Ohio Department of Transportation · 2019-08-02 · Ohio Department of Transportation Digital Infrastructure Assets and Strategy EY as a leading infrastructure and P3 advisor 6 We

Ohio Department ofTransportationDigital Infrastructure Assets andStrategyRequest for Information ResponseErnst & Young Infrastructure Advisors, LLC

Ohio Department of TransportationDigital Infrastructure Assets and Strategy

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1 Company background► Introduction to EY► EY as a leading infrastructure and P3 advisor► EY infrastructure advisory for wireless and broadband

services

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2 Reponses to RFI inquiries 8

Contents

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EY | Assurance | Tax | Transactions | Advisory

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help buildtrust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team todeliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for ourpeople, for our clients and for our communities.

EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each ofwhich is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services toclients. For more information about our organization, please visit ey.com.

Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US.

Ernst & Young Infrastructure Advisors, LLC is a registered municipal advisor and an affiliate of Ernst & Young LLP.

© 2019 Ernst & Young Infrastructure Advisors, LLC.All Rights Reserved.

ED None

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended tobe a substitute for detailed research or the exercise of professional judgment and contains no trade secrets. Neither Ernst &Young LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned toany person acting or refraining from action as a result to any material in this publication. On any specific matter, referenceshould be made to the appropriate advisor.

ey.com

Please Note: This RFI submission does NOT include any information consideredTrade Secret.

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Section 1

CompanyBackground

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EY was named the No. 1 Company byDiversityInc magazine for Overall Diversity,including:

► No. 1 Company Diversity Councils► No. 1 Company Employee Resource

Groups► No. 1 Company for People With

Disabilities► No. 1 Company for Mentoring► No. 4 Company for Recruitment► No. 7 Company for Supplier Diversity

A global multidisciplinary firmErnst & Young (EY) is one of the world’s largest integratedprofessional services organizations and has been inbusiness for more than 100 years. As a global leader inassurance, tax, transaction and advisory services, we arecommitted to serving both public and private sectorclients across a wide range of industries.

Our global organization enables our clients to take fulladvantage of the resources that are available across EY’snetwork of financial, commercial and technicalprofessionals. We can access the right people andassemble broader, more experienced teams, wherever theclient is based, to deliver seamless service worldwide.

At the same time, we are united by a single operatingstructure and a common culture of innovation andknowledge sharing. This unique one-organizationapproach qualifies the people of EY to serve clients bybringing together multiple competencies within anintegrated team, which transcends geographic bordersand organizational lines.

Introduction to EY

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A diverse and inclusive workforce

At EY, we believe that our high-performing teams,maximize the power of different opinions,perspectives and cultural references, will help ourclients succeed. Our focus on diversity andinclusiveness is integral to how we serve our clients,develop our people and play a leadership role in ourcommunities.

EY’s values

Our shared values run through all of our advisory work,which influences the way we work with each other and theway we serve our clients. Our values define who we are:

► People who demonstrate integrity, respect and teaming► People with energy, enthusiasm and the courage to lead► People who build relationships based on doing the right

thing

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NOTE: ERNST & YOUNG IS NOT A NETWORKINGSOLUTIONS PROVIDER OR POTENTIAL EQUITYOR DEBT INVESTOR. RATHER, ERNST & YOUNGSERVES AS A STRATEGIC COMMERCIAL ANDFINANCIAL ADVISOR TO PUBLIC AGENCIES ONADVANCED NETWORKING PROJECTS AND ISPROVIDING THIS RFI RESPONSE FROM SUCHPERSPECTIVE.


Our Commitment to the State of Ohio

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EY’s Ohio roots date back to 1849 and one of our predecessor firms (Ernst & Ernst) was founded in Cleveland in in 1903.Our leadership in serving Ohio communities is unmatched:► We serve 86% of the Fortune 1000 companies and 62% of the Russell 3000 companies in Central Ohio.► We serve 92% of the Fortune 1000 companies and 64% of the Russell 3000 companies across Greater Cincinnati and

Northern Kentucky.

EY US is committed to helping build astronger Ohio.Our purpose is “building a better working world.” Theinsights and services we provide to our clients helpsolve their most pressing issues. A better workingworld is one where economic growth is sustainable andinclusive. Our corporate responsibility efforts focus onthree areas: growing the positive effects ofentrepreneurs, developing future generations of talent,and building a more diverse and inclusive society. Forexample:► We provided more than 4,000 hours of service

during the 2018 EY Connect Day.► Our local leaders serve on more than 65 nonprofit

boards throughout Ohio.► We participate in local annual programs with United

Way, Junior Achievement, ArtsWave and others.► We were awarded United Way’s Corporate Hero

Award for Excellence in Volunteering (Cincinnati).

EY US serves central governments,departments, agencies, highereducation, and local and municipalgovernments.Some of our EY US clients in the Ohio market include:► Cincinnati USA Regional Chamber and Cincinnati

Business Committee► New Albany Community Foundation► Kent State University► Ohio State University► Drive Ohio and Ohio

Department ofTransportation

► K-12 School Districts

EY US has approximately 700 professionalsmaking an impact across the state of Ohio


EY as a leading infrastructure and P3 advisor

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► We have facilitated the delivery of billions of dollars of new and potential infrastructure throughcurrent and recent engagements ($50b in North America alone), spanning all essential public servicesand among them several of the largest and most complex undertakings in the world.

► EY is also a leading advisor on public-private partnerships (P3s), rapidly evolving as animportant alternative delivery model to bring forward critical infrastructure.

► Globally, EY has advised on almost 900 P3 transactions and we are consistently ranked asa top infrastructure advisor around the world. Our significant experience in helping toshape the P3 market is also reflected in our market recognition and awards.

► In recent years, we are noted as having closed the most P3 transactions in the US, as wellas being responsible for helping to deliver a number of first-of-a-kind P3 projects.

► In the US, EY provides financial and commercialadvisory services relating to infrastructure throughErnst & Young Infrastructure Advisors, LLC (EYIA),which is a Securities and Exchange Commission (SEC)and Municipal Securities Rulemaking Board (MSRB)registered Municipal Advisor wholly owned by the USpartnership.

► EY is the only firm among the “Big 4” that has anentity (EYIA) registered as a municipal advisor,enabling us to advise across a range of public,private and hybrid financing structures.

► EY’s transaction and advisory experience spansmultiple sectors including water, energy, waste,transportation, social infrastructure, technology andsecurity, recreation and other essential public assetsand real estate.

► Our services span the entire infrastructure lifecycle,from strategic master planning, capital plandevelopment and program management, to projectprocurement, fundraising and post constructionsupport.

A leading US infrastructure practice


EY as a leading infrastructure and P3 advisor (cont’d)

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Rank Firm TransactionsTotal

(USD m)Market Share(%) by Value

1 EY 86 42,607 8.652 KPMG 77 42,240 8.57

3 PWC 72 44,010 8.934 Deloitte 51 27,981 5.685 Macquarie 36 23,280 4.726 HSBC 24 24,408 4.95

Global P3 Financial Advisor by Transaction Volume (Last Five Years)

Source: Infrastructure Journal

Ernst & Young has been at theforefront of the changing P-3landscape over the past year,working on a variety of emergingand innovative deals.

Partnerships Awards(Judging Panel)

“ ”We understand whatdrives value in atransaction, and whatis important to bothpublic and privatestakeholders in anegotiation.

We are regularcontributors to thenational debate on P3and infrastructure andare regularlyrecognized for ourwork through industryawards.

EY has advised on 86 P3 projects globally over the past five years alone. We have listed only aselection of our US and International experience advising on P3s over the past 7 years in thetables on the following pages and have provided selected case studies with additional details ofsome of the most relevant projects in the following section.

• 2018 Global PPP of the Year• 2018 Global Transport PPP of the Year• 2018 Best Financial Structure• 2017 Best Social Infrastructure Project• 2016 Best Operational Project• 2015 Financial Advisor of the Year• 2014 Best Financial Advisor• 2014 Best Road/Bridge/Tunnel Project

• 2018 Outstanding Financial Advisor• 2018 Outstanding Emerging Project • 2018 P3 Deal of the Year

• 2016 P3 Deal of the Year

• 2018 Financial Advisor of the Year• 2018 P3 Deal of the Year• 2016 NA Social Infrastructure Deal of the Year• 2015 NA Rail Deal of the Year

• 2018 Global PPP of the Year• 2018 Transport PPP of the Year• 2017 Financial Advisor of the Year

P3 Bulletin

National Council for PPPs

Infrastructure Journal

Partnerships Bulletin

Project Finance International

BestFinancialStructure

2018

FinancialAdvisor

of the Year2018

P3 Dealof the Year

2018

Global PPPof the Year

2018

OutstandingFinancialAdvisor2018

P3 Dealof the Year

2018


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Key contacts

EY infrastructure advisory for wireless and broadband services

For government entities, the development and commercialization of advanced network infrastructurecan be a significant opportunity. It can also introduce new challenges, including unfamiliar policy andprocurement processes, novel commercial structures and evolving regulations.EY has considerable experience providing edge-to-edge infrastructure services for government,higher education and nonprofit sectors. EY understands the needs of the public sector for thestrategic, financial, technical, procurement and regulatory aspects of advanced networking solutions.

EY offers a wide range of financial and commercial services relating to advanced networkinginitiatives on both a standalone and integrated basis, including but not limited to:

StrategyEY helps public sector clients develop an integrated strategy for the deployment of wireless (4G, 5G, Wi-Fi) andbroadband/fiber optic networks. We leverage our knowledge and experience in advanced networking andtechnology across people, process and technology to provide public entities with a tailored and executablestrategy. We connect the strategy to key issues, such as enabling public safety, bridging the digital divide,deploying smart city applications, deploying intelligent transportation systems and enabling connectedautonomous vehicles.

Commercial potential and market valuationEY helps clients determine the commercial potential and fair market value (FMV) of wireless telecom facilitiesinstalled on government property. EY can analyze FMV for newly deployed or existing assets for monetization,sale, sale/leaseback, assessing existing contracts or other financial dimensions.

Procurement and negotiationsEY provides advisory services for marketing, negotiation and sale/lease of public property, capitalimprovements, wireless sites and rights-of-way. We can advise on your negotiations with wireless carriers,tower companies and others to structure agreements. We can work with you to develop a competitivesolicitation process with entities seeking access to government facilities, rights-of-way or infrastructure.

P3 advisory servicesEY is a leading provider of P3 advisory services, including analysis of market opportunities, key risks, businessmodels and procurement approach. Our team conducts industry research and develops preliminarymemorandums and investor surveys. We can advise you on the RFQ/RFP process, potential deal structures,client negotiations with selected partners and the commercial/financial close.

Marc PowellErnst & Young Infrastructure Advisors, LLCSenior Managing [email protected]+1 305 415 1441

Neil McMonagleErnst & Young Infrastructure Advisors, LLCSenior Managing [email protected]+1 312-879-2450

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Section 2

Response to RFIQuestions

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What solutions would you recommend and where would you wish to place yoursolution?a. E.g., underground, in ODOT right of way, along I-70 but not U.S. 40, etc.1

NOTE: EY IS NOT A NETWORKING SOLUTIONS PROVIDER ORPOTENTIAL EQUITY OR DEBT INVESTORS. EY SERVES AS ASTRATEGIC COMMERCIAL AND FINANCIAL ADVISOR TOPUBLIC AGENCIES ON ADVANCED NETWORKING PROJECTSAND IS PROVIDING A RESPONSE TO THIS RFI FROM SUCHPERSPECTIVE.

EY cannot recommend a specific solution or location at this time.It is our experience that cellular carriers and telecommunicationscompanies are generally seeking large, contiguous rights-of-wayfor the deployment of broadband or wireless antennainfrastructure. Departments of transportation tend to havejurisdiction over just such contiguous rights-of-way, making forideal public agencies to unlock the value of such advancednetworking solutions.

Further, we have found that existing fiber networks, or conduit,can be of significant commercial value depending on the location,condition, and regulatory constraints relating to specific assets.Macro site cell towers may carry residual value as well, dependingon tower conditions, site conditions, and colocation rights.

However, prior to targeting a specific industry networkingsolution, EY recommends that DOTs identify and prioritize theirpolicy, diligence the commercial value of their assets (e.g., ROW),and understand the anticipated capital costs for any proposedsolution. Such up front analysis is critical for maximizing thepolicy objectives of the public sector in this sector (e.g.,leveraging a DOTs most commercially viable ROW to maximizebroadband deployment in rural communities).

Each right-of-way is different, providing varying commercial valueand cost to build. The commercial potential of each situationmust be assessed independently, as do the needs of the publicand private entities. Together, these will define the universe ofpossibilities.

EY ValueEY’s core business is advising public agencies on P3 programs and projects. Based on years of experience andextensive financial analysis for P3 projects, we understand the key challenges and value drivers of a broadbanddeployment partnership from the public sector perspective. We can bring to ODOT the lessons learned regardingthese key issues and the steps involved in P3 project delivery gained from our extensive experience. We have aneffective and responsive work approach – we right-size our analysis in order to provide timely results, and developtask plans and approaches that will drive the team toward timely completion of deliverables and achievement ofmilestones.

Key questions that drives thestructuring a procurement forcommunications infrastructure:

- What is the commercial value ofmy right-of-way?- What is the commercial value ofmy existing assets?- How much value can a commercialpartner extract now or in the futurewith fiber, towers, antennas andnetworks?- What are my current and futuretelecommunications needs?- What are my other needs fromeconomic, social and politicalperspectives?- What am I able to request from aprivate partner given my needs andthe value of what I have? What isthe ultimate intersection?- How do I go about realizing thatvalue?


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Given the assets provided above, what asset(s) would you leverage and how wouldyou use those assets?

a. Are there additional assets that you would recommend be leveraged includingitems such as the State of Ohio Fleet?b. How would your system(s) interact with the assets?2

EY is not a networking solutions provider and is not proposing a specific solution in response to this RFI. In ourexperience as a commercial and financial advisor to public agency on advanced networking projects we havefound that the commercial value of a DOT’s ROW or other assets is not distributed equally.

Further, although commercial value is often linked to population density and socioeconomic indicators, otherfactors may impact any commercial assessment, including the existing level of broadband and wirelessconnectivity infrastructure, the competitive nature of the Internet Service Provider market, and the types ofindustry / businesses most prevalent in a given region.

Public agencies should first consider the commercial value across their portfolio of assets in order to leveragethe most commercially valuable existing assets (e.g. ROW in densely populated areas) to be cost effective inachieving its objectives (e.g. rural broadband access).

EY ValueEY helps clients determine the commercial potential and fair market value (FMV) of wireless telecom facilitiesinstalled on government property. EY can analyze FMV for newly deployed or existing assets for monetization, sale,sale/leaseback, assessing existing contracts or other financial dimensions.


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What are your goals and how will achievement of your goals benefit both the publicand Ohio government (ODOT, Municipalities, Counties, etc.), goals? How will yourconcept help you reach your goals and our purpose(s)?3

Balancing of policy objectives and commercial value: Private entities are increasingly approaching publicagencies with proposals to access right-of-way for broadband and communication infrastructure build-outs.Given the market dynamics, there is an alignment of interests between the public and private sectors, creatingopportunities for collaboration, from which parties can mutually benefit. In recent years, however,transactions in some major cities and states initiated by private companies turned out to be significantly belowmarket value. Some questions thus arise: how can cities and public agencies avoid information asymmetry andbe proactive in identifying and valuing mutually beneficial opportunities and better position themselves tomaximize the public benefits? How can effective partnerships with the private sector be established?

The key to successful delivery of digital infrastructure transactions is clear policy objectives and proper duediligence on commercial value and costs. ODOT must first clearly define and prioritize its policy objectives(e.g., comprehensive rural access, revenue-neutral structure, etc.) and identify its constraints, whether fiscal,contractual or regulatory. ODOT should then consider procurement options / strategies that will achieve itsobjectives, while maximizing value by encouraging private sector innovation in the delivery and financing ofthe project.

**Asset preservation and planning for future uses: revenue is not the only measure of asset value or basis forasset preservation. ODOT should also understand the future needs and the needs for wireless infrastructure intheir communities and to support mobility – or as part of a comprehensive smart city or next generationtransportation plan.

Governmental andOperational Goals1 Budgetary and

Commercial goals2 Social Goals3► Current and future capacity

needs► Asset preservation**► Enhancing and extending

connectivity statewide► Enabling next generation

transportation capabilities

► Achieve a hurdle rate ofreturn

► Minimize public subsidy► Avoid data transmission or

network costs► Maximize future income► Complete a funding plan

► Achieve broadband for lowincome or rural areas

► Economic and workforcedevelopment

► Improve first respondercommunication

EY Value

EY helps public sector and not-for-profit clients develop an integrated enterprise strategy for the deployment ofwireless (4G, 5G, Wi-Fi) and broadband/fiber networking. We leverage our knowledge and experience relatedto network infrastructure strategy across people, process and technology. Our team has the knowledge andexperience in wireless, broadband, public real estate and infrastructure to provide you with a tailored andexecutable strategy. We connect the strategy to key issues, such as enabling public safety, bridging the digitaldivide, deploying smart city applications, deploying intelligent transportation systems and enabling connectedautonomous vehicles.


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What will you provide directly in return and/or what direct public purpose will beserved?

a. I.e., will you propose free access, a # of strands, a lease of space, conduit to bededicated for any use by the State or its partners, etc.4

EY is not a networking solutions provider. It is ourexperience that a wide variety of contribution structuresmay be feasible (in-kind, monetary, and others).However, in order to ensure fair market value and tostructure a project delivery approach that maximizesODOT”s objectives, it is necessary for ODOT to firstassess the commercial value of its assets. Without suchup-front diligence, projects are procured and / ornegotiated with an asymmetry in information, potentiallyleading to sub-optimal outcomes for public agencies.

• Assessing commercial value of delivery options:The goal for public agencies should be to leveragethe most commercially valuable existing assets (e.g.ROW in densely populated areas) to be cost effectivein achieving its objectives (e.g. rural broadbandaccess). ODOT should consider innovative andcreative solutions rather than a narrow range ofmarket precedents or off-the-shelf structures. Theamount of capital costs, who bears the costs, andtime to recoup those costs ultimately depend on thetransaction structure. To the right are key questionsto understand the value of right-of-way and beloware the research channels available to help answerthose questions:

Key questions for understanding the value ofright-of-way:

• What is the state of the development of thetelecommunications infrastructure along theagency’s right-of-way?

• What is the potential value to private players,given the demographics, firmographics, existingnetworks and regulatory environment?

• What is the cost of deployment of variousnetwork alternatives? How does cost compare tovalue?

• Are there “pockets of gold” that can help financeother network needs?

• Are there social benefits that could accrue fromthe project under certain alternatives?

Secondary ResearchGeo-mapping data,government andeconomic data, publishedreports, company websites, etc. to informstrategy, benchmarking,and commercialassessment

CommercialAssessmentEvaluate market potentialacross Georgia usingbusiness modeling and ageo-mapping analysis

Development and P3InsightLeverage commercialassessments of third-party experts to supportthe P3 Approach

Primary ResearchBlinded interviews tounderstand marketdynamics around costs,market projections, andROI drivers

Commercial Value Assessment Research Channels


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For a valuation that is informed by existing contracts, assets and/or provided assumptions, there are threeapproaches to valuing tangible assets and intangible assets – Income, Market and Cost – as summarized in thefollowing matrix with respect to common asset types.

► Income Approach: This approach focuses on the income-producing capability of the identified asset or business. Theunderlying premise is that the value of an asset can be measured by the present worth of the net economic benefit (cashreceipts less cash outlays) to be received over its life. The steps followed include estimating the expected after-tax cashflows attributable to the asset over its life and converting these after-tax cash flows to present value through ‘discounting’.The discounting process uses a rate of return that accounts for both the time value of money and investment risk factors.Finally, the present value of the after-tax cash flows over the life of the asset is totaled to arrive at an indication of value

► Market Approach: This approach measures value based on what other purchasers in the market have paid for assets orbusiness interests that can be considered reasonably similar to those being valued. Data is collected on the prices paid forreasonably comparable assets or interests. Adjustments are made to the prices paid to compensate for differences betweenthose assets or interests and the asset or interest being valued. This results in an estimate of the price reasonably expectedto be realized from the sale of the asset or business interest. In the context of real property, the Market Approach is alsoknown as the Sales Comparison Approach. (The Sales Comparison Approach is defined in The Appraisal of Real Estate, 14thedition, as: “The process of deriving a value indication for the subject property by comparing similar properties that haverecently sold with the property being appraised, identifying appropriate units of comparison, and making adjustments to thesale prices (or unit prices, as appropriate) of the comparable properties based on relevant, market-derived elements ofcomparison. The Sales Comparison Approach may be used to value improved properties, vacant land, or land beingconsidered as though vacant when an adequate supply of comparable sales is available.”) However, in the absence of a well-established or reliable revenue history for existing or prospective wireless infrastructure, a market assessment as discussedin 3.5(a)(ii) would be needed since the opportunity is unique with no readily apparent comparable assets.

► Cost Approach: This approach is based on the premise that a prudent investor would pay no more for an asset than itsreplacement or reproduction cost. The cost to replace would include the cost of constructing a similar asset of equivalentutility at prices applicable at the time of the valuation analysis. This estimate may then be adjusted by losses in valueattributable to obsolescence (physical, functional and/or economic). The approach is used to estimate values incircumstances where it is not possible to estimate values using a Market Approach or an Income Approach. In valuingtangible assets, the value of an asset is estimated by reference to the reproduction or RCN of modern equivalent assets,optimized for over-design, over-capacity and redundant assets, and adjusted to reflect losses in value attributable tophysical, functional, and economic obsolescence.

Valuation Approach

Business/Asset/LiabilityFi

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Land

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Income x x x x x

Market x x x x x

Cost x x x


• ·Is the project commercially or technicallycomplex, or outside the expertise of theagency, such that it could benefit fromspecialist, private sector involvement andinnovation?

• ·How do the agency and its stakeholders feelabout a long-term (potentially 30+ year)partnership?

• ·To what extent does the agency want to fostermultiple competing players (i.e., wholesalemodel) versus a single provider?

• ·How urgent is the need that is driving thisproject? Is accelerating the project a priority?

• ·What are the goals and objectives for theproject?

• rural and underserved areas

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In what ways should we be looking at our assets as a revenue generatingcommodity?

a. Are you aware of schemes being used by other governments in the U.S. orelsewhere that have provided successful monetization of governmentproperty like right of way?

b. Do you have an in-kind contribution solution?c. What timeframes for recoupment of cost would you foresee?

5• ·What are the perceived benefits of entering

into a P3? Under what conditions are thesebenefits most likely to be realized?

• ·What are the agency’s communication needs?What are the future infrastructure needsrelating to CAVs?

• ·Is the project likely to be financially andcommercially feasible, based on the cost of theproject and revenue potential?

• Are there “pots of gold” in the right-of-way thatcan fund public objectives?

• Are there zones that telecommunicationsproviders would aggressively compete for?

• ·What assets does the agency own (e.g., right-of-way, existing infrastructure) that haveunrealized value?

Key questions to determine the structure and scope of a project

Determining an optimal delivery method before going to procurement. Rather than letting bidders definethe approach with an existing information asymmetry, ODOT should go to market with a framework that isboth commercially viable and meets ODOT’s objectives based on findings of the market assessment.

Types of infrastructure that could be developed in a public agency’s right of way, and associated cash flowstreams include:


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Below is a summary of precedent design-build-finance-operate-maintain P3 procurements that have beenprogressed in the US and Canada:


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Describe existing partnerships with entities utilizing your products/ services withinthe context of the solutions you are recommending. Are there existinggovernments using your solution?6

Government Agency Project Description

Georgia Department ofTransportation(“GDOT”)

Georgia Interstate Broadband Deployment Project► GDOT is currently procuring a private partner for a broadband fiber and wireless antenna P3

project. The project will involve a private partner delivering, through a Design-Build-Finance-Operate-Maintain (DBFOM) agreement, additional broadband capacity for GDOT on interstatesaround the state in return for the ability to lease unused conduit to generate revenue and providebroadband service to rural areas of Georgia. Additionally, the private partner will potentially delivera 5G-ready wireless network on the interstates with the ability to commercialize additional networkcapacity. A portion of the network will be used for GDOT ITS needs, including supporting futureautonomous/connected vehicles.

► As financial, commercial and procurement advisor to GDOT, EY has assessed the overall revenueand profit potential to GDOT or a network supplier for open-access fiber broadband and wirelessantennas along GDOT ROW mileage, analyzed the potential profitability by geography, andidentified viable network options in terms of geographic deployment. Based on this analysis, EYhas supported GDOT in crafting the project scope, P3 delivery structure and is assisting withprocurement activities (e.g., market sounding, RFQ/RFP support, evaluation support) throughcommercial/financial close.

Massachusetts BayTransit Authority(“MBTA”)

P3 Evaluation and Right of Way Valuation► EY was selected to provide financial and commercial advice for MBTA’s initiatives to improve

cellular connectivity across Right of Way and to perform a system wide bus stop designassessment. MBTA currently has unreliable and discontinuous commercial cellular service andlimited public Wi-Fi services at stops and along its right-of-way, along with outdated bus stops in astate of a disrepair providing inadequate functionality. MBTA has determined a need for upgradedand redesigned bus stops, with improved connectivity for system operations, and possibly publicWi-Fi services for commuters. Additionally, there is a desire for improved cellular connectivityacross Right of Way and revenue generation from potential partnerships. EY is performing astrategic assessment of broadband opportunities along the right-of-way, associated monetizationopportunities, system-wide bus stop analysis, and joint procurement option analysis wherefeasible. Study includes developing various alternatives for infrastructure to meet the needs ofMBTA and its stakeholders, and commercial valuation across partnership options. EY is alsoproviding advice on a strategic deployment schedule for investment related to the bus system.

Indiana Toll RoadConcession Company(“ITR”)

Fiber and Cell Network► EY advised ITR in the evaluation of proposals for the installation and management of a fiber and

cell network along a right of way next to the Indiana Toll Road. ITR has built approximately 70miles of the network and evaluated proposals from private partners for the remaining buildout.Work involved supporting the evaluation of each proposal, including assessing the key features ofeach approach, quantifying the value and tradeoffs from potential revenue sharing arrangements,and understanding of the key risks.

EY is not a networking solutions provider or potential investor. EY serves as a commercial and financial advisorto public agencies on advanced networking projects and has a deep history of advising on modern wirelesstelecom and the relevant antecedent and interrelated sectors including in wireline, fiber optics, data, smartcities and more broadly real estate, infrastructure and public-private partnerships. Below are examples ofrecent and/or current engagements with government entities EY has assisted, seeking deployment of digitalinfrastructure within the public right-of-way of existing assets:


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Government Agency Project Description

Virginia Departmentof Transportation(“VDOT”)

Broadband P3 Initiative► EY is currently conducting a feasibility study for the Virginia department of transportation broadband

P3 Initiative. The department is considering creating a broadband P3 on its right of way and EY isassessing market demand, operations and maintenance costs and capital expenditure required tobuild such a network, as well as the presence of existing networks. This will help VDOT determinewhether a self-funding P3 would be possible. Preliminary results have been presented to theCommonwealth Board of Transportation but for administrative reasons, estimates have not beenmade public yet.

► The first phase of the project – assessing the fiber network – has been completed. The next phasewill be the feasibility analysis of a wireless overlay.

► The project also delved into the needs of the department, the needs of the other state agencies, theability to leverage that network to stimulate the provision of rural broadband services tounderserved communities, either directly or through a wireless internet service provider (WISP)model, and the ability to support future transportation needs such as Connected AutonomousVehicles (CAVs) and Intelligent Transportation Systems (ITS).

First ResponderNetwork Authority(“FirstNet”)

FirstNet - National Public Safety Broadband Network► FirstNet, an independent authority within the Department of Commerce, is currently procuring a

nationwide, single interoperable platform for emergency and daily public safety communicationsthat will be available to public safety users in the 56 states and territories of the United States.FirstNet is procuring the delivery of the network as a public private partnership and has beenallocated up to $7 billion in funding for the project by Congress, as well as an allocation of 700Mhzspectrum. FirstNet plans to leverage a combination of existing and newly developedtelecommunications infrastructure and assets (including cell towers) for the full project buildout. The private partner will manage the operations of the project over a 25 year contract period.

► EY supported FirstNet’s Office of the Chief Financial Officer, leadership, and senior managementsince May 2014 on financial planning, development of multiple RFIs and analysis of responses, anddrafting of procurement documentation. Proposals were received at the end of May 2016 and EYassisted FirstNet in evaluation.

PennsylvaniaTurnpikeCommission

Broadband Network Public-Private Partnership► The Pennsylvania Turnpike Commission is exploring the possibility of entering into a public-private

partnership in which the Development Entity will design, build, finance, operate and maintain a fiberoptic broadband network within the Turnpike’s over 450 miles of right-of-way, for the benefit of theCommission and its users, as well as for the benefit of the Development Entity and its customers.The primary purpose of the Broadband Infrastructure will be to support the Commission’sexpansion of cashless toll collections throughout its system. The Broadband Infrastructure will alsoprovide connectivity for the Commission’s administrative buildings, maintenance sheds, tollingsystems, traffic cameras, dynamic message signs, and similar devices and will accommodatefuture applications.

► As financial and commercial advisor to the Commission, EY provides advice relating to theprocurement, structuring, evaluation, negotiation, and financing of the project. EY has assisted theCommission with market sounding, refinement of project scope based on industry feedback,analysis of deal structure and key commercial arrangements, application for federal grant support(INFRA), development of the RFQ and RFP as well as advising on the financial and commercialaspects of the procurement. The project is currently in procurement with a shortlist of four globallyrecognized proposer teams.


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If you have a recommended solution, describe the availability and implementationtime. Are there barriers that you recommend be addressed by ODOT to implementyour solution? Law changes? Installation of access points to power?7

As previously noted, EY does not advocate for or recommend any specific solution. However, EY understands itis important to have a deep understanding of the regulatory and administrative context to ensure an effectiveand timely delivery of the project.

► Implications of Regulatory Environment The existing and potential regulatory environment as well as localpublic policy objectives and economic development priorities could have direct implications on the commercialvalue of the broadband network and the structuring of the project. For instance, the classification ofbroadband internet access service as a “telecommunications service” and the resulting designation of aprivate telecommunications company as a “common carrier” will make the private company subject toregulations (e.g. pricing rules) so as to provide indiscriminate public access and protect the data privacy of thegeneral public. This would be beneficial to the expansion of broadband access to underserved communities,but may not be conducive to encourage overall infrastructure investment, network enhancement orincentivize competition, which could in turn negatively impact the value of the project opportunity. Thesetypes of considerations should be explored and assessed with the help of experienced legal and commercialadvisors to determine the most appropriate deal structure for successful commercialization of theinfrastructure.

► Consideration of regulatory or legislative change: EY can assist ODOT in identifying and implementingchanges or enhancements to regulatory schemes to enhance/preserve value and/or address policy objectivesand integrate the requests of industry by performing the following services:

► Identifying the constraints to value capture► Quantifying the value that could be obtained if the constraints were relaxed► Identifying the controls that should be placed on third parties and quantifying the costs and benefits

of such controls► Providing recommendations that can be drafted into rules or regulation by ODOT’s counsel

► Undertaking legislative advocacy: EY can provide independent advice, research and precedents and othertechnical assistance – including drawing on knowledge of approaches taken in/by other jurisdictions


20

What security issues do you foresee with your solution?8As previously noted, EY does not advocate for any specific solution recommendation. However, EY is preparedto assist public agencies by leveraging its deep understanding of, and experience in, cybersecurity.


21

Describe your willingness to form teams composed of multiple manufacturers orvendors to achieve the goals of your proposed solution.9

We do not believe this question is applicable to our firm, as EY is not a networking solutions provider or potentialinvestor.

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This publication contains information in summary form and is therefore intended forgeneral guidance only. It is not intended to be a substitute for detailed research or theexercise of professional judgment. Neither EY LLP nor any other member of the globalEY organization can accept any responsibility for loss occasioned to any person acting orrefraining from action as a result of any material in this publication. On any specificmatter, reference should be made to the appropriate advisor.

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Ohio Department of Transportation · 2019-08-02 · Ohio Department of Transportation Digital Infrastructure Assets and Strategy EY as a leading infrastructure and P3 advisor 6 We