Transcript The Market
Mr. Andrew Nester Chairman - LMA Systems, Inc.
Broadband Wireless World Forum San Francisco, CA February 19-21, 2001
The Market
Wireless Broadband
The Strategis Group predicts that wireless broadband revenues will reach $3.4 billion in 2003.
Dain Rauscher Wessels estimates wireless broadband revenues will reach $7.4 billion in 2003.
eMarketer reports by 2003 small and medium sized business will represent 80% of the total fixed wireless market.
Competitive Assessment
100% of towns/cities with more than 1,000,000 inhabitants have access to both DSL and cable.
In towns/cities with 50,000 to 100,000 inhabitants, 26.2% have cable and 32.1% have DSL.
(Source: US Dept. of Commerce)
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Broadband Opportunity
50 40 30 20 10 0
Commercial Opportunity
65% of small and mid-sized companies have Internet Access 11% of these companies use broadband (Source: Insight Research, March 2000) Residential Opportunity Internet Access 2000 Broadband Access 2000 14 12 10 8 6 4 2 0 US Rural Internet Access Central Cities Urban US Rural Broadband Access Central Cities Urban (Source: NTIA and ESA, US Dept. of Commerce)
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Wireless Broadband Opportunity
Exploding demand for high speed broadband services Need for high speed connections over the last mile Availability of proven wireless solution using MMDS spectrum Availability of licensed MMDS spectrum in second tier markets Availability of proven, reliable head-end and CP equipment FCC first accepted applications for two way data services in August 2000 Sprint and WorldCom providing leadership and credibility
Spent $1B each to acquire spectrum in 1999 Announced plans to launch 60 first tier markets over next two years
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Competition
Residential SOHO DSL (ADSL) Cable T1 T3 Satellite MMDS LMDS Unlicensed Wireless LMA Systems, Inc. Proprietary Document Small Business Medium Business Large Business
Who is LMA Systems?
Provider of fixed, two-way wireless broadband solutions to businesses, residences, and institutions.
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LMA Target Markets
Focus is on secondary and rural U.S. markets
Minimum market size 50,000HH “Positive” demographics
Good business mix High PC penetration High HH income High education level Good growth projections Few Competitors
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Target Subscribers
Small & Medium Businesses Corporate Telecommuters SOHO Advanced Residential
Heat Seekers Multiple PCs Home Networks
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Have a Strategic Plan
Acquire spectrum in second tier and rural markets Provide technical/customer support from single network operating center Offer broadband services to small to medium sized businesses and advanced residential customers Target through “geo-marketing” to capitalize on coverage areas Increase recurring revenue stream in two ways:
Develop broadband value added services Leverage network with larger numbers of residential customers
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Frequency Evaluation Criteria
Availability (fragmented ownership provides opportunities) Fit (clustered, usable spectrum) Valuation ($X per channel per household, adjusted for market size) Acquisition options
Purchase Lease (with option to buy and/or right of first refusal) Joint Venture (with option to buy and/or right of first refusal)
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Comparison of Technologies
Bandwidth Range Propagation CPE Cost Ideal Market License Cost LMDS Very High Short True LOS High Urban Medium LPTV * High Long Near LOS Low Suburban/ Rural Medium MMDS High Long Near LOS Low Suburban/ Rural Medium Unlicensed Medium Medium Near LOS Medium Suburban Low
* LPTV is currently licensed for downstream only.
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Site Buildout Plan
Cookie Cutter approach Approximately $500K to $1M per site (hard and soft costs) FCC application and buildout occur simultaneously 90 days to launch of services Dedicated Team (s)
RF Engineer Data Engineer Project Management Launch Marketing Programs Launch Sales Team Launch Installers Assigned QoS Support (Technical/Customer)
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Subscriber Acquisition
Comprehensive Site Marketing Plans Business Partners Direct Sales In-House Sales Universities MTU’s (Multi-Tenant Units) Third Party Sales Corporate Sales
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Broadband Services
Base Level Offering
Internet Access/Services
Data Carrier Services Virtual Private Networks (VPN)
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Broadband Services
Advanced Offering
B2B Application Services/ Web Hosting
Voice over IP Custom Video Application Services - Delivering top end applications to small and medium sized businesses. Examples:
Profession Specific (Legal, Health Care, HR, etc.) Customer Relationship Management (CRM)/Contact Management Project Management Data Warehousing
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Have the Right Balance
Businesses bring in five times the revenue of residential accounts.
Businesses are better users of value added services.
Residential accounts may transition to business accounts as e-commerce, home-based businesses and telecommuting grow.
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Different Markets have Different Needs
Choose your markets and segments carefully.
Select the right portfolio of products to meet the needs of your customers.
Don’t be everything to everyone.
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The Key is…
Carefully manage subscriber acquisition & retention costs.
In today's competitive broadband marketplace, it's not enough to know who your customers are, what you want to sell them and how you hope to manage that relationship. To survive and succeed, providers must manage subscribers based on the value those customers bring to the enterprise. Those that do not will lose the coming battle for market share and increasing revenue.
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Cost per Residential Subscriber
Equipment Costs
$2,500 $2,000 $1,500 $1,000 $500 $0 xDSL MMDS Unlicensed BWA Cable Plant/License Headend/Common Equip.
CPE Installation (Source: First Union Securities, Sept. 2000)
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Where You Want to Be
Unlimited
Sweet Spot
Limited
MMDS DSL LMDS Cable
High
Delivery Cost
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Key Factors for Success
Procure adequate spectrum Conduct thorough market and competitive assessments Know your target market and their needs Establish differentiation Manage subscriber acquisitions
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Questions & Answers
Thank you.
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