The City of Geneva, Illinois
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The City of Geneva, Illinois Broadband Network Initiative United Telesystems, Inc. 1 Greatcoat Lane Savannah, Georgia 31411 912 598-7223 September 20, 2002 RESTRICTIONS ON DISCLOSURE OF DATA The data furnished in this document shall not be disclosed outside the organization or government to which it is submitted and shall not be duplicated, used, or disclosed in whole or in part, for any purpose other than to evaluate the document and to implement the plan that it sets forth. This restriction does not limit any right to use information contained in this document if it is obtained from another source. United Telesystems, Inc. THE CITY OF GENEVA, ILLINOIS BROADBAND NETWORK INTITIATIVE TABLE OF CONTENTS SEPTEMBER 20, 2002 1 TAB - Executive Summary of Business Plan 2 TAB - Broadband Services Industry Overview 3 TAB - Partnering Opportunity 4 TAB - Qualifying Statements and Plan of Financing 5 TAB - Municipal Administrative and Utility Applications 6 TAB - Broadband System Development & Marketing Plan 7 TAB - Proposed Video, Data and Telephone Services 8 TAB - Geneva Only Financial Projections Years 1 - 10 9 TAB - Geneva Only Financial Projections Months 1 - 12 10 TAB - Geneva Only Financial Projections Months 13 - 24 11 TAB - Tri-Cities Combined Financial Projections Years 1 - 10 12 TAB - Tri-Cities Combined Financial Projections Months 1 - 12 13 TAB - Tri-Cities Combined Financial Projections Months 13 - 24 14 TAB - Broadband Network Equipment Costs Detail 15 TAB - Video Service Provider Overview 16 TAB - Incumbent Telecommunications Provider Overview 17 TAB - Illinois Competitive Local Exchange Carrier Overview Confidential Page 1. 9/20/02 United Telesystems, Inc. THE CITY OF GENEVA, ILLINOIS BROADBAND NETWORK INTITIATIVE TABLE OF CONTENTS SEPTEMBER 20, 2002 (Continued) 18 TAB - Service Area Franchise Agreements 19 TAB - Federal and State Legal Review 20 TAB - Broadband Terms Glossary Confidential Page 2. 9/20/02 United Telesystems Inc. THE CITY OF GENEVA, ILLINOIS BUSINESS PLAN FOR THE PROVISIONING OF BROADBAND SERVICES SEPTEMBER 20, 2002 EXECUTIVE SUMMARY A. The Role of Municipalities and the Broadband Initiative 1. Improve and Maintain Local Infrastructure - In the past, one of the fundamental missions of municipal entities such as the City of Geneva, Illinois (the “City”) and the City of Geneva has been to improve and maintain local infrastructure to facilitate the provisioning of utility services in order to promote the quality of life for local citizens in and around the City of Geneva (the “Geneva Service Area”). While the passage of years can sometimes cause many daily conveniences to be taken for granted, municipal officials have often determined that the capitalization and deployment or construction of infrastructure was in the best interest of the community and its citizens. In addition to the capitalization of utility infrastructures, municipal officials have previously elected to construct and maintain such infrastructure as roads, bridges, sidewalks, and more recently, fiber optic based broadband telecommunications systems. In each case, decisions to provide these various components of local infrastructure have been generally based upon the desire to serve a public need and/or demand. 2. The Broadband Business Plan - UTI has provided this independent Broadband Business Plan to assist the City in the process of converting the advent of technological advancements and regulatory freedoms into financially sound decisions and policies designed to enhance the local infrastructure and to enhance the quality of life for the citizens of Geneva. To enable the City to accomplish its objectives while protecting its core services, UTI has provided the information necessary to support the deployment of a technically advanced fiber optic based broadband network (the “Broadband Network”) that is cost effective and capable of satisfying market demand. Confidential Page 1. 9/20/02 United Telesystems Inc. This Broadband Business Plan incorporates information associated with facility-based service provisioning opportunities. The primary objective of the Broadband Business Plan is to provide the City with information to allow decisions to be made associated with pursuing existing and potential broadband services opportunities through a defined course of action and implementation plan. The deregulation of the telecommunications industry presents new challenges and opportunities as municipal entities like the City seek to define and achieve strategic objectives in evolving competitive markets. This Broadband Business Plan represents the first step in the progressive efforts undertaken by the City to enhance the local infrastructure in the Geneva Service Area to allow for the provisioning of advanced video, data, and telecommunications service offerings to residential and commercial consumers. B. The Municipal Broadband Services Opportunity 1. The Commercial Broadband Services Opportunity - The City has the opportunity to achieve the long-term objectives of enhancing the local infrastructure, keeping service fees reinvested locally, revenue diversification, and improving the quality of life for local residents in the Geneva Service Area through developing a commercial broadband service offering for residential and commercial customers. To allow these services to be provided, the City may elect to construct a state-of-the-art fiber optic based Broadband Network with a capable of delivering advanced video, telephone, Internet, and data services to residents of the Geneva Service Area. 2. Industrial Growth Opportunity - As another primary justification for deploying a broadband infrastructure, the City must seek to promote commerce and local industrial growth through providing existing local businesses and businesses seeking to expand or locate in the Geneva Service Area with access to an enhanced fiber optic based broadband infrastructure. Confidential Page 2. 9/20/02 United Telesystems Inc. 3. Internal Operations and Utility Enhancement Opportunity - While providing advanced video, data, and telecommunications services to consumers, the City will also improve the cost effectiveness, efficiency, and productivity of existing municipal operations through supporting internal needs such as those associated with the operation of existing utilities. 4. The Educational Opportunity - Another of the City’ initial justifications for deploying a broadband infrastructure should be founded upon the need to develop and promote new local educational opportunities through the enhancement of communications capabilities between educational facilities in the Geneva Service area and between those facilities and available global educational resources. C. Broadband Services - The Broadband Business Plan prepared by United Telesystems Inc. (“UTI”) for the City anticipates that the City will capitalize, construct, and operate a 113 mile all optical fiber-to- the-home/fiber-to-the-business (“FTTH/FTTB”) Broadband Network as follows over a period of twenty-four (24) months and will provide the following services in and around Geneva, Illinois (the “Geneva Service Area”): Broadband Video Services (Cable Television) High Speed Broadband Internet Access Competitive Local Exchange Carrier Telephone Service Long Distance Telephone Service Local & Wide Area Telecommunications Networking Fiber Optic Transport Utility Management D. Broadband Network Architecture – In this the City Broadband Business Plan, UTI has incorporated a FTTH/FTTB Broadband Network architecture option. The FTTH/FTTB architecture refers to an all-optic network with fiber optic cable deployed from the headend/central office facility directly to the residential and commercial customer premise. The FTTH/FTTB architecture utilizes an all fiber design from the headend/central office to the customer premise. The increased capital cost of developing a FTTH/FTTB network over a deep fiber-coaxial FTTC/FTTB network may be offset Confidential Page 3. 9/20/02 United Telesystems Inc. by the operating and service benefits derived from the architecture through improved signal quality, capacity, reliability, scalability, interactivity, flexibility, potentially lower operating costs, and the extended operational life of the infrastructure. The FTTH/FTTB approach eliminates the need for active electronics and network power supplies. Should the City adopt a FTTH/FTTB architecture, it will be necessary to acknowledge a certain element of vendor and technology related risks associated with the decision as there have been a limited number of FTTH/FTTB systems developed, most of which have been developed in relatively small service, and the vendors supporting most of these projects are new entrants to the market place. The following diagram sets forth the proposed FTTH/FTTB architecture: Confidential Page 4. 9/20/02 United Telesystems Inc. E. Project Services Summary - The financial projections in the City Broadband Business Plan anticipates that the City will provide the aforementioned services to customers over a period of twenty-four (24) months and includes the following residential and commercial customer assumptions: Batavia Service Type Distribution Residential Category Type Video Telecom Data H omes Passed 8,247 8,247 8 ,247 Projected Residential Subscribers 2,804 666 1 ,088 Service Penetration 34% 8% 13% Video, Telecom and Data Subscribers 152 152 1 52 Video and Data Subscribers 325 - 3 25 Video and Telecom Subscribers 290 290 - Telecom and Data Subscribers - 24 2 4 Video Subscribers - Analog Only