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HomeMy WebLinkAbout10A - Issuance of a Franchise to Integra Telcom for Cable Communication Serivces MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 CITY COUNCIL AGENDA REPORT May 4, 2009 ~b 10A Frank Boyles, City Manager CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE ISSUANCE OF A FRANCHISE TO INTEGRA TELECOM FOR CABLE COMMUNICATION SERVICES. Introduction The purpose of this agenda item is to review and, if appropriate, approve a cable television franchise with Integra Telecom. HistoJ"'{ For more than two decades the City has been a party to a franchise agreement for cable communications. Triax was the first company which provided cable in Prior Lake. In 1999 Triax transferred its interest to Mediacom and the City entered into a 15-year franchise with the successor company. Current Circumstances For some years, there have been three technologies available to provide television services. The first was over the air waves used initially by most commercial channels. Next, cable television services became popular and, more recently, dish services have beamed signals from satellites to subscriber homes. A new technology has become available which is known as Internet Protocol Television (IPTV). IPTV utilizes telephone lines and/or cable to carry audio and video signals to the user. The new technology has made it possible for companies with telephone plants in place to use them to provide telephone, Internet and television service. Integra Telecom (located in Prior Lake) has been researching this technology and has inquired about the possibility of being granted a cable franchise by the City of Prior Lake. State, federal and local requirements set forth a process for the issuance of a franchise. A notice must be published twice in consecutive editions of the City's official newspaper, a request for proposal is prepared, proposals are received and a public hearing conducted. These steps were taken. Integra Telecom submitted an application (attached). The City conducted a public hearing on April 20, 2009, at which time representatives of Integra presented their proposal and responded to questions from residents and City Council members. www.cityofpriorlake.com ''::','1 iJPh~{9B2t~~1.9g00.'):/:~; F;ax:. 952.447.4245 The City Attorney and I have met with Integra representatives to discuss the proposed franchise agreement. The franchise for Integra cannot be more beneficial or more restrictive than the franchise agreement already executed by Mediacom. A copy of the proposed franchise agreement is attached for Council information. Shown below are highlights from the proposed document: . Franchise Area Because Integra is granted a service area by the PUC, the service area to be served under the franchise corresponds with that area. . Term The term of the agreement is until November 30,2014, to correspond with the Mediacom agreement. This will allow the City to negotiate new agreements and modify applicable City Code in a coordinated fashion. . Franchise Fees Identical to Mediacom. . Liabilitv Insurance Safeguards are in this agreement in the event of policy termination or cancellation. . Securitv Funds A Letter of Credit will be required as a security against non- performance of franchise provisions. . Channel Caoacitv The minimum channels will be 120 as compared with 80 in the Mediacom agreement. . Public. Education and Government (PEG) Access Integra will provide the same services as set forth on the Mediacom agreement. . Exhibit D - Promotion of PEG Access Integra will pay $ .65 per month per customer for PEG support, which is identical to Mediacom. They will also pay $.10 per month per person to provide funding for PEG access capital expenditures for the term of the franchise. Over a fifteen-year period and assuming the same customer base, this would be the same PEG capital contribution provided by Mediacom. ISSUES: The City Council has had the opportunity to have a presentation by Integra of the features proposed by the IPTV system. The statutorily defined process has been followed. Significant efforts have been made to assure that, on balance, the franchise agreements with Mediacom and Integra are similar. Mediacom has been provided a copy of the franchise agreement and I expect to receive written comments by Friday, May 1, 2009. The City Council is not obliged to assure agreement between all parties. They only need to conclude that the proposed service is in the public interest and that the franchise agreements are neither more beneficial nor restrictive. A copy of the proposed franchise agreement and the approving resolution is attached. FINANCIAL IMPACT: The granting of a franchise to Integra should generate additional Public, Education and Government fees as well as franchise fees. Those fees will help offset any increased costs the City could incur for preparing, interpreting and administering the franchise. We are also hopeful that the competition between franchisers will either improve services offered, price or both. ALTERNATIVES: 1. Adopt the attached resolution approving execution of a franchise agreement with Integra for cable TV services. 2. Take no action and provide direction to the staff. RECOMMENDED Alternative #1. MOTION: ti PRl~ co~ 4646 Dakota Street S.E. U ~ PriorLake,MN55372-1714 ~ RESOLUTION 09-xxx A RESOLUTION AUTHORIZING THE GRANTING OF A FRANCHISE TO INTEGRA TELECOM FOR CABLE COMMUNICATION PURPOSES Motion By: Second By: WHEREAS, Federal, state and local laws prescribe the process and conditions under which the City Council may issue a franchise for cable communications; and WHEREAS, In accordance with such requirements the City has: . Published a notice soliciting franchise proposals in the legal newspaper in two consecutive editions. . Prepared and distributed to all who requested a copy of a request for proposal for cable services. . Received one proposal to provide cable communication services from Integra Telecom within the prescribed time line. . Conducted a public hearing to receive input for and against the issuance of a cable television franchise. . Negotiated a franchise agreement with Integra Telecom; and WHEREAS, The City Council has concluded that the franchise proposed for issuance to Integra Telecom is neither more restrictive nor more beneficial than that possessed by other franchisees in the community. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. It is in the public interest to grant a cable communication franchise to Integra Telecom. 3. The Integra franchise is neither more restrictive nor beneficial than those held by other franchisees for cable TV. 4. The Mayor and City Manager are authorized to execute the agreement on the City's behalf, provided that within 30 days of the date of this resolution Integra Telecom, a. Executes the agreement. b. Provides a certificate of insurance in accordance with the franchise agreement. c. Provides a letter of credit in accordance with the franchise agreement. PASSED AND ADOPTED THIS 4th DAY OF MAY 2009. YES NO I Haugen I Erickson I Hedberg I LeMair I Millar Haugen Erickson Hedberg LeMair Millar Frank Boyles, City Manager C:\Documents and Settings\cgreen\Local Settings\Temp J:'l"~n . Integra Telecom Phone 952.447.9800 / Fax 952.447.4245 THE CITY OF PRIOR LAKE, MINNESOTA CABLE TELEVISION FRANCHISE AGREEMENT Prepared By: SCOTT RICE TELEPHONE COMPANY DBA INTEGRA TELECOM .2009 TABLE OF CONTENTS 1. GENERAL PROVISIONS...................................... ............................................ ........................1 1.1) Definitions. .................................... ........... ............ ........... .............................................1 1.2) Written Notice. .............................................................................................................1 2. RENEWAL OF FRANCHISE................................................................................................... ..2 2.1) Grant. ............................................................................................................................2 2.2) Right of Grantor to Issue and Renew Franchise...........................................................2 2.3) Effective Date of RenewaL...................................................... .....................................2 2.4) Term........................................................................................................................... ...3 2.5) Franchise Not Exclusive. ...................................................................... ........................3 2.6) Ownership of Grantee........................... ...................................................................... ..3 3. GENERAL REQUIREMENTS................................. ....................... ........................ ...................3 3.1) Governing Requirements. .. ...........................................................................................3 3.2) Franchise Fee. ... ............................................................................................................3 3.3) Not Franchise Fees. .................................................................. .................................. ..4 3.4) Recovery of Processing Costs. ........................................................ .............................4 3.5) Liability Insurance. .......................................................................................................5 3.6) Indemnification...................................................................... .......................................6 3. 7) Grantee's Insurance. ......... .............................................. ..............................................7 3 .8) Workers' Compensation Insurance. ............ ............... ........... ...... ...... ...... ...... ........... .... 7 3.9) Security Fund................................................. ............................................................... 7 3.10) Procedure for Enforcing Franchise Agreement. .........................................................8 3.11) Reservation of Rights. ............................................................................... ....... ..........8 4. DESIGN PROVISION.............................. ......... ........................................................................ ..8 4.1) Minimum Channel Capacity.........................................................................................8 4.2) System Design. ........................................... .................. ................................................9 4.3) Operation and Maintenance of System......... .......... ............ ..... ........ .... ............. ............9 4.4) Special Testing. ............................................................................................................9 4.5) FCC Reports. ..............................................................................................................1 0 4.6) Emergency Alert Capability. ......................................................................................10 4.7) Parental Control Lock.................................................................................... .............10 4.8) Technical Standards..... ............................................................ ................................. ..10 4.9) Right of Inspection. ....................................................................................................1 0 4.10) Periodic Evaluation, Review and Modification........................................................ 1 0 5 . SERVICES AND PROGRAMMING....................................................................................... .12 5.1) Services and Programming. . ............................ ......................................................... ..12 5.2) Leased Channel Service........................................................................ ..................... .12 5.3) Periodic Subscriber Survey. ............ .... ...................................................................... .12 6. PUBLIC ACCESS PROVISIONS............................................................................................ .12 6.1) Public, Educational and Government Access. ............................................................12 6.2) Grantee Support for PEG Usage. ................................................................................12 7 . REGULATION...................................... ........... ....................................... ...... ......................... ...13 7.1) Amendment of Franchise Agreement. ........................................................................13 11 7.2) Conflict Between Section 306 of the City Code and Agreement. ..............................13 7.3 ) Force Majeure......................................................... .......... ......................................... .13 7.4) Rate Regulation. ................................ ........................................................................ .14 7.5) Telecommunications Network Transfer Prohibition. .................................................14 7.6) Termination by Grantee............................................................................................ ..14 111 FRANCHISE AGREEMENT THIS FRANCHISE AGREEMENT (hereinafter the "Agreement"), made and entered into this day of 2009, by and between the City of Prior Lake, a municipal corporation of the State of Minnesota (hereinafter the "City" or "Grantor"), and Scott Rice Telephone Company dba Integra Telecom (hereinafter the "Grantee"). WITNESSETH WHEREAS, pursuant to Section 306 of the Prior Lake City Code, the City is authorized to grant and renew one or more nonexclusive revocable Franchises to operate, construct, maintain and reconstruct a cable television system within the City; WHEREAS, Grantee proposes to construct, operate and maintain the Cable Television System described at Exhibit E (the System) to provide Cable Services if granted a Franchise by the City; WHEREAS, the City, after due evaluation of the Grantee's technical ability, financial condition and legal qualifications, and after public hearing, has determined that it is in the best interest of the City and its residents to grant a Franchise to be held by the Grantee; WHEREAS, in consideration of Grantee's provision of Cable Services as required by this Agreement, the City has agreed to grant a Franchise to be held by the Grantee; and NOW, THEREFORE, in consideration of the foregoing promises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. GENERAL PROVISIONS 1.1) Definitions. Capitalized terms used in this Agreement shall be defined as set forth in Section 306 of the City Code unless (i) otherwise defined herein, or (ii) the context otherwise requires. Service Area or Franchise Area. For purposes of this Franchise Agreement these terms shall mean the authorized telephone service area for Scott Rice Telephone Company dba Integra Telecom as prescribed in the Certificate of Need issued by the Minnesota Public Utilities Commission and dated August 12, 1998, in Docket No. P- 5643/NA-98-660. (Scott Rice Telecommunications, Inc. was initially registered with the Minnesota Secretary of State as a domestic corporation on February 13, 1945). 1 1.2) Written Notice. All notices, reports or demands required or permitted to be given under this Agreement and/or Section 306 of the City Code shall be in writing and shall be deemed to be given when delivered personally to the party designated below, or when five (5) days have elapsed after it has been deposited in the United States mail in a sealed envelope, with registered or certified mail, postage prepaid thereon, or on the next business day if sent by express mail or nationally recognized overnight air courier addressed to the party to which notice, report or demand is being given, as follows: If to City: City Manager 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 If to Grantee: General Manager Integra Telecom 4690 Colorado Street SE PO Box 299 Prior Lake, MN 55372 Such addresses may be changed by either party upon notice to the other party given as provided in this Section. 1.3) Recitals Part of Agreement. The parties to this Agreement agree that the facts set forth in the Recitals above are a part of this Agreement as if they were restated in it. SECTION 2. GRANT OF FRANCHISE 2.1) Grant. This Franchise hereby grants Grantee the authority, right and privilege to construct, reconstruct, operate and maintain a Cable Television System described at Exhibit E (the System) to provide Cable Services within the Franchise Area. 2.2) Right of Grantor to Issue and Renew Franchise. Grantee acknowledges and accepts the right of Grantor to issue and/or renew the Franchise under federal or state law and Section 306 of the City Code as it existed on the Effective Date hereof. Any future renewals granted by Grantor will be governed by the applicable federal or state law and Section 306 of the City Code at the time of renewal. 2.3) Effective Date of Franchise. The grant of the Franchise provided for in this Agreement shall be effective on the date that both parties have executed this Agreement (the "Effective Date"), provided that said date is no later than thirty (30) days after the date the City Council, by Resolution, approves this Agreement (the "Approval Date"). The grant of the Franchise provided for in this Agreement is further contingent upon the Grantee filing with the Prior Lake City Clerk a fully executed copy of this Agreement together with the security fund and insurance certificates provided for in this Agreement and Section 306 of the City Code. If such filing does not occur within thirty (30) days after the Approval Date, the Grantor may, in its sole discretion, declare the grant of the Franchise provided for herein to be null and void. 2.4) Term. The term of the Franchise granted pursuant to this Agreement shall be from the date this Agreement was executed by both parties to November 30,2014, at which time the Franchise shall expire and be of no force or effect unless the Franchise is then renewed in accordance with the City Code and Applicable Laws. Notwithstanding the foregoing, the City may extend the term of this Franchise for a period of not more than 180 days should additional time be required by the City to process an application or request for renewal of this Franchise. 2.5) Franchise Not Exclusive. The Franchise granted pursuant to this Agreement shall not be construed as limiting the right of Grantor, through its proper offices, and in accordance with the City Code and Applicable Law, to grant other Franchises containing terms and conditions that are no more favorable or less burdensome than those imposed on Grantee by this Franchise; provided, however, that such additional grants shall not operate to materially modify, revoke or terminate any rights granted to Grantee herein and shall be in accord with the provisions of Section 306 of the City Code. 2.6) Ownership of Grantee. Grantee is a wholly-owned subsidiary of Integra Telecom Holdings, Inc. Integra Telecom Holdings, Inc. is a wholly-owned subsidiary of Integra Telecom, Inc., an Oregon corporation. Integra Telecom, Inc. is a privately-held corporation. Three private equity investors each own more than a 5% equity interest in Grantee through their investment in Integra Telecom, Inc. SECTION 3. GENERAL REQUIREMENTS 3.1) Governing Requirements. Grantee shall comply with all lawful requirements of this Agreement, Section 306 of the Prior Lake City Code and applicable City, State and Federal Laws. 3.2) Franchise Fee. In consideration of the grant of the Franchise provided for herein, the Grantee shall, at all times during the term of this Agreement, pay to Grantor a Franchise Fee of five percent (5%) of Grantee's Gross Revenues as defined in Section 306.200 but excluding any Access Operating Support funds collected (e.g., the Access Operating Fee and PEG Fee required by Exhibit 0, Paragraph 5, shall not be included as part of Grantee's Gross Revenues). The Franchise Fee shall be payable quarterly within thirty (30) days of the expiration of the preceding calendar quarter. Each payment shall be certified by Grantee's local management and shall be accompanied by a report in such form as the City may reasonably request showing the computation of the Franchise Fee as it relates specifically to the Franchise Area for the preceding calendar quarter and such other relevant facts as may be required by the City, including the completion of a Franchise Fee Payment Worksheet in the form attached hereto as Exhibit B. 3.3) Not Franchise Fees. (a) Grantee acknowledges and agrees that the Franchise Fees payable by Grantee to the City pursuant to Section 3.2 hereof shall take precedence over all other payments, contributions, Services, equipment, facilities, support, resources or other activities to be provided or performed by the Grantee pursuant to this Agreement and/or Section 306 of the City Code and that the Franchise Fees provided for in Section 3.2 of this Agreement shall not be deemed to be in the nature of a tax, and shall be in addition to any and all taxes of general applicability and other fees and charges which the Grantee shall be required to pay to the City and/or to any other governmental authority, all of which shall be separate and distinct obligations of Grantee. (b) Grantee shall not apply or seek to apply or make any claim that all or any part of the Franchise Fees or other payments or contributions to be made by Grantee to Grantor pursuant to this Agreement and/or Section 306 of the City Code shall be deducted from or credited or offset against any taxes, fees or assessments of general applicability levied or imposed by the City or any other governmental authority, including any such tax, fee or assessment imposed on both utilities and cable operators or their services. (c) Grantee shall not apply or seek to apply all or any part of any taxes, fees or assessments of general applicability levied or imposed by the City or any other governmental authority (including any such tax, fee or assessment imposed on both utilities and cable operators for their services) as a deduction or other credit from or against any of the Franchise Fees or other payments or contributions to be paid or made by Grantee to Grantor pursuant to this Agreement and/or Section 306 of the City Code, each of which shall be deemed to be separate and distinct obligations of the Grantee. 3.4) Recovery of Processing Costs; Cost Sharing. (a) During the term of this Agreement, if the Grantee initiates a request for approval regarding the transfer of this Franchise or a change in control of the Grantee (which approval the City shall not unreasonably deny or delay), the Grantee shall, to the extent permitted by Applicable Laws, reimburse the Grantor for all reasonable out-of- pocket costs, including attorneys' and consultants' fees and costs, incurred by the Grantor in connection with Grantor's review and processing of Grantee's request up to a mutually agreed upon reasonable cap. (b) To aid in the analysis and resolution of any future disputed matters relative to this Agreement, the Grantor and Grantee may, by mutual written agreement (both as to whether to hire and whom to hire), employ the services of technical, financial and/or legal consultants, as mediators. All reasonable fees of the consultants incurred by the Grantor and/or the Grantee in this regard shall, unless the parties otherwise agree, be borne equally by Grantor and Grantee. 3.5) Liability Insurance. (a) Upon the Effective Date, the Grantee shall, at its sole expense and in addition to all other required insurance under Section 306.2700 of the City Code, take out and maintain during the term of this Agreement public liability insurance with a company licensed to do business in the State of Minnesota with a rating by A.M. Best & Co. or an equivalent rating service of not less than "A." The public liability insurance shall protect the Grantee, the Grantor, their officials, officers, directors, employees and agents from claims which may arise from operations under this Agreement, whether such operations be by the Grantee, its officials, officers, directors, employees, agents or any subcontractors of Grantee. The public liability insurance shall include, but shall not be limited to, protection against claims arising from bodily and personal injury and damage to property, resulting from Grantee's vehicles, products and operations. The amount of insurance for single limit coverage applying to bodily and personal injury and property damage shall not be less than Two Million Dollars ($2,000,000.00). The following endorsements shall be attached to the liability policy: (1) The policy shall provide coverage on an "occurrence" basis. (2) The policy shall cover both personal injury and bodily injury. (3) The policy shall cover blanket contractual liability subject to the standard universal exclusions of contractual liability included in the carrier's standard endorsement as to bodily injuries, personal Injuries and property damage. (4) Property damage liability. (5) The Grantor shall be named as an additional insured on the policy. (6) An endorsement shall be provided which states that the coverage is primary insurance with respect to claims arising from Grantee's operations under this Agreement and that no other insurance maintained by the Grantor will be called upon to contribute to a loss under this coverage. (7) Standard form of cross-liability shall be afforded. (b) Grantor reserves the right to adjust the insurance limit coverage requirements of this Agreement no more often than once every three (3) years. Any such adjustment by the Grantor will be no greater than the increase in the State of Minnesota Consumer Price Index (all consumers) over the preceding such three (3) year period. (c) Grantee shall submit to Grantor a certificate of insurance signed by the insurance agent showing proof of the required insurance. The certificate shall state that the policies shall not be cancelled without providing thirty (30) days written notice in advance to Grantor. Consistent with Section 7.7 of this Agreement, upon receipt of any such cancellation notice, Grantee shall obtain an alternative to the required insurance prior to the cancellation date. Failure to do shall be considered a material breach of this Agreement for which Grantee shall be subject to revocation by the City of its right to operate a Cable System in City pursuant to Section 7.7 of this Agreement. 3.6) Indemnification. (a) Grantee shall indemnify, defend and hold Grantor, its officers, boards, commissions, agents, and employees (collectively the "Indemnified Parties") harmless from and against any and all lawsuits, claims, causes of action, actions, liabilities, demands, damages, judgments, settlements, disability, losses, expenses (including attorney's fees and disbursements of counsel) and costs of any nature that any of the Indemnified Parties may at any time suffer, sustain or incur arising out of, based upon or in any way connected with the Grantee's negligent acts or omissions or intentional misconduct related to Cable Service operations or the exercise of this Franchise, the breach by Grantee of its obligations under this Agreement or Section 306 of the City Code and/or the activities of Grantee, its subcontractor, employees and agents hereunder. Grantee shall be solely responsible for and shall indemnify, defend and hold the Indemnified Parties harmless from and against any and all matters relative to payment of Grantee's employees, including compliance with Social Security and withholdings. (b) The indemnification obligations of Grantee set forth in this Agreement are not limited in any way by the amount of damages or type of damages or compensation payable by or for Grantee under Workers' Compensation, disability or other employee benefit acts, acceptance of insurance certificates required under this Agreement, or the terms, applicability or limitations of any insurance held by Grantee. (c) Grantor does not, and shall not, waive any rights against Grantee which it may have by reason of the indemnification provided for in this Agreement, because of the acceptance by Grantor, or the deposit with Grantor by Grantee, of any of the insurance policies described in this Agreement. (d) The indemnification of Grantor by Grantee provided for in this Agreement shall apply to all damages and claims for damages of any kind suffered by reason of any of the Grantee's operations referred to in this Agreement, regardless of whether or not such insurance policies shall have been determined to be applicable to any such damages or claims for damages. (e) Grantee shall not be required to indemnify Grantor for the negligence or misconduct of Grantor, its officials, boards, commissions, agents, or employees. Grantor shall hold Grantee harmless, subject to the limitations in Minnesota Statutes Chapter 466, for any damage resulting from the negligence or misconduct of the Grantor or its officials, boards, commissions, agents, or employees in utilizing any PEG access channels, equipment, or facilities and for any such negligence or misconduct by Grantor in connection with work performed by Grantor and permitted by this Agreement, on or adjacent to the Cable System. 3.7) Grantee's Insurance. Grantee shall not commence any Cable System reconstruction work or permit any subcontractor to commence work until all insurance required under this Agreement and Section 306 of the City Code has been obtained and the certificate of insurance required in Section 3.5(c) is provided to Grantor. Said insurance shall be maintained in full force and effect until the expiration of this Agreement. 3.8) Workers' Compensation Insurance. Grantee shall obtain and maintain Workers' Compensation Insurance for all of Grantee's employees, and in case any work is sublet, Grantee shall require any subcontractor similarly to provide Workers' Compensation Insurance for all of their employees, all in compliance with State laws, and to fully indemnify the Grantor from and against any and all claims arising out of occurrences on the work performed by Grantee and/or its subcontractors. Grantee hereby indemnities Grantor for any and all costs, expenses (including attorneys' fees and disbursements of counsel), damages and liabilities incurred by Grantor as a result of any failure of either Grantee or any subcontractor to take out and maintain such insurance. Grantee shall provide the Grantor with a certificate of insurance indicating Workers' Compensation coverage on the Effective Date. 3.9) Security Fund. (a) Within sixty (60) days of the Approval Date, Grantee shall establish and provide to Grantor a security fund, as security for the full and timely payment and performance by Grantee of all of its obligations under this Agreement and Section 306 of the City Code. The security fund shall be in the amount of at least Ten Thousand Dollars ($10,000) and shall be in the form of an irrevocable letter of credit reasonably acceptable to the City Attorney. (b) The security fund shall be maintained at the Ten Thousand Dollar ($10,000) level throughout the term of this Franchise Agreement. If, at any time during the term of this Franchise, Grantee seeks consent to a transfer or assignment of its rights hereunder, Grantor may unilaterally increase the security fund up to Twenty Thousand Dollars ($20,000) if it so chooses. (c) The security fund may be drawn upon by Grantor for those purposes specified in Section 3.10 hereof, in accordance with the procedures of Section 3.10 and Section 306 of the City Code. Grantee's recourse, in the event Grantee believes that Grantor's actions in taking any security funds is improper, shall be through legal action after the security has been drawn upon. Actions brought by Grantee hereunder may be subject to 47 U.S.C. S555A - Limitations of Franchising Authority Liability - which is hereby incorporated by reference as if fully set forth herein. (d) Nothing herein shall be deemed a waiver of the normal permit requirements made of all contractors working within the City's rights-of-way. 3.10) Procedure for Enforcing Franchise Agreement. (a) The procedures for enforcing violations or breaches of this Franchise Agreement and/or Section 306 of the City Code shall be consistent with the procedures set forth in Section 306.3000 of the City Code in effect on the date of enactment of the Franchise. (b) In the event the Council finds that a material violation or breach exists and that Grantee has not cured the same in a satisfactory manner, has not diligently commenced correction of such violation or breach or has not diligently proceeded to fully remedy such violation or breach, the Council may impose liquidated damages, assessable from the security fund, of Three Hundred Dollars ($300) per day or per incident for unexcused violations or breaches regarding Section 306.1200 of the City Code and up to One Hundred Fifty Dollars ($150) per day or per incident for all other violations or breaches of this Agreement and/or Section 306 of the City Code, provided that all violations or breaches of a similar nature occurring at the same time shall be considered one (1) incident. However, City reserves the right to impose separate penalties for each day said violation continues. 3.11) Reservation of Rights. Grantor and Grantee reserve all rights that they may possess under Applicable Laws unless expressly waived herein. SECTION 4. DESIGN PROVISION 4.1) Minimum Channel Capacity. (a) Grantee currently operates and maintains a communications system which provides telecommunications and information services to residents and businesses ("Telecommunications Network") within the City pursuant to authority prescribed in the Certificate of Need issued by the Minnesota Public Utilities Commission. Utilizing its Telecommunications Network, Grantee shall maintain and operate within the City a System which shall be capable of delivering a minimum of one hundred twenty (120) video program channels and which shall at System turn-up deliver to all subscribers capable of receiving said channels a minimum of one hundred twenty (120) video program channels. (b) All programming decisions remain the sole discretion of Grantee provided that Grantee complies with federal law regarding notice to City and Subscribers prior to any channel additions, deletions, or realignments, and further subject to Grantee's signal carriage obligations pursuant to 47 U.S.C. SS 531-536, and subject to City's rights pursuant to 47 U.S.C. ~ 545. . 4.2) System Design. (a) The System required herein will be engineered and built to provide a minimum of one hundred twenty (120) channels. Grantee shall, upon request, meet with City to explain its System operations prior to the commencement of Cable Services in the City and shall, at the request of City, participate in public meetings designed to inform residents of City of said operation. The System shall at all times meet the technical standards established by the FCC as they may be amended from time to time and shall be operated so as to minimize disruption of signal to Subscribers. The general System description is outlined in Exhibit E, which is incorporated herein by reference. (b) When System has been turned up and service commenced, upon a request for service from a prospective Subscriber, Grantee shall generate a service order and service order will contain an installation date. Grantee shall advise prospective Subscriber that if installation is not accomplished within the time frame specified by the service order, installation shall be free to the Subscriber or, at the election of the Subscriber, Grantee shall provide the Subscriber with a Twenty Dollar ($20) credit, provided that no such free installation or credit shall apply if delay in installation is caused by prospective Subscriber or by events pursuant to Section 7.3 herein. 4.3) Operation and Maintenance of System. The Grantee shall render effective service, make repairs promptly, and interrupt service only for good cause and for the shortest period of time possible. Such interruption, to the extent feasible, shall be preceded by notice in accordance with Section 1.2 herein and all applicable provisions of the Section 306 of the City Code, and shall occur, to the extent feasible, during periods of minimum use of the System. 4.4) Special Testing. City may require special testing of a location or locations within the System if there is a particular matter of controversy or unresolved complaints pertaining to such location(s). Demand for such special tests may be made on the basis of complaints received or other evidence indicating an unresolved controversy or noncompliance. Such tests shall be limited to the particular matter in controversy or to unresolved complaints. The City shall endeavor to so arrange its request for such special testing so as to minimize to the extent reasonably feasible hardship or inconvenience to Grantee or to the Subscribers caused by such testing. Before ordering such tests, Grantee shall be afforded thirty (30) days to correct problems or complaints upon which tests were ordered. The City shall meet with Grantee prior to requiring special tests to discuss the need for such and, if possible, visually inspect those locations which are the focus of concern. If, after such meetings and inspections, City wishes to commence special tests and the thirty (30) days have elapsed without correction of the matter in controversy or unresolved complaints, the tests shall be conducted by a qualified engineer selected by City. In the event that special testing is required by City to determine the source of technical difficulties, the cost of said testing shall be borne by the Grantee if the testing reveals the source of the technical difficulty to be within Grantee's reasonable control. If the testing reveals the difficulties to be caused by factors which are beyond Grantee's reasonable control then the cost of said test shall be borne by City. 4.5) FCC Reports. Upon request, the results of tests required to be filed by Grantee with the FCC shall also be copied to City. 4.6) Emergency Alert Capability. Grantee shall at all times comply with all Applicable Laws regarding the provision of emergency alert services. At a minimum, Grantee shall at all times have the capability for an emergency override alert. The emergency override by City shall emanate from Prior Lake City Hall, 4646 Dakota Street S.E., Prior Lake, MN. 4.7) Parental Control Lock. Grantee shall provide, for sale or lease, to Subscribers, upon request, a parental control locking device or digital code that permits inhibiting the video and audio portions of any Channels offered by Grantee. 4.8) Technical Standards. Grantee shall, at a minimum, comply at all times with all applicable Federal Communications Commission (FCC) Rules and Regulations, including but not limited to, Part 76, Subpart K (Technical Standards), as may be amended from time to time. 4.9) Right of Inspection. Grantor shall have the right to inspect all construction, reconstruction or Installation work performed by Grantee under the provisions of this Agreement and Applicable Laws, to ensure Grantee's compliance and to protect the health, safety and welfare of Grantor's citizens. 4.10) Periodic Evaluation, Review and Modification. Grantor and Grantee acknowledge and agree that the field of cable television is a relatively new and rapidly changing one which may see many regulatory, technical, financial, marketing and legal changes during the term of this Agreement. Therefore, in order to provide for the maximum degree of flexibility in this Agreement, and to help achieve a continued, advanced and modern Cable System, the following evaluation provisions will apply: (a) The City reserves the right to adopt rules and regulations controlling the procedures as set forth below and the subjects for evaluation sessions. (Evaluation sessions are public meetings in which the City enquires regarding topics concerning Cable service, such as those found in subsection (c) below, and Grantee provides such information and documents as reasonably requested by City.) In the absence of any City action taken to exercise these rights, Grantee shall be subject to the procedures and the subjects described in this Section 4.10. (b) The City may require, in its sole discretion, that the Grantee participate in evaluation sessions with the City at any time and from time to time during the term of this Agreement; provided, however, there shall not be more than one (1) evaluation session during any calendar year. (c) Topics which may be discussed at any evaluation session include, but are not limited to, rates, channel capacity, the System performance, programming, PEG access, municipal uses of the System, Subscriber complaints, judicial rulings, FCC rulings and any other topics the City or Grantee may deem relevant. (d) During an evaluation session, Grantee shall fully cooperate with the City and shall provide without cost and in a timely manner such information and documents as the City may reasonably request to perform the evaluation and the disclosure of which would not violate federal law or reveal confidential proprietary information. (e) As a result of an evaluation session, the City or Grantee may determine that an amendment in the terms of this Agreement may be required, that the requirements of the System or this Agreement should be updated, changed or revised, and/or that additional services should be provided by Grantee (collectively a "Proposed Modification"). If the Proposed Modification is consistent with the terms of this Agreement, Section 306 of the City Code, the needs of the City and existing state-of- the-art technology, including what is provided by Grantee in other Systems owned, operated or managed by it, its parent company or any affiliated company, Grantee and the City will, in good faith, review the terms of the Proposed Modification and consider amending this Agreement accordingly. All franchise modifications, however, must be mutually acceptable to both the City and Grantee. SECTION 5 SERVICES AND PROGRAMMING 5.1) Services and Programming. Grantee shall provide Grantor with a list of programming services and other services offered, which list shall be attached hereto as Exhibit C (the 'Channel Line-up'). The Channel Line-up shall include all applicable charges and pricing schedules. The Channel Line-up shall be updated each time a change is made by Grantee. Grantee shall not alter the number of program services or other services without thirty (30) days prior written notification to the Grantor and System Subscribers. Notwithstanding the foregoing, Grantee may not reduce the number of channels or services below the minimum number of 120 as provided for in Section 4.1. 5.2) Leased Channel Service. Grantee shall offer leased channel service on reasonable terms and conditions and in accordance with Applicable Laws. 5.3) Periodic Subscriber Survey. (a) To the extent Grantee conducts customer surveys with respect to all or a portion of the system serving the City, upon request, it shall provide the City with all information and findings from such surveys, subject to the privacy rights of subscribers and the right of Grantee to withhold confidential proprietary material. (b) Grantee shall provide the City with the results of any survey conducted and shall report in writing or orally before the City Council what steps Grantee is taking, if any, to implement the findings of the survey, such as correcting problems and expanding services. SECTION 6. PUBLIC ACCESS PROVISIONS 6.1) Public, Educational and Government Access. (a) City or its designee is hereby designated to operate, administer, promote, and manage access (public, education, and government programming) (hereinafter "PEG access") to the cable system established pursuant to this Section 6. Grantee shall have no responsibility whatsoever for PEG access except as expressly stated in this Section 6. 6.2) Grantee Support for PEG Usage. In accordance with the provisions of the Cable Act and Minn. Stat. 9 238.084, Grantee shall provide and make available for public, educational and governmental (PEG) access usage within the Service Area the following: (a) Provision and use of the grant funds and Channels designated in Exhibit 0 of this Agreement for local educational and governmental programming and access use at no charge in accordance with the requirements of Exhibit O. (b) Maintenance of the Access Facilities and Channels, and support of educational and governmental programming to the extent specified in Exhibit 0 of this Agreement. (c) Provision of free public building Installation and cable service as more clearly specified in Exhibit 01, and provision of cablecasting capability to the locations specified in Exhibit 02. (d) Access Facilities shall be operated by the City. SECTION 7 REGULATION 7.1) Amendment of Franchise Agreement. Grantee and City may agree, from time to time, to amend this Franchise. Such written amendments may be made subsequent to a review session pursuant to Section 4.1 0 or at any other time if City and Grantee agree that such an amendment will be in the public interest or if such an amendment is required due to changes in federal, state or local laws. City shall act pursuant to local law pertaining to the amendment of Section 306 of the City Code. 7.2) Conflict Between Section 306 of the City Code and Agreement. In the event of any conflict between the terms and conditions of this Franchise Agreement and the provisions of the Section 306 of the City Code, the provisions of this Franchise Agreement shall control. Grantee expressly acknowledges and agrees that the City hereby retains all of its police powers and the City may unilaterally amend Section 306 of the City Code in the exercise of its police powers and Grantee shall comply with Section 306 of the City Code as may be amended; provided, however that City hereby agrees to use reasonable efforts to address public health, welfare and safety needs without resorting to amending Section 306 of the City Code. 7.3) Force Majeure. In accordance with Section 306.3100 of the City Code, in the event Grantee's performance of any of the terms, conditions, obligations or requirements of this Agreement or Section 306 of the City Code is prevented or impaired due to strike, riot, war, earthquake, flood, unusually severe rain or snow storm, tornado or other catastrophic act of nature, labor disputes, failure of utility service necessary to operate the Cable System, governmental administrative or judicial order or regulation, unavailability of materials or qualified labor to perform the work necessary or other event that is reasonably beyond the events beyond the reasonable control of the Grantee's ability to anticipate or control, such inability to perform shall be deemed to be excused for the period of such inability and no penalties or sanctions shall be imposed as a result thereof. 7.4) Rate Regulation. Nothing in this Agreement shall in any way prevent Grantor from regulating any rates charged by Grantee. If Grantor elects to so regulate, Grantor shall follow the procedures outlined in Section 306.1900 of the City Code or Applicable Laws. 7.5) Telecommunications Network Transfer Prohibition Under no circumstance including, without limitation, upon expiration, revocation, termination, denial of renewal of the Franchise or any other action to forbid or disallow Grantee from providing Cable Services, shall Grantee or its assignees be required to sell any right, title, interest, use or control of any portion of Grantee's Telecommunications Network to the City or any third party. Grantee shall not be required to remove its Telecommunications Network or to relocate the Telecommunications Network or any portion thereof as a result of revocation, expiration, termination, denial of renewal or any other action to forbid or disallow Grantee from providing Cable Services. This provision is not intended to contravene PEG requirements set out in this Agreement. Upon expiration of franchise, Grantee will remove any Cable system equipment from City property and restore property to its original condition. 7.6) Termination by Grantee Grantee shall have the right to terminate this Agreement and all obligations hereunder upon ninety (90) days' notice to the City if Grantee concludes in its reasonable business judgment that the provision of Cable Service in the City is no longer technically, economically or financially consistent with Grantee's business objectives. 7.7) Termination by Grantor. In accordance with Section 306.3000 of the City Code, Grantor may revoke Grantee's right to operate a Cable System in City if Grantee violates any material term of this Agreement, Section 306 of the City Code, or Applicable Laws, including, but not limited to, state and federal laws and regulations relating to Cable Services. Notwithstanding the foregoing, should Grantee's insurer provide thirty days written notice pursuant to Section 3.5(c) above of insurer's intent to cancel Grantee's public liability insurance policy, Grantee, on or before the thirtieth day of the thirty day notice, shall produce satisfactory evidence to Grantor of one of the following: 1) an alternative public liability insurance policy in force, consistent with the requirements of Section 3.5; or 2) self-insurance capable of providing coverage consistent with the requirements of Section 3.5; or 3) a letter of credit in the amount equal to the coverage required under Section 3.5. If Grantee fails to produce any of the above alternatives by the termination of the 30 days notice, Grantor may immediately suspend Grantee's right to provide service pursuant to the franchise, and will provide Grantee fourteen (14) days notice of a public hearing to be held before the Council, pursuant to Section 306.3000 of the City Code, to address a franchise violation, and proceed thereafter pursuant to Section 306.3000. At any time in the City's process under Section 306.3000 of the City Code, through termination of Grantee's right to appeal an adverse decision, or the issuance of a final decision upon appeal, Grantee may produce to the Grantor satisfactory evidence of one of the three alternatives listed above and Grantor will immediately lift the suspension of Grantee's right to provide service pursuant to its franchise. In the event that Grantee does not receive 30 days notice from its insuror of intent to cancel its public liability insurance, upon Grantee's learning that said insurance was cancelled or will be cancelled in less than 30 days, Grantee shall notify the Grantor of the cancellation, and Grantee shall have fourteen 14 days from learning of the cancellation, or the remainder of the notice period of an impending cancellation if longer than 14 days, to produce one of the three alternatives above. If Grantee fails to produce any of the above alternatives by the expiration of the 14 days or remaining notice period, Grantor may immediately suspend Grantee's right to provide service pursuant to the franchise, and will provide Grantee 14 days notice of a public hearing to be held before the Council, proceeding thereafter as provided above. 8) Severability If any section, subsection, paragraph, phrase or sentence is held invalid by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect and the invalidated provision shall be treated as if it never existed. IN WITNESS WHEREOF, Grantor and Grantee have executed this Agreement the day, month and year first above written. Dated: CITY OF PRIOR LAKE, MINNESOTA By: Its: Mayor ATTEST: By: Its: City Manager (SEAL) SCOTT RICE TELEPHONE COMPANY DBA INTEGRA TELECOM Dated: By: Its: (CORPORATE SEAL) STATE OF MINNESOTA ) ) 55. COUNTY OF ) The foregoing instrument was acknowledged before me on , 2009, by , the Mayor of the City of Prior Lake, on behalf of the City. Notary Public STATE OF MINNESOTA ) ) 55. COUNTY OF ) The foregoing instrument was acknowledged before me on , 2009, by , the of Scott Rice Telephone Company dba Integra Telecom, on behalf of the Company. Notary Public EXHIBIT A OWNERSHIP SCOTT RICE TELEPHONE COMPANY DBA INTEGRA TELECOM IS A WHOLLY OWNED SUBSIDIARY OF INTEGRA TELECOM HOLDINGS, INC., AN OREGON CORPORATION. INTEGRA TELECOM HOLDINGS, INC., IS A WHOLLY OWNED SUBSIDIARY OF INTEGRA TELECOM, INC., AN OREGON CORPORATION. INTEGRA TELECOM, INC. IS A PRIVATELY HELD CORPORATION. THREE PRIVATE EQUITY INVESTORS EACH OWN MORE THAN A 5% EQUITY INTEREST IN GRANTEE THROUGH THEIR INVESTMENT IN INTEGRA TELECOM, INC. EXHIBIT B FRANCHISE FEE PAYMENT WORKSHEET Scott Rice Telephone Company dba Integra Telecom (Prior Lake) Subs Franchise Fee: 5% Gross Date ,20_ Revenue Source Basic Pay Tier Advertising and Pay-Per-View I Other Total $ EXHIBIT C CHANNEL LINE-UP C-l EXHIBIT D GRANTEE COMMITMENT TO PEG ACCESS FACILITIES AND EQUIPMENT 1. PUBLIC, EDUCATIONAL AND GOVERNMENT (PEG) ACCESS CHANNELS Grantee shall provide to each of its subscribers who receive some or all of the services offered on the Cable System, reception on at least one (1) specially designated noncommercial public access channel available for use by the general public on a first come, first-served nondiscriminatory basis; at least one (1) specially designated access channel for use by local educational authorities; at least one (1) specially designated access channel available for government use (hereinafter collectively referred to as the 'PEG Channels'); and at least one (1) specially designated access channel available for lease on a first-come, first-served, nondiscriminatory basis by commercial and noncommercial users. No charges may be made for channel time or playback of prerecorded programming on the specially designated noncommercial access channels. Personnel, equipment and production costs may be assessed, however, for live studio presentations exceeding five (5) minutes in length. Charges for those production costs and fees for use of other public access channels must be consistent with the goal of affording the public a low-cost means of television access. Whenever the PEG Channels are in use during eighty percent (80%) of the weekdays, Monday to Friday, for eighty percent (80%) of the time for any consecutive three (3) hour period for six (6) weeks running, and there is demand for use of an additional channel for the same purpose, the Grantee shall then have six (6) months in which to provide a new PEG Channel for the same purpose, provided that provision of the additional channel or channels must not require the Cable System to install converters. The PEG Channels shall be dedicated for PEG use for the term of the Franchise Agreement, provided that Grantee may, utilize any portions of the PEG Channels not scheduled for PEG use. Grantor shall establish rules and procedures for such scheduling in accordance with Section 611 of the Cable Act (47 U.S.C. S 531). Grantee shall also designate the standard VHF channel 6, or its digital equivalent, for uniform regional channel usage currently provided by 'Metro Channel 6' as required by Minn. Stat. S 238.43. Programming on this regional channel shall include a broad range of informational, educational, and public service programs and materials to cable television subscribers throughout the Twin Cities metropolitan area. 2. PEG OPERATIONS Grantor may in its sole discretion, negotiate agreements with neighboring jurisdictions served by the same Cable System, educational institutions or others to share the operating expenses of the PEG Channels. Grantor and Grantee may negotiate an agreement for management of PEG facilities, if so desired by both parties. D-l 3. PROMOTION OF PEG ACCESS Grantee shall allow the Grantor to place bill stuffers in Grantee's Subscriber statements at a cost to the Grantor not to exceed Grantee's cost, no more than twice per year upon the written request of the Grantor if the placement of such materials would not materially and adversely affect Grantee's cost for the production and mailing of such statements. The Grantor agrees to pay Grantee in advance for the actual cost of such bill stuffers. Upon request, Grantee shall also make available access information provided by Grantor in Subscriber packets at the time of Installation and at the counter in the System's business office within the Service Area. To the extent Grantee utilizes local advertising insertion equipment and has the requisite capability, Grantee shall also distribute, at no charge to Grantor, through advertising insertion equipment, 28 weekly promotional and awareness commercial spots at randomly selected times in unpurchased advertising space on a 'run of schedule basis' produced at the Grantor's cost and submitted by the Grantor in a format compatible with such advertising insertion equipment once Grantee has acquired and activated such capability. 4. SERVICE TO PUBLIC BUILDINGS (a) One (1) cable drop connection and the highest level of cable service excluding pay-per-view and pay-per-channel programming shall be provided free of charge to each public building listed in Exhibit D-1 with no Installation charges or monthly service charges. Said drop connection and service provision shall be provided no later than eighteen (18) months from the Effective Date of this Agreement. Grantee shall, in any public building hereinafter built within Grantee's Franchise Area, provide all materials, design specifications and technical advice for anyone cable outlet to be installed during the construction of such building, without cost to the Grantor and Grantee shall provide the same service to such new public building as required in this paragraph (a). (b) No later than eighteen (18) months from the Effective Date of this Agreement, Grantee shall provide a two-way connection to the public buildings listed in Exhibit D 2 to facilitate cablecast programming from those buildings. (c) Grantee shall at all times cooperate with City in providing technical assistance required by City regarding PEG access programming. Within a reasonable time period following City's request, but no later than five (5) business days, Grantee shall provide technical assistance necessary to improve signal quality on the PEG access Channels. 5. PEG ACCESS OPERATING SUPPORT. Grantee, on behalf of City, shall provide the following financial support for PEG programming: (a) Grantee shall collect on behalf of City a per Subscriber fee of sixty-five cents ($0.65) per month, which may be increased to a maximum of one dollar twenty cents D-2 ($1.20) per month in City's sole discretion, solely to fund public, educational and governmental access -related expenditures (hereinafter "Access Operating Fee"). The Access Operating Fee may be adjusted by the City, upon ninety (90) days advanced written notice to Grantee, no more frequently than every two (2) years during the term of this Franchise. The City agrees that any increase in the Access Operating Fee will be applied equally to all franchised cable operators in the City. (b) Throughout the Franchise term, Grantee shall collect on behalf of City a per Subscriber fee of ten cents ($.10) per month solely to fund public, educational and governmental access capital expenditures (hereinafter "PEG Surcharge Fee"). The PEG Surcharge Fee is provided by Grantee to City in lieu of any upfront capital grant and is intended to approximate the per subscriber contribution made by the City's existing incumbent cable operator over the term of such operator's franchise in the City. Any and all payments by Grantee to City in support of PEG access programming shall not be deemed 'franchise fees' within the meaning of Section 622 of the Cable Act (47 USC Section 542). D-3 EXHIBIT 01 SERVICE TO PUBLIC FACILITIES PUBLIC BUILDINGS CITY OF PRIOR LAKE, MINNESOTA BUILDINGS: City Hall Police Station Fire Station 1 Public Works Maintenance Library Club Prior Water Treatment Facility Other: Any city building hereafter built within the Franchise Area or existing city building hereafter encompassed within the Franchise Area. SCHOOLS IN PRIOR LAKE: District Services Center Alternate Learning Center Five Hawks Grainwood Hidden Oaks Twin Oaks Westwood Jeffers Pond Elementary Other: Any school district building hereafter built within the Franchise Area or existing school building hereafter encompassed within the Franchise Area. Dl-l EXHIBIT 02 PUBLIC BUILDINGS TO BE PROVIDED WITH CABLECASTING CAPABILITY City Hall Police Station Prior Lake Senior High (to the extent Grantee has legal authority to serve this facility) District Service Center D2-1 EXHIBIT E DESCRIPTION OF SYSTEM INTEGRA TELECOM Prior Lake (This exhibit is intended to provide City with a general description of the System and Grantee reserves the right to substitute comparable technology or design parameters to provide or enhance the described System.) Grantee will use IPTV (Internet Protocol Television) to provide Cable service to residents, businesses and facilities in Prior Lake. IPTV will deliver television content to the viewer via Grantee's Telecommunications Network facilities that currently provide broadband Internet access as well as voice telephony to subscribers. The International Telecommunication Union focus group on IPTV (ITU-T FG IPTV) defines IPTV as follows: "IPTV is defined as multimedia services such as television/video/audio/textlgraphics/data delivered over IP based networks managed to provide the required level of quality of service and experience, security, interactivity and reliability. " A general definition of IPTV is television content that, instead of being delivered through traditional broadcast and cable formats, is received by the viewer through the technologies used for computer networks. IPTV allows the transmission of single or multiple program transport streams by the same network operator that owns or directly controls the telecommunications "Last Mile," or copper loop, to the consumer's premises. This control over delivery enables a guaranteed quality of service, and also allows the service provider to offer an enhanced user experience such as programming guides, interactive services etc. Telecommunications providers' IPTV service can be contrasted with "Internet TV," such as "You-Tube," which offers transport streams sent over public IP networks (normally the Internet) from outside the network that connects to the user's premises. An Internet TV provider has no control over the final delivery and so broadcasts on a "best effort" basis. IPTV, on the other hand, is usually delivered over a telecommunications provider's complex and investment-heavy network, which is carefully engineered to ensure bandwidth efficient delivery of vast amounts of multicast video traffic. E-I In order to provide its IPTV service, Grantee will construct a commercial satellite antenna and broadcast antenna receiving station at its central office at 5786 Credit River Road SE, Prior Lake, MN to capture video and network broadcast programming signals. The signals are obtained through contractual relationships with video content networks and companies. Grantee will convert those signals into a format that allows them to be carried out over its broadband Internet connection to subscribers. Grantee will use a "dedicated," or non-public, data network infrastructure to manage and control video quality. As previously noted, a dedicated data network infrastructure design is distinctly different from "Internet Video" obtained over the public Internet network, which offers no end-to-end service management or quality of service capabilities. With the addition of its IPTV offering, Grantee will be able to offer its Prior Lake subscribers "Triple Play"--the commercial bundling of IPTV, Voice and Internet access into a unified service offering. Grantee's Telecommunications Network is expandable and may increase capacity and bandwidth to respond to consumer demand for new service offerings and programming. E-2