United Telesystems, Inc.
The total number of MVPD subscribers used to calculate the HHI is 88,310,074 from TABLE B-1.
The HHI is calculated on the basis of market shares for the top 60 companies. Because all of the remaining MVPDs have very small shares of the market, an HHI calculation that included all cable system operators could only be slightly higher (no more than 2-3 points) than the given HHI.
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TABLE B-4 Concentration in the National Market for the Purchase of Video Programming 1998-2001
Market Share Percent of MVPD Subscribers 1998 1999 2000 2001 Top Share 26.48 20.50 19.07 16.44
Top 2 42.62 36.45 33.99 30.79
Top 3 48.94 45.68 44.27 42.11
Top 4 54.63 53.94 52.70 51.64
Top 10 71.04 74.95 83.90 84.29
Top 25 80.99 84.92 89.75 89.70
Top 50 86.08 89.58 92.14 91.38
HHI 1096 923 954 905
Source:
Data for 1998 through 2000 were taken from Reports, 1997-2000. Data for 2001 are from TABLE B-2.
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APPENDIX C
TABLE C-1 MSO Ownership in National Video Programming Services
Programming Service Launch Date MSO Ownership (%) Action Max Jun-98 AOL Time Warner (100) American Movie Classics (AMC) Oct-84 Cablevision (75) Animal Planet Oct-96 Liberty Media (49), Cox (19.7) @Max May-01 AOL Time Warner (100) BET Movies Feb-97 Liberty Media (100) Black STARZ! Feb-97 Liberty Media (100) Bravo Feb-80 Cablevision (75), Liberty Media (25) Canales ñ (6 digital channels)1 Oct-98 Liberty Media (100) Cartoon Network Oct-92 AOL Time Warner (100) Cinemax Aug-80 AOL Time Warner (100) CNN Jun-80 AOL Time Warner (100) CNN Español Mar-97 AOL Time Warner (100) CNN Headline News Jan-82 AOL Time Warner (100) CNN International Jan-95 AOL Time Warner (100) CNN/Sports Illustrated Dec-96 AOL Time Warner (100) CNN Money Dec-95 AOL Time Warner (100) Comedy Central Apr-91 AOL Time Warner (50) Court TV Jul-91 Liberty Media (50), AOL Time Warner (50) Discovery Channel Jun-85 Liberty Media (49), Cox (24.6) Discovery Civilization Oct-96 Liberty Media (49), Cox (24.6) Discovery En Español Aug-98 Liberty Media (49), Cox (24.6) Discovery Health Jul-98 Liberty Media (49), Cox (24.6) Discovery Home & Leisure Oct-96 Liberty Media (49), Cox (24.6) Discovery Kids Oct-96 Liberty Media (49), Cox (24.6) Discovery Science Oct-96 Liberty Media (49), Cox (24.6)
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Programming Service Launch Date MSO Ownership (%) Discovery Wings Jul-98 Liberty Media (49), Cox (24.6) E! Entertainment Jun-90 Comcast (40), Liberty Media (10) Encore Apr-91 Liberty Media (100) Encore Action Sept-94 Liberty Media (100) Encore Love Stories Jul-94 Liberty Media (100) Encore Mysteries Jul-94 Liberty Media (100) Encore True Stories and Drama Sept-94 Liberty Media (100) Encore WAM! America's Youth Sept-94 Liberty Media (100) Network Encore Westerns Jul-94 Liberty Media (100) 5StarMax May-01 AOL Time Warner (100) FOX Sports Net (5 channels) Various Cablevision (50) GEMS International Television Apr-93 Liberty Media (50) Golf Channel Jan-95 Liberty Media (10), Comcast (90) Great American Country Dec-95 Comcast (100) Hallmark Channel (formerly Odyssey) Oct-93 Liberty Media (32.5) HBO (Home Box Office) Nov-72 AOL Time Warner (100) HBO Latino Nov-00 AOL Time Warner (100) HBO Plus Dec-75 AOL Time Warner (100) HBO Signature Oct-93 AOL Time Warner (100) HBO Comedy May-99 AOL Time Warner (100) HBO Family Dec-96 AOL Time Warner (100) HBO Zone May-99 AOL Time Warner (100) Home Shopping Network Jul-85 Liberty Media (19.7) Independent Film Channel Sep-94 Cablevision (75) International Channel Jul-90 Liberty Media (90) MoreMAX Aug-91 AOL Time Warner (100) MoviePlex Dec-79 Liberty Media (100) MuchMusic USA Jul-94 Cablevision (75)
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Programming Service Launch Date MSO Ownership (%) Outdoor Life Network Jul-95 Cox (33.3), Comcast (17), Liberty Media (15.4) OuterMax May-01 AOL Time Warner (100) Ovation: The Arts Network Apr-96 AOL Time Warner (4.2) PIN (Product Information Network) Apr-94 Cox (45) Prevue Channel Jan-88 Liberty Media (51) QVC Nov-86 Comcast (57), Liberty Media (43) Sci-Fi Channel Sept-92 Liberty Media (19.7) Sneak Prevue May-91 Liberty Media (12) Starz! Feb-94 Liberty Media (100) Starz! Action May-99 Liberty Media (100) Starz! Cinema May-99 Liberty Media (100) Starz! Family May-99 Liberty Media (100) Starz! Love Stories Feb-94 Liberty Media (100) Starz! MoviePlex Jan-95 Liberty Media (100) Starz! Mystery Feb-94 Liberty Media (100) Starz! Theater Mar-96 Liberty Media (100) Starz! True Stories Feb-94 Liberty Media (100) Starz! Wam Feb-94 Liberty Media (100) Starz! Westerns Feb-94 Liberty Media (100) Style May-99 Comcast (40), Liberty Media (10) TBS Dec-76 AOL Time Warner (100) Telemundo2 Jan-87 Liberty Media (40) TLC (The Learning Channel) Nov-80 Liberty Media (49), Cox (24.6) Thematic Multiplex SM Jul-94 Liberty Media (100) Thriller Max Jun-98 AOL Time Warner (100) TNT (Turner Network Television) Oct-88 AOL Time Warner (100) Travel Channel Feb-87 Liberty Media (49), Cox (24.6) Turner Classic Movies Apr-94 AOL Time Warner (100)
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Programming Service Launch Date MSO Ownership (%) USA Network Apr-80 Liberty Media (21) Viewers Choice 1-10 and Hot Choice (11 Nov-85 Cox (20), Time Warner (17), Liberty multiplexed channels) Media (11.7), Comcast (11) WE Jan-97 Cablevision (75) WMAX May-01 AOL Time Warner (100)
Notes:
1 Canales ñ, Liberty Media’s digital package of Spanish-language channels, consists of FoxSportsAmericas, CBS Telenoticias, CineLatino, BoxTejano, BoxExitos, and Canal 9.
2 On October, 11, 2001, NBC announced that it would acquire the Telemundo Network Group. Since this sale is subject to regulatory approval by the Federal Communications Commission and the Federal Trade Commission, we list it as vertically integrated with Liberty Media. See Steve McClellan, Lo Mas Grande Deal De NBC, Broadcasting & Cable, Oct. 15, 2001, at 6.
Sources:
NCTA, Directory of Cable Networks, Cable Television Developments 2001, at 28-146.
Joe Schlosser, Fox Puts on Some Speed, Broadcasting and Cable, Aug. 6, 2001, at 4.
BET.com, at http://www.bet.com/atBET/0.,C-6-73-137584,00.html.
Viacom.com, at http://www.viacom.com/unitbyseg.tin?sBusSegmentNickname=ctv.
Liberty Media Corp., at http://www.libertymedia.com/our_affiliates/video_programming.htm
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TABLE C-2 National Video Programming Services Not Affiliated With a Cable Operator
Programming Service Launch Date A&E (Arts & Entertainment) Feb-84 ABC Family (formerly Fox Family Channel) Apr-77 All News Channel Nov-89 America's Store Sep-86 ANA Television Network Dec-91 ART (Arab Radio & Television) 1999 Asian American Satellite TV Jan-92 BBC America Mar-98 BET Jan-80 BET Action Pay Per View Sep-90 BET Gospel Nov-98 BET on Jazz Jan-96 Biography Channel Dec-98 Bloomberg Information Television Jan-95 Boating Channel Nov-98 Box Music Network Dec-85 Canal Sur Aug-91 CCTV-4 (China Central Television) Jan-98 CelticVision Mar-95 Classic Arts Showcase May-94 CMT (Country Music Television) Mar-83 CNBC Apr-89 CNET: The Computer Network Jan-95 College Entertainment Network Jan-97 Crime Channel Jul-93 C-SPAN* Mar-79 C-SPAN2* Jun-86 C-SPAN3* Sep-97 CTN (Chinese Television Network) 1995 Deep Dish TV Jan-86
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Programming Service Launch Date Disney Channel Apr-83 Do-It-Yourself Channel Sep-99 Dream TV Network Nov-96 Ecology Communications Nov-94 ESPN Sep-79 ESPN Classic Sports (formerly Classic Sports Network) May-95 ESPN2 Oct-93 ESPNEWS Nov-96 ESPN EXTRA Sep-99 ESPN NOW Sep-99 ETC (The Erotic Network) Jul-00 EWTN: Global Catholic Network Aug-81 Extasy Feb-98 Filipino Channel Apr-94 Flix Aug-92 Food Network Nov-93 Fox Movie Channel Nov-94 Fox News Channel Oct-96 Fox Sports World Español Feb-99 Fox Sports World 1997 FoxNet Jul-91 FX Jun-94 Free Speech TV (FSTV) Jun-95 Galavision Oct-79 Game Show Network Dec-94 Golden Eagle Broadcasting Nov-98 Goodlife Television Network (formerly Nostalgia Channel) Jun-98 History Channel Jan-95 History Channel International Dec-98 Home & Garden Television Dec-94 Hot Choice Jun-86
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Programming Service Launch Date Hot Networks Mar-99 HTV Aug-95 Idea Channel Jan-92 iN DEMAND (Pay Per View) Nov-85 Inspirational Network Apr-78 Interactive Channel Nov-93 International Channel Jul-90 Ladbroke Racing Channel Nov-84 Lifetime Movie Network Jun-98 Lifetime Television Feb-84 Lightspan Partnership, Inc. Feb-95 Locomotion Channel Nov-96 MBC Movie Network Nov-98 Melli TV 1995 MSNBC Jul-96 MTV “S” Aug-98 MTV “X” Aug-98 MTV Networks Latin America (formerly MTV Latino) Oct-93 MTV: Music Television Aug-81 MTV 2 Aug-98 My Pet TV Sep-96 NASA Television Jul-91 National Geographic Channel Jan-01 National Jewish Television May-81 Newsworld International Sep-94 Nick At Nite’s TV Land Apr-96 Nickelodeon Gas-Games & Sports Network Mar-99 Nick Too Jan-99 Nickelodeon/Nick at Nite Apr-79 Noggin Feb-99 NUE-TV Jul-00 Oasis TV Sep-97
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Programming Service Launch Date Outdoor Channel Apr-93 Oxygen Feb-00 Pax TV Aug-98 Playboy TV Nov-82 Pleasure Channel Jun-99 Praise Television Dec-96 Proto X 1997 Puma TV 1997 RAI International 1999 Recovery Network Feb-97 Scandinavian Channel Oct-99 SCOLA Aug-87 Shop at Home Jun-86 Short TV Jan-99 Showtime Jul-76 Showtime Beyond Sep-99 Showtime Event Television (SET) 1979 Showtime Extreme 1998 Showtime Family Zone Mar-01 Showtime Next Mar-01 Showtime Women Mar-01 Skyview World Media 1992 SoapNet Jan-00 Speedvision Jan-96 Spice 1 May-89 Spice 2 Unknown Sun TV Aug-96 Starnet Jan-89 Sundance Channel Feb-96 The Erotic Network (TEN) Aug-98 TMC (The Movie Channel) Dec-79 True Blue Feb-98 TNN (The National Network) Mar-83
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Programming Service Launch Date Toon Disney Apr-98 Trinity Broadcasting Network Mar-83 TRIO Sep-94 TV 5 – USA Inc. Jan-98 TV Asia Apr-93 TV Games Network Unknown TV Japan Jul-91 TVN Entertainment Corporation (33 digital pay-per-view channels) Feb-98 TVR (TV Russia Network) 1995 TV Guide Channel Jan-88 TV Guide Interactive Oct-96 TV Guide Sneak Preview 1991 TVN Direct Jan-96 Universal Torah Broadcasting Network Dec-98 Univision Sep-76 UVTV/KTLA Mar-88 UVTV/WGN Nov-98 UVTV\WPIX May-84 ValueVision Oct-91 VH1 (Music First) Jan-85 VH1 (Classic Rock) Aug-98 VH1 Soul Aug-98 VHI Country Aug-98 Weather Channel May-82 Weather Channel/Latin America Nov-96 Weatherscan April-98 Weatherscan Local May-99 Wisdom Television Jul-97 Worship Network Sep-92 X Cubed Unknown Z Music Mar-93 ZEE TV 1999
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Note:
* Cable affiliates provide 95 percent of funding for C-SPAN, C-SPAN2, and C-SPAN3, but have no ownership or program control interests. DBS licensees provide the other 5 percent of funding and also have no ownership or program control interests.
Source:
NCTA, Directory of Cable Networks, Cable Television Developments 2001, at 28-154.
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TABLE C-3 Regional Video Programming Services
Programming Services Launch Date MSO Ownership (%) Arabic Channel Apr-91 Arizona News Channel Nov-96 Automotive Television Network (ATN) Sep-95 Bonjour USA Sep-94 Cable TV Network of New Jersey Jul-93 California Channel Feb-91 Casa Club TV Jul-97 Central Florida News 13 Oct-97 AOL Time Warner (50) ChicagoLand Television News (CLTV) Jan-93 CN8 – The Comcast Network 1996 Comcast (100) Comcast SportsNet Oct-97 Comcast (45) Comcast SportsNet Mid Atlantic Apr-84 Comcast (45) County Television Network San Diego Jul-96 Ecumenical Television Channel 1983 Empire Sports Network Dec-90 Florida's News Channel Sep-98 Fox Sports Net West Oct-85 Cablevision (45) Fox Sports Net 2 Jan-97 Cablevision (45) Fox Sports Net Arizona Sep-96 Cablevision (45) Fox Sports Net Bay Area Apr-90 Cablevision (45) Fox Sports Net Chicago Jan-84 Cablevision (45) Fox Sports Cincinnati 1989 Cablevision (45) Fox Sports Net Detroit Sep-97 Cablevision (45) Fox Sports Intermountain West 1990 Cablevision (45) Fox Sports Midwest 1989 Cablevision (45) Fox Sports Net New England Nov-81 Cablevision (22.5), Liberty Media (50) Fox Sports New York 1982 Cablevision (41.5) Fox Sports Net North Mar-89 Cablevision (45) Fox Sports Net Northwest Nov-88 Cablevision (45) Fox Sports Net Ohio Feb-89 Cablevision (45)
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Programming Services Launch Date MSO Ownership (%) Fox Sports Net Pittsburgh Apr-86 Cablevision (45) Fox Sports Net Rocky Mountain Nov-88 Cablevision (45) Fox Sports Net South Aug-90 Cablevision (45) Fox Sports Net Southwest Jan-83 Cablevision (45) Fox Sports West 2 Jan-97 Cablevision (45) Hip Hop Network Jan-97 Home Team Sports (HTS) Apr-84 Liberty Media (17) International Television Broadcasting (ITV) Apr-86 Las Vegas One News Apr-98 Local News on Cable Feb-97 Lottery Channel Nov-95 Madison Square Garden Network (MSG) Oct-69 Liberty Media (18), Cablevision (41.5) MediaOne News Dec-95 Liberty Media (100) MGM Jul-97 Michigan Government Television Jul-96 Midwest Sports Channel Mar-89 MSG Metro Guide Aug-98 Cablevision (100) MSG Metro Learning Channel Aug-98 Cablevision (100) MSG Traffic and Weather Aug-98 Cablevision (100) Neighborhood News L.I. Unknown Cablevision (75) New England Cable News Mar-92 Liberty Media (50) New England Sports Network (NESN) Mar-84 New York 1 News Sep-92 News 12 Connecticut Jun-95 Cablevision (75) News 12 Long Island Dec-86 Cablevision (75) News 12 New Jersey Mar-96 Cablevision (75) News 12 The Bronx Jun-98 Cablevision News 12 Westchester Nov-95 Cablevision (75) News 8 Austin Sep-99 News Channel 5+ Sept-96 News Now 53 Jun-97 Cox (50) News on One Oct-97
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Programming Services Launch Date MSO Ownership (%) News Watch 15 Oct-99 Newschannel 8 Oct-91 NGTV Dec-87 Nippon Golden Network Jan-82 NorthWest Cable News Dec-95 Ohio News Network May-97 PASS Sports (Pro-Am Sports System) Apr-84 Pennsylvania Cable Network (PCN) Sep-79 Pittsburgh Cable News Channel (PCNC) Jan-94 Rarities Exchange Dec-98 San Diego’s News Channel 15 Jan-97 Six News Now Jul-95 South Florida News Channel 1998 SportsChannel Florida Dec-87 Liberty Media (6), Cablevision (13.5) Sunshine Network Mar-88 Liberty Media (34.5), Comcast (16), Cox (5.3) Texas Cable News Jan-99 TV33 Dec-95 WSBK Feb-88
Sources:
NCTA, Regional Cable Networks, Cable Television Developments 2001, at 174-200.
Cablevision Systems Corp., at http://www.cablevision.com/cvhome/cvrainb/rainbow.htm.
FoxSports, at http://foxsports.com/direct/index.sml.
New Frontier Media, at http://www.noof.com/business/broadcast.html.
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TABLE C-4 Planned Programming Services
Programming Service Planned Launch Date, If Announced AACN 2Q02 American Legal Network TBA AMC’s American Pop TBA American West Network TBA Anthropology Programming and Entertainment TBA Anti-Aging Network TBA Applause TBA Auto Channel 2Q02 Baby TV TBA Beauty Channel 4Q02 BET Rap/Hip Hop TBA BET World Music Beat TBA Black Women’s Television 4Q01 Boating Channel TBA Bravo World Cinema TBA Children’s Fashion Network 4Q01 Collectors Channel TBA Documentary Channel 4Q01 Eurocinema TBA Fad TV (Fashion & Design Television) 2Q02 Fashion Network TBA Fine Living 1Q02 G4 April 2002 GETV Network March 2002 Global Village Network TBA Hobby Craft Interactive TBA Honey Vision TBA Investment TV 4Q01 Local News Network TBA Love Network TBA Moviewatch 2002
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Programming Service Planned Launch Date, If Announced Native American Nations Program Network 2002 Noah’s World International April 2002 Orb TV TBA Performance Showcase TBA Premiere Horse Network TBA Puppy Channel February 2002 RadioTV Network 4Q02 Real Estate Network (TREN) TBA Romanceland TBA Seminar TV Network (Seminar TV) 1Q02 Senior Citizens Television Network 1Q01 Si TV 2002 Skywatcher Channel TBA The Football Channel (TFN) TBA The Gospel Network TBA The Military Channel TBA The World Cinema Channel TBA Theater Channel TBA The Tennis Channel July 2002 Youth Sports Broadcasting Channel TBA
Sources:
NCTA, Planned Services, Cable Television Developments 2001, at 155-173.
John M. Higgins, Tennis Anyone, Broadcasting & Cable, Sept. 3, 2001, at 12.
Scripps Secures Time Warner Carriage, Multichannel News, Oct. 15, 2001, at 2.
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TABLE C-5 MSO Ownership in National Programming
Services1 Subs. Liberty AOL Comcast Cox Cablevision (mil) Media Time Warner Systems
Action Max 37.0 100.0% AMC 75.0 75.0%
Animal Planet 54.0 49.0% 19.7% @Max *2 100.0% BET Movies 10.0 100.0% Black Starz! * 100.0% Bravo 49.4 25.0% 75.0% Canales ñ (6 channels) * 100.0% Cartoon Network 60.0 100.0% Cinemax 100.0% CNN 79.7 100.0% CNN Español 10.5 100.0% CNN Headline News 76.2 100.0% CNN International3 10.0 100.0% CNN/SI 15.4 100.0% CNN Money 13.0 100.0% Comedy Central 69.0 50.0% Court TV 40.0 50.0% 50.0% Discovery 81.7 49.0% 24.6% Discovery Civilization 7.0 49.0% 24.6% Discovery En Español * 49.0% 24.6% Discovery Health 25.0 49.0% 24.6% Discovery 7.0 49.0% 24.6% Home&Leisure Discovery Kids 10.0 49.0% 24.6% Discovery Science 10.0 49.0% 24.6% Discovery Wings 7.0 49.0% 24.6% E! Entertainment 65.0 10.0% 40.0% Encore 16.0 100.0% Encore Action * 100.0%
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Services1 Subs. Liberty AOL Comcast Cox Cablevision (mil) Media Time Warner Systems
Encore Love Stories * 100.0% Encore Mysteries * 100.0% Encore True * 100.0% Stories/Drama Encore WAM! * 100.0% Encore Westerns * 100.0% Fox Sports (5 channels) 100.0% 5Star Max * 100.0% GEMS International TV 6.4 50.0% Golf Channel 29.5 10.0% 90.0% Great American Country 15.0 100.0% Hallmark Channel * 32.5% HBO 37.04 100.0% HBO Latino * 100.0% HBO Plus * 100.0% HBO Signature * 100.0% HBO Comedy * 100.0% HBO Family * 100.0% HBO Zone * 100.0% HSN 50.0 19.7% Independent Film 30.0 75.0% Channel International Channel 8.3 90.0% More Max * 100.0% Movie Plex 8 100.0% Much Music USA 19.1 75.0% Outdoor Life 26.0 15.4% 17.0% 33.3% Outer Max * 100.0% Ovation 15.0 4.2% PIN 35.0 45.0% Prevue Channel * 51.0%
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Services1 Subs. Liberty AOL Comcast Cox Cablevision (mil) Media Time Warner Systems
QVC 74.8 43.0% 57.0% Sci-Fi 66.0 19.7% Sneak Prevue * 12.0% Starz! 13.0 100.0% Starz! Action * 100.0% Starz! Cinema * 100.0% Starz! Family * 100.0% Starz! Love St. * 100.0% Starz! MoviePlex * 100.0% Starz! Mystery * 100.0% Starz! Theater * 100.0% Starz! True Stories * 100.0% Starz! WAM * 100.0% Starz! Westerns * 100.0% Style 8.0 10.0% 40.0% TBS 82.0 100.0% Telemundo 22.2 40.0% TLC 78.0 49.0% 24.6% Thematic Multiplex SM 24.55 100.0% Thriller Max * 100.0% TNT 81.6 100.0% Travel Channel 52.3 49.0% 24.6% TCM 45.0 100.0% USA 81.0 21.0% Viewers Choice 1-10 * 11.7% 17.0% 11.0% 20.0% WE (formerly Romance) 25.0 75.0% Wmax * 100.0%
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Notes:
1 In addition to cable, other services such as MMDS (wireless cable), SMATV (satellite master antenna television), satellite, including DBS (direct broadcast satellite) and HSD (home satellite dish), broadcast television, and LPTV (low power television) may distribute these signals. Subscriber figures may include these non-cable services.
2 Indicates that subscribership count is unknown or not available.
3 CNN International subscribership of 10 million includes domestic US subscribers only. CNN International has 129 million subscribers outside the U.S.
4 HBO subscriber numbers include HBO Latino, HBO Plus, HBO Signature, HBO Comedy, HBO Family, HBO Zone, and Cinemax, 5 Star Max, @ Max, MoreMax, ActionMax, Outer Max, Thriller Max and W Max.
5 Encore’s Thematic Multiplex subscriber numbers include Encore Love Stories, Encore Westerns, Encore Mystery, Encore Action, Encore True Stories and Encore WAM.
Sources:
NCTA, Directory of Cable Networks, Cable Television Developments 2001, at 25-146.
GemstarTV Guide International, at http://www.gemstartvguide.com/investors/shareholders.asp.
ATT Broadband, at http://www.attbroadband.com/services/other/Partners.html.
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TABLE C-6 Top 20 Programming Services by Subscribership
Rank Programming Number of MSO Ownership Interest in Network Subscribers (Millions) Network (%) 1 TBS 82.0 AOL Time Warner (100) 2 Discovery Channel 81.7 Liberty Media (49), Cox (24.6) 3 TNT 81.6 AOL Time Warner (100) 4 ESPN 81.0 5 USA Network 81.0 Liberty Media (21) 6 Fox Family Channel 80.5 7 A&E 80.4 8 TNN 80.1 9 Lifetime Television 79.9 10 Nickelodeon/Nick at Nite 79.8 11 CNN 79.7 AOL Time Warner (100) 12 C-SPAN 79.4 13 The Weather Channel 78.9 14 TLC 78.0 Liberty Media (49), Cox (24.6) 15 MTV 77.3 16 QVC 77.0 Comcast (57), Liberty Media (43) 17 CNN Headline News 76.2 AOL Time Warner (100) 18 CNBC 76.0 19 AMC 75.9 Cablevision (75) 20 VH1 74.2
Notes:
In addition to cable, other services such as MMDS (wireless cable), SMATV (satellite master antenna television), satellite, including HSD (home satellite dish) and DBS (direct broadcast satellite), broadcast television and LPTV (low power television) may distribute these signals. Subscriber figures may include these non-cable services. Cable affiliates provide 95 percent of funding for C-SPAN, but have no ownership or program control interests. DBS licenses provide the other five percent of funding and also have no ownership or program control interests.
Source:
NCTA, Top 20 Cable Networks, Cable Television Developments 2001, at 22-23.
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TABLE C-7 Top 20 Programming Services by Prime Time Rating
Rank Programming Service MSO with Ownership Interest (%) 1 Lifetime Television 2 USA Network Liberty Media (21) 3 TNT AOL Time Warner (100) 4 Cartoon Network AOL Time Warner (100) 5 TBS AOL Time Warner (100) 6 Nick at Night 7 A&E 8 Discovery Channel Liberty Media (49), Cox (24.6) 9 WGN-C 10 TNN 11 History Channel 12 ESPN 13 TLC Liberty Media (49), Cox (24.6) 14 MTV 15 FX 16 Sci-Fi Liberty Media (19.7) 17 Fox News 18 TV Land 19 BET 20 HGTV
Source:
Paul Kagan Assocs., Inc., Day Part Ratings Averages, Prime Time (3rd Quarter), Cable Program Investor, Sept. 11, 2001, at 6.
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CITY OF GENEVA, ILLINOIS BROADBAND NETWORK INITIATIVE HEADEND LEASE AND SYSTEM MANAGEMENT OPPORTUNITY SEPTEMBER 20, 2002
I. GENERAL
The city of Geneva, Illinois (the “City”) has an opportunity to partner with neighboring municipal service providers to develop and operate its broadband network as set forth in the draft of the following management agreement. United Telesystems, Inc. (“UTI”) has previously supported similar arrangements, bringing as many as four (4) municipal clients together to operate their systems jointly through a common headend facility along with participating in an arrangement whereby certain operating expenses associated with common elements such as technical support and customer service are shared among the various entities.
II. THE HEADEND
Should such an arrangement be pulled together between the City and neighboring municipal service providers, the networks would be operated through the established municipal service providers “headend” facility in one of the communities via a fiber optic link. The headend is the technological center of the system, where many programming operations and functions are processed, such as the reception of satellite delivered programming and broadcast signals. It includes facilities for descrambling incoming signals from satellite and broadcast programming networks, assigning them channel numbers, and processing them for retransmission over broadband lines. The headend also contains electronic equipment for inserting advertising at the local level, encrypting signals for security purposes, and playing or producing public access/local origination programming. Should the City elect to enter into an arrangement with municipal service providers to gain access to the municipal service providers headend, the City can expect to save up to a pro rata percentage of the capital costs currently budgeted in anticipation of the City establishing a stand alone, single system headend facility.
III. SYSTEM OPERATIONS
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Municipal service providers could also share valuable engineering, design, and construction support information and services should the City elect to move forward to construct and operate a broadband network. The attached management agreement sets for a framework around which the City and municipal service providers may work to accomplish this objective. By working out such an arrangement with municipal service providers, the City may position itself to further conserve capital and to operation more efficiently through the sharing of common resources.
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BROADBAND SYSTEM MANAGEMENT AGREEMENT
BROADBAND SYSTEM MANAGEMENT AGREEMENT (the "Agreement") dated as of the ______day of ______2002, between the Cities of Batavia, Geneva, and St. Charles, IL ("Customer") and Tri-Cities Broadband Authority ("Service Provider").
RECITALS
A. Customer intends to construct and own a certain Broadband System located in and around Batavia, Geneva, and St. Charles, IL (the "System").
B. Service Provider is an authority established to facilitate the provisioning of broadband services.
C. Customer desires to enter into a management agreement with Service Provider for providing for the management of the operation of the System.
D. Service Provider has the experience and ability to manage the System and is willing to do so upon the terms and conditions set forth in this Agreement.
AGREEMENTS
In consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Customer and Service Provider hereby agrees as follows:
I. EMPLOYMENT OF MANAGER: TERM
1.1 Customer hereby employs Service Provider and Service Provider hereby accepts the employment as exclusive manager of the System upon the conditions and for the term and compensation set forth in this Agreement.
1.2 This Agreement shall become effective as of the date hereof and shall continue in full force and effect unless terminated in accordance with Article 7 of this Agreement.
II. SERVICES TO BE PERFORMED
Subject to (i) the limitations on the authority of the Service Provider set forth in Article IV, (ii) the right of Customer to perform certain functions itself and to direct the Service Provider to take or omit to take certain actions, as set forth in this Agreement, (iii) the right of Customer to supervise the conduct of the business by the Service Provider as set forth in this Agreement, after consultation with and the consent of the Service Provider, which consent shall not be unreasonably withheld, (iv) such limitations as are required to preserve Customer's rights and (v) such requirements as are specified in any franchise,
Page 1. UTI Draft 9/20/02
license, contract, law or regulations applicable to the System, the Service Provider shall manage and supervise the operations of the System. Service Provider shall make available to the System its experience and knowledge as to preferred operating methods and procedures and provide such general overall management services and strategic planning as are necessary for the proper and efficient operation of the System. Such management and supervisory services of Service Provider shall include, but not necessarily be limited to:
2.1 Supervision. Service Provider shall supervise and conduct the day-to-day operations of the System in the ordinary course of business and shall devote such time as is required and as may be necessary for the proper and efficient management of the System.
2.2 System Construction. On behalf of Customer, Service Provider shall coordinate the engineering, design, construction and activation of the System. During the construction phase, Service Provider shall be compensated for construction support services based upon the total number of plant miles to be constructed and activated. In calculating the amount to be remitted by Customer to Service Provider for construction support services, the total plant miles to be constructed as determined by the final system design shall be used to determine the pro rate share of Operating Expenses due from Customer to Service Provider as set forth in Section V herein. Customer shall be responsible for all capital costs relating to the construction of the System.
2.3 Marketing and Installations. Customer shall coordinate the subscriber marketing and installation activities of the System.
2.4 Employees. On behalf of Customer, Service Provider shall recruit, select, hire, supervise, train, instruct, discharge, and otherwise manage all on-site employees, agents or contractors considered by Service Provider to be necessary for the efficient day-to-day operation of the System all of whom shall be employees of Service Provider.
2.5 Negotiation of Contracts. Service Provider shall negotiate all contracts and issue purchase orders necessary for the operation, maintenance, servicing, repair, protection, improvement, expansion, and other management of the System.
2.6 Maintenance. Service Provider shall cause the System to be maintained and serviced at all times in good operating condition. As specifically directed by Customer, any and all capital improvements to the System shall be managed by Service Provider.
2.7 Insurance. Service Provider shall maintain in effect (a) such policies of insurance as Customer may from time to time direct to be carried against fire and extended coverage and other such hazards as Service Provider may elect to insure against and (b) policies of insurance against liability for injury or death to persons and damage to property. Each of such policies and coverages shall name as insureds Customer, Service Provider and any other third party as may be required by contract in connection with operation of the System. Service Provider shall maintain in effect policies of insurance
Page 2. UTI Draft 9/20/02
or other coverage for workmen's compensation in such forms and in such amounts, as Customer may from time to time consider appropriate.
2.8 Other Responsibilities. Service Provider shall perform all other supervisory management services as required to result in the efficient operation of the System.
III. RECORDS: REPORTS. FILINGS
3.1 Customer shall keep or cause to be kept all necessary books and records of all of the System' affairs, in which shall be entered the transactions of the System.
3.2 Other than reports required by the Federal Communications Commission (“FCC”) Customer shall be responsible for the filing of all federal, state and local reports as may be required, including, without limitation, income tax withholding reports and copyright filings. Service Provider shall be responsible for filing all FCC reports relating to the operation and maintenance of the System on behalf of Customer.
IV. AUTHORITY OF MANAGER
4.1 Service Provider is authorized to take any action not specifically prohibited or limited by this Agreement or by law or administrative enactment, which may be required in the judgment of Service Provider in order to ensure the proper operation of the System.
4.2 Service Provider shall comply with all terms and conditions of franchises for the System.
4.3 Service Provider shall not take any action nor shall it omit to take any action, which would result in a violation on Customer's part of any agreement pursuant to which any security interest in any assets comprising a part of the System has been granted ("Security Agreement").
V. SYSTEM OPERATING AND PROGRAMMING EXPENSES
5.1 The pro rata amount of Operating Expenses due to the Service Provider by Customer will be computed on a monthly basis and payable at the end of each calendar month. Service Provider shall submit a statement to Customer reflecting its pro rata share of Operating Expenses. If this Agreement is terminated, the Operating Expenses will be prorated to the date of termination.
5.2 The pro rata amount of Operating Expenses due to the Service Provider by Customer shall be calculated by (a) dividing the total number of active plant miles owned by Customer by the total number of active plant miles under the management of the Service Provider and (b) then multiplying the percentage therein derived by the total Operating Expenses incurred by the Service Provider during the calendar month. Customer shall remit payment of the Operating Expenses within fourteen (14) days of the receipt of the Operating Expenses statement by Customer.
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5.3 Customer shall be responsible for the calculation and payment of all Programming Expenses relating to programming services provided to subscribers by the System and shall maintain all necessary agreements with programmers.
VI. OPERATING REVENUES AND EXPENSES
6.1 Any and all funds derived from the System shall be the property of Customer.
6.2 Customer shall be responsible for all payments of costs, expenses, fees and charges with respect to operations of the System as provided for in this Agreement, including, but not limited to, the Operating and Programming Expenses (or any other disbursement, charges, compensation, and reimbursement payable to Service Provider).
VII. DEFAULT AND TERMINATION
7.1 A default by Customer or Service Provider shall occur if Customer or Service Provider shall breach any material covenant or condition of this Agreement to be kept or performed by it.
7.2 This Agreement may be terminated as follows:
(a) By either Customer or Service Provider on written notice to the other in the event of any default by the other which continues uncured for 30 days (in the case of any failure to make payment of money) or for 60 days (in the case of any other default) after written notice is given from the non-defaulting party to the other party.
(b) By either Customer or Service Provider on written notice to the other, if the other party (i) files a petition in bankruptcy or insolvency, (ii) makes an assignment for the benefit of creditors, (iii) files a petition for the reorganization or for the appointment of a receiver or trustee of all or a substantial portion of its property, or (iv) if a petition in bankruptcy or other above-described petition is filed against either Customer or Service Provider which is not discharged within 180 days of filing,
(c) Upon expiration of the term of this Agreement set forth in 1.2; provided, however, that Customer and Service Provider may mutually agree to continue this Agreement for any additional period of time.
7.3 After receipt of notice of termination and before the date of termination provided by such notice or this Agreement, Service Provider shall continue to manage the System in accordance with this Agreement, unless instructed by Customer in writing to the contrary, in which case such instructions shall prevail over any other provisions of this Agreement. In addition, Service Provider shall take all actions necessary to deliver to
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Customer or its designee, possession or control of all property of Customer used in or relating to the System, in an orderly manner and without interruption of Customer's obligations to its obligees, including, but not limited to, its Subscribers, customers, advertisers, employees, agents, contractors and all governmental authorities.
7.4 Subject to any special instructions by Customer, on the date of termination of this Agreement, Service Provider shall immediately relinquish to Customer or its designee, possession and control of all property of Customer used in or relating to the System, including, but not limited to, the physical plant and equipment, and all documents, records and data.
VIII. MISCELLANEOUS
8.1 All communications permitted or required between the parties hereto shall be in writing and shall be deemed to have been duly given when delivered by messenger, overnight delivery service, facsimile (receipt confirmed) or by registered or certified mail postage prepaid, return receipt requested, addressed to the following addresses or at such other addresses as may be designated from time to time by written notice to the other party.
If to Customer:
The City of Batavia 100 North Island Avenue Batavia, IL 60510-1930 Attn: City Administrator William R. McGrath Tel. No. 630-879-1424 Fax No. 630-879-0710 And,
The City of Geneva 22 South First Street Geneva, IL 60134 Attn: City Administrator Phillip Page Tel. No. 630-232-7594 Fax No. 630-262-0867
And, The City of St. Charles Two East Main Street St. Charles, IL 60174-1984 Attn: City Administrator Larry Maholland Tel. No. 630-377-4425
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Fax No. 630-377-4440
If to Service Provider:
Tri-Cities Broadband Authority [Insert Contact] [Insert Address]
8.2 Neither party shall have the right to assign this Agreement without the written consent of the other party, nor shall this Agreement or any of the rights or obligations of the parties arising under this Agreement, be transferable by operation of law or otherwise; provided, however, that either party may assign this Agreement to an affiliated entity without the consent of the other party. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns.
8.3 This Agreement may not be modified, altered or amended in any manner except by agreement in writing duly executed by the parties. This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this Agreement.
8.4 This Agreement may be signed in any number of identical counterparts, and all such counterparts, when taken together, shall be deemed to constitute the original of this Agreement.
8.5 This Agreement shall be governed by and construed according to the laws of the State of Illinois.
CUSTOMER SERVICE PROVIDER
By: ______By: ______
Title: ______Title: ______
By: ______
Title: ______
Page 6. United Telesystems, Inc.
THE CITY OF GENEVA, ILLINOIS BROADBAND NETWORK INITIATIVE QUALIFYING STATEMENTS & PLAN OF FINANCING SEPTEMBER 20, 2002
I. QUALIFYING STATEMENTS
This Business Plan and associated financial projections were prepared under the assumption that the construction and operation of the broadband network (the “Broadband Network”) and associated business would be developed by the City of Geneva, Illinois (the “City”) through the issuance of revenue bonds in conjunction with the City of Geneva with a general obligation pledge from the City of Geneva, Illinois. No consideration has been given in the Business Plan to possible operating expense or capital cost savings realized through the utilization of existing resources. The implementation of the plan as set forth in the Business Plan anticipates that the broadband services division of the City will operate on a “stand alone” basis and, therefore, the Business Plan does not contemplate that the project will have any impact on existing utility department resources.
The development of a Broadband Network by the City as contemplated by this Business Plan has been deemed feasible based upon the assumptions set forth. The Business Plan and associated financial projections represent a plan, which by design, is intended to be conservative in all respects. For example, expense items such as franchise fees and pole attachment rental are shown as being paid. It is likely that existing resources can be integrated into the operation of the Broadband Network to reduce capital expenditures and operating expenses. The ultimate feasibility of the project, should it be undertaken by the City, will be dependent upon the City ability to: (a) construct and operate the Broadband Network within the capital and operating budgets set forth; and (b) achieve service penetration for the broadband services set forth at suggested rates levels sufficient to support the capital investment in the infrastructure and associated operating expenses. If service penetration levels are substantially lower than the projected percentages in the Business Plan, then additional cash reserves will be necessary to cover operating losses and debt financing.
As in other industries, technical obsolescence will always remain a concern in the broadband services industry. Deploying the Broadband
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Network utilizing the most advanced technology feasibly available will help insure that the Broadband Network will have a viable life span long enough to recover the capital investment. The equipment and architecture of the Broadband Network recommended in this Feasibility Study utilize the most advanced proven telecommunications technology available. The life spans of fiber optic cables are in excess of 20 years. As new network enhancements are developed, it is likely that the Broadband Network will require upgrading to keep pace with changes in technology and to take advantage of new business opportunity.
Historically, incumbent service providers have often elected to aggressively oppose municipal entities seeking to provide video, data, or telecommunications services in direct competition with private enterprise. Incumbent service providers frequently seek to delay or prevent competition through legal and/or legislative actions. It is likely that incumbent service providers may also elect to upgrade systems and adjust service rates in an attempt to decrease the effects of competition. Should the City elect to proceed, these factors should be taken into consideration and should be anticipated.
II. PLAN OF FINANCING
A. General Overview
The Business Plan capital and operating budgets include: (a) labor, materials, and equipment capital costs associated with the deployment of the Network based upon the level of service to be provided as determined by an assessment of the Geneva Service Area; (b) revenue projections based upon recommended service offerings and proposed rates; and (c) an operating budget including marketing expenses, technical expenses, general and administrative expenses, and service related recurring expenses.
The Financial Projections in the Business Plan anticipate that the Broadband Network will be capitalized through the issuance of revenue bonds as allowed under Illinois law. The cost of issuance, insurance and net interest cost projected are estimated based upon recent interest rates and associated costs incurred in bond issues closed for similar projects. Issuance costs could vary and interest rates are subject to frequent changes based upon market conditions.
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The Business Plan anticipates that start-up capital for the project will be drawn from existing cash reserves and then repaid from the proceeds of the tax-exempt revenue bonds issued by the City. The Business Plan anticipates that all start-up expenses associated with the development of the Broadband Network incurred ninety (90) days prior to the passage of a reimbursement resolution by the City calling for the issuance of tax-exempt revenue bonds to finance the project will be repaid to the City. It is anticipated that the operation of the Broadband Network will have no impact on the City of Geneva’s general fund or taxpayers.
B. Plan of Financing Overview
The Business Plan assumes that the City will issue non-taxable municipal revenue bonds to capitalize the construction of the proposed broadband network. The Business Plan anticipates that the revenue bonds will be secured by a general obligation pledge by the City of Geneva and the assets of the broadband network and the revenues of the project.
C. Revenue Bond Issue Sources and Uses Statement
The following Revenue Bond Issue Sources and Uses Statement sets forth the details of revenue bonds to be issued by the City to capitalize the Broadband Network infrastructure as contemplated in the Business Plan Financial Projections. A significant and sufficient amount of detail required to evaluate the financial feasibility of the project can be found in the Business Plan Financial Projections.
Should the City elect to proceed with the implementation of the Business Plan, it is anticipated that the City will research financing options, the final terms of which, can then be incorporated in the financial projections included as part of this Business Plan. The terms of financing included as part of the Financial Projections were derived from the terms of tax-exempt revenue bonds issued currently planned by other clients of UTI implementing similar plans.
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D. Revenue Bond Debt Service Schedule
A revenue bond debt service schedule follows. The debt service schedule assumes an interest only period during the construction period of three (3) years as allowed under applicable Illinois statutes, interest capitalized in the proceeds of the bond issue for two (2) years, and an amortization period of fifteen (15) years, beginning in year four (4). The debt service schedule also assumes a net interest cost of 4.75% based upon general obligation pledge by the City of Geneva. As stated previously, interest rates change frequently and are subject to market conditions.
GENEVA FIBER NETWORK BOND DEBT SERVICE SCHEDULE Issuance Amount: $20,720,000 Annual interest rate: 4.75% Interest only period: 36 Months Term in years: 15 Payments per year: 2 First principal payment due: 7/1/2005 Calculated payment: $973,527.25 Payment Beginning Ending Cumulative No. Date Balance Interest Principal Balance Interest 1 1/1/2003 20,720,000.00 492,100.00 0.00 20,720,000.00 492,100.00 2 7/1/2003 20,720,000.00 492,100.00 0.00 20,720,000.00 984,200.00 3 1/1/2004 20,720,000.00 492,100.00 0.00 20,720,000.00 1,476,300.00 4 7/1/2004 20,720,000.00 492,100.00 0.00 20,720,000.00 1,968,400.00 5 1/1/2005 20,720,000.00 492,100.00 0.00 20,720,000.00 2,460,500.00 6 7/1/2005 20,720,000.00 492,100.00 0.00 20,720,000.00 2,952,600.00 1 7/1/2005 20,720,000.00 492,100.00 481,427.25 20,238,572.75 3,444,700.00 2 1/1/2006 20,238,572.75 480,666.10 492,861.15 19,745,711.60 3,925,366.10 3 7/1/2006 19,745,711.60 468,960.65 504,566.60 19,241,145.00 4,394,326.75 4 1/1/2007 19,241,145.00 456,977.19 516,550.06 18,724,594.94 4,851,303.95 5 7/1/2007 18,724,594.94 444,709.13 528,818.12 18,195,776.82 5,296,013.08 6 1/1/2008 18,195,776.82 432,149.70 541,377.55 17,654,399.27 5,728,162.78 7 7/1/2008 17,654,399.27 419,291.98 554,235.27 17,100,164.00 6,147,454.76 8 1/1/2009 17,100,164.00 406,128.90 567,398.36 16,532,765.65 6,553,583.65 9 7/1/2009 16,532,765.65 392,653.18 580,874.07 15,951,891.58 6,946,236.84 10 1/1/2010 15,951,891.58 378,857.42 594,669.83 15,357,221.75 7,325,094.26 11 7/1/2010 15,357,221.75 364,734.02 608,793.23 14,748,428.52 7,689,828.28 12 1/1/2011 14,748,428.52 350,275.18 623,252.07 14,125,176.44 8,040,103.46 13 7/1/2011 14,125,176.44 335,472.94 638,054.31 13,487,122.13 8,375,576.40 14 1/1/2012 13,487,122.13 320,319.15 653,208.10 12,833,914.03 8,695,895.55 15 7/1/2012 12,833,914.03 304,805.46 668,721.79 12,165,192.24 9,000,701.01 16 1/1/2013 12,165,192.24 288,923.32 684,603.94 11,480,588.30 9,289,624.32 17 7/1/2013 11,480,588.30 272,663.97 700,863.28 10,779,725.03 9,562,288.29 18 1/1/2014 10,779,725.03 256,018.47 717,508.78 10,062,216.24 9,818,306.76 19 7/1/2014 10,062,216.24 238,977.64 734,549.62 9,327,666.63 10,057,284.40 20 1/1/2015 9,327,666.63 221,532.08 751,995.17 8,575,671.46 10,278,816.48 21 7/1/2015 8,575,671.46 203,672.20 769,855.05 7,805,816.41 10,482,488.68 22 1/1/2016 7,805,816.41 185,388.14 788,139.11 7,017,677.29 10,667,876.82 23 7/1/2016 7,017,677.29 166,669.84 806,857.42 6,210,819.88 10,834,546.65 24 1/1/2017 6,210,819.88 147,506.97 826,020.28 5,384,799.60 10,982,053.63 25 7/1/2017 5,384,799.60 127,888.99 845,638.26 4,539,161.34 11,109,942.62 26 1/1/2018 4,539,161.34 107,805.08 865,722.17 3,673,439.17 11,217,747.70 27 7/1/2018 3,673,439.17 87,244.18 886,283.07 2,787,156.10 11,304,991.88 28 1/1/2019 2,787,156.10 66,194.96 907,332.29 1,879,823.81 11,371,186.84 29 7/1/2019 1,879,823.81 44,645.82 928,881.44 950,942.37 11,415,832.65 30 1/1/2020 950,942.37 22,584.88 950,942.37 0.00 11,438,417.53
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CITY OF GENEVA, ILLINOIS BROADBAND NETWORK INITIATIVE MUNICIPAL GOVERNMENT ADMINISTRATIVE & UTILITY APPLICATIONS SEPTEMBER 20, 2002
I. OVERVIEW
A. GENERAL
As part of the overall communications infrastructure plan that utilizes the Broadband Network to increase utility operational efficiency and provide a platform for future services, it is important to take note of the infrastructure’s capacity to potentially provide the City of Geneva (the “City”) with a cost-effective and flexible utility automation system solution. In much of the information provided in this section the value of the application is not only seen and quantified by the City but also by the consumer. Several vendors are currently developing and marketing utility automation solutions to utility service providers. While complete and detailed information specific to any one solution and or vendor is not incorporated in this Business Plan, the foregoing represents capabilities that would be requested at the time proposals are solicited.
The proposed Broadband Network can serve as a primary or secondary communications path to provide connectivity for the new Supervisory Control and Data Acquisition (“SCADA”) system. The Broadband Network is also capable of supporting the management and information needs of other city utilities such as water, sewage, and gas. Enhanced services for electric service providers, facilitated by the Broadband Network, should also be considered.
United Telesystems, Inc. (“UTI”) has attached an energy management services capital budget and operating financial projections associated with providing the energy management related function of load management capability to customers for a monthly fee along with remote electric service connect/disconnect and projected operating cost savings to the City associated with having this capability. The equipment used as an assumption in the energy management financial projections is manufactured by muNet, Inc. Information about muNet, Inc. is also attached.
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B. THE ALL FIBER BROADBAND PLATFORM
The fiber-to-the-home (“FTTH”) Broadband Network can be utilized as a cost-effective and efficient platform to respond to the increasing need for utility systems operational efficiency and information flow. The FTTH network is entirely utility non-application specific, meaning no special modifications are required to facilitate utility applications. The architecture consists of a number of fiber optic transmitters and receivers that receive and convert optical signals to electrical signals at the customer premise. Side-of- the-home gateways can be connected for the final link to the utility application end use devices such as an electric or water meter and home user interface.
The side-of-the-home gateway provides data communications from the broadband Wide Area Network (“WAN”) to the home Local Area Network (“LAN”). It is designed to facilitate communication between the utility host and residential devices such as an electric meter, water meter, or home user interface. Gateways being introduced by various vendors support utility operational applications such as automatic meter reading, service connect/disconnect, tamper detection, and in-home applications such as customer-controlled load management (sometimes referred to as “Demand Response”) and real-time pricing.
If more interaction or additional applications are required such as messaging, display of billing information, or home security services, multiple user interfaces may be supported with the addition of application host software. Various manufacturers can provide additional information on those types of user interfaces. Also, the deployment of a customized "utility" channel to display information such as billing or historical data over a customer's television set may be considered in the future.
II. APPLICATIONS
A. O&M OF ELECTRIC SYSTEM
The proposed Broadband Network could provide a communications path for SCADA needs. Highly reliable, high capacity broadband communications capability could be provided for electric system operations and maintenance. A likely alternative may use a mix of communications between the radio and FTTH systems. Existing radio network may remain
Confidential Page 2. 9/20/02 United Telesystems, Inc. the primary means of SCADA connectivity, with the broadband network being used to augment communications in areas where problems with communications links have been, or may be, encountered. Where wider monitoring coverage is desired, the broadband network may transport signals to the Master or to another point in the SCADA network.
Real time information on parameters such as voltage, amperage, power-quality and breaker status gives system operators a true picture of the condition of their system. Remote control of substation devices such as breakers and voltage regulators, along with distribution automation improves customer satisfaction by reducing outage times and by maintaining good power quality as system conditions change.
Another application for the Broadband Network would be to extend SCADA functionality from the substation out to distribution feeders. Distribution SCADA technology is commonly associated with communications between a dispatch center and substations, while Distribution Automation (“DA”) technology is commonly associated with extending control functions beyond the substation into the distribution network providing electric service. The Broadband Network could provide connectivity supporting DA signals. Capacitor banks located on feeders around the system and DA controls could be accessed through the Broadband Network through a control device that could be placed at that site to provide connectivity and control for the capacitor bank. Similar configurations could serve gang operated switches located on the electric distribution system.
B. MAINTAINING SUCCESSFUL C&I CUSTOMERS
Commercial and industrial (“C&I”) customers with high annual load factors, sometimes exceeding 80%, justify special attention and warrant the highest possible level of service. The Broadband Network currently under consideration offers new service opportunities for these valuable customers. Wide area networking between C&I customers in the community would be possible. High speed Internet access could further serve to support their business needs. Packaging telecommunications services with electric service could further enhance relationships with C&I customers and increase customer affinity.
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Expanding the use of SCADA, in conjunction with broadband connectivity would facilitate enhanced electric services for these customers. Metering information could be relayed to utility headquarters at the same time that it is passed on to the customer. Additional customer premise equipment could monitor surges and sags enabling power quality problems to be more quickly identified and resolved. Automatic outage detection could reduce outage times. After advanced energy services have been offered and implemented for select C&I customers, the experience gained could be used to extend value-added services to other C&I customers as well as reaching the residential customer base.
C. REVENUES FROM OTHER ELECTRIC DISTRIBUTION SUPPLIERS
An opportunity for the City may exist in providing enhanced energy management (EEM) and SCADA support services to electric distribution suppliers using the proposed Broadband Network infrastructure. A point-to- point fiber cable run to additional connectivity points could be incorporated in the overall broadband system design. Leadership in SCADA technology and the vision of offering video, Internet and telephony combine to also create the possibility to offer services in neighboring communities as well as to existing customers.
D. AUTOMATIC METER READING
The Broadband Network presents an opportunity for the City to remotely read utility meters for the City services, as well as for those services provided by others. It is even feasible that a wireless technology could be used to extend remote metering capability into an even wider area, using the broadband network for connectivity to the operations center. When considering an upgrade to automatic meter reading, benefits for certain customer groups should be considered. These groups include: “high value” commercial and industrial; restricted access meter sites; sites with high occupancy turnover and sites where security may be an issue. Aging meters, that need replacement may also help justify investment to update and upgrade to meters with new technology that have automatic meter reading capability.
A utility automation system should be designed to accommodate interactive energy service applications provided by various vendors. Each
Confidential Page 4. 9/20/02 United Telesystems, Inc. meter module should count and deliver kWh and kW for single-phase meters. The system should also be able to store meter readings for at least four different levels so as to support real-time pricing. The application/database should be capable of: (1) reading a single meter on demand from the user, (2) storing all meter data for a large population of meters, (3) integrating demand readings into user-defined intervals as low as one minute, (4) creating standardized and custom reports with an integral report generator, (5) providing networking support for high-speed data transfer to authorized users, both inside and outside the utility, to facilitate billing and other CIS functions, and (6) supporting add-on modules for gas and water meter reading.
Following are specific benefits potentially derived from the incorporation of AMR into the operation of a Broadband Network:
1. AMR would allow daily reads for Industrial Customers. Readings could then be posted on the Internet to allow customer load profiling abilities.
2. The City could use strategically located meters to report outages. Tying in the monitoring of these meters with SCADA would allow more efficient use of utility crews.
3. The residential application of AMR could reduce service orders by allowing auto read for successor type orders, also soft connects and disconnects. Typically, orders have been reduced by as much as 80% as an industry standard.
4. Billing complaints could be handled more efficiently with AMR. Load profiling ability could be enabled and disabled via the Broadband Network to create usage charts to explain customer's bill.
5. Power Quality problems (such as voltage flicker) could be analyzed remotely thereby reducing the manpower required to hook up equipment on site. These problems could be detected before the customer calls, adding to the level of service quality offered by The City.
6. Power theft could be detected quickly, allowing more efficient use of revenue protection workers. Simply turning the meter over would not
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cause lost revenue.
7. The amount of inaccurate meter reads and can't-reads would be reduced or eliminated (with full scale implementation), thus reducing the delay in billing and the cost to re-read a meter or estimate a bill.
The City may be able to generate additional revenue streams by providing meter-reading services to other utilities. Many electric and water systems use leased phone lines to communicate with facilities in their service areas. These sites include facilities such as substations, treatment plants and pumping stations. In a like manner, natural gas systems typically lease phone lines to monitor points in their gas distribution system. Recurring monthly fees are typically paid to local exchange carriers to reach each site. It is likely that an enhanced SCADA system will have the functional requirements and the capacity to satisfy water, gas, and electric system monitoring needs.
Accounting for the cost saving associated with remote meter reading could hasten the point in time when a fully automated system to read all utility meters could be justified. Water and gas utility sites could be referenced together with the electric system and the routing for the proposed broadband network. Connectivity to their facilities should be provided using the most economical and reliable solution.
E. LOAD CONTROL
Customer–controlled load management is a fairly new form of load management. This program allows the consumer to have more control over their energy consumption by enabling them to program appliances and adjust energy consumption based on the cost of energy. This process entails the installation of a device at the customer site with the device receiving signals notifying it of new pricing. For the utility, this form of load management provides a more efficient and cost-effective means of utilizing existing power capacity, rather than increasing capacity through capital purchases. Both the consumer and the utility could benefit from the addition of this program.
Load control modules and applications software should enable both utility direct load control and customer-controlled load management (Demand Response). The control units should accept alternative incoming
Confidential Page 6. 9/20/02 United Telesystems, Inc. communications mediums (such as LonWorks and CEBus powerline carrier or two-way UHF signals) to carry the appropriate load control protocols. This devise should also be able to send information back to a network controller about the switch, including all or partial contents of the switch's memory. The device should be able to confirm the switch's status, i.e. load(s) presently on or off, as well as the receipt and execution of a load control command from a master station application. All individual relay functions of the switch should be monitored.
The platforms should be enhanced to send these commands, receive the data, and present and store the data under real-time and off-line report generators. Residential and commercial users could directly control their load switches through a local user interface, as would be appropriate in a real-time pricing or time-of-use rate scenarios. The City may perform these functions remotely for the user's benefit in exchange for a service fee.
F. REAL-TIME PRICING (RTP)
Real-time pricing occurs when a utility charges the customer based on its cost to supply energy at any given time. By using load control devices, such as programmable thermostats, the consumer can specify a different temperature in response to the cost of energy to gain maximum benefit from electric utility pricing programs. Agents embedded in home energy products could monitor indoor and outdoor conditions and the market price of energy to adjust local consumption based on consumer instructions/preferences given to it.
Real-time pricing user interfaces for home energy management systems are available from various manufacturers. The application should relay the rate change to appropriate gateways and meter modules and then report back the current meter reading (which may include both kWh and kW data) and begin recording pulses in the new rate level's register. Once the RTP/AMR application receives the meter reading from the prior level, it can compare this reading to the last reading and calculate a consumption figure for that level. The RTP/AMR application will be responsible for routing the master database of meter readings and billing data.
G. OUTAGE DETECTION
Outage detection sensing and reporting could also be incorporated in
Confidential Page 7. 9/20/02 United Telesystems, Inc. the Broadband Network. A network controller should identify actual “outages” when a gateway fails to respond to a poll. When a gateway fails to respond, or when it has re-established communications, a message is sent to the outage-processing platform. Outage information will be processed and relayed. The platform will translate the system address to a phone number through a cross-reference table, so that existing third party platforms can monitor outages reported by either telephone or gateway-based sensors.
Outage detection services can also bring value to the utility via its usage by the consumer. Communities of networked agents could be used to detect power outages and signals each other to effect a correction of the outage. Power switching agents could respond to alarms from home- or substation based agents to re-route power distribution in the regional or local grid.
H. TAMPER DETECTION
Tampering with the meter or the gateway will be sensed by any removal or disconnection of the utility meter(s). This should set a flag in the gateway memory that the event occurred. When polled by a network controller, the gateway will pass this information on for display, alarming and logging. The application will also be responsible for notifying the utility user that some sort of breach has occurred while also logging the date/time of the event.
I. REMOTE SERVICE DISCONNECT
A whole house disconnect device could be an integral part of the gateway packaging. The breaker will incorporate a hard-wired link to the gateway, where only a driver circuit is required to open or close the breaker. With the proper signal from the master station, the device will disconnect or reconnect power to the home or business. If the meter is equipped with an AMR module, the meter should be read after power has been disconnected and the reading sent back to the AMR application. At power restoration, the meter will be read before the contactor allows power to flow to the home or business.
J. UTILITY AND CITY SECURITY
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The events of September 11, 2001, have prompted a renewed interest in issues related to maintaining and strengthening our critical infrastructure. Numerous federal agencies - the Department of Energy (DOE), the Federal Bureau of Investigation (FBI), the North American Electric Reliability Council (NERC), and electric industry officials are taking a careful look at the security of our transmission grid and electric generation facilities. On a local level, the events of September 11 also hit hard as the reality of unsecured city and utility facilities has become a more prevalent issue. On the night of September 11 many utilities posted trained guards in and around their facilities. This proved to be the acknowledgement that utility security – like airport security – may have some serious holes that need patching. The North American Electric Reliability Council (NERC) offers a plan for protecting the assets of the electricity sector. This plan has 11 components, one of which refers to physical security of the plant. Telecommunications infrastructure is noted as not only a portion of the infrastructure to be secured, but as a tool to assist in maintaining a secure electric distribution system.
III. CASE STUDIES
1. Customer Controlled Load-Management (Demand Response) a. Scottsboro Electric Plant Board (SEPB), AL, 750 Mhz, fiber- coax system installed in 1999. Testing muNet and Inter-Wave Inc. for AMR and other services; remote connect/disconnect, tamper detection and posting energy information on the Web. Manager, Jimmy Sandlin, reports that this is a way to improve their core business of selling electricity – and then they have another use for the infrastructure as well. Scottsboro sees this service as another way to enhance their image in the eyes of customers who for years only communicated with the utility when being billed or during an outage.
Mr. Sandlin sees this broadband system as an avenue to allow the utility customers an opportunity to manage their own bills by being allowed to schedule their usage of electricity with time-of-use rates, etc. The SEPB is currently engaged with the Tennessee Valley Authority (TVA) to run a pilot project to 25 residents homes where in which the residents would have such control over their utility consumption and hence their monthly bill. A goal of this project is to prove the economics of the Confidential Page 9. 9/20/02 United Telesystems, Inc.
investment.
b. Northeast Utilities, Hartford, CT, this utility is testing load curtailment with 50 residential customers using WebGate equipment. Customers can adjust or turn thermostats and hot water heaters on or off. Dave Scott, manager of meter engineering and reading for Northeast, points out that the State commissions recognize problems in California energy markets and realize that the same thing can happen in New England as well. “If we prepare for it and have mechanisms in place to allow us to curtail a load before it gets to be in a critical state like California, then we’re better off. The commissions are encouraging the distribution companies to develop programs to provide customers with that type of control”, said Mr. Scott.
2. Automatic Meter Reading (AMR) a. Glasgow Electric Plant Board, KY, has been testing AMR systems for many years. Currently (2002) they are testing AMR via Internet protocol using the WebGate IRIS gateway device to 25 utility employees. The WebGate gateway is one vendor’s answer to providing two-way communication between customer and utility, and can be used to offer real-time metering and a host of other services as well. At about $150 per meter, broadband systems are cheaper to install than many other AMR systems. b. Clark Public Utilities, Vancouver, WA, has been in the process of converting to AMR since August 2001. This process is expected to take nearly a year as there are nearly 150,000 meters. The utility reports that their up-front installation costs are about $12.9 million, but that they'll save about $22.5 million over 10 years, for a net savings after the costs of implementing the system of nearly $10 million. Officials report that the system actually pays for itself in four years. This utility will also have the ability to do remote connects and disconnects saving their staff approximately 9,000 special visits each year for such things as rechecking meter readings, checking for meter tampering, and disconnections of service for lack of payment or because people are moving. Also, other utilities with this type of system report reductions in the amount of
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power theft.
3. Remote Connect and Disconnect a. Tacoma Power and The Click! Network, WA, is currently testing remote connect/disconnect of electricity, Internet, and cable services in 10 employee homes. They are testing a variety of vendors solutions at this point. Jon Athow, gateway project manager for Tacoma Power reports that this pilot is part of Tacoma Power’s vision to connect its electric and Click! Telecommunications systems at the customer site.
4. Value Added Services a. Newnan Utilities, GA, began offering cable and high-speed internet service in 1997. It has 4,700 broadband customers who are eligible to sign up for the new remotely controlled home automation service branded as “nuHome”. nuHome provides a simple and complete home management solution for consumers interested in conserving energy, controlling devices and communicating with family members – from anywhere in the world. This service is only available to customers who subscribe to Newnan’s Internet service. From any cell phone (enabled with the standard text messaging feature) or web browser, the customer can access their home through the nuHome automation service. This monthly service uses the customers standard home PC, Newnan’s Internet service, and a few simple devices the customer plugs in.
The packages range from $15 to $30 with the basic package including remote control of two lamps and a light switch or one lamp, a light switch and an appliance. Another package includes two lamps and light switches, one appliance and a camera or thermostat control. Newnan began offering this service in January of 2002.
IV. SUMMARY
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Deregulation of the electric utility industry will eventually lead to customer choice. The customer’s selection of a power supplier will be based, in large part, on price and service. Electricity will become even more of a commodity than it is today. Electricity cannot be seen or touched. It is odorless and tasteless. It can only be stored in small quantities. The product itself is hard to differentiate between various suppliers. High quality electric service, bundled with other attractive services, will differentiate successful utilities from their competitors. Progressive change today will strengthen competitive position tomorrow for utilities willing to undertake new ventures. A lack of progressive action today will increase future business risks.
In addition to video, data/Internet, and telecommunications services, constructing and operating a broadband network in the City creates opportunities to offer several value-added services for the City delivered services and to utility service providers. Energy management, automatic meter reading, SCADA, power quality, Internet and wide-area networking all become more likely candidates to bundle with the core business of selling utility services.
It is possible that sites, in or near the City, could benefit from real- time monitoring and control. Such sites include: water utility points, gas utility points, capacitor banks, industrial sites, line re-closures and gang operated switches. Communications with additional sites would provide operational benefits, more revenue and increase customer satisfaction. The Broadband Network may provide the best connectivity solution for some of these sites. Regardless of the communications medium used, a closer evaluation of these opportunities should be undertaken to incorporate them in the City’s overall communications business plan.
Electric rates to end-use customers may preclude investment in load management devices for all but a few industrial customers with demand charges. If and when power costs increase, and corresponding rate structures change to a threshold that justifies wide use of energy management services, the City will be in a strong competitive position. By leveraging load patterns and SCADA capabilities in concert with a broadband network’s automatic meter reading capabilities, the ability to retain and attract electric customers in a competitive market will be greatly strengthened.
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CITY OF GENEVA, ILLINOIS BROADBAND NETWORK INITIATIVE FIBER TO THE HOME SYSTEM DEVELOPMENT AND MARKETING PLAN SEPTEMBER 20, 2002
I. GENERAL
In order to ensure the success of the proposed business plan, a detailed strategy for the development of the fiber-to-the-home (“FTTH”) system must be adhered to in order to meet the subscriber penetration and revenue goals projected in this business plan. Failure to follow a proven strategy for deployment of the FTTH system can drastically affect the success of this project. The following sections address some of the major strategic decisions for the development of a successful FTTH system.
II. HEADEND AND CENTRAL OFFICE FACILITY
One of the first strategic decisions will be the location of the headend/central office facility. The headend/central office facility is the heart of the FTTH system and must be strategically located based upon several criteria. Although it is not a technical requirement with the advantages provided through the utilization of fiber optics, if possible, the headend/central office facility should be located in the geographic center of the service area. This will serve to improve operating efficiencies with reducing the capital cost of plant constructed to serve outlying areas.
Based upon past experience, whenever possible, it is best to locate the headend/central office facility at the same location as the FTTH operations office. A tower, earth station and headend building will require at least one acre of land that is zoned for this type of use. A tower with a height of about 200 ft. is typical, headend building space requirements are about 2,500 sq. ft. for a smaller system, a clear southwestern view is required for the location of the earth station, warehouse facilities are needed during the construction period of the FTTH system and office space will be needed for customer service and technical personnel.
Various approaches have worked for United Telesystems, Inc. clients in the
Confidential Page 1. 9/20/02 United Telesystems, Inc. past. One is to construct a totally separate headend, warehouse and office facility for the entire operation. Another is to locate the headend, tower and earth station near existing facilities and incorporate this new business into the existing facilities and operations. If planned and implemented properly, both options have proven to be efficient.
III. ENGINEERING AND CONSTRUCTION PLANNING
One of the first steps in the development of the system is to define a feasible service area. While this study includes a general ride out of the service area with estimated plant miles and potential customers passed, a more detailed walk out of the service area is required as a foundation for the FTTH system design. Therefore, UTI recommends that a company be hired to do a complete walk out of the service area including all footages required to build the network. Once the walk out or strand mapping has been completed, then a final service area can be determined based upon the density of the service areas mapped. Subsequent to the walk out or strand mapping of the service area, a FTTH design company will develop a detailed design of the broadband network. This includes routing of cables, placing of electronics and power supplies in the system.
Another important strategic step is making the poles ready and underground areas ready for the installation of this new FTTH system. There must be adequate space on poles and in public rights-of-way to accommodate this new system. Permitting with all utility companies, phone companies, cable companies, railroads and transportation departments must be completed before installation of this system can be accomplished. The make ready phase can be a time consuming process so the earlier the make ready and permitting work can be started in the development of the system the better. The construction of the FTTH system can be started once the walkout, system design and a good portion of the make ready work has been completed.
IV. FIBER TO THE HOME SYSTEM CONSTRUCTION
Typically construction of the fiber to the home (“FTTH”) network starts at the headend/central office facility and proceeds to each pocket of approximately 96 home service areas that are called Last Mile Cores (“LMCs”). A LMC generally consists of about 96 homes or businesses and two to three miles of constructed plant. Dedicated fiber optic cables are built to the center of the Last Mile Core service area. The fiber optic cable connects to the LMC electronics that distributes
Confidential Page 2. 9/20/02 United Telesystems, Inc. signals via fiber optic cable to fiber subscriber distributions units (“taps”) or signals are distributed via fiber optic cable directly to the customer premise from the LMC if a home run FTTH architecture is utilized. A residential or business gateway device is placed at the customer premise to access the fiber optic network. The FTTH network provides video (CATV and digital, including IP streaming), high-speed data and telephony services (IP-based or circuit based) to subscribers with dedicated and on-demand symmetrical data rates of up to 500 Mb/sec, all on a single fiber. The placement of the Last Mile Cores is important since fiber optic cable, electronics and power supplies will be located at or close to this location. It needs to be in an accessible location that fits into the design standards of the network.
In an aerial deployment of plant, the following order is generally followed in constructing the system.
1. Installation of the ¼” strand on the poles. 2. Over lashing of the fiber optic cable(s) on the strand. 3. Installation of the system power supplies to serve the Last Mile Cores. (“LMCs”) 4. Splicing of the fiber optic cables in the headend facility. 5. Installation of Last Mile Cores (“LMCs”) and Taps including splicing of fiber optic cables in the plant. 6. Activation of each LMC. 7. Installation of gateways devices at test sites. 8. Certification of the plant. 9. Thirty to sixty day burn in period for equipment.
In an underground deployment of plant, the same order is followed except the fiber cables are usually all buried at the same time.
V. DEPLOYMENT STRATEGY
Initially, a service area must be defined with adequate density to justify the development of a FTTH system. Typically, the city limits of a system is the first area or first phase of a project that is constructed because most franchise agreements with cities require that all the homes passed within the city be eventually serviced by the new FTTH system. In almost all cases, it is not economically feasible to build FTTH plant to every single home in the county. Therefore, a proper deployment strategy is critical to the success of a new
Confidential Page 3. 9/20/02 United Telesystems, Inc. competitive FTTH system.
Another factor in defining the initial service area is to determine the number of subscribers required to justify the fixed capital cost needed to develop a competitive broadband system. It might be necessary to construct all the city service area, plus the high-density areas just outside the city limits. Assuming the initial service area is defined, and then we can finalize the business plan to obtain the necessary capital dollars to develop this initial service area. This will be considered the first major phase of deployment of the FTTH system.
Once the system is constructed, activated, tested and is ready for providing service then a marketing deployment strategy is required to roll out the new FTTH services to the community. It has been our experience that the most successful systems use door-to-door sales to each home in the Last Mile Core service areas with the highest density areas first and the nodes that are located closest to the headend facility. Therefore, a ranking of LMC service areas by density and location will be required before launching service to the community. This type of deployment strategy is beneficial for several reasons. Revenue is greater in earlier periods of deployment, it enhances the efficiency of direct sales representative and installation personnel since they are working in the same area and it assists the customer service department to provide exceptional service from day one of launch. Launching FTTH services to the entire community in a mass marketing first come, first serve basis can overload staff and can result in poor subscriber penetration results, poor average subscriber rates and customer dissatisfaction.
Once up to twenty-five Last Mile Core service areas have been thoroughly marketed, results for the entire Phase I of deployment of the FTTH system can be accurately projected. If subscriber and revenue goals are being met, then possibly a Phase II of the deployment into less densely populated areas in the county or a neighboring community can be considered. This strategy can be repeated into additional phases, once the targeted goals in the other phases of deployment are achieved.
Proper planning, implementation, and deployment strategies are essential to the success of a competitive FTTH system. VI. SALES & MARKETING GENERAL OVERVIEW
A. Service Area – The Business Plan anticipates that the City of Geneva, Illinois (“the City”) intends to market video, data and telephone services
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to potential customers in and around the City service areas (the “Service Area”):
B. Initial Activation Marketing Effort - The Business Plan anticipates that initial activation sales and marketing effort will be founded on direct sales. The Business Plan does not anticipate that the City will utilize any other form of marketing in newly activated service areas.
C. Direct Sales Strategy – The Business Plan anticipates the City will implement effective and proven direct sales marketing strategies, which are organized and implemented to maximize video, data and telephone service penetration levels.
D. Direct Sales Policies and Procedures - To accomplish sales objectives, the Business Plan anticipates that the City will establish certain policies and procedures to provide the foundation for the direct sales subscriber acquisition effort.
VII. THE DIRECT SALES TEAM
A. Sales Representatives - To achieve an average of over 120 targeted average installations per week as set forth in the Business Plan, the direct sales team should be comprised of approximately 4 to 6 Sales Representatives. The ratio of Sales Representatives to activated homes passed equates to achieving a 38% service penetration level with each Sales Representative averaging approximately 5 sales per day, 5 days per week.
B. Management – The Business Plan anticipates that the following City management and support personnel will assist in supporting the direct sales subscriber acquisition effort in the Service Area: (1) Sales and Marketing Manager; (2) Office Support Assistant; and (3) Sales Team Leader (possibly a contractor). The direct sales team will be directly supervised by the Sales Team Leader, who will report directly to the Sales and Marketing Manager.
C. Sales Territory Management - The number of activated homes passed issued to Sales Representative will be increased or reduced based upon service penetration levels. Higher service penetration levels will result in
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an increase in the sales to contact ratio, which will result in fewer activated homes issued and outstanding to any individual Sales Representative. Lower service penetration levels will result in the result in more activated homes being issued to achieve installation objectives.
D. Contractor Classification - All Sales Representatives will be class “1099” contractors and will be responsible for expenses directly related to canvassing for customers.
E. Sales Compensation – The Business Plan anticipates that compensation for contract sales services rendered to the City will be paid on a commission only basis at the gross rate of 1.00 to 1.50 times the first month’s recurring service charge for all video services sold by Sales Representatives and the Team Leader.
F. Commissions Breakdown – The Business Plan anticipates that approximately 25% to 28% of gross sales commissions should be allocated to sales management and 75% to 72% of gross sales commissions should be allocated to the Sales Representatives.
VIII. GENERAL DIRECT SALES POLICIES AND PROCEEDURES
As part of the subscriber acquisition campaign, each Sales Representative will be required to:
1. Contact all potential customers at each serviceable address issued. 2. Present all levels of service offerings and pricing. 3. Provide an overview of installation procedures. 4. Explain customer billing procedures and pro-ration. 5. Complete work orders for installation and billing. 6. Schedule the installation. 7. Obtain atypical wiring and outlet placement information to facilitate installations.
IX. REPORTING
Daily sales reports, including the following information for the previous day, the current week and to date, should be provided to Geneva management for the first 1,000 homes passed, with weekly reports provided thereafter:
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1. The total number of activated homes passed that have been issued to Sales Representatives. 2. Number of potential subscribers contacted. 3. Number of sales, including details of services sold. 4. Number of potential subscribers contacted who declined to purchase any video services offered. 5. Number of residences or commercial units listed as potential customers, which were found to be vacant.
X. TEAM LEADER RESPONSIBILITIES
The direct sales Team Leader should be responsible for the following:
1. The Team Leader will coordinate field efforts of his or her team with the Sales Manager regarding the issuance of all serviceable homes to be marketed. 2. Immediately following the issuance of a new service area and prior to the assignment of homes to Sales Representatives, the Team Leader will conduct a field survey of the designated service area. 3. Subsequent to conducting the field survey, the Team Leader shall assign territory to Sales Representatives. 4. The Team Leader will review and approve the contact sheets of all Sales Representatives on a daily basis to determine sales to contact percentages which shall serve as a basis for the issuance of new activated homes passed territory. 5. The Team Leader will conduct random calls on a regular basis in serviceable areas previously issued and marketed to maintain quality controls. 6. Upon the completion of sales efforts on each serviceable street, the Team Leader will provide completed contact sheets to the City management, which will become a part of the systems permanent records.
XII. SALES REPRESENTATIVES RESPONSIBILITIES
Sales Representative responsibilities should include the following:
1. Sales Representatives must be available for work every week day
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and Saturdays, other than recognized holidays. 2. Sales Representatives are to report to their Team Leader to turn in completed orders and contact sheets on a daily basis. 3. Sales Representatives are required to attend all scheduled sales meetings. 4. Sales Representatives will derive all customer orders from only those areas assigned to them. No referrals or orders from unassigned areas will be accepted without the permission of the Team Leader. 5. Sales Representatives are expected to meet established minimum standards of sales performance on a daily and weekly basis. 6. All Sales Representatives must keep a neat and professional appearance in the office and while in the field. 7. Identification badges are to be worn by Sales Representatives in a visible place on the office premises as well as in the field at all times.
XIII. MARKETING GOALS AND METHODS OF MARKETING
The Marketing Plan anticipates that the City will hire outside sales Representatives to market video and data services to potential customers in the Service Area based upon the following marketing goals and methods of marketing:
A. Marketing Goals Achieve 38% penetration of non-subscribers with video service and 25% penetration of data service. Achieve 75% penetration of premium service to basic subscriber base. Utilize telemarketing effort with in- house employees to reach homes where no contact was ever made.
B. METHODS OF MARKETING
A. Direct Sales Utilizing door-to-door marketing, homes should be marketed by nodes with contact sheets issued to Sales Representatives giving specific addresses in each node. An effort of 3 times at each door should result in a sale or no sale being made. Addresses of residents that cannot be reached should be compiled and a telemarketing person can attempt to make contact or a direct piece should be sent detailing the sales offer.
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B. Marketing Offer The marketing offer needs to be bold in a competitive market. Free installation of video and data service; First or second month of video and data service free: Premium services marketed to potential subscribers could be “buy one-get one-free for 30 days” or two free pay-per-view coupons when buying a premium service.
C. Direct Mail / Door Hanger Utilize a customized direct mail piece or door hanger to be mailed or left at the door after 3 efforts have been made to each potential subscriber. This piece should state the offer as well as advantages of the City’s services.
D. Newspaper Advertising Most premium and pay-per-view service programmers have ad slicks that can be customized and are available for the asking. Ads should be customized with an offer for new subscribers or an offer for premium or pay-per-view services. E. Local Radio Advertising Local radio advertising spots are available through most premium services and pay-per-view services. Customize with offer for premium service specials and pay-per-view services.
F. Cross Promotional Insertion Ads Use cross- promotional insertion ads on your allotted advertising spots for efficient and cost-saving advertising. Make strong offers for premium services, data service and pay-per-view services. Ad copy is available through your programming services to reach new subscribers as well as to increase penetration with your premium services and data service.
G. Telemarketing Telemarketing can be used to sell, promote, or follow up on your marketing campaign. You may want to use telemarketing on specific target areas and not be too broad. Have a well-rehearsed script and utilize in-house employees to do more promoting and follow up on services sold for this type of marketing.
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H. Data Service Display Having a data service display available with a full time attendant/sales person that can explain and sale the service is most valuable to market and sale data service. A space should be set up at the office to provide this valuable sales tool.
XIV. CONCLUSION
While a well organized and managed direct sales campaign cannot guarantee service penetration levels projected in the Business Plan, it is the one element of the development of a Broadband Network which, if managed poorly, can almost certainly guarantee that adequate projections will not be met. Competitive broadband service providers have one opportunity to sell services to customers at the time of system launch which cannot be repeated or replicated through any subsequent marketing tactics or efforts. This initial opportunity to sell services to customers, therefore, will be extremely vital to the success of the project. The proper implementation of a direct sales campaign should be the cornerstone of the Geneva sales and marketing plan. More traditional forms of marketing can be implemented by the City upon its completion.
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Geneva Fiber Network Geneva, Illinois Analog Channel Lineup
Channel Service Channel Service 2 WBBM (2) CBS Chicago 43 ABC Family Channel 3 WFLD (32) FOX Chicago 44 Lifetime 4 The Weather Channel 45 Women's Entertainment 5 WMAQ (5) NBC Chicago 46 Oxygen 6 WCIU (26) IND Chicago 47 HGTV 7 WLS (7) ABC Chicago 48 The Learning Channel 8 WPWR (50) UPN Chicago 49 DIY Network 9 WGN (9) WB Chicago 50 ESPN 10 Local Community Channel 51 ESPN 2 11 WTTW (11) PBS Chicago 52 ESPN Classic Sports 12 WCPX (38) PAX Chicago 53 The Golf Channel 13 WJYS (62) Christian Chicago 54 Outdoor Life Channel 14 HBO 55 Speed Channel 15 HBO 2 56 Fox Sports Midwest 16 HBO Family 57 Outdoor Channel 17 WGBO (66) UNIVISION Chicago 58 Inspirational Network 18 TBS 59 TBN 19 WSNS (44) TELEMUNDO Chicago 60 EWTN 20 WYCC (20) PBS Chciago 61 CMTV 21 Educational/Govt. Access Ch 62 Great American Country 22 TV Guide Channel 63 VH-1 23 Headline News 64 BET 24 QVC 65 MTV 25 HSN 66 Comedy Channel 26 Fox News 67 Court TV 27 CNN 68 C-Span 28 MSNBC 69 C-Span 2 29 CNBC 70 Tech TV 30 The Disney Channel 71 Sci- Fi Channel 31 USA Network 72 National Geographic 32 The National Network 73 Discovery Health Network 33 fX 74 Food Network 34 The History Channel 75 Travel Channel 35 The Discovery Channel 76 Bravo 36 Animal Planet 77 Fine Living 37 TV Land 78 E! Television 38 Nickelodeon 79 Game Show Network 39 Cartoon Network 40 American Movie Classics 41 A & E 42 TNT
Confidential Page 1. 9/20/2002 GENEVA FIBER NETWORK Digital Video Services
Service Service Service
Digital Basic Tier Services Digital Premium Services Digital Premium Services Discovery Kids Encore Group HBO Group Discovery Science Encore HBO East Discovery Home & Leisure Encore Westerns HBO Plus Discovery Wings Encore Action HBO Signature Discovery Civilizations Encore True Stories HBO Family East SoapNet Encore Mystery HBO Comedy East BBC America Encore Love Stories HBO Zone East Much Music Toon Disney Starz!/Encore Group Cinemax Group Noggin Encore Cinemax Nick Games & Sports Starz! More Max East WAM! Starz! Theather Action Max East Boomerang Starz! BET Movies Thriller Max East Bloomberg Television Starz! Family CNN/FN Starz! Cinema The Movie Channel Group CNN en Espanol The Movie Channel East Inspirational Life TV Digital Audio The Movie Channel 2 Style Music Choice (45 Channels) The Movie Channel West Lifetime Movie Network IFC Digital Pay-Per-View Channels Showtime Group BET on Jazz In Demand PPV Preview Showtime East VH 1 Classic Rock In Demand (21 Channels) Showtime 2 East VH-1 Country ESPN Sports Packages Showtime 3 East VH 1 Soul NBA/WNBA League Pass Showtime Beyond East MTV 2 NHL Center Ice Package Showtime Extreme East MTV S Video On Demand Channel(s) MTV X Showtime Digital Package Biography Channel Showtime Group History International The Movie Channel Group Goodlife Television Network Flix Fox Sports World Sundance Channel Wisdom Network BET Gospel Shop NBC FamilyNet Confidential 9/20/2002
GENEVA FIBER NEWORK Video Services Rates and Charges
Basic Services Rate Equipment Rental Rate Limited Basic (18 Channels) $10.95 Standard Converter with Remote $1.00 Expanded Basic (57 Channels) $23.55 Digital Converter (Additional Set) $5.95 Standard Basic (75 Channels) $34.50 Digital Converter with Music Choice & PPV $6.95 Line Maintenance Plan $1.95 Total Basic (75 Channels) $36.45 Installation of Residental Service Digital Basic Tier (35 Video Chs. + 45 Audio Chs.) $10.95 Unwired Home $30.00 Premiere Basic (110 Video Chs. + 45 Audio Chs.) $47.40 Prewired Home $20.00 Multi-Family Residence $15.00 Premium Services Additional Outlet (same trip) $10.00 HBO, HBO Plus, HBO Family (Analog Service) $11.95 Additional Outlet (separate trip) $15.00 HBO Digital Group (6 Channels) $11.95 Relocate Outlet (same trip) $10.00 Showtime Group (5 Channels) $10.95 Relocate Outlet (separate trip) $15.00 Cinemax Group (4 Channels) $9.95 Wiring Within Walls (per outlet) $40.00 The Movie Channel Group (3 Channels) $8.95 Digital Converter (same trip) $5.00 Starz Group (6 Channels) $8.95 Digital Converter (separate trip) $10.00 Encore Group (6 Channels) $5.95 Reconnect Residential Service $20.00 Digital Basic Tier (35 Video Chs + 45 Audio Chs) $10.95 Other Charges Packaging Returned Check Charge $25.00 Showtime Digital Combo (Show, TMC, Flix & Sundance $12.95 Hourly Service Call $30.00 HBO Digital Group and Cinemax Digital Group $19.50 Late Fee $2.95 Starz Group (6 channels) $8.95 Franchise Fee (City) 5.00% Encore Group (6 channels) $5.95 FCC Fee (Monthly) $0.00
Digital Premium Discount: (Digital Basic Tier plus) Two Premium A La Carte or Packaged Services $2.00 Three Premium A La Carte or Packaged Services $4.00 Four or More Premium A La Carte or Packaged Services $6.00
Digital Pay-Per-View Services IN Demand PPV Movies (21 Channels) $3.95 Video On Demand Movies $4.50 Sports Packages (Varies) Special Pay Per View Events (Varies) United Telesystems, Inc. 9/20/2002
GENEVA FIBER NETWORK High Speed Data Service Residential Rates and Charges 2002
Services Rate Services Rate Residental: w/CATV Residental: No CATV
Platinum Service - Downstream to 3.0 Mbps $64.95 Platinum Service - Downstream to 3.0 Mbps $69.95 Gold Service -Downstream to 2.0 Mbps $44.95 Gold Service -Downstream to 2.0 Mbps $49.95 Silver Service - Downstream to 1.0 Mbps $34.95 Silver Service - Downstream to 1.0 Mbps $39.95 Standard Service - Downstream to 512 Kbps $26.95 Standard Service - Downstream to 512 Kbps $31.95
Other Charges: Other Charges:
Additional Email Address (Monthly Fee) $5.00 Additional Email Address (Monthly Fee) $7.50 Charge for Data Transfer Over Cap per 50 MB $1.00 Charge for Data Transfer Over Cap per 50 MB $1.50
Installation Services: Installation Services:
Installation (Includes NIC Card & Software) $99.00 Installation (Includes NIC Card & Software) $125.00 Installation (No NIC Card & Software) $75.00 Installation (No NIC Card & Software) $100.00 Dedicated High Speed Cable Outlet $50.00 Dedicated High Speed Cable Outlet $75.00
Residental Service Packages Residental Service Packages
Platinum Service $64.95 Platinum Service $69.95 includes: Speeds Up to 3.0 Mbps Downstream and includes: Speeds Up to 3.0 Mbps Downstream and 512 Kbps Up, Dynamic IP Address, 512 Kbps Up, Dynamic IP Address, Up to 4 Email Addresses, 7.5 MB Personal Web Up to 4 Email Addresses, 7.5 MB Personal Web Space, Data Transfer Cap of 10 GB Space, Data Transfer Cap of 10 GB
Gold Service $44.95 Gold Service $49.95 includes: Speeds Up to 2.0 Mbps Downstream and includes: Speeds Up to 2.0 Mbps Downstream an 256 Kbps Up, Dynamic IP Address, 256 Kbps Up, Dynamic IP Address, Up to 3 Email Addresses, 5 MB Personal Web Up to 3 Email Addresses, 5 MB Personal Web Space, Data Transfer Cap of 7.5 GB Space, Data Transfer Cap of 7.5 GB
Silver Service $34.95 Silver Service $39.95 includes: Speed Up to 1.0 Mbps Downstream includes: Speed Up to 1.0 Mbps Downstream and 128 Kbps Upstream, Dynamic IP Address and 128 Kbps Upstream, Dynamic IP Address Up to 3 Email Addresses, 3 MB Personal Web Up to 3 Email Addresses, 3 MB Personal Web Space, Data Transfer Cap of 5 GB Space, Data Transfer Cap of 5 GB
Standard Service $26.95 Standard Service $31.95 includes: Speed Up 512 Kbps Downstream and includes: Speed Up 512 Kbps Downstream and 128 Kbps Upstream, Dynamic IP Address 128 Kbps Upstream, Dynamic IP Address 2 Email Address, Data Transfer Cap of 3 GB 2 Email Address, Data Transfer Cap of 3 GB
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GENEVA FIBER NETWORK High Speed Data Service Business Rates and Charges 2002
High Speed Data Services Monthly Installation Business Rate Charges Rate
Standard Business Service - Level 1 $49.95 Standard Business Service - Level 1 $150.00 Standard Business Service - Level 2 $69.95 Standard Business Service - Level 2 $200.00 Business Plus Service - Level 1 $89.95 Business Plus Service - Level 1 $300.00 Business Plus Service - Level 2 $99.95 Business Plus Service - Level 2 $350.00 Business Elite Service - Level 1 $129.95 Business Elite Service - Level 1 $500.00 Business Elite Service - Level 2 $169.95 Business Elite Service - Level 2 $550.00 Direct Business Service - Customized Quote Direct Business Service - Customized Quote
Other Charges Charge
Additional Static Email Address (Monthly Fee) $15.00 Charge for Data Transfer Over Cap per 50 MB $1.50
Monthly Monthly Business Service Packages Rate Business Service Packages Rate
Standard Service Level 1 $49.95 Standard Service Level 2 $69.95 includes: Speeds Up to 512 Kbps Downstream and includes: Speeds Up to 2.0 Mbps Downstream and 128 Kbps Upstream, One Static IP Address 256 Kbps Upstream, One Static IP Address Up to 4 Email Addresses, 5 MB Web Space Up to 5 Email Addresses, 7.5 MB Web Space Space, Data Transfer Cap of 10 GB Space, Data Transfer Cap of 10 GB Installation Charge $150.00 $200.00
Business Plus Service Level 1 $89.95 Business Plus Service Level 2 $99.95 includes: Speed Up to 512 Kbps Downstream includes: Speeds Up to 2.0 Mbps Downstream and 128 Kbps Upstream, Three Static IP Addresses and 256 Kbps Upstream, Three Static IP Addresses Up to 10 Email Addresses, 10 MB Web Space Up to 10 Email Addresses, 10 MB Web Space Space, Data Transfer Cap of 15 GB Space, Data Transfer Cap of 15 GB Installation Charge $300.00 $350.00
Business Elite Service Level 1 $129.95 Business Elite Service Level 2 $169.95 includes: Speed Up to 2.0 Mbps Downstream includes: Speeds Up to 3.0 Mbps Downstream and 128 Kbps Upstream, Five Static IP Addresses and 512 Kbps Upstream, Five Static IP Addresses Up to 15 Email Addresses, 15 MB Web Space Up to 15 Email Addresses, 15 MB Web Space Space, Data Transfer Cap of 20 GB Space, Data Transfer Cap of 20 GB Installation Charge $500.00 Installation Charge $550.00
Business Direct Service The City of Geneva can provide customized service tailored to the high speed data needs of growing organizations including fiber connnectivity directly to the business within the designated service area.
Confidential Page 1 9/20/2002 Batavia Residential Telephony Packaging and Pricing
A La Carte Basic Standard Family Family Plus A La Carte A La Carte Features Rates Service Service Service Service Percentages Avg. Rate Basic Touch Tone Service-Primary Line $16.95 x x x x Basic Additional Line $12.95 x 15% $1.94 911 Free x x x x Call Waiting $4.00 x x x 10% $0.40 Caller ID (name and number) $4.00 x x x 7% $0.28 3 Way Calling $4.00 x x x 3% $0.12 Call Forwarding $4.00 x x 3% $0.12 Preferred Call Forwarding $4.00 x x 1% $0.04 Prioirity Ring $4.00 x x 1% $0.04 Distinctive Ring $4.00 x x 1% $0.04 Selective Call Blocking $4.00 x x 1% $0.04 900/976 Call Blocking Free x x x x 1% Last Call Return $4.00 x x 2% $0.08 Speed Dial 8 $3.00 x x 3% $0.09 Speed Dial 30 $4.00 x 2% $0.08 Non-published number $2.75 $0.00 Listing Omitted from Phone Directory Free x x x x Standard Directory Listings Free x x x x Additional Directory Listings $1.55 x 5% $0.08 Inside Wire Maintenance $2.00 x 15% $0.30 Continuous Redial *66 $2.00 x x x 2% $0.04 Anonymous Call Rejection $0.00 x x $0.00 Customer Code Restriction $0.00 x x x $0.00 Voice Mail $4.00 15% $0.60 Voice Mail with Extensions $4.50 x 2% $0.09 Voice Mail with Pager Notifications $6.95 2% $0.14 Voice Mail with Pager Notifications & Ext. $7.95 x 1% $0.08
Monthly Service Rate $16.95 $22.95 $32.95 $42.95
Subscription Percentage 5.00% 60.00% 20.00% 15.00%
Average Per Customer Type $0.85 $13.77 $6.59 $6.44 $4.60
Average Rate Per Phone Customer$ 27.65 $32.25
Note: All rates are exclusive of Taxes, Charges, Fees, and Accessments Batavia Small Business Telephony Packaging and Pricing Basic Standard Business Business Deluxe A La Carte Business Business Plus Advantage Business A La Carte A La Carte Features Rates Service Service Service Service Service Percentages Avg. Rate Basic Touch Tone Service-Primary Line $24.95 x x x x x Basic Touch Tone Service-Secondary Line $24.95 3% $0.75 Basic Additional Line -Roll Over $9.95 $0.00 $1.00 $2.00 $3.00 10% $1.00 911 Free x x x x x Call Waiting $6.50 x x x x 5% $0.33 Caller ID Deluxe $10.00 x x x 5% $0.50 Caller ID Enchanced $15.00 x x 1% $0.15 3 Way Calling $5.00 x x x x 2% $0.10 Call Forwarding - Busy Line $4.25 x x x 2% $0.09 Call Forwarding - No Answer $4.25 x x x 1% $0.04 Prioirity Ring $9.00 x x x 1% $0.09 Distinctive Ring $9.00 x x x 1% $0.09 Selective Call Blocking $5.00 x x x 1% $0.05 900/976 Call Blocking Free x x x x x Call Return $5.00 x x x 2% $0.10 Call Trace $6.50 1% $0.07 Speed Dial 8 $4.00 x 3% $0.12 Speed Dial 30 $5.00 x x 2% $0.10 Non-published number $2.75 1% $0.03 Listing Omitted from Phone Directory Free x x x x x Standard Directory Listings Free x x x x x Additional Directory Listings $2.00 x x 5% $0.10 Foreign Directory Listings $2.00 x 2% $0.04 Inside Wire Maintenance $4.00 x x 25% $1.00 Continuous Redial *66 $2.00 x x x x 2% $0.04 Anonymous Call Rejection $2.00 x x x $0.00 Customer Code Restriction $2.00 x x x x $0.00 Voice Mail $15.00 x 10% $1.50 Voice Mail with Extensions $17.50 x 2% $0.35 Voice Mail with Pager Notifications $20.00 2% $0.40 Voice Mail with Pager Notifications & Ext. $22.50 x x 1% $0.23 Information at 411 $0.75 Courtesy Complete for 411 $7.50
Monthly Service Rate $24.95 $49.95 $79.95 $109.95 $139.95
Subscription Percentage 2.50% 30.00% 40.00% 12.50% 5.00%
Average Per Customer Type $0.62 $14.99 $31.98 $13.74 $7.00 $7.24
Average Rate Per Phone Customer $75.57
Note: All rates are exclusive of Taxes, Charges, Fees, and Accessments $68.33 Confidential 9/20/2002
TRI-CITIES FIBER NEWORK Video Services Rates and Charges
Basic Services Rate Equipment Rental Rate Limited Basic (18 Channels) $10.95 Standard Converter with Remote $1.00 Expanded Basic (57 Channels) $22.00 Digital Converter (Additional Set) $5.95 Standard Basic (75 Channels) $32.95 Digital Converter with Music Choice & PPV $6.95 Line Maintenance Plan $1.95 Total Basic (75 Channels) $34.90 Installation of Residental Service Digital Basic Tier (35 Video Chs. + 45 Audio Chs.) $10.50 Unwired Home $30.00 Premiere Basic (110 Video Chs. + 45 Audio Chs.) $45.40 Prewired Home $20.00 Multi-Family Residence $15.00 Premium Services Additional Outlet (same trip) $10.00 HBO, HBO Plus, HBO Family (Analog Service) $11.95 Additional Outlet (separate trip) $15.00 HBO Digital Group (6 Channels) $11.95 Relocate Outlet (same trip) $10.00 Showtime Group (5 Channels) $10.95 Relocate Outlet (separate trip) $15.00 Cinemax Group (4 Channels) $9.95 Wiring Within Walls (per outlet) $40.00 The Movie Channel Group (3 Channels) $8.95 Digital Converter (same trip) $5.00 Starz Group (6 Channels) $8.95 Digital Converter (separate trip) $10.00 Encore Group (6 Channels) $5.95 Reconnect Residential Service $20.00 Digital Basic Tier (35 Video Chs + 45 Audio Chs) $10.95 Other Charges Packaging Returned Check Charge $25.00 Showtime Digital Combo (Show, TMC, Flix & Sundance $12.95 Hourly Service Call $30.00 HBO Digital Group and Cinemax Digital Group $19.50 Late Fee $2.95 Starz Group (6 channels) $8.95 Franchise Fee (City) 5.00% Encore Group (6 channels) $5.95 FCC Fee (Monthly) $0.00
Digital Premium Discount: (Digital Basic Tier plus) Two Premium A La Carte or Packaged Services $2.00 Three Premium A La Carte or Packaged Services $4.00 Four or More Premium A La Carte or Packaged Services $6.00
Digital Pay-Per-View Services IN Demand PPV Movies (21 Channels) $3.95 Video On Demand Movies $4.50 Sports Packages (Varies) Special Pay Per View Events (Varies) United Telesystems, Inc. 9/20/2002
TRI-CITIES FIBER NETWORK High Speed Data Service Residential Rates and Charges 2002
Services Rate Services Rate Residental: w/CATV Residental: No CATV
Platinum Service - Downstream to 3.0 Mbps $63.95 Platinum Service - Downstream to 3.0 Mbps $68.95 Gold Service -Downstream to 2.0 Mbps $43.95 Gold Service -Downstream to 2.0 Mbps $48.95 Silver Service - Downstream to 1.0 Mbps $33.95 Silver Service - Downstream to 1.0 Mbps $38.95 Standard Service - Downstream to 512 Kbps $25.95 Standard Service - Downstream to 512 Kbps $30.95
Other Charges: Other Charges:
Additional Email Address (Monthly Fee) $5.00 Additional Email Address (Monthly Fee) $7.50 Charge for Data Transfer Over Cap per 50 MB $1.00 Charge for Data Transfer Over Cap per 50 MB $1.50
Installation Services: Installation Services:
Installation (Includes NIC Card & Software) $99.00 Installation (Includes NIC Card & Software) $125.00 Installation (No NIC Card & Software) $75.00 Installation (No NIC Card & Software) $100.00 Dedicated High Speed Cable Outlet $50.00 Dedicated High Speed Cable Outlet $75.00
Residental Service Packages Residental Service Packages
Platinum Service $63.95 Platinum Service $68.95 includes: Speeds Up to 3.0 Mbps Downstream and includes: Speeds Up to 3.0 Mbps Downstream and 512 Kbps Up, Dynamic IP Address, 512 Kbps Up, Dynamic IP Address, Up to 4 Email Addresses, 7.5 MB Personal Web Up to 4 Email Addresses, 7.5 MB Personal Web Space, Data Transfer Cap of 10 GB Space, Data Transfer Cap of 10 GB
Gold Service $43.95 Gold Service $48.95 includes: Speeds Up to 2.0 Mbps Downstream and includes: Speeds Up to 2.0 Mbps Downstream an 256 Kbps Up, Dynamic IP Address, 256 Kbps Up, Dynamic IP Address, Up to 3 Email Addresses, 5 MB Personal Web Up to 3 Email Addresses, 5 MB Personal Web Space, Data Transfer Cap of 7.5 GB Space, Data Transfer Cap of 7.5 GB
Silver Service $33.95 Silver Service $38.95 includes: Speed Up to 1.0 Mbps Downstream includes: Speed Up to 1.0 Mbps Downstream and 128 Kbps Upstream, Dynamic IP Address and 128 Kbps Upstream, Dynamic IP Address Up to 3 Email Addresses, 3 MB Personal Web Up to 3 Email Addresses, 3 MB Personal Web Space, Data Transfer Cap of 5 GB Space, Data Transfer Cap of 5 GB
Standard Service $25.95 Standard Service $30.95 includes: Speed Up 512 Kbps Downstream and includes: Speed Up 512 Kbps Downstream and 128 Kbps Upstream, Dynamic IP Address 128 Kbps Upstream, Dynamic IP Address 2 Email Address, Data Transfer Cap of 3 GB 2 Email Address, Data Transfer Cap of 3 GB
Confidential Page 1 9/20/2002 United Telesystems, Inc. 9/20/2002
TRI-CITIES FIBER NETWORK High Speed Data Service Business Rates and Charges 2002
High Speed Data Services Monthly Installation Business Rate Charges Rate
Standard Business Service - Level 1 $49.95 Standard Business Service - Level 1 $150.00 Standard Business Service - Level 2 $69.95 Standard Business Service - Level 2 $200.00 Business Plus Service - Level 1 $89.95 Business Plus Service - Level 1 $300.00 Business Plus Service - Level 2 $99.95 Business Plus Service - Level 2 $350.00 Business Elite Service - Level 1 $129.95 Business Elite Service - Level 1 $500.00 Business Elite Service - Level 2 $169.95 Business Elite Service - Level 2 $550.00 Direct Business Service - Customized Quote Direct Business Service - Customized Quote
Other Charges Charge
Additional Static Email Address (Monthly Fee) $15.00 Charge for Data Transfer Over Cap per 50 MB $1.50
Monthly Monthly Business Service Packages Rate Business Service Packages Rate
Standard Service Level 1 $49.95 Standard Service Level 2 $69.95 includes: Speeds Up to 512 Kbps Downstream and includes: Speeds Up to 2.0 Mbps Downstream and 128 Kbps Upstream, One Static IP Address 256 Kbps Upstream, One Static IP Address Up to 4 Email Addresses, 5 MB Web Space Up to 5 Email Addresses, 7.5 MB Web Space Space, Data Transfer Cap of 10 GB Space, Data Transfer Cap of 10 GB Installation Charge $150.00 $200.00
Business Plus Service Level 1 $89.95 Business Plus Service Level 2 $99.95 includes: Speed Up to 512 Kbps Downstream includes: Speeds Up to 2.0 Mbps Downstream and 128 Kbps Upstream, Three Static IP Addresses and 256 Kbps Upstream, Three Static IP Addresses Up to 10 Email Addresses, 10 MB Web Space Up to 10 Email Addresses, 10 MB Web Space Space, Data Transfer Cap of 15 GB Space, Data Transfer Cap of 15 GB Installation Charge $300.00 $350.00
Business Elite Service Level 1 $129.95 Business Elite Service Level 2 $169.95 includes: Speed Up to 2.0 Mbps Downstream includes: Speeds Up to 3.0 Mbps Downstream and 128 Kbps Upstream, Five Static IP Addresses and 512 Kbps Upstream, Five Static IP Addresses Up to 15 Email Addresses, 15 MB Web Space Up to 15 Email Addresses, 15 MB Web Space Space, Data Transfer Cap of 20 GB Space, Data Transfer Cap of 20 GB Installation Charge $500.00 Installation Charge $550.00
Business Direct Service The Tri-Cities can provide customized service tailored to the high speed data needs of growing organizations including fiber connnectivity directly to the business within the designated service area.
Confidential Page 1 9/20/2002 City of Geneva Page: 1 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Bond Compliance Flow of Funds
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Customer Revenues Video $537,202 $1,879,926 $1,941,624 $2,023,871 $2,090,676 $2,160,084 $2,251,585 $2,326,758 $2,404,874 $2,506,744 Residential High Speed Data $96,450 $454,219 $578,084 $602,063 $609,328 $617,084 $643,945 $652,904 $662,331 $692,239 Commerial Video and High Speed Data $670,638 $1,003,011 $1,015,414 $1,058,285 $1,070,984 $1,083,835 $1,129,599 $1,143,154 $1,156,871 $1,205,724 Telecommunications $669,344 $2,451,084 $2,527,452 $2,654,089 $2,787,314 $2,926,535 $3,072,824 $3,226,595 $3,386,702 $3,556,319
Total Customer Operating Revenues $1,973,634 $5,788,240 $6,062,574 $6,338,308 $6,558,302 $6,787,538 $7,097,954 $7,349,411 $7,610,777 $7,961,025
Customer Operating Expenses Video $933,777 $1,723,027 $1,800,932 $1,862,421 $1,925,745 $1,991,376 $2,060,919 $2,131,466 $2,204,587 $2,282,019 Residential High Speed Data $91,914 $202,988 $243,607 $249,612 $254,024 $258,767 $265,545 $270,693 $276,032 $283,549 Commerial Video and High Speed Data $68,063 $210,379 $205,152 $210,035 $221,457 $223,358 $228,518 $230,487 $232,473 $237,945 Telecommunications $532,657 $1,054,998 $1,038,968 $1,076,582 $1,114,972 $1,154,943 $1,197,263 $1,240,587 $1,285,595 $1,333,487
Total Customer Operating Expenses $1,626,413 $3,191,393 $3,288,660 $3,398,649 $3,516,198 $3,628,444 $3,752,245 $3,873,233 $3,998,688 $4,137,000
Net Revenues Before Other Resolution Income & Expenses Video ($396,575) $156,898 $140,691 $161,450 $164,931 $168,708 $190,667 $195,292 $200,287 $224,725 Residential High Speed Data $4,536 $251,231 $334,478 $352,451 $355,304 $358,317 $378,400 $382,211 $386,298 $408,690 Commerial Video and High Speed Data $602,575 $792,632 $810,262 $848,250 $849,527 $860,478 $901,081 $912,667 $924,398 $967,779 Telecommunications $136,686 $1,396,086 $1,488,483 $1,577,508 $1,672,342 $1,771,592 $1,875,562 $1,986,008 $2,101,107 $2,222,832
Total Net Revenues Before Other O&M Under Resolutio $347,222 $2,596,847 $2,773,914 $2,939,659 $3,042,104 $3,159,094 $3,345,709 $3,476,178 $3,612,090 $3,824,025
Other Income & Expenses Interest Earned $182,064 $41,123 $54,954 $77,464 $95,856 $107,558 $121,419 $138,201 $157,158 $178,385 Other O&M Expenses Under Resolution $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Revenues As Defined By Resolution $529,286 $2,637,971 $2,828,868 $3,017,123 $3,137,960 $3,266,652 $3,467,128 $3,614,379 $3,769,247 $4,002,410
Uses of Net Revenue Debt Service (Defined as Principal and Interest) $0 $0 $492,100 $1,465,627 $1,947,055 $1,947,055 $1,947,055 $1,947,055 $1,947,055 $1,947,055 Utility Plant Improvement Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Fund Transfer $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Available for Flow of Funds $529,286 $2,637,971 $2,336,768 $1,551,496 $1,190,905 $1,319,598 $1,520,073 $1,667,324 $1,822,193 $2,055,356
Debt Service Coverage 0.00 0.00 5.75 2.06 1.61 1.68 1.78 1.86 1.94 2.06
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 2 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Customer Summary
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Homes Passed by Service Area Geneva, Illinois 7,964 8,052 8,149 8,247 8,346 8,446 8,547 8,650 8,754 8,859 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total 7,964 8,052 8,149 8,247 8,346 8,446 8,547 8,650 8,754 8,859
Total Video Customers by Service Area Geneva, Illinois 2,708 2,738 2,771 2,804 2,838 2,872 2,906 2,941 2,976 3,012 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total 2,708 2,738 2,771 2,804 2,838 2,872 2,906 2,941 2,976 3,012 Video Customers to Homes Passed 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0%
Total Residential Data Customers Total 513 1,062 1,075 1,088 1,103 1,118 1,135 1,152 1,170 1,190 Residential Data Customer to Homes Passed 6.4% 13.2% 13.2% 13.2% 13.2% 13.2% 13.3% 13.3% 13.4% 13.4%
Residential Telephone Customers in Service Residential Households 558 564 592 621 653 685 719 755 793 833 Multiple Dwelling Units 40 40 42 44 47 49 51 54 57 59 Total Residential Telephone Customers in Service 597 604 634 666 699 734 771 809 850 892 Residential Telephone Customers to Homes Passed 7.5% 7.5% 7.8% 8.1% 8.4% 8.7% 9.0% 9.4% 9.7% 10.1%
Commercial Customers Passed Geneva, Illinois 1,925 1,947 1,970 1,994 2,017 2,042 2,066 2,091 2,116 2,141 Phase II Service Area 0000000000 Phase III Service Area 0000000000 End Commercial Units Passed 1,925 1,947 1,970 1,994 2,017 2,042 2,066 2,091 2,116 2,141
Commercial Data Customers Total 97 339 343 347 351 355 360 364 368 373 Commercial Data Customer to Units Passed 5.0% 17.4% 17.4% 17.4% 17.4% 17.4% 17.4% 17.4% 17.4% 17.4%
Commercial Telephone Customers in Service Small Business A 96 97 102 107 113 118 124 130 137 144 Small Business B 72 73 77 80 85 89 93 98 103 108 Large Entities 48 49 51 54 56 59 62 65 68 72 Total 217 219 230 241 254 266 279 293 308 324 Commercial Telephone Customers to Units Passed 11.3% 11.3% 11.7% 12.1% 12.6% 13.0% 13.5% 14.0% 14.6% 15.1%
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 3 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Summary (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Average Video Customers by Service Area Geneva, Illinois 1,354 2,723 2,754 2,787 2,821 2,855 2,889 2,923 2,959 2,994 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total Average Video Customers 1,354 2,723 2,754 2,787 2,821 2,855 2,889 2,923 2,959 2,994
Average Video Customers Percentage by Service Area Geneva, Illinois 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Phase II Service Area 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Phase III Service Area 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Total Average Video Customers to Homes Passed 17.00% 33.81% 33.80% 33.80% 33.80% 33.80% 33.80% 33.80% 33.80% 33.80%
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 5 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Summary (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Total Plant Miles by Service Area Geneva, Illinois 112.00 113.24 114.60 115.97 117.36 118.77 120.20 121.64 123.10 124.58 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Plant Miles 112.00 113.24 114.60 115.97 117.36 118.77 120.20 121.64 123.10 124.58
Plant Miles % Per Service Area Geneva, Illinois 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Phase II Service Area 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Phase III Service Area 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 13 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Telecommunications Customer Assumptions (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Lines Sold Residential Households 669 7 34 36 37 39 41 43 46 47 Multiple Dwelling Units 48032333333 Small Business A 385 4 20 20 22 22 24 25 26 27 Small Business B 722 8 36 39 40 42 45 46 49 51 Large Entities 1,203 14 60 64 67 71 74 77 82 85 Grand Total Lines Sold 3,027 33 153 161 169 177 187 194 206 213
Lines in Service (EOP) Residential Households 669 676 710 746 783 822 863 906 952 999 Multiple Dwelling Units 48 48 51 53 56 59 62 65 68 71 Small Business A 385 389 409 429 451 473 497 522 548 575 Small Business B 722 730 766 805 845 887 932 978 1,027 1,078 Large Entities 1,203 1,217 1,277 1,341 1,408 1,479 1,553 1,630 1,712 1,797 Grand Total Lines In Service EOP 3,027 3,060 3,213 3,374 3,543 3,720 3,907 4,101 4,307 4,520
Average Lines Residential Households 335 673 693 728 765 803 843 885 929 976 Multiple Dwelling Units 24 48 50 52 55 58 61 64 67 70 Small Business A 193 387 399 419 440 462 485 510 535 562 Small Business B 361 726 748 786 825 866 910 955 1,003 1,053 Large Entities 602 1,210 1,247 1,309 1,375 1,444 1,516 1,592 1,671 1,755 Grand Total Average Lines In Service 1,515 3,044 3,137 3,294 3,460 3,633 3,815 4,006 4,205 4,416
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 4 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Summary (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Commercial Customers Passed Begin Commercial Units Passed 0 1,925 1,947 1,970 1,994 2,017 2,042 2,066 2,091 2,116 Geneva, Illinois 1,925 1,947 1,970 1,994 2,017 2,042 2,066 2,091 2,116 2,141 Phase II Service Area 0000000000 Phase III Service Area 0000000000 End Commercial Units Passed 1,925 1,947 1,970 1,994 2,017 2,042 2,066 2,091 2,116 2,141
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 12 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Telecommunications Customer Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Customers Sold Residential Households 558 6 28 30 31 33 34 36 38 40 Multiple Dwelling Units 40022222333 Small Business A 96155566677 Small Business B 72144444555 Large Entities 48123333333 Grand Total Customers Sold 814 9 41 43 45 48 50 53 55 58
Customers in Service - EOP Residential Households 558 564 592 621 653 685 719 755 793 833 Multiple Dwelling Units 40 40 42 44 47 49 51 54 57 59 Small Business A 96 97 102 107 113 118 124 130 137 144 Small Business B 72 73 77 80 85 89 93 98 103 108 Large Entities 48 49 51 54 56 59 62 65 68 72 Grand Total Customers In Service EOP 814 823 864 907 953 1,000 1,050 1,103 1,158 1,216
Average Customers Residential Households 528 563 578 607 637 669 702 737 774 813 Multiple Dwelling Units 38 40 41 43 45 48 50 53 55 58 Small Business A 91 97 100 105 110 115 121 127 134 140 Small Business B 68 73 75 79 82 87 91 95 100 105 Large Entities 46 49 50 52 55 58 61 64 67 70 Grand Total Average Customers 771 822 844 886 929 977 1,025 1,076 1,130 1,186
Average Service Penetration Residential Households 6.63% 6.99% 7.09% 7.36% 7.63% 7.92% 8.21% 8.52% 8.84% 9.18% Multiple Dwelling Units 0.48% 0.50% 0.50% 0.52% 0.54% 0.57% 0.58% 0.61% 0.63% 0.65% Small Business A 4.73% 4.98% 5.08% 5.27% 5.45% 5.63% 5.86% 6.07% 6.33% 6.54% Small Business B 3.53% 3.75% 3.81% 3.96% 4.06% 4.26% 4.40% 4.54% 4.73% 4.90% Large Entities 2.39% 2.52% 2.54% 2.61% 2.73% 2.84% 2.95% 3.06% 3.17% 3.27% Average Residential Service Penetration 7.11% 7.49% 7.60% 7.88% 8.17% 8.49% 8.80% 9.13% 9.47% 9.83% Average Commercial Service Penetration 10.65% 11.25% 11.42% 11.84% 12.24% 12.73% 13.21% 13.68% 14.22% 14.71%
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 22 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Sources and Uses
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Sources Begin Cash on Hand $0 $2,373,025 $3,663,629 $5,164,280 $6,390,393 $7,170,549 $8,094,606 $9,213,383 $10,477,167 $11,892,320 Paid In Capital - Broadband Service Provider $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Revenue Bond Issue Proceeds - Capital Budget $18,205,728 $0 $0 $0 $0 $0 $0 $0 $0 $0 Revenue Bond Issue Proceeds - Capitalized Interest $1,968,400 $0 $0 $0 $0 $0 $0 $0 $0 $0 Revenue Bond Issue Proceeds - Debt Service Reserve $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cost of Revenue Bond Financing $174,048 $0 $0 $0 $0 $0 $0 $0 $0 $0 Original Issue and Underwriters Discount $257,736 $0 $0 $0 $0 $0 $0 $0 $0 $0 Revenue Bond Financing Insurance $109,816 $0 $0 $0 $0 $0 $0 $0 $0 $0 Excess Revenue Bond Proceeds $4,272 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subordinated Debt - Broadband Service Provider $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Interest Earned $182,064 $41,123 $54,954 $77,464 $95,856 $107,558 $121,419 $138,201 $157,158 $178,385 Utility Plant Improvement Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 EBITDA $347,222 $2,596,847 $2,773,914 $2,939,659 $3,042,104 $3,159,094 $3,345,709 $3,476,178 $3,612,090 $3,824,025 Total Sources $21,349,286 $5,010,996 $6,492,497 $8,181,403 $9,528,353 $10,437,202 $11,561,734 $12,827,761 $14,246,414 $15,894,730
Uses Capital Expenditures $17,842,561 $363,167 $344,016 $325,383 $410,749 $395,541 $401,297 $403,540 $407,040 $410,752 Operating Loss $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Revenue Bond Issue Interest $492,100 $984,200 $984,200 $984,200 $949,627 $901,686 $851,442 $798,782 $743,591 $685,748 Revenue Bond Principal Reduction $0 $0 $0 $481,427 $997,428 $1,045,368 $1,095,613 $1,148,272 $1,203,463 $1,261,306 Cost of Revenue Bond Financing $174,048 $0 $0 $0 $0 $0 $0 $0 $0 $0 Original Issue and Underwriters Discount $257,736 $0 $0 $0 $0 $0 $0 $0 $0 $0 Revenue Bond Financing Insurance $109,816 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subordinated Debt - Broadband Service Provider Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Subordinated Debt - Broadband Service Provider Principa $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Reimbursement - Broadband Service Provider $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Utility Plant Improvement Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Property Tax Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 GG Fund Transfer $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Uses $18,976,261 $1,347,367 $1,328,216 $1,791,011 $2,357,803 $2,342,596 $2,348,351 $2,350,594 $2,354,094 $2,357,806
End Cash on Hand $2,373,025 $3,663,629 $5,164,280 $6,390,393 $7,170,549 $8,094,606 $9,213,383 $10,477,167 $11,892,320 $13,536,924
Total Amount of Revenue Bond Financing: $20,720,000 Total Amount of Subordinated Debt Financing: $0
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 20 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Cash Flow Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Video Services Revenue $537,202 $1,879,926 $1,941,624 $2,023,871 $2,090,676 $2,160,084 $2,251,585 $2,326,758 $2,404,874 $2,506,744 Video Services Operating Expenses $933,777 $1,723,027 $1,800,932 $1,862,421 $1,925,745 $1,991,376 $2,060,919 $2,131,466 $2,204,587 $2,282,019 Video Services Customer Cash Flow ($396,575) $156,898 $140,691 $161,450 $164,931 $168,708 $190,667 $195,292 $200,287 $224,725
Residential High Speed Data Revenue $96,450 $454,219 $578,084 $602,063 $609,328 $617,084 $643,945 $652,904 $662,331 $692,239 Residential High Speed Data Expense $91,914 $202,988 $243,607 $249,612 $254,024 $258,767 $265,545 $270,693 $276,032 $283,549 Residential High Speed Data Cash Flow $4,536 $251,231 $334,478 $352,451 $355,304 $358,317 $378,400 $382,211 $386,298 $408,690
Commercial Video and High Speed Data Revenue $670,638 $1,003,011 $1,015,414 $1,058,285 $1,070,984 $1,083,835 $1,129,599 $1,143,154 $1,156,871 $1,205,724 Commercial Video and High Speed Data Operating Exp. $68,063 $210,379 $205,152 $210,035 $221,457 $223,358 $228,518 $230,487 $232,473 $237,945 Commercial Cash Flow $602,575 $792,632 $810,262 $848,250 $849,527 $860,478 $901,081 $912,667 $924,398 $967,779
Telecommunications Revenue $669,344 $2,451,084 $2,527,452 $2,654,089 $2,787,314 $2,926,535 $3,072,824 $3,226,595 $3,386,702 $3,556,319 Telecommunications Expenses $532,657 $1,054,998 $1,038,968 $1,076,582 $1,114,972 $1,154,943 $1,197,263 $1,240,587 $1,285,595 $1,333,487 Telecommunications Cash Flow $136,686 $1,396,086 $1,488,483 $1,577,508 $1,672,342 $1,771,592 $1,875,562 $1,986,008 $2,101,107 $2,222,832
Total Revenue $1,973,634 $5,788,240 $6,062,574 $6,338,308 $6,558,302 $6,787,538 $7,097,954 $7,349,411 $7,610,777 $7,961,025 Total Operating Expense $1,626,413 $3,191,393 $3,288,660 $3,398,649 $3,516,198 $3,628,444 $3,752,245 $3,873,233 $3,998,688 $4,137,000 EBITDA $347,222 $2,596,847 $2,773,914 $2,939,659 $3,042,104 $3,159,094 $3,345,709 $3,476,178 $3,612,090 $3,824,025
Interest Earned $182,064 $41,123 $54,954 $77,464 $95,856 $107,558 $121,419 $138,201 $157,158 $178,385
Municipal Bond - Interest $492,100 $984,200 $984,200 $984,200 $949,627 $901,686 $851,442 $798,782 $743,591 $685,748 Municipal Bond - Principal $0 $0 $0 $481,427 $997,428 $1,045,368 $1,095,613 $1,148,272 $1,203,463 $1,261,306 Municipal Bond - Total $492,100 $984,200 $984,200 $1,465,627 $1,947,055 $1,947,055 $1,947,055 $1,947,055 $1,947,055 $1,947,055
Net Operating Cash Flow $37,186 $1,653,771 $1,844,668 $1,551,496 $1,190,905 $1,319,598 $1,520,073 $1,667,324 $1,822,193 $2,055,356 Cummulative Cash Flow $37,186 $1,690,957 $3,535,625 $5,087,121 $6,278,026 $7,597,624 $9,117,697 $10,785,021 $12,607,214 $14,662,570
Operating Expense Ratio 82% 55% 54% 54% 54% 53% 53% 53% 53% 52% Operating Income Ratio 18% 45% 46% 46% 46% 47% 47% 47% 47% 48%
Debt Service Coverage Ratio 0.00 0.00 2.87 2.06 1.61 1.68 1.78 1.86 1.94 2.06 Rate of Return on Depreciated Assets 3.06% 16.00% 18.14% 20.58% 22.76% 25.39% 29.06% 32.95% 37.76% 44.61% Outstanding Debt Ratio to Assets 0.95 0.97 1.00 1.04 1.09 1.15 1.24 1.34 1.48 1.67
Cable Services Percentage of Total Revenue 66% 58% 58% 58% 57% 57% 57% 56% 56% 55% Telecom Services Percentage of Total Revenue 34% 42% 42% 42% 43% 43% 43% 44% 44% 45%
Cash on Hand $2,373,025 $3,663,629 $5,164,280 $6,390,393 $7,170,549 $8,094,606 $9,213,383 $10,477,167 $11,892,320 $13,536,924
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 19 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Subscriber Revenue $1,973,634 $5,788,240 $6,062,574 $6,338,308 $6,558,302 $6,787,538 $7,097,954 $7,349,411 $7,610,777 $7,961,025 Interest Earned $182,064 $41,123 $54,954 $77,464 $95,856 $107,558 $121,419 $138,201 $157,158 $178,385 Total Revenue $2,155,699 $5,829,364 $6,117,528 $6,415,772 $6,654,158 $6,895,096 $7,219,373 $7,487,612 $7,767,935 $8,139,410
Operating Expenses $1,626,413 $3,191,393 $3,288,660 $3,398,649 $3,516,198 $3,628,444 $3,752,245 $3,873,233 $3,998,688 $4,137,000 Depreciation Expense $517,625 $1,203,086 $1,236,650 $1,258,342 $1,285,725 $1,312,095 $1,338,848 $1,365,750 $1,392,886 $1,420,270 Property Tax Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Operating Income $11,661 $1,434,885 $1,592,218 $1,758,781 $1,852,235 $1,954,558 $2,128,280 $2,248,628 $2,376,361 $2,582,141
Interest Expense $492,100 $984,200 $984,200 $984,200 $949,627 $901,686 $851,442 $798,782 $743,591 $685,748
Net Income ($480,439) $450,685 $608,018 $774,581 $902,608 $1,052,871 $1,276,839 $1,449,846 $1,632,769 $1,896,392
Fund Transfer $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Net Income After Fund Transfer ($480,439) $450,685 $608,018 $774,581 $902,608 $1,052,871 $1,276,839 $1,449,846 $1,632,769 $1,896,392
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 21 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Additional Information
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Total Capital Expenditures $17,842,561 $363,167 $344,016 $325,383 $410,749 $395,541 $401,297 $403,540 $407,040 $410,752 Total Capital Expenditures to Date $17,842,561 $18,205,728 $18,549,744 $18,875,128 $19,285,876 $19,681,418 $20,082,714 $20,486,254 $20,893,294 $21,304,046 Total Capital Expenditures Per Video Customer $6,912 $6,642 $6,688 $6,725 $6,791 $6,849 $6,906 $6,963 $7,018 $7,071
Total Capital Expenditures $17,842,561 $363,167 $344,016 $325,383 $410,749 $395,541 $401,297 $403,540 $407,040 $410,752 Total Depreciated Asset Basis $17,324,937 $17,170,479 $16,311,410 $15,400,143 $14,552,550 $13,662,366 $12,751,569 $11,816,261 $10,857,550 $9,875,416
Total Plant Cost $17,842,561 $363,167 $344,016 $325,383 $410,749 $395,541 $401,297 $403,540 $407,040 $410,752 Total Plant Cost to Date $17,842,561 $18,205,728 $18,549,744 $18,875,128 $19,285,876 $19,681,418 $20,082,714 $20,486,254 $20,893,294 $21,304,046
Total Cost Per Residential Plant Mile $154,687 $151,632 $142,337 $132,792 $123,995 $115,030 $106,088 $97,141 $88,201 $79,272 Total Plant Cost Per Home Passed $2,175 $2,132 $2,002 $1,867 $1,744 $1,618 $1,492 $1,366 $1,240 $1,115 Total Plant Cost Per Customer $6,398 $6,272 $5,887 $5,492 $5,129 $4,758 $4,388 $4,018 $3,648 $3,279
Paid in Capital $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Paid in Capital $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Total Debt $20,720,000 $20,720,000 $20,720,000 $20,720,000 $20,238,573 $19,241,145 $18,195,777 $17,100,164 $15,951,892 $14,748,429 EBITDA to Debt Multiple 123.30 103.99 7.47 7.05 6.65 6.09 5.44 4.92 4.42 3.86 Debt Per Customer $8,027 $7,518 $7,471 $7,382 $7,126 $6,696 $6,257 $5,812 $5,358 $4,895 Accumulated Depreciation $517,625 $1,720,710 $2,957,360 $4,215,702 $5,501,427 $6,813,521 $8,152,369 $9,518,119 $10,911,005 $12,331,275 Depreciable Plant in Service and Inventory $17,324,937 $16,485,018 $15,592,385 $14,659,426 $13,784,450 $12,867,896 $11,930,346 $10,968,135 $9,982,289 $8,972,771
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 24 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Variables and Valuation
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Equity Additions $100,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Equity $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Debt Additions $20,720,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Municipal Bond Debt Before Principal Reduction $20,720,000 $20,720,000 $20,720,000 $20,720,000 $20,238,573 $19,241,145 $18,195,777 $17,100,164 $15,951,892 $14,748,429 Municipal Bond Debt Reductions $0 $0 $0 $481,427 $997,428 $1,045,368 $1,095,613 $1,148,272 $1,203,463 $1,261,306 Total Municipal Bond Debt $20,720,000 $20,720,000 $20,720,000 $20,238,573 $19,241,145 $18,195,777 $17,100,164 $15,951,892 $14,748,429 $13,487,122
Municipal Bonds Available $20,720,000 $41,123 $0 $0 $0 $0 $0 $0 $0 $0 Municipal Bond Draw $18,124,177 $2,595,823 $0 $0 $0 $0 $0 $0 $0 $0 Cash on Hand $2,373,025 $3,663,629 $5,164,280 $6,390,393 $7,170,549 $8,094,606 $9,213,383 $10,477,167 $11,892,320 $13,536,924
Loans From Shareholders $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Preferred Stock $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Valuation Equity $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 Senior Debt $20,720,000 $20,720,000 $20,720,000 $20,238,573 $19,241,145 $18,195,777 $17,100,164 $15,951,892 $14,748,429 $13,487,122 Sub Debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Loans From Shareholders $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Preferred Stock $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Liabilities $20,820,000 $20,820,000 $20,820,000 $20,338,573 $19,341,145 $18,295,777 $17,200,164 $16,051,892 $14,848,429 $13,587,122
EBITDA $347,222 $2,596,847 $2,773,914 $2,939,659 $3,042,104 $3,159,094 $3,345,709 $3,476,178 $3,612,090 $3,824,025
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 25 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Variables and Valuation (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Sale Price @ a Multiple of: 8 $2,777,773 $20,774,779 $22,191,309 $23,517,270 $24,336,831 $25,272,752 $26,765,670 $27,809,423 $28,896,717 $30,592,204 End Cash $2,373,025 $3,663,629 $5,164,280 $6,390,393 $7,170,549 $8,094,606 $9,213,383 $10,477,167 $11,892,320 $13,536,924 Gross Profit ($15,669,202) $3,618,408 $6,535,589 $9,569,091 $12,166,236 $15,071,582 $18,778,888 $22,234,698 $25,940,608 $30,542,005 Return on Equity 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Annual Rate of Return 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Return on Assets -77.4% 17.5% 30.7% 44.3% 56.6% 70.1% 86.6% 101.1% 115.7% 132.5% Annual Rate of Return on Depreciated Assets -77.4% 8.7% 10.2% 11.1% 11.3% 11.7% 12.4% 12.6% 12.9% 13.2%
Total Video Customers 1,360 2,741 2,774 2,807 2,840 2,873 2,908 2,942 2,977 3,013 Sales Price Per Video Customer $2,043 $7,579 $8,001 $8,379 $8,570 $8,795 $9,204 $9,452 $9,707 $10,154 Total Cost Per Video Customer $15,314 $7,595 $7,507 $7,246 $6,810 $6,367 $5,915 $5,456 $4,988 $4,510 Profit (Loss) Per Video Customer ($13,271) ($16) $494 $1,132 $1,759 $2,428 $3,289 $3,996 $4,719 $5,644
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 23 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
ASSETS Current Assets Cash and cash equivalents $2,373,025 $3,663,629 $5,164,280 $6,390,393 $7,170,549 $8,094,606 $9,213,383 $10,477,167 $11,892,320 $13,536,924 Short Term Investments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Receivable, Net $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Inventories, Net $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Current Assets $2,373,025 $3,663,629 $5,164,280 $6,390,393 $7,170,549 $8,094,606 $9,213,383 $10,477,167 $11,892,320 $13,536,924 Fixed Assets Land and Buildings $20,000 $21,500 $23,000 $24,500 $26,000 $27,500 $29,000 $30,500 $32,000 $33,500 Leasehold Improvements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Towers, Earth Stations and Headend Equipment $4,512,842 $4,595,817 $4,678,792 $4,761,767 $4,844,742 $4,927,717 $5,010,692 $5,093,667 $5,176,642 $5,259,617 Distribution Plant and Subscriber Drops $6,851,193 $6,926,199 $7,010,571 $7,096,058 $7,182,678 $7,270,452 $7,359,398 $7,449,536 $7,540,887 $7,633,472 Customer Premise Equipment $4,602,635 $4,705,368 $4,788,679 $4,874,263 $4,962,208 $5,052,607 $5,145,557 $5,241,156 $5,339,512 $5,440,735 Computer Equipment and Software $135,000 $150,000 $165,000 $180,000 $195,000 $210,000 $225,000 $240,000 $255,000 $270,000 Vehicles, Machines, Mobile Comm. and Other Equipmen $402,500 $402,500 $420,000 $420,000 $500,500 $564,900 $632,520 $699,496 $766,601 $833,680 Test Equipment and Special Tools $135,000 $157,000 $179,000 $201,000 $223,000 $245,000 $267,000 $289,000 $311,000 $333,000 Furniture, Fixtures and Other Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Assets $1,183,391 $1,247,344 $1,284,703 $1,317,540 $1,351,748 $1,383,241 $1,413,548 $1,442,899 $1,471,652 $1,500,042 Less accumulated depreciation and amortization ($517,625) ($1,720,710) ($2,957,360) ($4,215,702) ($5,501,427) ($6,813,521) ($8,152,369) ($9,518,119) ########## ########## Total Fixed Assets $17,324,937 $16,485,018 $15,592,385 $14,659,426 $13,784,450 $12,867,896 $11,930,346 $10,968,135 $9,982,289 $8,972,771 Other Assets Other Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cost of Bond Financing & Insurance $541,600 $541,600 $541,600 $541,600 $541,600 $541,600 $541,600 $541,600 $541,600 $541,600 Total Assets $20,239,561 $20,690,247 $21,298,265 $21,591,419 $21,496,599 $21,504,103 $21,685,328 $21,986,902 $22,416,208 $23,051,294
LIABILITIES AND FUND EQUITY Current Liabilities $0 $0 $0 $0 $0 $0 $0 Accounts Payable and accrued liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Due to other Funds $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Long Term Debt Bonds Payable $20,720,000 $20,720,000 $20,720,000 $20,238,573 $19,241,145 $18,195,777 $17,100,164 $15,951,892 $14,748,429 $13,487,122 Other Payables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Long Term Debt $20,720,000 $20,720,000 $20,720,000 $20,238,573 $19,241,145 $18,195,777 $17,100,164 $15,951,892 $14,748,429 $13,487,122 Total Liabilities $20,720,000 $20,720,000 $20,720,000 $20,238,573 $19,241,145 $18,195,777 $17,100,164 $15,951,892 $14,748,429 $13,487,122 Fund Equity Reserved Funds: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Reserved Funds $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Unreserved Funds: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Designated Funds $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Undesignated Funds $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Unreserved Funds $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Fund Equity ($480,439) ($29,753) $578,265 $1,352,846 $2,255,454 $3,308,326 $4,585,164 $6,035,010 $7,667,780 $9,564,172 Total Liabilities and Fund Equity $20,239,561 $20,690,247 $21,298,265 $21,591,419 $21,496,599 $21,504,103 $21,685,328 $21,986,902 $22,416,208 $23,051,294
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 17 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Key Operating Statistics - Residential
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Monthly Revenue All Services Per Video Customer Video Services $59.58 $51.86 $52.92 $54.51 $55.64 $56.81 $58.51 $59.75 $61.02 $62.86 High Speed Data Access Services $7.80 $11.70 $15.65 $16.10 $16.10 $16.11 $16.62 $16.65 $16.69 $17.24 Telecommunications Service $10.11 $9.03 $9.20 $9.54 $9.91 $10.29 $10.67 $11.07 $11.48 $11.91 Average Monthly Revenue All Services Per Video Custom $77.49 $72.59 $77.77 $80.16 $81.66 $83.21 $85.81 $87.47 $89.19 $92.01 Average Annual Revenue All Services Per Video Custom $929.87 $871.07 $933.27 $961.93 $979.95 $998.53 $1,029.66 $1,049.65 $1,070.32 $1,104.09 Average Monthly Revenue Per Telecommunications Cust $45.79 $40.89 $40.94 $40.92 $41.00 $40.95 $41.00 $40.97 $40.97 $40.95 Average Annual Revenue Per Telecommunications Custo $549.42 $490.73 $491.25 $491.08 $492.04 $491.41 $491.95 $491.60 $491.65 $491.44
Monthly Programming Expense Per Video Customer Basic Programming $15.20 $13.62 $14.03 $14.45 $14.89 $15.33 $15.79 $16.27 $16.76 $17.26 Premium Programming $6.07 $5.44 $5.60 $5.77 $5.95 $6.12 $6.31 $6.50 $6.69 $6.89 Pay Per View Programming $1.38 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 $1.20 Channel Guide $0.28 $0.09 $0.09 $0.09 $0.09 $0.09 $0.09 $0.09 $0.08 $0.08 Total Programming $22.92 $20.36 $20.93 $21.51 $22.12 $22.74 $23.39 $24.05 $24.73 $25.43
Monthly Operating Expense Per Video Customer Sales & Advertising Expense Per Video Customer $14.16 $3.77 $3.43 $3.49 $3.55 $3.62 $3.68 $3.74 $3.81 $3.88 Field & Technical $42.26 $14.48 $15.83 $16.06 $16.33 $16.60 $16.87 $17.15 $17.44 $17.73 General & Administrative $29.05 $8.45 $8.48 $8.62 $8.77 $8.93 $9.07 $9.24 $9.40 $9.56 Total Operating Expense $85.47 $26.70 $27.74 $28.17 $28.65 $29.14 $29.63 $30.13 $30.65 $31.17
Monthly Telecommunications Oper Exp Per Video Customer Cost of Goods Sold $0.83 $0.41 $0.42 $0.43 $0.44 $0.45 $0.46 $0.47 $0.48 $0.49 Facility Based $6.16 $3.51 $3.19 $3.24 $3.29 $3.34 $3.39 $3.44 $3.49 $3.54 Commercial & Marketing $3.01 $0.24 $0.27 $0.27 $0.28 $0.29 $0.30 $0.31 $0.32 $0.33 Administrative $1.48 $0.38 $0.39 $0.40 $0.41 $0.42 $0.43 $0.44 $0.45 $0.47 Total Telecommunications Oper Exp Per Video Custome $11.48 $4.54 $4.26 $4.34 $4.42 $4.49 $4.57 $4.66 $4.74 $4.83
Monthly Cash Flow All Services Per Video Cust ($42.39) $20.99 $24.84 $26.14 $26.48 $26.83 $28.22 $28.63 $29.07 $30.58
Monthly Revenue/Expenses Per Channel Total Channels 131 131 131 131 131 131 131 131 131 131 Revenue Per Sub Per Channel $0.59 $0.55 $0.59 $0.61 $0.62 $0.64 $0.66 $0.67 $0.68 $0.70 Programming Exp. Per Sub Per Channel $0.17 $0.16 $0.16 $0.16 $0.17 $0.17 $0.18 $0.18 $0.19 $0.19
Monthly Telecommunications Oper Exp Per Telecommunications Customer Cost of Goods Sold $1.00 $1.86 $1.85 $1.83 $1.80 $1.78 $1.75 $1.73 $1.71 $1.69 Facility Based $7.37 $15.86 $14.21 $13.89 $13.60 $13.29 $13.01 $12.72 $12.45 $12.18 Commercial & Marketing $3.60 $1.07 $1.18 $1.17 $1.17 $1.16 $1.15 $1.14 $1.14 $1.13 Administrative $1.78 $1.70 $1.72 $1.71 $1.69 $1.67 $1.66 $1.64 $1.62 $1.61 Total Telecommunications Oper Exp Per Telecommunica $13.73 $20.50 $18.97 $18.59 $18.26 $17.89 $17.57 $17.23 $16.92 $16.61
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 18 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Key Operating Statistics - Commercial
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Monthly Revenue Per Customer Per Service Average Video Service Per Video Service Unit $445.16 $774.62 $774.99 $798.23 $798.23 $798.23 $822.18 $822.18 $822.18 $846.85 Average High Speed Data Revenue Per Data Customer $440.56 $766.63 $766.99 $789.99 $789.99 $789.99 $813.69 $813.69 $813.69 $838.11 Average Telecommunications Revenue Per Telecommuni $201.06 $701.00 $703.20 $704.07 $706.39 $704.63 $704.67 $706.39 $704.59 $707.06
Monthly Expense Per Customer Per Service Programming Expense Per Video Service Unit $1.54 $2.77 $2.85 $2.94 $3.02 $3.12 $3.21 $3.31 $3.40 $3.51 High Speed Data Expense Per Data Customer $0.92 $1.66 $1.71 $1.76 $1.81 $1.87 $1.92 $1.98 $2.04 $2.10 Telecommunications Expenses Per Telecommunications C $160.02 $238.27 $220.29 $216.25 $212.77 $208.22 $204.29 $200.94 $196.79 $193.85
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 28 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Selling & Advertising - Residential
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Salaries - Sales $43,625 $44,934 $39,784 $40,977 $42,207 $43,473 $44,777 $46,120 $47,504 $48,929 Sales Commissions $16,359 $22,467 $19,892 $20,489 $21,103 $21,736 $22,388 $23,060 $23,752 $24,464 Payroll Taxes $9,783 $10,993 $9,733 $10,025 $10,326 $10,636 $10,955 $11,283 $11,622 $11,970 Benefits $22,249 $22,916 $20,290 $20,898 $21,525 $22,171 $22,836 $23,521 $24,227 $24,954 Advertising & Promotions $9,600 $9,888 $10,185 $10,490 $10,805 $11,129 $11,463 $11,807 $12,161 $12,526 Direct Mail $2,400 $2,472 $2,546 $2,623 $2,701 $2,782 $2,866 $2,952 $3,040 $3,131 Sales Materials $1,364 $56 $953 $964 $976 $987 $999 $1,011 $1,023 $1,036 Support Materials $682 $28 $476 $482 $488 $494 $500 $506 $512 $518 Graphic Design $1,500 $1,545 $1,591 $1,639 $1,688 $1,739 $1,791 $1,845 $1,900 $1,957 Office Supplies/Postage $900 $927 $955 $983 $1,013 $1,043 $1,075 $1,107 $1,140 $1,174 Training & Seminars $1,200 $1,236 $1,273 $1,311 $1,351 $1,391 $1,433 $1,476 $1,520 $1,566 Travel & Entertainment $600 $618 $637 $656 $675 $696 $716 $738 $760 $783 Miscellaneous $4,800 $4,944 $5,092 $5,245 $5,402 $5,565 $5,731 $5,903 $6,080 $6,263 Total Sales & Marketing Expenses $115,062 $123,024 $113,406 $116,783 $120,260 $123,842 $127,530 $131,329 $135,242 $139,272 Total Sales & Marketing Expense Allocation $115,062 $123,024 $113,406 $116,783 $120,260 $123,842 $127,530 $131,329 $135,242 $139,272
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 41 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Sales and Marketing Variables
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Sales and Marketing Employees and Contractors Marketing and Sales Manager 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Sales Clerks 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 In-House Field Representatives 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Contract Field Representatives 3.00 0.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Total Sales and Marketing Employees and Contractors 4.25 1.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Sales and Marketing Employees and Contractors Marketing and Sales Manager $37,500 $38,625 $39,784 $40,977 $42,207 $43,473 $44,777 $46,120 $47,504 $48,929 Sales Clerks $6,125 $6,309 $0 $0 $0 $0 $0 $0 $0 $0 In-House Field Representatives $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Contract Field Representatives $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Sales and Marketing Salary & Wages $43,625 $44,934 $39,784 $40,977 $42,207 $43,473 $44,777 $46,120 $47,504 $48,929
Vehicles 0000000000
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 29 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Field & Technical Expenses - Residential
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Salaries - Technical $169,438 $224,976 $253,520 $260,540 $268,356 $276,407 $284,699 $293,240 $302,037 $311,098 Payroll Taxes $27,635 $36,694 $41,349 $42,494 $43,769 $45,082 $46,434 $47,827 $49,262 $50,740 Benefits $86,413 $114,738 $129,295 $132,875 $136,862 $140,968 $145,197 $149,552 $154,039 $158,660 Pole Rental $4,160 $12,720 $12,943 $13,098 $13,256 $13,415 $13,576 $13,738 $13,903 $14,070 Plant Repairs & Maintenance $2,652 $8,109 $8,251 $8,350 $8,450 $8,552 $8,654 $8,758 $8,863 $8,970 Equipment Repairs & Maintenance $2,100 $2,163 $2,228 $2,295 $2,364 $2,434 $2,508 $2,583 $2,660 $2,740 Converter Maintenance $2,100 $2,163 $2,228 $2,295 $2,364 $2,434 $2,508 $2,583 $2,660 $2,740 Vehicle Expense $19,950 $28,500 $29,355 $30,236 $31,143 $32,077 $33,039 $34,030 $35,051 $36,103 Mobile Communications $8,400 $12,360 $12,731 $13,113 $13,506 $13,911 $14,329 $14,758 $15,201 $15,657 Supplies - Technical,Engineering, Drafting, etc. $1,800 $1,854 $1,910 $1,967 $2,026 $2,087 $2,149 $2,214 $2,280 $2,349 Training & Seminars $1,200 $1,236 $1,273 $1,311 $1,351 $1,391 $1,433 $1,476 $1,520 $1,566 Tools & Equipment $1,200 $1,236 $1,273 $1,311 $1,351 $1,391 $1,433 $1,476 $1,520 $1,566 Utilities - Power Supplies $4,420 $13,514 $13,752 $13,917 $14,084 $14,253 $14,424 $14,597 $14,772 $14,949 Utilities - Headend $6,000 $6,180 $6,365 $6,556 $6,753 $6,956 $7,164 $7,379 $7,601 $7,829 Property Damage $600 $618 $637 $656 $675 $696 $716 $738 $760 $783 Uniforms $1,050 $1,500 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 $1,700 Office Supplies $1,200 $1,236 $1,273 $1,311 $1,351 $1,391 $1,433 $1,476 $1,520 $1,566 Miscellaneous $3,000 $3,090 $3,183 $3,278 $3,377 $3,478 $3,582 $3,690 $3,800 $3,914 Total Field & Technical Expenses $343,318 $472,886 $523,265 $537,303 $552,734 $568,621 $584,977 $601,815 $619,151 $636,999 Total Field & Technical Expense Allocation $343,318 $472,886 $523,265 $537,303 $552,734 $568,621 $584,977 $601,815 $619,151 $636,999
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 42 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Field & Technical Variables
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Field & Technical Employees and Contractors Technical Manager (s) 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Headend Technicians 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Construction Manager/Plant Manager 0.50 0.50 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Broadband Service Technicians 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 Telecom Service Technicians 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Installer/Service Technician 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 High Speed Data Technician 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 Contract Installers 4.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Total Field & Technical Employees and Contractors 10.50 7.50 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00
Field & Technical Salary & Wages Technical Manager (s) $75,000 $76,788 $76,950 $78,900 $81,267 $83,705 $86,216 $88,803 $91,467 $94,211 Headend Technicians $17,500 $25,619 $25,675 $26,350 $27,141 $27,955 $28,793 $29,657 $30,547 $31,463 Construction Manager/Plant Manager $27,500 $28,325 $56,650 $58,300 $60,049 $61,850 $63,706 $65,617 $67,586 $69,613 Broadband Service Technicians $26,521 $51,758 $51,758 $53,265 $54,863 $56,509 $58,204 $59,950 $61,749 $63,601 Telecom Service Technicians $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Installer/Service Technician $22,917 $42,488 $42,488 $43,725 $45,037 $46,388 $47,779 $49,213 $50,689 $52,210 High Speed Data Technician $36,563 $50,213 $50,213 $51,675 $53,138 $54,732 $56,374 $58,065 $59,807 $61,601 Total Field & Technical Salary & Wages $169,438 $224,976 $253,520 $260,540 $268,356 $276,407 $284,699 $293,240 $302,037 $311,098 High Speed Data Salary & Wages $36,563 $50,213 $50,213 $51,675 $53,138 $54,732 $56,374 $58,065 $59,807 $61,601
Vehicles - Field & Technical 5566666666 Vehicles - High Speed Data 2222222222
Attributable Technical Salary & Wage Expenses Cable Services Salary & Wages Allocated 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Telecom Salary & Wages Allocated to Cable Services 66.09% 57.65% 58.31% 58.13% 57.50% 56.88% 56.71% 56.10% 55.50% 55.33% Additional Allocation - 1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Additional Allocation - 2 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 30 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 G & A Expenses - Residential
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Salaries & Wages $113,333 $122,956 $125,486 $129,217 $133,094 $137,086 $141,199 $145,435 $149,798 $154,292 Payroll Taxes $18,485 $20,054 $20,467 $21,075 $21,708 $22,359 $23,030 $23,720 $24,432 $25,165 Benefits $57,800 $62,708 $63,998 $65,901 $67,878 $69,914 $72,011 $74,172 $76,397 $78,689 Contract Labor $2,400 $2,472 $2,546 $2,623 $2,701 $2,782 $2,866 $2,952 $3,040 $3,131 Consulting $2,400 $2,472 $2,546 $2,623 $2,701 $2,782 $2,866 $2,952 $3,040 $3,131 Vehicle Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Travel & Entertainment $1,200 $1,236 $1,273 $1,311 $1,351 $1,391 $1,433 $1,476 $1,520 $1,566 Training & Seminars $600 $618 $637 $656 $675 $696 $716 $738 $760 $783 Bank Charges $600 $618 $637 $656 $675 $696 $716 $738 $760 $783 Security $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Contributions $600 $618 $637 $656 $675 $696 $716 $738 $760 $783 Bad Debt $10,744 $37,599 $38,832 $40,477 $41,814 $43,202 $45,032 $46,535 $48,097 $50,135 Uniforms $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Insurance $16,200 $16,686 $17,187 $17,702 $18,233 $18,780 $19,344 $19,924 $20,522 $21,137 Utilities $4,200 $4,326 $4,456 $4,589 $4,727 $4,869 $5,015 $5,165 $5,320 $5,480 Postage $1,800 $1,854 $1,910 $1,967 $2,026 $2,087 $2,149 $2,214 $2,280 $2,349 Copyright Fees $112 $393 $410 $427 $446 $464 $484 $505 $526 $548 Franchise Fees $24,198 $84,681 $87,461 $91,165 $94,175 $97,301 $101,423 $104,809 $108,328 $112,916 FCC Regulatory Fee $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales Tax $29,038 $101,618 $104,953 $109,398 $113,010 $116,761 $121,707 $125,771 $129,993 $135,500 Billing Service $18,665 $65,318 $66,102 $66,895 $67,698 $68,510 $69,332 $70,164 $71,006 $71,858 Answering Service $3,600 $3,708 $3,819 $3,934 $4,052 $4,173 $4,299 $4,428 $4,560 $4,697 Dues & Subscriptions $900 $927 $955 $983 $1,013 $1,043 $1,075 $1,107 $1,140 $1,174 Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Telecommunications $3,900 $4,017 $4,138 $4,262 $4,389 $4,521 $4,657 $4,797 $4,940 $5,089 Office Supplies $1,500 $1,545 $1,591 $1,639 $1,688 $1,739 $1,791 $1,845 $1,900 $1,957 Repair & Maint. $1,200 $1,236 $1,273 $1,311 $1,351 $1,391 $1,433 $1,476 $1,520 $1,566 Office Equipment $1,200 $1,236 $1,273 $1,311 $1,351 $1,391 $1,433 $1,476 $1,520 $1,566 Subs/Research $300 $309 $318 $328 $338 $348 $358 $369 $380 $391 Taxes & Licenses $1,800 $1,854 $1,910 $1,967 $2,026 $2,087 $2,149 $2,214 $2,280 $2,349 Accounting $2,400 $2,472 $2,546 $2,623 $2,701 $2,782 $2,866 $2,952 $3,040 $3,131 Legal $3,600 $3,708 $3,819 $3,934 $4,052 $4,173 $4,299 $4,428 $4,560 $4,697 Property Taxes $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Janitorial Services $1,500 $1,545 $1,591 $1,639 $1,688 $1,739 $1,791 $1,845 $1,900 $1,957 Computer Repair $1,500 $1,545 $1,591 $1,639 $1,688 $1,739 $1,791 $1,845 $1,900 $1,957 Miscellaneous $3,600 $3,708 $3,819 $3,934 $4,052 $4,173 $4,299 $4,428 $4,560 $4,697 Telecom Allocation ($40,162) ($91,724) ($95,570) ($98,126) ($99,980) ($101,876) ($104,609) ($106,586) ($108,617) ($111,527) Management Entity Allocation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total G & A Expenses $289,213 $462,313 $472,610 $488,716 $503,994 $519,800 $537,670 $554,627 $572,166 $591,948 Total G & A Expense Allocation $289,213 $462,313 $472,610 $488,716 $503,994 $519,800 $537,670 $554,627 $572,166 $591,948
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 43 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 G & A Variables
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
General Managers 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Office Manager 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 MIS Director 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Accountant 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Customer Service Representatives 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Support Staff 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Total G & A Employees 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50
G & A Salary & Wages General Managers $41,250 $25,106 $25,859 $26,635 $27,434 $28,257 $29,105 $29,978 $30,878 $31,804 Office Manager $11,250 $11,588 $11,588 $11,925 $12,283 $12,651 $13,031 $13,422 $13,824 $14,239 MIS Director $13,750 $14,163 $14,163 $14,575 $15,012 $15,463 $15,926 $16,404 $16,896 $17,403 Accountant $7,500 $7,725 $7,957 $8,195 $8,441 $8,695 $8,955 $9,224 $9,501 $9,786 Customer Service Representatives $29,167 $51,500 $53,045 $54,636 $56,275 $57,964 $59,703 $61,494 $63,339 $65,239 Support Staff $10,417 $12,875 $12,875 $13,250 $13,648 $14,057 $14,479 $14,913 $15,360 $15,821 Total G & A Salary & Wages $113,333 $122,956 $125,486 $129,217 $133,094 $137,086 $141,199 $145,435 $149,798 $154,292
Vehicles 1111111111
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 27 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Programming & Related Exp. - Residential
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Limited Basic Service $6,159 $22,201 $23,142 $24,122 $25,144 $26,209 $27,319 $28,477 $29,683 $30,940 Standard Basic Service $117,280 $422,731 $440,640 $459,305 $478,761 $499,042 $520,181 $542,216 $565,184 $589,125 Pay Programming $49,295 $177,682 $185,209 $193,055 $201,233 $209,757 $218,642 $227,904 $237,558 $247,621 PPV Programming $11,199 $39,191 $39,661 $40,137 $40,619 $41,106 $41,599 $42,098 $42,604 $43,115 Guide Channels $2,250 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 Total Programming Expense $186,184 $664,805 $691,652 $719,619 $748,756 $779,113 $810,742 $843,695 $878,028 $913,801
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 40 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Capital Expenditures
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Strand Mapping, Permitting, Engineering and Design $66,504 $0 $0 $0 $0 $0 $0 $0 $0 $0 Project Consulting $150,000 $15,000 $15,000 $11,250 $8,438 $6,328 $4,746 $3,560 $2,670 $2,002 Aerial Make Ready Engineering $19,481 $215 $236 $239 $242 $245 $248 $251 $254 $257 Aerial Make Ready $210,808 $2,331 $2,558 $2,588 $2,619 $2,651 $2,683 $2,715 $2,747 $2,780 Aerial Strand Labor $97,403 $1,077 $1,182 $1,196 $1,210 $1,225 $1,240 $1,254 $1,269 $1,285 Aerial Strand, Hardware & Materials $95,839 $1,060 $1,163 $1,177 $1,191 $1,205 $1,220 $1,234 $1,249 $1,264 Wave7 Optical Cores and Taps $2,693,800 $29,780 $32,683 $33,075 $33,472 $33,874 $34,280 $34,692 $35,108 $35,529 Fiber Cable $471,018 $5,207 $5,715 $5,783 $5,853 $5,923 $5,994 $6,066 $6,139 $6,212 Fiber Labor $307,507 $3,400 $3,731 $3,776 $3,821 $3,867 $3,913 $3,960 $4,008 $4,056 Underground Plant Labor $1,487,063 $16,440 $18,042 $18,259 $18,478 $18,699 $18,924 $19,151 $19,381 $19,613 Fiber Splicing $370,295 $4,094 $4,493 $4,547 $4,601 $4,656 $4,712 $4,769 $4,826 $4,884 Customer Premise Install Labor & Materials - Residential $756,568 $8,364 $9,179 $9,289 $9,401 $9,514 $9,628 $9,743 $9,860 $9,979 Customer Premise Install Labor & Materials - Commercia $53,500 $591 $2,705 $2,840 $2,982 $3,131 $3,287 $3,452 $3,624 $3,806 Headend Video Electronics $1,449,429 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 Headend Building, Tower & Generator $569,180 $0 $0 $0 $0 $0 $0 $0 $0 $0 Digital Headend Equipment $474,054 $0 $0 $0 $0 $0 $0 $0 $0 $0 Headend Optoelectronics $638,391 $0 $0 $0 $0 $0 $0 $0 $0 $0 Hotel/Motel Rewiring - Labor & Materials $221,407 $2,448 $2,686 $2,718 $2,751 $2,784 $2,818 $2,851 $2,886 $2,920 Customer Premise Equipment $36,367 $402 $441 $447 $452 $457 $463 $468 $474 $480 Digital Customer Premise Equipment $805,997 $8,910 $9,779 $9,896 $10,015 $10,135 $10,257 $10,380 $10,504 $10,630 Telephone Switch & Data Equipment $1,381,788 $77,975 $77,975 $77,975 $77,975 $77,975 $77,975 $77,975 $77,975 $77,975 Wave7 Customer Premise - Residential $2,803,714 $30,996 $34,017 $34,425 $34,838 $35,256 $35,679 $36,107 $36,540 $36,979 Wave7 Customer Premise - Commercial $872,153 $9,642 $31,492 $33,066 $34,719 $36,455 $38,278 $40,192 $42,202 $44,312 High Speed Data Installation - Residential $45,652 $52,354 $7,112 $7,275 $7,440 $7,608 $7,779 $7,953 $8,130 $8,311 High Speed Data Installation - Commercial $38,753 $428 $470 $476 $482 $487 $493 $499 $505 $511 Office Building, Land, Studio, Furniture & Office Equipm $20,000 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 Computer Equipment & Billing System Software $135,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 Marketing & Sales - Video $140,809 $1,557 $1,708 $1,729 $1,750 $1,771 $1,792 $1,813 $1,835 $1,857 Marketing & Sales - Data $42,936 $30,103 $4,269 $4,364 $4,461 $4,559 $4,660 $4,762 $4,866 $4,971 Special Project Fund $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Fusion Splicer and Splicing Equipment $60,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 Tools, Test Equipment and Spare Equipment $75,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 Vehicles and Mobile Communications $402,500 $0 $17,500 $0 $80,500 $64,400 $67,620 $66,976 $67,105 $67,079 Total $16,992,915 $345,873 $327,635 $309,889 $391,189 $376,706 $382,187 $384,324 $387,657 $391,192 Contingency $849,646 $17,294 $16,382 $15,494 $19,559 $18,835 $19,109 $19,216 $19,383 $19,560 State Sales Tax $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Capital Expenditures $17,842,561 $363,167 $344,016 $325,383 $410,749 $395,541 $401,297 $403,540 $407,040 $410,752 Total Capital Expenditures to Date $17,842,561 $18,205,728 $18,549,744 $18,875,128 $19,285,876 $19,681,418 $20,082,714 $20,486,254 $20,893,294 $21,304,046
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 14 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Plant Statistics
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Total Plant Miles to Construct Geneva, Illinois 102.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Plant Miles to Construct 102.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Residential Plant Miles - Constructed Geneva, Illinois 112.00 1.24 1.36 1.38 1.39 1.41 1.43 1.44 1.46 1.48 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Residential Plant Miles - Constructed 112.00 1.24 1.36 1.38 1.39 1.41 1.43 1.44 1.46 1.48
Residential Plant Miles - End Geneva, Illinois 112.00 113.24 114.60 115.97 117.36 118.77 120.20 121.64 123.10 124.58 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Residential Plant Miles - Begin 112.00 113.24 114.60 115.97 117.36 118.77 120.20 121.64 123.10 124.58
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 15 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Plant Statistics (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Commercial Plant Miles - Begin Geneva, Illinois 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Residential Plant Miles - Constructed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Commercial Plant Miles - Constructed Geneva, Illinois 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Commercial Plant Miles - Constructed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Commercial Plant Miles - End Geneva, Illinois 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Commercial Plant Miles - End 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Plant Miles Total Plant Miles - Begin 0.00 112.00 113.24 114.60 115.97 117.36 118.77 120.20 121.64 123.10 Total Plant Miles - Constructed 112.00 1.24 1.36 1.38 1.39 1.41 1.43 1.44 1.46 1.48 Total Plant Miles - End 112.00 113.24 114.60 115.97 117.36 118.77 120.20 121.64 123.10 124.58
Total Construction Footage 591,360 6,538 7,175 7,261 7,348 7,436 7,525 7,616 7,707 7,800 % of Outside Plant - Aerial 47% 47% 47% 47% 47% 47% 47% 47% 47% 47% % of Outside Plant - Underground 53% 53% 53% 53% 53% 53% 53% 53% 53% 53% Aerial Construction Footage 278,294 3,077 3,376 3,417 3,458 3,499 3,541 3,584 3,627 3,670 Underground Construction Footage 313,066 3,461 3,798 3,844 3,890 3,937 3,984 4,032 4,080 4,129
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 16 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Homes and Customers Per Mile
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Residential Homes Passed Per Mile Geneva, Illinois 71.11 71.11 71.11 71.11 71.11 71.11 71.11 71.11 71.11 71.11 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Average Homes Passed Per Mile 71.11 71.11 71.11 71.11 71.11 71.11 71.11 71.11 71.11 71.11
Customers Per Mile 24.18 24.18 24.18 24.18 24.18 24.18 24.18 24.18 24.18 24.18
Commercial Units Passed Per Mile Geneva, Illinois 17.19 17.19 17.19 17.19 17.19 17.19 17.19 17.19 17.19 17.19 Phase II Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Phase III Service Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Active Commercial Units Passed Per Mile 0.86 0.86 0.86 0.86 0.86 0.86 0.86 0.86 0.86 0.86
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 6 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Homes Passed - Customers
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Add Serviceable Homes Passed Total & by Franchise Area Begin Homes Passed 0 7,964 8,052 8,149 8,247 8,346 8,446 8,547 8,650 8,754 Geneva, Illinois 7,964 88 97 98 99 100 101 103 104 105 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total Add Serviceable Homes Passed 7,964 88 97 98 99 100 101 103 104 105 End Homes Passed 7,964 8,052 8,149 8,247 8,346 8,446 8,547 8,650 8,754 8,859
Total Potenial Homes Passed by Franchise Area Geneva, Illinois 7,964 8,052 8,149 8,247 8,346 8,446 8,547 8,650 8,754 8,859 Phase II Service Area 0000000000 Phase III Service Area 0000000000 End Homes Passed 7,964 8,052 8,149 8,247 8,346 8,446 8,547 8,650 8,754 8,859
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 7 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Homes Passed - Customers (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
End Customers by Franchise Area Geneva, Illinois 2,708 2,738 2,771 2,804 2,838 2,872 2,906 2,941 2,976 3,012 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total Customers 2,708 2,738 2,771 2,804 2,838 2,872 2,906 2,941 2,976 3,012
Average Customers by Franchise Area Geneva, Illinois 1,354 2,723 2,754 2,787 2,821 2,855 2,889 2,923 2,959 2,994 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total Average Customers 1,354 2,723 2,754 2,787 2,821 2,855 2,889 2,923 2,959 2,994
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 8 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Homes Passed - Customers (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Average Customers Percentage by Franchise Area Geneva, Illinois 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Phase II Service Area 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Phase III Service Area 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
New Plant Extensions Homes Constructed Geneva, Illinois 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Phase II Service Area 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Phase III Service Area 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Video Service Penetration - New Construction All 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0%
Video Service Penetration - Overall 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0%
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 9 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Homes Passed - Customers (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
New Construction Video Service Installs Geneva, Illinois 2,708 30 33 33 34 34 34 35 35 36 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total New Construction Video Service Installs 2,708 30 33 33 34 34 34 35 35 36
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 10 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Homes Passed - Customers (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Video Services Reconnects Geneva, Illinois 20 82 920 931 942 953 965 976 988 1,000 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total Basic Video Service Reconnects 20 82 920 931 942 953 965 976 988 1,000
Video Services Disconnects Geneva, Illinois 20 82 920 931 942 953 965 976 988 1,000 Phase II Service Area 0000000000 Phase III Service Area 0000000000 Total Basic Video Service Disconnects 20 82 920 931 942 953 965 976 988 1,000
Video Service Customers Begin Basic Video Service Customers 0 2,708 2,738 2,771 2,804 2,838 2,872 2,906 2,941 2,976 Net Add Basic Video Service Customers 2,708 30 33 33 34 34 34 35 35 36 End Basic Video Service Customers 2,708 2,738 2,771 2,804 2,838 2,872 2,906 2,941 2,976 3,012 Average Basic Video Service Customers 1,354 2,722 2,754 2,787 2,821 2,855 2,889 2,923 2,959 2,994
Confidential 9/20/2002 United Telesystems, Inc. City of Geneva Page: 11 Geneva, Ilinois FTTH/FTTB Broadband Financial Projections - Base Case 2002 Homes Passed - Customers (Cont.)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
High Speed Data Customers Begin High Speed Data Customers 0 513 1,062 1,075 1,088 1,103 1,118 1,135 1,152 1,170 Add High Speed Data Customers 522 598 81 83 85 87 89 91 93 95 High Speed Data Disconnects 9 49 69 69 70 71 72 74 75 76 End High Speed Data Customers 513 1,062 1,075 1,088 1,103 1,118 1,135 1,152 1,170 1,190 Average High Speed Data Customers 256 787 1,068 1,081 1,096 1,111 1,127 1,144 1,161 1,180 High Speed Data Penetration to Homes Passed 6.44% 13.19% 13.19% 13.20% 13.22% 13.24% 13.28% 13.32% 13.37% 13.43% High Speed Data Penetration to Subscribers 18.93% 38.79% 38.79% 38.81% 38.87% 38.95% 39.05% 39.18% 39.33% 39.49%
Commercial Customers Passed Begin Commercial Units Passed 0 1,925 1,947 1,970 1,994 2,017 2,042 2,066 2,091 2,116 Geneva, Illinois 1,925 21 23 24 24 24 25 25 25 25 Phase II Service Area 0000000000 Phase III Service Area 0000000000 End Commercial Units Passed 1,925 1,947 1,970 1,994 2,017 2,042 2,066 2,091 2,116 2,141 Total Add Commercial Unites Passed 1,925 21 23 24 24 24 25 25 25 25
Video Service Penetration - Commercial Units 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Begin Commercial Unit Video Customers 0 96 97 98 100 101 102 103 105 106 Commercial Units Video Added Customers 96111111111 Ending Commercial Video Units Customers 96 97 98 100 101 102 103 105 106 107 Average Commercial Video Units 48 97 98 99 100 101 103 104 105 106 Average Commercial Video Penetration to Units Passed 2.5% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Average FCC Equivalent Commercial Units 6 20 19 20 19 19 19 19 18 19
Total Average Equivalent Video Customers 1,360 2,741 2,774 2,807 2,840 2,873 2,908 2,942 2,977 3,013
Confidential 9/20/2002 United Telesystems, Inc.