(A) As a new entrant provider of cable television service, the company's ability to construct and extend its system will be largely dependent upon the market penetration and success it achieves over time. In recognition of this and the many challenges of being a new entrant, the parties agree to the following:
(1) The company will make its cable service available to at least 5% of the residential households existing in the franchise area by no later than June 30, 2010 ("Phase 1").
(2) If the company achieves a market penetration of at least 30% of the households passed by its cable system after completion of Phase 1, the company will make its cable service available to at least 20% of the residential households in the franchise area by no later than December 31, 2012 so long as the company is achieving a market penetration of at least 30% of the households passed by its cable system ("Phase 2"). Market penetration will be measured as of June 30th of each year during Phase 2. If the company is achieving a penetration of at least 30% of the households passed by its system as of June 30th the company will commit to build for the following calendar year on a schedule designed to achieve the Phase 2 buildout percentage by December 31, 2012 in roughly equal annual increments.
(3) If the company achieves a market penetration of at least 40% of the households passed by its cable system after completion of Phase 2, the company will make its cable service available to at least 40% of the residential households existing in the franchise area by no later than December 31, 2015 so long as the company is achieving a market penetration of at least 40% of the households passed by its cable system ("Phase 3"). Market penetration will be measured as of June 30th of each year during Phase 3. If the company is achieving a penetration of at least 40% of the households passed by its system as of June 30th the company will commit to build for the following calendar year on a schedule designed to achieve the Phase 3 buildout percentage by December 31, 2015 in roughly equal annual increments.
(4) If the company achieves a market penetration of at least 40% of the households passed by its cable system after completion of Phase 3, the company will make its cable service available to at least 60% of the residential households existing in the franchise area by no later than December 31, 2018 so long as the company is achieving a market penetration of at least 40% of the households passed by its cable system ("Phase 4"). Market penetration will be measured as of June 30th of each year during Phase 4. If the company is achieving a penetration of at least 40% of the households passed by its system as of June 30th the company will commit to build for the following calendar year on a schedule designed to achieve the Phase 4 buildout percentage by December 31, 2018 in roughly equal annual increments.
(5) If the company achieves a market penetration of at least 40% of the households passed by its cable system after completion of Phase 4, the company will make its cable service available to at least 80% of the residential households existing in the franchise area by no later than December 31, 2020 so long as the company is achieving a market penetration of at least 40% of the households passed by its cable system ("Phase 5"). Market penetration will be measured as of June 30th of each year during Phase 5. If the company is achieving a penetration of at least 40% of the households passed by its system as of June 30th the company will commit to build for the following calendar year on a schedule designed to achieve the Phase 5 buildout percentage by December 31, 2020 in roughly equal annual increments.
(6) On or before August 1 of each year of the franchise, the grantee shall furnish the city with a report containing the number of homes passed as of June 30, the market penetration as of June 30 and grantee's plans for building during the upcoming year.
(B) Both parties acknowledge that the above-referenced benchmarks are based in large part upon a static view of the video services market as of the effective date of this chapter. Accordingly, the parties agree to re-open discussions on this topic and adjust or eliminate these benchmarks in the event of a material adverse change in market conditions. A material adverse change in market conditions will be deemed to have occurred if the company can demonstrate that its gross margin on cable services provided in the franchise area has declined by 20% or more or market penetration has declined by 20% or more.
(Ord. O-19-08, passed 11-11-08)