Northern Tier Network Consortium

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Northern Tier Network Consortium Ron
Kraemer Patrick Christian UW-Madison July 11, 2008
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Northern Tier Network Map
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Discussion Topics

• Operations
• Performance metrics
• Capacity expansion
• Wave valuation model

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Operations

• 1.5 years in operation (bootstrapping)
• (some) fiber cuts, (lots of) extraordinary fiber
  relocates, (a few) hardware facility failures,
  a bridge failure, floods
• Operating procedures for
• Outage notifications (planned/unplanned)
• Fiber emergency break-fix
• Optional/Professional Remote Hands Eyes
• Collocation/spares depots access procedures
• Identified service levels (e.g. provisioning,
  troubleshooting response)
• Formalization of management structure
  (BOG/BOMC/Techs)

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Performance Metrics

• Definitions
• Qtr, annual and longitudinal reporting
• Reporting areas
• General activity reporting (count statistics)
• All operator activities (all tickets/change mgnt)
• System (all, planned, unplanned events)

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Performance Metrics

• Reporting areas (continued)
• System impact (summary statistics)
• System uptime (all events unplanned)
• Event root cause summary (5 categories fiber,
  hardware, facilities, operations, misc)
• Event summary statistics (mean/median/min/max)
• Circuit (institutional) impact (summary
  statistics)
• Circuit uptime (not including customer premise
  equipment)
• Auto-restoration (path swap) reporting
• Hoping to (someday) be able to benchmark with
  others

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Capacity Expansion Current Utilization
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Capacity Expansion Add Express Path
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Wave Valuation Model

• Why considering this?
• Preparing for wave trading across NTNC with NTNC
  partners and external parties
• Bartering can be an inefficient way of exchange
• Understanding BOREAS-Net institution needs for
  wave(s) to Seattle and/or Winnipeg
• Valuation calculated via cost-basis and
  market-basis approaches

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Wave Valuation Model Cost Basis

• Cost-basis valuation approach
• Full CapEX and OpEx (equip, fiber, ops)
• MPLS-CHI Equipment 1/20 1/5 1/3 (4.2MM
  571,000) 15,903
• (add) MPLS-CHI fiber IRU/hut prep (1/20)
  276,473 13,824
• (add) MPLS-CHI annual maint. costs (1/20)
  (260,884 368,775) 31,483
• Assumptions 20 waves, 5yr depreciation cycle,
  1500 mile network but only considering 500 mile
  segment (CHI-MPLS), 20yr fiber IRU, no CPI growth
• Value of ONE wavelength on MPLS-CHI route
  61,210

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Wave Valuation Model

• Market-based valuation approach
• Internet2 WaveCO
• NLR WaveNet
• Commercial carrier
• SEACHI market-based valuation
• NLR WaveNet 49.10/10Gbps-mile-year
• Internet2 WaveCo 142.59/10Gbps-mile-year
• Commercial carrier 98.40/10Gbps-mile-year
• Assumptions CHI-SEA (via KC Denver) pricing
  approximates NTNC path, uniform or postalized
  pricing across US, on-net pricing only (no local
  loop considerations), no CPI growth
• Does NOT include 5MM membership fee
• Does NOT include aggregate membership or
• participaton fees

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Northern Tier Network Map
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NTNC Path Investor Interest
1. Total mileage 2481 miles 2. ATT NextGen
fiber route mileage from Seattle, WA to Spokane,
WA 3. ATT NextGen fiber route mileage from
Spokane, WA to Glendive, MT 4. ATT NextGen fiber
route mileage from Glendive, MT to Minneapolis,
MN 5. MNDoT/WisDoT/Adesta fiber route mileage
from Minneapolis, MN to Chicago, IL by way of
Madison and Milwaukee, WI
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NTNC Path 10Gbps-mile-year shares
Lower Valuation Bound 121,317 per 10Gb/yr
Upper Valuation Bound 353,766 per 10Gb/yr
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NTNC Path 10Gbps-mile-year shares
Commercial Valuation 244,130 per 10Gb/yr
Commercial Valuation 244,130 (98.40/10Gb-mile-y
ear 2481 NTNC miles)
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Northern Tier Network Map
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Winnipeg Path Investor Interest
1. Total mileage 1045 miles 2. Est. fiber route
mileage from Winnipeg, MB, CA to Emerson, MB,
CA 3. Est. fiber route mileage from Emerson, MB,
CA to Fargo, ND to Minneapolis, MN (NTN-ND
Northern Tier Network North Dakota) 4.
BOREAS-Net owned fiber from MNDoT and WisDoT
along Touch America fiber path (actual
OTDR distance)
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Winnipeg Path 10Gbps-mile-year shares
Lower Valuation Bound 51,298 per 10Gb/yr
Upper Valuation Bound 149,970 per 10Gb/yr
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Winnipeg Path 10Gbps-mile-year shares
Commercial Valuation 80,000 per 10Gb/yr
Commercial Valuation 80,000 CANARIE price of
77/mile from Winnipeg to Chicago (StarLight)
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BOREAS-Net Update

• Discussion/Questions/Comments?
• kraemer_at_cio.wisc.edu
• patrick.christian_at_doit.wisc.edu