1. Service Providers Success Stories Panel 10 Years Later - Still Here! Frank Caruso Director of Information Technology Kutztown Borough Hometown Utilicom/HomeNet

2.  Fiber To The Home Community launched August 2002.  The Borough is a Municipality with 2200 electric meters 5600 residents.  Kutztown is a college community – 40% rental properties.  Utility services provided, electric, refuse, water, sewer.  Telecommunication Services include, Internet, Television, Digital Phone, Copper, Wireless Hot Spot's.  Formulation of a Telecommunications plan began in 1996.  2000 the Borough Council voted to build “The Highway”.  30% of our build is underground.  We own poles and right of way. Borough of Kutztown

3. Why  Poor service performance.  Lack of services and improvement.  Monopolized services.  Own poles, trucks, lineman, right of ways.  Additional revenue source keep the tax base low. (2mils)  Improve Borough’s own telecom services. Decision Makers Elected Officials Comprehensive Plan Community

4.  May 2002 first 50 test homes launched.  August 2002 additional 75 homes launched.  By the end of December 2002 225 online.  Offered a la carte services and bundled.  Telephone provided by a 3 rd party.  Build by request – built to the street - to the home by request.  Atlantic Engineering.  Optical Solutions (OSI) initially / CALIX C7 current.  Clear QAM. Brief Overview  No set-tops – Offer HBO/CINEMAX/SHOWTIME/FLIX/ENCORE.  Do not offer PPV or VOD.  Television lineup includes Analog, Digital and HD.  Analog 118 Digital 153 (non-dup) HD 44 (dup- digital) Premiums 34 expanded offering $55.  Internet maximum 8 x 8 service $80. (Internet ranges from $27-$60)  Bundle with Internet 8 x 8, Expanded television, TiVO $89.95 per month.

5. “Build It and They Will Come” Not Quite!  Kutztown had three meetings with potential service providers from the Telephone, Internet, Security providers.  Intent by the Borough was to find service providers, Kutztown would maintain the lines and host the central operating center.  Two RFP’s issued for providers.  ZERO responses. Kutztown then altered its position and built a Television Head- End control center and became a Television and Internet provider.  Opposition locally business owners, Governmental opposition.  Advertising campaign by current service providers to scare the community.

6. Why didn’t they come? CUSTOMER OWNERSHIP  D&E Communications came to The Borough with an idea to build a soft switch and fiber 26 miles to provide dial-tone. They would pay a fee for each POTS connection. MIDDLE MAN  Providers were not comfortable. LEGISLATION  Lobbyist – Legislation STOPPED any PA Government Agency from building competitive system. (One Official labeled kutztown “The Republic Of”)  Internal Governmental Issues. Elected Officials (transient) Solicitors (Operating as a Government)

7. Original Build  Analog System (88 channels).  Tiered Internet Service Offerings.  HBO/CINEMAX.  Starz / Encore /FLIX. Retro  This was 2002 – Modems were used tying up phone lines, the idea of Internet without a phone line was a new concept.  Television without Set-top units for premium services was not an option

8. System Improvements  Consolidated Bill for all utility and Telecommunication Services.  Rebuilt head-end for Digital and HD service.  Use DQM’s to allow channel remapping to whole numbers.  Added Digital Phone (VOIP) Service – 2010.  Added TiVO as our choice “Set-Top” – 2011.  Added Bundled Services which include TiVO.  TiVO units are leased. (ownership remains with the Borough)  2012 Multi-room TiVO devices launched.  WiFi Hotspots throughout town. (Park, Pool, Walking trail)  Insertion advertising.

9. What we learned  To remain competitive, system requires capital.  Today’s technology upgrades much faster than previous technology.  Fixed geographical area, competition can price you out of business.  Strength in our System is the Community – Service is our recipe to success.  Formation of a Telecommunications Advisory Commission TAC - made up of community residents, customers of HomeNet  Marketing, staying on-top keeping the community informed  Bulk Sales to landlords – success (both us and landlord)  Rural areas will get an immediate system upgrade, price reduction, special offers once a community begins the FTTH initiative.  Don’t’ underestimate negative press, use it to your advantage.

10.  Television Business has a tight profit line.  Internet is where the money is.  FTTH plant stability, cost to maintain, - far lower than copper.  Living within Government Laws.  Advance notifications for new products, pricing, offerings.  Purchasing and Pricing of Products.  FTTH – Educating the Public Market.  Comparisons are difficult versus copper plant.  Measurements available primarily defined by copper service providers.  Standard customer understanding the products.  Answer the Fear Factor’s.  Apprehension to allow Government to be connected to private home or business.  Competitor scare tactics, debt, lack of business knowledge.

11. Statistics  Basic Television64  Expanded Television559  Internet Service618  Telephone Service329  VOIP Service (Digital Phone)75  Bulk Services (TV,INT)610  Bundled Services (TV.INT.TiVO)131  TiVO Units138  IP static IP’s27  Email Services(Additional)17 Approximately 3100 Services Sold each month 1207 Customers

12. FIBER TO THE HOME Entire community Those participating as customers and those that are not Lower Prices, Competitive Offerings, Improved Services

13. 10 Years