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MediaOne 534 WGGdf W Drive Customer Serwce 512483.9.4.9 UI Rosevrfle,M/V 5511 rr�ir��.�tr r�� 12 433.3233 FAX 512 463,9184 z ism . r Mr. Steve Sarkozy City Manager ' MedieaOne City of Roseville Th6 is Broadband.This is the way, 2660 Civic Center Drive Roseville, MN 55113-1899 Dear Steve: On behalf of MediaOne, 1 would like to thank you and Donn wiski for meeting with us on June 24, 1 998 to further develop our mutual understandings with respect to the Roseville Cable television franchise renewal. As a general matter, please let me take this opportunity to express MediaOne's continuing interest in exploring mutual opportunities with the City of Roseville which could, quite likely, expand beyond the ea b le television franchise relationship over the years. We would also like to take this opportunity to confirm our interpretation of the renewal franchise with respect to certain institutional network issues. Pursuant to Section 7 of the Renewal Franchise, the City of Roseville and other institutions designated on Exhibit g will be allowed to make use of the video capacity of the Institutional Network as well as six non-video dedicated channels (3 upstream and 3 downstream) at no charge. As we discussed, the City is entitled to use additional capacity on the Institutional Network at MediaOne's actual cost plus a 45 percent margin, or the "most favored comparable user rate"', whichever is lower. The "most favored comparable use rate" is a fairly straightforward concept. Any user of the Institutional Network, whether a public institution or commercial customer can be used for comparison purposes. Subject to any appropriate confidentiality agreements, MediaOne will make the essentiai deal points or actual agreements available-to the City in order to establish terms or comparability' With respect to MediaOne's actual cost plus a 45 percent margin, we contemplate that "actual cost" will be determined based on an appropriate allocation of the incremental expenses and capital investments of the institutional network upgrade over and above the subscriber network upgrade plus the actual expenses and capital investment associated with deployment of any special equipment necessary for a particular application. We would anticipate providing the city with a summary statement upon request. ..The charges will include the 45 percent margin specified in Section 7 of the Franchise. we are certain that such a rate will compare favorably in the marketplace. We discussed the ability of the City to use the Institutional Network for revenue-generating purposes. In that regard, we hope that we clarified our understanding that the City would not be free to sell capacity, nor would the City be free to use the Institutional Network to 'Offer a service for a fee if MediaOne is also in the business of offering such a service. On the other hand. MediaOne encourages utilization of the Institutional Network, and understand than in so doing, it may well serge as a transportation infrastructure for distributing service which the City might sell to others. This would not be prohibited.