CPE
  equipment as to invite competition!
• Standards allow competition and creates
  competitive pricing structures- highly needed
  particularly in the secondary markets.
  Manufacturers, this is an 11B equipment market!

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Strategies for Success

• Create Alliances i.e. Chambers of Commerce
• Regional Economic Development Centers
• Apartment House Associations