OREGON CONNECTIONS
HOOD RIVER
October 24, 2013
Company Background

Clear Creek Communications
 Service
Area
 52
Sq. Miles
 Founded 1906
 Statistics
 Dwindling
Access Lines
 Stable DSL and Cable Modem Customers (20/80)
 Stable Number of Video Customers
 Growing Number of Security Customers
 We
serve no place
 Virtually
no cities, towns or named communities
The Network of the Future



May Not Be Your Own
External Forces Are Changing How Traditional
Carriers View the Very Nature of Their Operations
Leveraging Any Available Network is Now
Acceptable
External Forces Change the Future

Three Drivers of Change
1.
2.
3.

Reductions in Traditional Revenues
Financiers Tighten Credit
Active Regulatory Period
Opportunities Brought by Change

Reactions
New Revenues and Markets
Actions
Outcomes
1.) Reduction in Traditional Revenues

ILEC’s Actions
 Traditional
Cost Cutting
 Can Result In Returned Revenue

Customers Actions
 Movement
Toward Wireless
 Can Result in Uncollected Revenues

Action Of Others
 Events
Beyond Your Control
 Can Result in Lower Revenue
ILEC’s Actions

Can’t Manage an ILEC Like a Normal Business
 Cost
Savings vs Cost Study
 Complicated by Two Year Lag
 Positive Impact Can Be Short Lived
 Frustration and ?#*%&$!
Customer Action

Adoption of Broadband
 Loss

Shift Toward Wireless
 Loss

of Second Lines
of Primary Lines
Recession
 Just
Trying to Cut Back
 Impact on All Services

Expanded Options
 Some
Customers May Not
Know You
Customer Actions

Wireless Drift

4500
4000
3500
3000
2500
2000
1500
1000
500
0
Access Line Loss
Actions of Others

Local Impact Caused By Separation Rules
 Returns
That Are Driven By Averages
 National
Average Loop Cost
 Local Rate Benchmarks
 CAPS

Directly Impacted Our Operations
 Heavy
Investment In Some Areas Raised NALC
 Our Investment Straight Lined
 Impacts
Our NALC Multiple
 Significant Reduction in Support
 20% of Annual Revenue Lost
Actions of Others

Exponential Growth
 National
Average Loop Cost
 Increase
7.5%,14%, 10%, 12%, 1%
 NACP Grew 3x Faster Than Company
800
700
600
500
400
300
200
100
0
2.2x
2.1x
1.9x
1.7x
1.5x
1.6x
Clear Creek
National Average
2006 2007 2008 2009 2010 2011
2.) Financiers Tighten Credit

Concerns With Industry Segment
 Telephone
Business Performance
 Regulatory Uncertainty

Result
 Cautious
Lending
 Tighter Covenants

Bottom-Line
 Less
Capital Available
 Loan Pre-Payments
Concerns With Industry Segment

Industry Multiples – Jan 2013
Mean Enterprise Value
Growth
Lending Multiple
Transport/
Data Center
13.0 x (DC’s)
10 – 20%
3.5 – 6.0 x
Cable
7.3 x
5 – 10%
3.5 – 6.0 x
Wireless
5.2 x
0 – 5%
2.5 – 3.5 x
Telco
5.7 x
-5 – 5%
1.5 – 3.0 x
Credit Impacts Operation

Shifts Importance of Debt Service


20% Movement in 5 Years
Options Still Exist For Funding
Telephone
23%
2012
Leverage Must Be Moderate
 Business Plan Must be Prudent
 Heightened Due Diligence
 Will Be Pricing to Risk
 Bank Will Have a Greater Focus

Management
 Diversification
 Performance To Plan

2016
Debt
Service
52%
Television
25%
Telephone
6%
Television
20%
Debt
Service
74%
3.) Active Regulatory Period

Pressure on Telco Operations
 Limitations
on USF Support
 Phase Down of Switched Access Cost Recovery
 Corporate Operations Expense Limitation
 Rate of Return Re-Prescription
 And More
Pressure on Telco Operations

USF and ICC Reform is Our Reality
 Industry
Continues to Advocate
 We
Are Well Represented
 Yet That May Not Solve Your Specific Challenge
 Some of Us May Have Serious Issues
 Regulators
 They
Continue to Regulate
May Not Have Your Best Interest In Mind
 Surprise!
4.) New Revenues and Markets



Positive Action Can Be Taken
Revenue Generation Possibilities
Actions We Pursued
 Large
Scale Project
 Security
and Home Automation
 Leverage
Available Networks
 Both
Wired and Wireless
 Partnering
Positive Action Can Be Taken

Additional Revenue May Be Generated By
 New
Services
 New Customers

Low Capital Options
 Funded

Per Customer
Partnerships
 Cost
Savings
 Expertise
Revenue Generation Possibilities

Many Carriers Have Developed New Services
 Regulated
& Non‐Regulated
 Monitoring/Security
 Home
Networking
 Computer Literacy/Support
 VoIP
 Hosted PBX
 Ethernet Transport to Wireless
 Dark Fiber
 Colocation
Revenue Generation Possibilities

Or Attempted to Leverage Existing Assets
 Assets
Owned and Operated
 Switching
Services
 Installation & Repair
 Customer Service
 Billing & Collection
 Accounting/Regulatory/Management
 Assets
of Others
 Wireless
Networks
 Interconnected Networks
 Capital Investment
 Labor and expertise
Security & Home Automation

ClearView
 Next
Generation Security
 Interactive
Security
 Energy Management
 Home Automation
 Video Monitoring
 Leverages
 Backhaul
Wireless and IP Networks
on Verizon, ATT, T-Mobile
 Video and Secondary on Any IP Connection
 Easily Offered Beyond Exchange
Industry With Growth Spurt

Projected Annual Revenue Growth
Business intelligence Apps
Energy Information Services
Hosted Access Control
Managed Access Control
Managed Video
Hosted Video
Video Verification
Monitored Residential Fire
Intergrating Alarms and HVAC
Video Guard Replacements
Intergrating Secuirty on IT Networks
Security via Mobile Devices
Alternative Alarm Signal Transmission
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Interactive Security

Complete Web Control
A
New Reality for Customers
Energy Management

Measure Energy Usage
 Multiple
Measurement Levels
 Set Energy Goals
 Query Current Usage

emPower
 Control
Lights
 Operate Appliances
 Thermostats
Home Automation

Intelligent Operations
 Smart
Schedules
 Activity Patterns
 Geo-Services

Home Control
 Garage
Doors
 Window Blinds
Video Monitoring

Video Is The Most Popular Feature
 Live
Streaming
 Video Alerts
 Cloud Storage
 Network DVR
Leverage Other Networks

Western Independent Networks
 Expands
Our Reach
 Offers
Transport Network Throughout Oregon And The
Greater Northwest Region
 Leverage The Networks Of 25 Shareholder Companies
 Expands
Our Opportunities
 Oregon
Broadband Partnership
 Participation With Others





Integra
Century Link
Wave Broadband
LS Networks
INDATEL (National Coverage)
Partnering

ClearView
 Particularly
Suited to Working Together
 Current Have 7 Partners
 Sharing
 Common
Brand
 Knowledge
 Marketing
 Sales and Technical Staff
 Facilitates Quick Entry
Partnering

Oregon Cable Group
 Created
in 1999
 Recently Joined
 Current Have 4 Members
 Sharing
 Headend
Equipment
 Capital Projects
 Knowledge
 Technical Staff
Partnering

Western Independent Networks
 Equity
Partner
 Network Partnership
 Services Utilized
 Point
to Point Special Access
 Ethernet Transport
 Internet Backbone Access
 IP Voice Aggregation
 Peering
 NOC and Maintenance Services
Partnering

Possibilities Abound
 Jointly
Provided Services
 Infrastructure Sharing
 Wholesale Purchasing
 Management/Labor Contracts
 Look Around You
 What’s
Happening in Your Neighborhood?
 Are You Part of The Discussion?