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Io�A-tti�- Description of Proposed System and Services to be Offered RCN intends to offer telephone seniice, cable television, and Internet access. Residents will be able to purchase these services individually or as a"bundled package". This system will offer residents 80 channels of television programming, 10 movie channels (i.e. HBO, Cinemax, etc.), 35 pay-per-view channels, 45 digital movie channels, toll free calling to 10 Northern Califomia area codes, 10 premium phone features (call waiting, voice mail, caller ID, et al), and high speed Internet access with unlimited online time. The key points to the recommended franchise agreement are: Franchise fees — the City will receive the maximum franchise fee, 5%, permitted by law. This fee will be applied to all revenues generated by cable television service and broadband Internet access. Revenues generated by telephone services are exempted by. . State law from franchise fees. Term of agreement and construction schedule — the length of RCN's franchise agreement is tied to how quickly RCN completes the construction of this system. The sooner that RCN completes the construction of this system the longer the franchise term that they will enjoy. The following table presents the proposed franchise term and corresponding construction schedule: Residential Build-Out Franchise Term 6 years 100% Complete 11 Years 5 years 100% Complete 13 Years 4 years 92.5% Complete* 16 Years (*Measured by completed (activated and marketable network) miles of plant against total build miles in the City. This will allow for inevitable delays in certain neighborhoods where groups have the authority to review and approve (or not) plans separate from the City. It is estimated that there are 149 aerial miles and 76 underground miles in the City for a total of 225 linear build miles of plant in Redwood City.) Service Area — RCN will serve the entire City. Support for Public Education and Group (PEG) Access — • A grant fund for PEG access paid on a per subscriber basis at the same rate established for AT8�T when that franchise is renewed. In addition, RCN agrees to pay the existing 25 cents per subscriber per month PEG payment that is now in place with AT&T on the effective date of the RCN franchise. These funds will be available to the City for equipment, facilities, and support of the PEG channel, or the construction of an institutional network (City-owned wide area network) if that is desired. • Public buildings and schools within the City of Redwood City listed in the franchise will 2