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2. Triax Cablevision Update.CITY OF 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 (612) 937 -1900 • FAX (612) 937 -5739 August 21, 1997 Mr. Paul Pecora Regional Manager / Triax Cablevision 1504 Second Street SE P. O. Box 110 Waseca, MN 56093 Re: Minutes of August 13, 1997 meeting Dear Mr. Pecora: Attached you will find the notes of our August 13, 1997 meeting as prepared by Brian Grogan from Moss and Barnett. You will notice by reading the minutes, that we made several requests from Triax during this meeting. I hope this outline will provide you the necessary direction to answer all of our questions and requests. If you have any questions regarding this information, please do not hesitate to call me at 937= 1900 ext. 119. If not I look forward to your prompt response. Thank you fox your assistance, Sincerely, Todd Gerhardt Assistant City Manager TG:v c: Don Ashworth, City Manager Edward Shukle, City of Mound Bruce Eisenhbauer, City of Waconia Jane Bremer, Traix 0 Cl BRIAN T, (i (6 1 X 47_0-.140 E-MAIL' I D • LAW OMCLS MOS & BARNETT A p go p E&gONAL A ssomATION 4 600 NORWEST CENT)tR go S 0jjTj j SrvrNTH STREET MINNEAPOLIS, MINNESOTA 55402.4129 TELEPHONE 161 21 347-0300 FACS)MME ( 612) 339.6686 Ad 1 -fli I sect- oil jL Ow a August 15, 1997 VIA FACSIMILE AND U.S. MAIL Mr. Don A shworth � .. , , . _ . ' . J Cit Mana � `" 690 Coulter Drive 1,4 P.O. Box 147 Chail iassen, NIN 55317 Mr. Bruce Eisenhauer ,� E_ Cit Administrator 109 South Elm Street 1 Waconia, T\1N 55387 Mr. FdWaTd J. Shukle, Jr. Cit Mana W53� Ma Road Mound, MN 55364 Re: Au 13, 1997 Meetin with Triax Representatives Dear Gentlemen: Pursuant to our meeting 1997 n with Triax -representatives on Au 13, , 1 have prepared this, letter to provide each of y ou with m notes on the discussion which took place at the meetin and m understandin of the commitnieDts made b each of the three. Cities and Triax to d this letter to Jane Bremer in her Capacity cxchan information in the near future. I have cop ie i my understandin of the meetin and can notif as, legal counsel to Tn*ax so that she " is aware of I. ooked. us • fber notes reflect any 'issues which I ma have misstated or overl Customer Service Issues The ineetin started j ust after 9:00 a.m., at the Chanhassen City Hall. Present at the • E* senhauer, Wacorj� 4- mectin Nvere Todd Gerhardt., Chanhassen Assistant Cit Mana Bnice I . t d 1, U 1 I_I I_l I • {� _ -71 AUG 15 ' 97 112' :51 t1 � � .011 P MOSS & BARNET 11 Fkc ijF�c�i ►�'�L A�ch�!!l'l ION Aug ust 1 1 997 Page ? City Administrator, Ed Shukle, Mound City Manager, Chanhassen May or Nanc 3 Mai1C1Ilo. Chanhassen City Council Member Mark Senn, Paul Pecora, Triax Sy stem Genera M anage Y al 1ti/i arlagc.r, .lane Bremer, Triax legal counsel and myself. The meeting began with a series of questions from Mayor Manclno to T r iax Y repr esentatives. The information obtained from these questions revealed that Triax has approximately 90,000 subscr ibers nation -wide with 16,000 subscribers in the regio g n. Cif those 16,000 subscri approximately 4,500 are Chanhassen residents 2 are Mound residents and 1 ,000 are waconia residents The three communities collect co just y l npilse cinder one half (U2.) of the region's subscn hers„ Triax's office located in Waseca, Mirulesota (app roximately one alp done - half hours from Lake Minuetonka) provides customer service for all of Triax's s ystem s ' Jr . � rriS lc Gated lie M lltl�esota. 11t tthe �� Wa seca facili ty there are approximate) 32 ful l-ti e q uivalent e service ' Y q customer representatives (CSR,� ) which serve a total subsct base of a roximat ' bers. j • approximately 1 C 8,000 subscr TThe Z� Waseca factlt t�r uses a full serv ice deliver S and auto -• �• • , y y mated phone s ystem to dispatch illf01 to approximately 85 technicians in various jurisdictions. ' •' These tec..]u�lc�ialls are generally cate 'Into "tech centers" and the c]c�Sest tech center in the region � ' s located in Mound where. three to five technicians are located. (questions were raised regarding what Triax is doin to im pro ve g p e on 1 is Customer serr i ce deficiencies. Triax responded by indicating that the have rec six . y ec.ently added six new c,ustonler service representativ alld ar e current) traini those individ ' Y g duals Tl�e W aseca office 1S opcji iron 9 :00 a.m. to 7:00 p.m. (Monday - Friday) o receive .. T y) telephone Inquiries and I1C�� telephone reporting So ftware is vein added to hel p deal wjth the excessive number of calls which have Neel) received over the last three to six months. h' • s T Is new reporting software 1 expected to be installed in the next six weeks and will also be able le tt� produce reports desGri bilig how often the phones are answered, within how man rings etc. Triax also outlined other problems which. bell - they eve have persisted ov the last six months which have resulted in significant customer service ' • i First, when Triax merged last year, it resulted in billing changes for man of its • y customers which caused customer confusion. This customer confusion resulted in increased tel ephone e ephone traffic which burdened the Waseca CSRS. Second, the Company as exp erienced Y p n umerous outages due 10 cut cables over the t ast s eve r al months Apparentl�� these cut cables ha ve •f , �• p a� e rcSUlted f All increase lI1 Triax S CQIlstr ^ many �}f� tl1C itlrlsdlCtlon$ whichC 17 lIl se rves. Triax indicated that as niuc }1 as 90% of the si gnal outage prc:�b) probl it experienced were related t � �' O CLit Cab�c� frd1lZ VAr1ollS c�)rltitl'ilet1011 CpnlTdGtOI'S. C'it�� representatives questioned Triax r °�. • regarding appropriate marking of their cables through Gopher State. It appears comm unication iunlcatipn bet ti�eell Gopher State and 7riax s Wase . V H`UG 15'97 N4 0 SS & BARNETT A PROfF'SS!ONA1. ASSC)C IA'1`(��N August 15, 17 Page 3 Triax believes that appropriate repro ~scntatiti��~ office was not being conducted p rop erly. is • � � and that this p roblem should be minimized. Moreover., receiving all G op h er State requests P • ' ' was attending reconstruction meetings and, w ith City rep resentatives questioned whetkier Triax �r P . p w ith the develop who are required to install cable re spect to Chanhassen, was cooperating wl p , p ' ' ' Gerhardt ex plained that Chanhassen sends complete �' ��ultai�eousl with other utilities. Todd P . ` . .�1 Y • plans are now bein sent to a specific individual to c;cinstructicin tans to Triax and that these p 8 p Chanhassen has been experiencing ensure p fallow - by Triax, At the present tune, • p p lth other utilities as required. n urn roux p roblems with Triax not joint trenching w e • cad t �rC its from Triax to back up Triax' Mark Senn requested n espy •f �i � �� . � � contractor cuts. Triax agreed to provide Copies that 90 /a of a ll o utages are caused by of these in cident reports as soon as possible. 'v s man telephone calls indicating that as Mr. Senn al expressed concern that he rece Y P . cha nnel line-up premium channels) nay be out at various mach as curie -half of the cha p Th 1 lies • sin an o p p ortunity ortunity to view the progTanlninig they want.. tirncs so th subscribers are lo s ing Pp d esir ed air • Lotus Lake development e it apparently is particularly true in the L ment in Chanhassen and he d P II •• ion.. Triax a . reed to provide an answer in the next day o r tw t o ininiediate answer t this quest g the extent passible. � � acre develop in Mound is in the prcicess Ed Shull`e expressed concern that a 20 to p • co mp l e t ed ,' � have been informed that it is Wert bung served and cif be and C ity representatives • � � ' line extension p olicy. Triax agreed to provide Ed will riot he served by cable dui, to Tnax s p Y . 1 is d evelopment and wh it may or n ay not be feasible to Sllull~c with a re4panse regarding th Y Se rve it given its p y • ' s resent density and location to the existing cable system. Bruce 1✓isenhauer indicated that in waconia the vast majority of complaints concern . s not being buried behind people's homes, cable not being tint�wy and blurry pictures, cable drop g quicl~l� , • in lIl new sub divisions and a general overall perception of very pour customer ins service by Triax. • at it has exper sa difficulty it I riax respon ended to these concerns by indicating th p its transition as • • a result of last year's transfers and that new staff is being added to address some • at within six weeks new phone service software and other of these problems. Triax reiterated th at n ., t • shou improve res eI111aI1CeIIlt woul be In place w �11C�1 shQU onsiveness$ Further, Triax indicated p , p . AT &T as its long distance carrier to a different carrier. that earlier this year it had changed front g • � • that new carrier was havin difficult meeting the call demand and the Trim explained the � Y C. . Company has no terminated that contract and is now going back with AT&T which Tnax hopes will improve telephone responsiveness. . y ID: A U G 15 ' 1'' :152 No . 011 F. MOSS & BA RNET'S August 15, 1997 Page 4 The City staff from all Cities expressed concern that as each of the Cities have grown significantly over the last five years and perhaps the cable company staff has not gro«In to meet the increased demand. Triax acknowledged this concern and expressed confidence that sufficient staff is in place and that customer service will improve. Mark Senn questioned Triax regarding whether there was a sufficient number of contractors available to bury the drop cables behind subscribers residences. All of the Cities, expressed concern regarding this issue and Triax responded by indicating that they compete for quality subcontractors with other area cable operators and that this has become an issue. Discussion at this point shifted to Triax's policy to provide credits to subscribers. Triax indicated that when service is out for 24 hours, the Company credits indivi who contact the office. Mayor Maneino indicated that if people are unable to get through on T riax's telephone lines, they are unable to notify Triax that service is out and therefore unable to obtain a credit. Mark Semi indicated that recently he attempted to contact T riax for four (4) straight h o urs on a Saturday afternoon and received a busy signal throughout the entire time period. Moreover, Mr. Senn indicated that in several instances residents he.had heard from had lost a portion of the channel line -up and, in particular, premium channels, but were still being billed the full service fee. He expressed concern why Triax is extremely prompt on billing and collection issues but 110t as prompt on service outages and other customer service issues. The question was also raised about "mass credits" which would be applied to all entire region or_jurisdiction. Tfiax indicated that credits are usually only given per individual and only upon notice or request. Triax did indicate that the Customer service representatives have recently been authorized to provide credits in certain circumstances even when service has been out for less than 24 hours, although the Cities still expressed concern about individuals ability to get lhrc�ugl� on the telephone lines to request such credits, At the C it y st request, Triax agreed that it would provide a wi itten detail of the number of Customers who had received credits and the amount of those credits together with whatever other information Triax could provide on this issue. Triax expressed concern that the information could not contain personally identifiable information as it would be a violation of state and /or federal law. Triax agreed that it would provide the information but would delete the street number (address) and/or name of the individual but would still nou rovide enough info rmation so p � g that the C'itics could determine approximately how many customers had received credits, in what ' amount, and their general location within each city to see if any patterns develo At the request of Mr. Senn, Triax also agreed to immediately provide a response to why the noTibeastern portion of Chanhassen has been plagued with system outages and other system MOSS & BARNETT A PROFESSIONAL Assrxiatcnx August 15, 1997 PaSe 5 problems. This portion of the City includes Lake Susan, Mission Hills and Lotus Lake, Tri agreed to immediately provide such a resp onse. At the request of Bruce Eisenhauer, Triax agreed to p rovide a list of new subdivisi j p within �� aconia which Triax has recently served or i scheduled to serve th's ' ), construct season. Bruce will review this list and notify Triax of an other subdivi • bel y signs which he meets the density requiremelits Rnd should be considered for service b Triax � soon - y h a. � c can as pc�ss� Finally, Triax also agreed to provide to each O rehensive writte Y a cony p e r eport by August 22, 1997 which will address each of the issues raised above. Each of the City representatives acknowledge that such a report will be needed to keep heir re P p City t} Cc� trn��il, � abrea of the situatipn and of the plans Tri• •has in lace to ' ' .. p impr the �ituatinn. addition, at the request of Mayor Mancino, Triax agreed to rovi •: . . p de updated lir�an statemer to verif that they have the financial capacity to continue to invest necess It capital into the systems to im prove on customer service, responsiveness to technical issues and outages and related matters. Triax also agreed to it"prove communications with the o authorities g vernrt�ent autl�allties and Concurred With City representatives that Cities can be a valuable ' resou r ce . urc,e #c� improve the Company's relationship with subscribers. Some discussion w as undertaken with respect to hov the City representatives should contact Triax and who the point person should be. At the preset titZle, the contact person is Paul Pecos who offices � T o fi c.es at the Waseca office. Mayor Mancino expressed concern that City representatives had to race a long dicta P g nee Gall to contact Mr. p ara or otherwise use a 1 -800 number which is difficult to get through on since It ti into the Customer seii representatives of Triax. Triax agreed to address this ' ' � issue. Triax also agreed to provide an updated telephone directory their em f .,. . �' or each of the Cities. es. Franchise Renews] The second part of the meeting focused on franchis - � se xenetival and system upgrade Issues. The discussion began with a Concern b Ci representatives ` y y p esentatives regarding how a the Cities would be to process the franchise renewal request in li tght of the Concerns over customer service. At the sane time, however, the City rep resent at ive s • r�C0�ri1Zed that the Snoilci the system is rebuilt and i mproved the sooner that man o • y f the custol�ier service problems may be addressed. Wi th i s, 'Triax brief exp t � Y P heir plans for system rebuild and up an e� • ' �:C >n�J1�1tIZlellt t0 m ove 1h �� rag d exp ressed their e process forward as quickly as possible so that the a r ad P� e could begin next spring. o At the City's request, Triax a reed to ray' • , x w consist of including technical Specifications arld ti . niln 'T for vi ID: AUG 15'97 12:54 No.011 P.07 %, I Q S S BARNETT A rFnFF'.C1:)1dAL ASSUCIAT1ON AuMlSt 15. 1 997 p ge 6 e �aric�us p hases of the rebuild The timing schedule will include 1) the start elate for th p •can tru ctic ?n, ?) p roposed time peed for system construction, and 3) the proposed date for � , activation of new services over the new system. Triax agreed to fax this information to Cty representatives as soon as passible, i.e. within the next week. The discussion then focused on information which Triax needs from the Cities to prepare a written proposal regarding franchise renewal This information is in addition to the written proposal prepared for the Cities and sent to Triax several months ago. In particular, Triax requires that each City provide: 1. Its estimated groNN over the next five to ten years including plans for zoning residential, commercial developments, etc. 2. Any plans to construct new public facilities in the Cities Fuld /or relocate existing public facilities. 3. Any fixture data applications which the Cities have knowledge of, including survey information or demographic information which would help Triax refine its target market for various high speed data or telephony services. 4. Any street paving and /or reconstruction projects planned over the next two years. 5. The final issue which Triax requires information from the Cities on concerns public, educational and governmental (PEG) access programming. with respect to this issue, Triax requires information from the Cities regarding the following (i) The number of PEG channels desired by each city and their anticipated uses (state law mandates three channels). (ii) The general programming which the Cities hope to carry direr these I' : C:i channels including programming such as City Council meetings, school board meetings, educational programming etc. t1�11 A list of all of the facilities which the City desires to be connected to the { cable system for the provision of Gable service:. This would include facilities such as City Hall, Police and Fire, K- 12 schools, community colleges, and other related facilities. (iv) A list of facilities which the City desires to have designated as "origination Points". These origination points are locations where .(, EC7) programming can be returned back to Triax's head -end facility for cablecasting on the MOSS & BARNETT A PRtiFF.WO AL ASSULll TION A LigLISt 15, 1 997 Page 7 PE G channels. F or example, an l or point may be at the 'City Hall City $ where Cit Council meetings may be desired to be aired live on the govcrnme nt access ebannel. Another potential location may be local public high school where various educational programming, activities or pub c g sp Ortin g m be desired to be cablecast on the educational access y channel. (v) Fina Y P ll the Ci should resent a plan regarding PEG access and their desires related thereto. This would include whether the Mound facility v&711 continue to fun ction as is how it should be staffed, what equipment should be in P lace, and other related matters. The Cit agreed i s reed that the would immediately begin to gather this information and formation to Triax on or before August 29, 1997 For your info ?rniation attempt to 1?rov�de this information g an b v w ay c o exam f le , I have attached hereto information prepared by Dave Frischnlon of P Wayz j• r e g arding wa yzata's PECK access needs and interests (copy sent via U S. Mail only - not ti� a} eg � � via facsimile). Bruce Eisenhauer requested that Triax inally B representatives appear before his City q p Coulicil in waconia to discuss the technical upgrade /rebuild of the cable system and the ways in whic.h such a new system will 'improve cable service to waconia reside Triax agreed that it � wo be ha to accommodate this request and they agreed to coordinate schedules at a time ot hap py re q convenient for the City. I anticipate �ntici ate the Cities will receive information from Triax within the next week regarding the issues addressed in the beg inning of this letter regarding customer service. With respect to g g the information the Cities need to provide to Triax, I believe much of this informatio can be sent directly from the Cities on to Jane Bremer. Please provide copies of any infomiation sent t o Ms. Brener or other Triax representatives to may attention for my files. With respec to the PEG access information, I believe it will be prudent for us to work P tog ether on this since Chai�iassen, waconia and Moun all use the Mound PEG access facility � ' ...rich and will likely have overlapping needs and interests. Please begin to work on gatherin g; as rn of the information as p ossible and forw ard it on to my attention. I will attempt to coordinate with each of you the final document to be sent to Triax regarding PEG access needs and desires. The Wayzata model prepared by Mr. Frischmon should serve as a nice example. and will keep you up to date on Wayzata lans. Obviously, all four Cities should continue close contact. on the PEG � s p y, issues to ensure duplication of resources will not occur, RI U0 I MOSS & BARNETT A Pv.oru1:,S1 >r -W. AssocIATION August 15, 1 997 Page b A U (3 15 t, .' 12 : 55 N o . 0 11 P. C , `_ If you should have any questions regarding the information contained within this letter, or if I leave. overlooked any issues, please feel free to contact me. Otherwise, i will look forward to hearing fro each of you regarding the information addressed in the preceding paragraph. Very t ru ly yours, I2644212MK 4,01 !.DOC cc, Rine R:cmer (vitt facsirmile; enc. b U .S. Mail) Fall Peccra (via Facsimile; enc. by U.S. Mail) David Frisc-linion MOSS & BARNETT, A Professional Association Brian T. Grogan F. V• �� r LAw OFFICES MOSS & BARNETT A PROFESSIONAL ASSOCIATION 4800 NORWEST CENTER 90 SOUTH SEVENTH STREET BRIAN T. GROGAN MINNEAPOLIS, MINNESOTA 55402 -4129 (612) 347 -0340 TELEPHONE ( 612) 347-0300 E- MAIL: GroganB @moss- barnett.com FACSIMILE ( 612) 339-6686 September 3, 1997 VIA FACSIMILE AND U.S. MAIL ivir. D oti rk W uet City Manager 690 Coulter Drive P.O. Box 147 Chanhassen, MN 55317 Re: Enforcement Provisions Under the City's Cable Television Franchise Ordinance Dear Don: Per your request, I have attached hereto a draft letter which may be forwarded to Triax Midwest Associates, L.P. ( "Triax ") to place them on notice of their failure to comply with the City's Cable Television Franchise. In particular, Triax has failed to comply with the FCC's Customer Service Standards. I have attached hereto a copy of the FCC's Customer Service Standards for your review and information. My files are not complete with respect to whether the City formally adopted the FCC's Customer Service Standards. Please review your records to determine the precise date when the FCC's Customer Service Standards were effective in Chanhassen in case Triax should challenge this issue. The Ci ty ' s 1 iY'sr {� • al • j 7T i ti �1� + �j [z% + r` .^�.'F �� •♦ �!_1n �h11+ ♦ [_\ ��r� l r�iiivll>L e ut Artic ►� ✓ L'C,%,�eI V1 �iL�i i. , f✓iLi d l:�'vJ ltiai� il►�L `viulli�.�. must maintain a letter of credit in the amount of $10,000. The City, in its sole discretion, may charge to and collect from the letter of credit certain penalties. The Franchise provides that for failure to comply with any provision of the Franchise the penalty shall be $50 per day for each day, or part thereof, that such failure occurs or continues. In order to implement penalties pursuant to the letter of credit the City must provide a written notice informing Triax of the violation. At any time after fifteen (15) days following local receipt of the written notice, provided Triax remains in violation of one or more provisions of the Franchise, the City may draw from the letter of credit all penalties due. Triax has thirty (30) days from the date of receipt to notify the City that it disputes whether a violation or failure has in fact occurred. If the City receives a written notice of dispute by Triax it must hear such MOSS',& BARNETT A PROFESSIONAL ASSOCIATION Mr. Don Ashworth September 3, 1997 Page 2 • Council meeting and must issue written findings of dispute at the next regulatory scheduled City C g fact regarding such matter. If the City ultimately determines that no violations have taken place the City must refund to Triax without interest all monies drawn from the letter of credit by reason of the alleged violation. In addition to the letter of credit the City may also enforce the Franchise through Article VIII regarding Default. In this provision of the City's Franchise a detailed procedure is g g p City may described under which the eventually terminate Triax's Franchise for failure to perform. Y Exercising remedies via the letter of credit in no way impacts the C.ity's ability to subsequently issue a notice of default if it so chooses. have attached hereto a draft letter to be sent to Triax to place them on notice of a I ha Franchise violation and the penalties which will be assessed from the letter of credit. If you should have any q g ar questions regarding this letter or wish to incorporate any amendments please let g me know. I p provide this letter so that you may seek input from the City Council regarding the appropriate ro riate measures to take to enforce Triax's compliance with the Franchise. If you should have any questions regarding this matter please feel free to contact me. Very truly yours, MOSS & BARNETT, A Professional Association r 5 Br - 1a: f! 1 . U 0ga l BTG /slo 129532/2RY401 ! .DOC Enclosures (a) A cable franchise authority may enforce the customer service standards set forth in section (c) of this rule against cable operators. The franchise authority must provide affected cable operators ninety (90) days written notice of its intent to enforce the standards. (b) Nothing in this rule should be construed to prevent or prohibit: (1) A franchising authority and a cable operator from agreeing to customer service requirements that exceed the standards set forth in section (c) of this rule; (2) A franchising authority from enforcing, through the end of the franchise term, pre- existing customer service requirements that exceed the standards set forth in section (c) of this rule and are contained in current franchise agreements; (3) Any State or any franchising authority from enacting or enforcing any consumer protection law, to the extent not specifically preempted herein; or (4) The establishment or enforcement of any State or municipal law or regulation concerning customer service that imposes customer service requirements that exceed, or address matters not addressed by, the standards set forth in section (c) of this rule. (c) Effective July 1, 1993, a cable operator shall be subject to the following customer service standards: (1) Cables stem office hours and telephone availability. (i) The cable operator will maintain a local, toll -free or collect call telephone access line which will be available to its subscribers 24 hours a day, seven days a week. (A) Trained company representatives will be available to respond to customer telephone inquiries during normal business hours. (B) After normal business hours, the access line may be answered by a service or an automated response system, including an answering machine. Inquiries received after normal business hours must be responded to by a trained company representative on the next business day. (ii) Under normal operating conditions, telephone answer time by a customer representative, including wait time, shall not exceed thirty (30) seconds the connection is made. If the call needs to be transferred, transfer time shall not exceed thirty (30) seconds. These standards shall be met no less than ninety (90) percent of the time under normal operating conditions, measured on a quarterly basis. (iii) The operator will not be required to acquire equipment or perform surveys to measure compliance with the telephone answering standards above unless an historical record of complaints indicates a clear failure to comply. (iv) Under normal operating conditions, the customer will receive a busy signal less than three (3) percent of the time. (v) Customer service center and bill payment locations will be open at least during normal business hours and will be conveniently located. (2) Installations, outages and service calls. Under normal operating conditions, each of the following four standards will be met no less than ninety five (95) percent of the time measured on a quarterly basis: (i) Standard installations will be performed within seven (7) business days after an order has been placed. "Standard" installations are those that are located up to 125 feet from the existing distribution system. (ii) Excluding conditions beyond the control of the operator, the cable operator will begin working on "service interruptions" promptly and in no event later than 24 hours after the interruption becomes known. The cable operator must begin actions to correct other service problems the next business day after notification of the service problem. (iii) The 11 appointment window" alternatives for installations, service calls, and other installation activities will be either a specific time or, at maximum, a four -hour time block during normal business hours. (The operator may schedule service calls and other installation activities outside of normal business hours for the express convenience of the customer.) (iv) An operato r ma y not cancel an appointment with a customer after the close of business on the business day prior to the scheduled appointment. representative is running (v) If a cable operator g late for an appointment with a customer and will pp not be able to keep the appointment as scheduled, the customer will be contacted. The appointment will be rescheduled, as necessary, at a time which is convenient for the customer. (3) Communications between cable operators and cable subscribers. (i) Notifications to subscribers. (A) The cable operator or shall provide written information on each of the following areas at the time of installation of service, at least annually to all subscribers, and at any time upon request: (1) Products and services offered; (2) P p programming P rices and options for ramming services and conditions of.subscription to g programming and other services; (3) Installation and service maintenance policies; (4) Instructions on how to use the cable service (5) Channel positions of programming carried on the system; and, (6) Billing p and complaint procedures, including the address and telephone number of the local franchise authority's cable office. (B) Customers will be notified of any changes in rates, Orogramming services or channel p ositions as soon as possible in writing. Notice must be given to subscribers a minimum of thirty ( � 30 days in advance of such changes if the change is within the control of the cable operator. In addition, the cable operator shall notify subscribers thirty (30) days in advance of any significant changes in the other information required by paragraph c 3 (i)(A) of this section. Notwithstanding any other provision of Part 76, a cable ( )() � _ � no rate chap operator shah not be required to provide prior novice of y e that is the result g of a regulatory fee, franchise fee, or any other fee, tax, assessment, or charge of any kind imposed by any Federal agency, State, or franchising authority on the transaction between the operator and the subscriber. (ii) Billing. Bills will be clear concise and understandable. Bills must be fully itemized, with itemizations including, but not limited to, basic and premium service charges and equipment charges. Bills will also clearly delineate all activity during the billing period, including optional charges, rebates and credits. g p (B) In case of a p billing dispute, the cable operator must respond to a written complaint from a subscriber within thirty (30) days. (iii)"Refunds. Refund checks will be issued promptly, but no later than either- (A) The customer's next billing cycle following resolution of the request or thirty (30) days, whichever is earlier, or (B) The return of the equipment supplied by the cable operator if service is terminated. (iv) Credits. Credits for service will be issued no later than the customer's next billing cycle following the determination that a credit is warranted. (4) Definitions. (i) Normal Business Hours. The term "normal business hours" means those hours during which most similar businesses in the community are open to serve customers. In all cases, "normal business hours" must include some evening hours at least one night per week and /or some weekend hours. (ii) Normal Operating Conditions. The term "normal operating conditions" means those service conditions which are within the control of the cable operator. Those conditions which are not within the control of the cable operator include, but are not limited to, natural disasters, civil disturbances, power outages, telephone ne twork outages, and severe or unusual weather conditions. Those conditions which are ordinarily within the control of the cable operator include, but are not limited to, special promotions, pay - per -view events rate increases, regular peak or seasonal demand periods, and maintenance or upgrade of the cable system. (iii) Service Interruption. The term "service interruption" means the loss of picture or sound on one or more cable channels. [To be placed - on City of Chanhassen, Minnesota letterhead] September 3, 1997 CERTIFIED MAIL RETURN RECEIPT REQUESTED Mr. Paul Pecora Triax Midwest Associations, L.P. 1504 Second Street, S .E. Waseca, MN 56093 Re: Failure to Comply 1 With the City f Chanhassen, Minnesota's Cable Television Y Franchise Ordinance Dear Mr. Pecora: In your capacity y g as System Manager for the cable system serving the City of Chanhassen, 0 our attention to lace Triax Midwest Associates, L.P. Minnesota this letter has been directed t y p in violation of the City's ("Triax") on notice that It is 's Cable Television Franchise. The. Franchise Y • requires that Triax will comply 1 with all state and federal laws and regulations governing cable television operators. The C y p City has adopted the FCC's Customer Service Obligations at 47 C.F.R. Section 76 • .309. Over the past three (3) months Triax has repeatedly failed to comply with one or Customer Service Obligations more of these C including the following: g Under normal operating conditions, telephone answer time by p g customer representatives, including wait time, shall not exceed thirty (30) seconds when the connection is made. If the call needs to be trarzs . f erred, transfer time shall not exceea thirly (30,' seconds. These standards shall be met no less than ninety percent ° e time under normal (90 %) of the operating conditions, measured on p a quarterly basis. City's Pursuant to Article VII, Section 4 of 's Franchise this letter constitutes written y notice of the above referenced Franchise violation. The City will impose penalties on Triax of $50 per day for each day, or part thereof, such failure occurs or continues. These penalties will • Triax's receipt begin no later than fifteen (15) days following t of this written notice provided p Triax remains in violation of the above referenced requirement. Mr. Paul Pecora September 3, 1997 Page 2 If you should have any questions regarding this letter or if I can provide any additional information please feel free to contact me. Very truly yours, Y OF �, iAi��Ti ASSEly l Il�V S0 1 A Don Ashworth City Administrator 129539/2RYB01 !.DOC cc: Mr. Brian Grogan Ms. Jane Bremer LAW OFFICES MOSS & BARNETT A PROFESSIONAL ASSOCIATION 4800 NORWEST CENTER 90 SOUTH SEVENTH STREET BRIAN T. GROGAN MINNEAPOLIS, MINNESOTA 55402 -4129 ( 612) 347 -0340 TELEPHONE ( 612) 347-0300 E- MAIL : GroganB@moss- bamett.com FACSIMILE ( 612) 339-6686 September 3, 1997 VIA FACSIMI AND U.S. MAIL - ,vy f� ^ r/ 1 1V10. JLiIV 3Jl�rllli,il Larkin, Hoffman, Daly & Lindgren 7900 Xerxes Avenue South Suite" 1500 , .r Bloomington, MN 55431 Re: Triax Midwest Associates, L.P. Dear Jane: As you know, I represent the Cities of Chanhassen, Mound, Waconia and Wayzata, Minnesota with respect to their cable television franchising matters. There are several issues of concern to my clients which I would like to bring to your attention.. 1. Pursuant to our August 13, 1997 meeting between Triax representatives and representatives . p of the Cities of Chanhassen, Mound and i Waconia, Triax agreed to provide a comprehensive • p p response to all of the issues discussed by August 22, 1997. To date neither I norm clients have e received any correspondence from Triax. This issue was of great concern to each of these Cities in as much as they have repii•esented to elected officials in their Cities that information would be forthcoming and that Triax 1vould be putting into lace a plan of action VNI ��..aa �• p g place p • ,.V u- t+.ilv.►�v.; lLv i:.,ajali «;,1.� �uJl�/lllv JG1 n �;'iUVliie a Wrli�en rC:i GtiSe On this rratt�r immediately so that further action b m clierlts will not be nec ' . . , y y essary. 2. The City of Waconia has contacted Paul P�cora, Triax's System Manger, to discuss problems �' g � p the local government Channel 8 has beer t;xperiencin . These problems have been. occurring g p g over the past month and relate to Channel 8's picture quality. To date the roblei has not been resolved and the City would. like some written clarification regarding what is being done g g to address this matter. 3. The Cities of Chanhassen, Mound and Waconia have each p rovided Triax with the initial information requested by Triax at the August 13, 1997 meeting ith re to ' franchise g p :1 renewal issues. The Cities are continuing to discuss the public, a ul- ational and governmental access channels, facilities and equipment and will have this information'toy �s y r'xr IJ � - (, ., MOSS & BARNETT A PROFESSIONAL ASSOCIATION Ms. Jane Bremer September."), 1997 Page 2 Triax in the near future. Triax, however also agreed to provide ' g p lde information to the Cities with respect to system construction information, timing for completion of construction p and related matters. To date none of this information has been p rovi to the Cities. 4. The City of Wayzata, Minnesota has rovided to Triax all ' p of the information requested by Triax with respect to PEG access issues and related matters. The City s s ' y till waiting to receive a written response from Triax regarding construction matters and the cost for extending cable service to various public facilities. To date no information has been provided by Triax to the City of Wayzata. The City of Way zata is also interested in arranging a mutually acceptable date for a meeting o further the franchise renewal enewal process.. Obviously, it would not be prudent to conduct this meeting ntil Triax provides the ' g p e City with the necessary information. Please clarify when the City f Wa zata can expect Y Y p a response from Triax and what dates would be appropriate to arrange a meeting g Since I represent all four (4) of these Cities and each have very imilar concerns I rY am hopeful that we can take advantage of some economies of scale and handle these matters on a joint basis. I believe the first order of action is address the Cities' customer s ' service concerns m the manner which I believe we all agreed to at the August 13 1997 meeting. g � g Thereafter, I would like to move forward quickly on the franchise renewal matters and arrange g to conduct afollow- up meeting on renewal in the very near future. Please provide me with copies of all correspondence directed to the Cities ' p Clues regarding these matters so that my files may be updated. If you have an questions regarding these i Y q ., g g sues .please feel free to contact me. Very truly yours, MOSS & BARNETT, ti )?rotessional Association Brian T. Grogan BTG /slo 129669/251X01 !.DOC cc: Mr. Don Ashworth Mr. Ed Shukle Mr. Bruce Eisenhauer Mr. Dave Frischmon LARKIN, HOFFMAN, DALY & LINDGREN, LTD. ATTORNEYS AT LAW Jane E. Bremer DIR. DIAL (612) 896 -3297 E -MAIL jbremer @Ihdi.com September 5, 1997 HAND DELIVERED Brian Grogan, Esq. Moss & Barnett 4800 Norwest Center 90 South Seventh Street Minneapolis, MN 55402 -4129 Mr. Bruce Eisenhauer Waconia City Administrator 109 South Elm Street Waconia, MN 55387 Mr. David Frischmon Wayzata Finance Director 600 E. Rice Street Wayzata, MN 55391 Mr. Don Ashworth Chanhassen City Manager 690 Coulter Drive Chanhassen, MN 55317 Mr. Edward J. Shukle, Jr. Mound City Manager 5341 Maywood Road Mound, MN 55364 RE: August 15, 1997 Memo & September 3, 1997 Letter from Brian Grogan, Esq. Gentlemen: Thank you for the opportunity to respond to the issues you and your cities have raised. We apologize that the response took longer than expected; many of the items required research and technical testing to properly respond. The response to your memo and letter is as follows: 1. The Triax phone system continues to be updated; more specifically, additional phone lines have been installed and the software package has been upgraded. This will allow Triax to produce more descriptive and statistical reports. Triax has hired six new customer service representatives and also has scheduled the conversion of its long distance service for the first week in October. This will significantly improve response time and reduce hold time and busy signals for customers. 1500 NORWEST FINANCIAL CENTER 7900 XERXES AVENUE SOUTH BLOOMINGTON, MINNESOTA 55431 -1194 TELEPHONE (612) 835 -3800 FAX (612) 896 -3333 2. The Gopher State contact person is Jody Spies, and she is located in the Waseca Regional office (507 - 835 - 5975). Ms. Spies, or someone from her department, is attending preconstruction meetings and working with developers to use joint trenches. LARKIN, HOFFMAN, DALY & LINDGREN, LTD. September 5, 1997 Page 2 report from Triax for the City 3. Attached is an incident p y of Chanhassen which shows outages in the two period eriod from June 2, 1997 to August 4, 1997. Only 3 of the 17 outages were due to failures in Triax -owned equipment. These failures are due to normal wear and tear. As per our renewal proposal, which includes a fiber optic rebuild, the resulting fiber optic system will include less electronic equipment, and therefore less equipment to fail. 4. Lotus Lake Development, Chanhassen. We have determined that the service problems associated with the upper going er 25 channels oin out was caused by an intermittent fiber laser transmitter failure. This equipment g ment was replaced on August 27, 19970 It is our understanding that this problem is now cured. • development is scheduled for completion 5. Pelican Point - Mound. This develop on September 15, 1997. p 6. Burying Drops. Going orward, the procedure for burying drops will be as follows: any time a g p needs to replace a drop, a s technician or installer nee p p� ecial work order will be scheduled which will be p completed with y . in ten days. Going ack, Paul Pecora has requested that the field supervisors create a g list of unburied lines. A At this point, Triax has hired additional contractors to assure these drops will be buried before the winter freeze. 7. Customer Credits. Triax has given a total of 185 service credits during the last 90 days to customers in Chanhassen. In Waconia 23 customers received credits; in Mound, 59 customers; and in Wayzata, 1,120 customers. 8. The Northeast portion of Chanhassen- outages were caused by road projects (cable cuts) and the problem with the fibre transmitter, which was replaced on August 27 (see point #4). s a list of new subdivisions 9. Attached i ' ions within Waconia which Triax has recently served or is scheduled to serve. 10. The most t current financial statements are attached for your review. • Direct dial numbers for the management staff are 11. The company directory will be soon forthcoming. being implemented, and nd a directory will be g iven to you within the next 30 days. In the meantime, either Paul Pecora or I can be contacted for any issues. • • ' modulator, 12. In Waconia, our technicians checked the line, the , and the character generator to diagnose the .Channel 8 p quality picture ualit p roblem. The AB switch was found to be the problem and was replaced last week. It is our understanding that this issue is resolved. 13. For Wayzata, the serviceability information is as follows: C y it Council Chambers — 600 Rice Street Already Installed W ayzata Country zata Countr Club — 200 Wayzata Boulevard Already Installed Wayzata Community Church —125 Wayzata Boulevard Already Installed y y Redeemer Church —115 Wayzata Boulevard Already Installed Fire Station — 600 Rice Street Already Installed .0 LARKIN, HOFFMAN, DALY & LINDGREN, LTD. September 5, 1997 Page 3 St. Bart's — 630 Wayzata Boulevard Unitarian Church — 605 Rice Street Wayzata Bay Center Wayzata Depot Serviceable, Normal Installation Charge ($45.00) Serviceable, Normal Installation Charge ($45.00) Serviceable, Normal Installation Charge ($45.00) Cost of Installation Listed Below: Two (2).500 Pin Connectors $20.80 One (1) Two -Way Tap 24.68 250 feet of Feeder Cable 155.00 *250 feet of Directional Bore 3,010.00 Engineering Cost 62.50 Installation of Drop 45.00 TOTAL: $3 *Total cost could be $1,490 more depending on final bid price of directional bore. Bid price is affected by factors such as the time of year work is performed. An overall action plan has been implemented for all the affected cities to address and hopefully avoid future service - related issues. We are printing all pending trouble call reports by street address and addressing them by area. We are also doing a combination RF balance of the entire system. This system balancing will be complete within two weeks of this letter. We are also reviewing all temporary lines and completely replacing any of the previous cut cable. We are scheduling trunk repairs from 5:00 to 7:30 a.m. in order to avoid complaints by customers. In the construction area, we have one person assigned to coordinate the management of these projects. He is currently making contact with appropriate city, county and state planning commission personnel, and. reviewing Triax's proposed activity with each city to insure that all current and future plan developments and road construction projects are complete. We hope this letter addresses the concerns you outlined in Mr. Brian Grogan's letter. If you have any further comments or we can provide additional assistance, please don't hesitate to contact me. Sincerely, /ane E. Bremer, for LARKIN, HOFFMAN, DALY & LINDGREN, Ltd. Enclosures cc: Ric Hanson (via facsimile) Paul Pecora (via facsimile) 0328405.01 Triax Cabeevision outa Summar Chanhassen, MN _ _ - -- - - - _T_ Problem __ - -- I ate L ocation D Blown Amplifier Fuse _ _ . -___ C3/02/97 Powers Blvd __ ____� _ Ut Cable ad Construction C rew _ 0"-/06/97 !Market Blvd ut Cable - Ro 6/0-1797 1 Market Blvd cut Cable - Road Construction Crew NSP Working of Electical Power .6/09/97 powers Blvd Cable - Road Construc tion Crew 6/12/97 Market Blvd - -- - - -- ...- - - -- Blown Power Su Mill Street �: �.6/23/97 Electrical Power Out;9!qe 6123197 ►Will Street __ . Cut Cable - Road Construction Crew Market Blvd n I of Electical Power _ -__.. 7/02197 Powers Blvd INSP W orki-- c Problem -- Resolved when Repair Crews Arrived 47/14/97 (Unknown Pr Circuit Breaker on Power SUPI� 1-1 r, 10-7 IPriworrz Rlvd 7/17/97 j Unknown 7/18/9-1" Lake Drive--- 1121197" i Market Blvd 7/24197 Market Blvd 71:30197 iMarket Blvd ;White Dove Circle ,8/04/97 Problem Resolved when Repair Crews ArOved Electical Power Failure Cut Cable - Road Construction Crew �Cut Cable - Road Construction Crew C ,Cut Cable - Road Cpnstruet rew I railed Line Extender Amplifier y � 1 r Jane Bremer ,4 Paul Pecora I' RO M THE DESK O F .. . Date- PAUL PFCCIP -k S - tAb ject: RE C. TC MAN AO: F-R TWAY CAB LEVI 7K-)N 1304 ?ITD ST. S.E.. [' _C - )_ BOX' 110 W. MCI .56093 r 5Q i j 8'35 -5Q; 5 'I Jane Bremer From Paul Pecora Date- September -1 1997 S - tAb ject: Waco ria Extensions -3 el ow is a list o ft extensi we have complete or are p en dinu for the City of Wa.coir a- Compl V tiillowbrooke ?�flars1i 'ew He ight s Penning (undez• review) I'li casan t Ridge I'll Hunters Crossing Green Meador Bent Creek Cleamrater Mills Addi ARTHUR ANDERSEN.LLP TRIAX MIDWEST ASSOCIATES, L.P. FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1995 TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ARTHUR ANDERSEN LLP REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Triax Midwest Associates, L.P.: We have audited the accompanying balance sheets of TRIAX MIDWEST ASSOCIATES, L.P. (a {Missouri limited partnership) as of December 31,1996 and 1995, and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tdax Midwest Associates, L.P. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. 6 4 1� &/D Denver, Colorado, March 12, 1997 TRIAX MIDWEST ASSOCIATES L.P. BALANCE SHEETS — AS OF DECEMBER 31 1996 AND 1995 (in Thousands) ASSETS 1996 1995 $ 7 $ 1 CASH RECEIVABLES, net of allowance of 1,320 1 060 $358 and $112 in 1 996 and 1995 re s p ectively -- OTHER RECEIVABLES 505 --- P� PROPERTY, PLANT AND EQUIPMENT, net 93,314 36203 PURCHASED INTANGIBLES, net 140,017 35,283 DEFERRED COSTS, net 6 410 -- OTHER ASSETS 1.670 972 $ 251,3$$ $ 5 08 LIABILITIES AND PARTNERS' DEFICIT ACCRUED INTEREST EXPENSE $ 4,745 $ 3,652 ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES 10 3 SUBSCRIBER PREPAYMENTS AND DEPOSITS 615 330 PAYABLES TO AFFILIATES 246 277 269,613 150,628 DEBT 285,633 158,633 - - PARTNERS DEFICIT X34 265 83 549 $ 251 . 30 $ The accompanying notes to financial statements are an integral part of these balance sheets. J TRIAX MIDWEST ASSOCIATES, L.P. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (In Thousands) REVENUES OPERATING EXPENSES: Programming Operating, selling, general and administrative Operating income OTHER EXPENSES: Management fees Depreciation and amortization Interest Other NET LOSS 1996 1995 $ 60,531 $ _44,371 13,378 9 16_ 394 11_ 29,772 21,005 30,759 23,366 2 2218 26 18 17 14,721 65 --- $ $ 5 The accompanying notes to financial statements are an integral part of these statements. TRIAX MIDWEST ASSOCIATES, L.P. STATEMENTS OF PARTNERS' DEFICIT FOR THE YEARS ENDED DECEMBER 31,1996 AND 1995 (In Thousands) Pre Recapitalization Limited Partners (Note 1) __ --- -_. r-------------- ---- -- --------------- -r Post Recapitalization Non- Managing Managing Special Cavalier Limited General Partner General Partner Limited Partner , Cable. L.P. All Others Partners Mote 1) Total (Effective August 30, 1996) (Effective August 30, 1996) BALANCES December 31 1994 $(17,628) - -- $(1,322) $(17,014) $(35,335) - -- $(71 Net Loss 122) --- _._____: J3,9 42) (8,186) - -- (1 2,250 ) BALANCES, December 31, 1995 (17,750) --- (1 (20,956) (43 --- (83,549) Net Loss for the eight month period --- --- (9,022) ended August 30, 1996 9 022) - -- - -- - -- 30 1996 Unaudited BALANCES, August . ( ) 26,772 ( ) --- (1 (20 (43 --- (92 Cash redemption of partnership interests p p --- --- (6 (12,071) (19,500) --- (38,251) Allocation of partners- capital --- 8 33 63 (104 in connection with recapitalization 1 --- -- 50 51,350 Cash contributions --- --- Issuance of limited partnership units in connection with acquisition of -..- --- 59 59,765 cable properties Cash distributions to DD Cable Partners --- --- _-- _� --- - -- - -- --- (4 (4 Syndication costs (839) (1 (2 Net Loss for the four month period --- --- (7,754) ending December 31, 1996 (7,754) - - -- - -- BALANCES December 31 1996 $ --- --- $ --- --- $ $ ) The accompanying notes to financial statements are an integral part of these statements. TRIAX MIDWEST ASSOCIATES, L.P. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,1996 AND 1995 (In Thousands) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: (268,477) (4 Net loss $(16 $(12 Adjustments to reconcile net loss to net cash (38 — flows from operating activities - (4 Depreciation and amortization 26,862 18,677 Revision of CPO amount -- (690) Accretion of interest on preferred stock obligation 90 135 Decrease (increase) in receivables 1 (296) Increase in other assets (7) (840) Increase in accrued interest expense 181 2 Increase (decrease) in accounts payable and 6 541 other accrued expenses 4 (564) Decrease in subscriber prepayments and deposits (2,684) (4) Write -off of loan costs 174 — (Decrease) increase in payabies to affiliates 31 134 Net cash flows from operating activities 14,237 6,652 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (10 (4 Cash paid for franchise costs (582) (5) Cash paid for organizational costs (823) Net cash flows from investing activities (11,680) (4,803 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt 275,000 4 Repayment of debt (268,477) (4 Contributions from partners 51,350 — Cash redemptions of partnership interests (38 — Cash distributions to DD Cable Partners (4 Cash paid for loan costs (5 (541) Repayment of preferred stock obligations (2 — Payments on capital leases (314) (202) Cash paid for syndication costs (2 — Other --- 65 Net cash flows from financing activities 4,061 (1,308 NET INCREASE IN CASH 6 541 CASH, beginning of year 1,156 615 CASH, end of year $ $ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ 12.926 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Acquisitions with capital leases $ 391 $ 309 Acquisitions of cable properties through issuance of limited partnership interests - see Note 3 The accompanying notes to financial statements are an integral part of these statements. TRIAX MIDWEST ASSOCIATES t L.P. NOTES TO 1=iNANCIAL STATEMENTS DECEMBER 31 1996 AND 1995 (7) THE PARTNERSHIP Organization and Capitalization Triax Midwest Associates, L.P. (the "Partnership") is a Missouri limited partnership formed for the purpose of acquiring, constructing an operating d o eratin cable television properties, iocated primarily in Illinois, Iowa and Minnesota. The Partne rshi p was capitalized and commenced operations on June 1, 1988. The genera! partner ("Triax Cable GP"), a Missouri limited partnership. The general partner is Triax Cable Genera! Partner, L.P. � dia of Triax. Communications of Triax Cable GP is Triax Associates IV, Inc. ("Triax IV"}, a wholly owned subsidiary issued 80 limited partnership units were in connection with the formation of the Corporation ("TCC"). Atotal of P P a limited partnership in which Triax Partnership, including 10 units purchased by Triax investors Midwest, L.P., p IV is a general partner. On June 1,1988, iimited partners con , tributed $29 000,000 cash to the Partnership for 58 limited partnership units, an additiona122 I p P ' ' imited artnershi units and a special limited partnership interest (given a stipulated value of $3,500,000 9 were exchan ed for the net assets of Illinois Triax Associates IV, G.P. ("Illinois IV" . Predecessor Partnership � a In December 1986 and earty 1987 certain uisitions of cable properties by subsidiaries of TCC were funded � Tria b y debt and $11,000,000 of capital provided by PK Triax Invest ors (' 'PK x").The net assets from these o ' ' all contributed to Illinois IV prior to June 1,1988. PK Triax had a 75 /° interest in Illinois as acquisitions were • bsidiaries of TCC had a 25% interest as general partners. PK Triax exchanged its sole limited partner and su • limited artnershi units in the Partne its interest m Illinois N for 22 P P rship and ceased to be a partner in Illinois IV. Illinois iV became a general partnership wholly owned by TCC subsidiaries and received a special. limited Partnership Interest in the Partnership (see below ). • liabilities transferred from Illinois IV at their historical cost basis to The Partnership recorded the assets and ble rties from the _ Illinois IV and the TCC subsidiaries. In so doing, losses from operations of these ca e dates of acquisition to Ju p ro p • ne 1 1988 , were allocated 25% to the special - limited partner and 75 /o to PK Tnax. PK Trims interest in the Partnership was transferred to Cavalier Cable, L.P., during 1989. fn connection with the Partnership p Reca italization discussed below, Cavalier Cable, L.P.'s interest was redeemed. General Partner Contribution and Investment in Preferred Stock On June 1, 1988, Tnax N p urchased all the stock of Vantage Cable, Inc. ("Vantage') for approximately • s of Vanta a totalin $23,649,000. Va $12,634,000, assuming liabi[itie g g ntage was then liquidated into Triax IV on a tax deferred basis. Triax IV then contri to Triax Cable GP, which concurrently contributed them to th a buted the net assets acquired d - 2 Partnershi for its general partner interest. To fund the acquisition, Triax IV issue P hi for a roximately $12,634 preferred stock to the Partners p pp ,000. The Partnership's investment in the Triax , n offset a ainst Tnax Cable GPs capital contribution. In connection with the IV preferred stock has bee 9 Partnership Recapitalization discussed below, the preferred stock issu ed b y Triax tv was deemed worthless and was canceled. • - stimated to be a roximately $5,000,000. Upon sale of these The built -in gain of tfie Vantage assets has been a pp 'ax i based on the ets taxable ain will be s ecially allocated to Triax Cable GP (and from there to Tn V) ass 9 P difference between the cost and tax basis of the assets at June 1 , 1988. Page 2 of 10 Partnership Recapitalization On August 30,1996 (the "Contribution Date', the Partnership completed a recapitalization of the Partnership in which new credit facilities were put in place (Note 4), additional partnership interests were issued and selected partnership interests were redeemed. Under the terms of a partnership amendment and other related documents, the Partnership received approximately $50.3 million in cash from new limited partners in exchange for limited partnership interests ( "New Cash Partners'. Approximately $38.3 million in cash was then utilized to redeem the special limited partnership interest and certain other existing limited partnership interests. For financial reporting purposes, this portion of the Partnership Recapitalization was accounted for as an equity transaction with no effect on the carving value of the Partnership's assets. However, for tax purposes, even though the New Cash Partners will acquiesce to the redeemed limited partners' tax basis capital accounts, (approximately $55 million in deficit capital accounts), they will be entitled to additional outside tax basis reflecting the amount invested. In addition, the Partnership purchased certain net assets of DD Cable Partners, L.P. and DD Cable Holdings, Inc. ( "DD Cable's (Note 3) through the net issuance of approximately $55.6 million in limited partnership interests. For financial reporting purposes, the acquisition was accounted for under the purchase method of accounting at fair market value. For tax purposes, the basis in the acquired net assets was recorded at DD Cable's historical tax basis. This results in a built-in gain on these assets based on the difference between the fair market value and tax basis of the assets at August 30, 1996. in connection with the Partnership Recapitalization, the general partnership interest of Triax Cable GP was converted to a non - managing general partnership interest. Triax Cable GP then contributed an additional $1.1 million to maintain its approximate 1 % proportionate interest in the Partnership. Triax Midwest General Partner, L.P. ( "Midwest GP" or "the Managing General Partner"} was appointed the managing general partner. The general partner of Midwest GP is Triax Midwest, L.L.C., a wholly -owned subsidiary of Triax Telecommunications Company, L.L.C. (j`TTC' . Midwest GP made no partnership equity contributions to the Partnership and received a residual interest in the Partnership, as discussed below under "Allocations of Profits, Losses, Distributions and Credits Subsequent to Partnership Recapitalization ". The Partnership Agreement, as amended, provides that on the fifth anniversary of the Contribution Agreement each limited partner has the option to sell its interest to the Partnership for fair market value at the time of the sale. The fair market value is to be determined by appraised value approved by a majority vote of the Advisory Committee. Allocation of Profits, Losses, Distributions and Credits Prior to Partnership Recapitalization The Special interest Illinois IV, as special limited partner, was entitled to priority cash distributions equal to amounts which its partners must pay to their preferred shareholders to redeem their preferred stock, to pay dividends thereon, and to redeem warrants related to their preferred stock, plus income taxes payable by the Illinois IV partners with respect to receipt of such priority distributions (Note 4). The Series B preferred stock and warrants were redeemed on December 27, 1990, for $2,000,000 and $978,707, respectively. Upon the recapitalization of the Partnership, the Series A preferred stock was redeemed for $1,500,000 plus cumulative dividends of $1,260,000 through August 30, 1996. in addition, the partnership made total priority distributions relating to both the Series A and Series B preferred stock of approximately $6,680,000. These distributions redeemed the special limited partner, in accordance with the Partnership Agreement, related to the income taxes payable on the built -in gains of certain assets acquired by subsidiaries of TCC and ultimately contributed to Illinois IV. Page 3of10 Distributions In connection with the Partnership Recapitalization, following satisfaction of the priority distributions to the special limited partner of approximately $6,680,000 and the redemption of preferred stock obligations totaling Pe P $2,760,000 cash distributions were made to the redeeming limited partners totaling approximately $31,571,000. In connection with the aforementioned distributions and redemptions, approximately $4,100,000 is being held in escrow b an outside a for final disbursement after post - closing adjustments have been finalized. As of i y party 000 of post-closing adjustments has been recognized December 31, 1996, appr oximatel y $ 386 P zed as other receivables and as reductions in cash redemptions to partnership interests in the accompanying balance sheets _ and statements of p artners' defick respectively. Management believes these amounts will be recoverable from the escrow, as the amounts relate to expenses incurred before the Partnership Recapitalization. Losses from Operations The Partnership will allocate its losses, other than fosses from capital transactions, 99 % to the limited partners according to their proportionate interests and 1 % to the general partner, except losses will not be allocated to any limited partner which would cause the limited partners' capital account to become negative by an amount greater than the limited partners' share of the Partnership's "minimum gain (that is, the excess of the Partnership's nonrecourse debt over its adjusted basis in the assets encumbered by the nonrecourse debt) and any amount the limited partner is obligated to contribute to the Partnership (subject to certain limitations). Profits and Gains Generally, the Partnership will allocate its profits and gains 99% to the limited partners and 1 % to the general partner until profits allocated to limited partners equal losses previously allocated to them. A special allocation of q ain equal to the difference between the fair value and tax basis of contributed property will be made, with g respect to partners contributing property to the Partnership, upon the sale of the contributed Partnership assets. ' Remaining profits will be allocated 1 00% to the general partner until its allocation is equal to losses previously allocated to it; and then 25% to the general partner and 75% to the limited partners. Allo cation of Profits Losses Distributions and Credits Subsequent to Partnershi Reca italizabon Distributions Cash distributions are to be made to both the limited partners and Triax Cable GP equal to their adjusted capital contributions, then to the limited partners and Triax Cable GP in an amount sufficient to yield a return of 13% per annum, compounded annually (the "Priority Return}, then varying rates of distribution to the Managing General P artner ( 17% to 19% and to the limited partners - and Triax Cable GP (83% to 81 %) based on internal ) rates of return earned by the limited partners, as set forth in the Amended .and Restated Partnership Agreement, on their adjusted capital contributions, and then 20% to the Managing General Partner and 80% to the limited partners and Triax Cable GP. Losses from Operations ate its losses to the limited partners and Triax Cable GP according to their The Partnership will allocate P proportionate interests in the book value of the partnerships, except losses will not be allocated to any limited partner which would cause the limited partner's capital account to become negative by an amount greater than an amount which the limited partners are obligated to contribute to the Partnership. Page 4 of 10 Profits and Gains Generally, the Partnership will allocate its profits according to the limited partners' and Triax Cable GP's proportionate interests in the book value of the Partnership until profs allocated to limited partners equal losses previously allocated to them. A special allocation of gain equal to the difference between the fair value and tax basis of contributed property will be made, with respect to partners contributing property to the Partnership, upon the sale of the contributed Partnership assets. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition Revenues are recognized in the period the related services are provided to the subscribers. Income Taxes No provision- has been made for federal, state or local income taxes because they are the responsibility of the individual partners. The principal difference between tax and financial reporting results from different depreciable tax basis in various assets acquired (Note 1). Property. Plant and Equipment Property, plant and equipment are stated at cost. Replacements, renewals and improvements are capitalized and costs for repairs and maintenance are charged directly to expense when incurred. The Partnership capitalizes a portion of technician and installer salaries to property, plant and equipment, which amounted to approximately $1,134,000 in 1996 and $598,000 in 1995. Depreciation and amortization are computed using the straight -line method over the following estimated useful lives (amounts in thousands): 1996 Property, plant and equipment $167,025 Less- Accumulated depreciation 3 711 $��14 1995 $97,682 Predominancy 10 years (61,479) $ 36.203 Life Purchased Intangibles Purchased intangibles are being amortized using the straight -line method over the following estimated useful lives (amounts in thousands): 1996 1995 Life Franchises $199,471 Noncompete 30 Goodwill 12,804 212,305 Less- Accumulated amortization (72,288 $ 40 1 $81,297 7 -11.5 years 30 3 years 12.804_ 20 years 94,131 ( 58,848 ) $ 35.283 Page 5of10 New Accounting Standard • Accounting Standards Board C FASB") issued Statement of Financial Accounting Dunng 1995, the Financial A 9 sets and for Long-Lived Assets To Be Standards No. 121, Accounting for the Impairment of Long-Lived A • 9 • • SFAS 121 requires that long -lived assets and certain identifiable intangibles to be Disposed Of' CSFAS 121'x. � . held and used by an entity • be reviewed for impairment whenever events or changes in circumstances indicate Y that the carrying amount of an asset may not be recoverable. SFAS 121 was adopted by the Company during 1996 with no impact on the financial statements. Deferred Costs Deferred costs are being .amortized using th e straight-line method over the following estimated useful lives g (amounts in thousands): 1996 1995 Life an costs $5,683 $ 572 2 -7 years Deferred to 823 74 5 -10 years Organizational costs 500 --- 5 years Other --� 7 646 Less Accumulated amortization 238 236 _ . $5J68 $_ During 1996 and 19 95 the Partnership wrote -off approximately $711,000 and $2,301,000, respectively, o • deferred debt issuance costs. Reclassifications �-= Certain reclassifications have been made to the 1995 financial statements to conform to the 1996 presentation. (3) ACQUISITIONS purchased certain cable television. system assets, located in Illinois, On August 30,1996, the Partnership Minnesota Vlfisconsin and Iowa, from DD Cable, including the assumption of certain liabilities of the acquired business. The acquisition was financed b y issuing net limited partnership interests valued at approximately $55.6 million. In addition, the Partnership utilized a portion of a newly e xecuted $375 million credit facility (Note 4 ) to repay approximately $116 million of existing indebtedness of DD Cable. The purchase puce was allocated to the acquired assets and liabilities as follows (amounts in thousands): Current assets $ 3 Property, a plant and equipment 59,786 Franchise costs 117007 - Subtotal 180,312 Less - current liabilities assumed (4,579 175,733 Less - cash distributed for: Payment of existing DD Cable debt (115,968) Cash distributions to DD Cable 4 200 Total partnership interest issued 55 56 The partnership interests issued to DD Cable are subject to adjustment based upon certain post- closing adjustments, which have not yet been finalized. Page 6 of 10 The Partnership has reported the operating results of DD Cable from the date of the acquisition. The following table shows the unaudited pro forma results of operations as if the Partnership had acquired DD Cable as of January 1,1995: (A) Unaudited results during the period from January 1, 1996 through August 30, 1996. For the Year Ended December 31, 1996 Pro Forma Unaudited Actual DD Cable (A) Adjustments Pro Forma Results REVENUES 60 531 $26,842 --- $87,373 Programming 13,378 5 - 18,801 Operating, selling, general and administrative 16_ 394 8112 - 24,506 29,772 13,535 - 43,307 Operating Income 30,759 13,307 - 44,066 Management Fees 2 1 (377) 3 Depreciation and Amortization 26 17,738 (1 42,636 Interest 17,941 7 (1 23,698 Other 65 - - 65 Net Loss $ 6 6 $ ) $ - 4,24E 5 (A) Unaudited results during the period from January 1, 1996 through August 30, 1996. (B) Derived from audited financial statements for the year ended December 31, 1995. For the Year Ended December 31, 1995 w�r Pro Forma rr.rr Unaudited Actual DD Cable Adjustments Pro Forma Results REVENUES $44,371 $38.426 --- $82,797 Programming 9,528 7 - 16,824 Operating, selling, general and administrative 11 11,700 - 23,177 21,_005_ 18,996 - 40,001 Operating Income 23,366 19 - 42,796 Management Fees 2 1 (599) 3 Depreciation and Amortization 18,677 30 (7,680) 41,508 Interest 14,721 12,156 (3 23,697 Other 26 - 26 Net Loss $(12.250) $ 11,459 5 (B) Derived from audited financial statements for the year ended December 31, 1995. Page 7 of 10 (4) D_ Debt consists of the following at December 31,1996 and December 31, 1995 (amounts in thousands): 1996 1995 Bank Revolving credit loan, due June 30, 2004, interest payable at rates based on vary interest rate options $ 29,000 $ — Term A loan, due June 30, 2004, interest payable _ at rates based on varying interest rate options 180,000 -- Term B loan, due June 30, 2005, interest payable at rates based on varying interest rate options 35,000 — Term C loan, due June 30, 2005, interest payable at 9.73% 25,000 -- Bank Revolving credit and term loan, paid in full on August 30,1996 — 63 Series C Senior Secured.Notes, paid in full on August 30, 1996 -- 40,000 Senior Subordinated Notes, paid in full on August 30, 1996 — 44,422 Various equipment loans and vehicle eases 613 536 leases 269,613 147,958 Preferred stock obligations, paid in full on August 30, 1996 (Note 1) 2 Au ,670 9 In connection with p p h the Partnership Recapitalization discussed in Note 1, the Partnership entered into a new $3 �Y 75 million credit facility with a group of lenders, consisting of a Revolving Credit Loan, Term A, Term B and Term C loans. The Revolving Credit Loan has a maximum availability of $135,000,000. R commitment fee of 3/8% per annum is charged dal unused portion of the available commitment. The Revolving Credit rg on the IY Loan and each of the Term A, B and C Loans are collateralized by all of the property, plant and equipment of the Partnership, as well as the rights under all present and future permits, licenses and franchises. LIBOR interest rate agreement with the lenders related to the Revolving Credit The Partnership entered into a L g Loan and the Term A and Term B Loans. The Partnership fixed the interest rate at 8.22% for the Revolving Credit Loan and the Term A Loan, and 8.34% for the Term B Loan for the period from October 7, 1996 through January 7 , 1997. In addition, the Partnership has entered into various interest rate swap transactions covering $90 million in notional amount as of December 31, 1996, which fixes the weighted average three -month rate at 5.76 %. The Term A Loan requires a principal payment to be made quarterly, beginning in September 1998. The uarterl payments begin at $1,125,000 per quarter and 'increase each September 30th thereafter. q Y P Ym The Term 8 and Term q quarterly C Loans require total uarterl principal payments of $125,000 for the quarters ending September 1998 and December 1998. Quarterly principal payments totaling $62,500 are then required through -� December 31 2003 at which time the quarterly payments increase to $2,250,000 through December 31, 2004, and $24,750,000 at March 31, 2005. The Loans are due in full on June 30, 2005. The loan agreements contain various covenant s , the most restrictive of which relate to maintenance of certain debt coverage ratios, meeting cash flow goals and limitations on indebtedness. Page 8of10 Debt maturities required on all debt as of December 31, 1996 are as follows (amounts in thousands): Year Amount $ 192 1998 2,675 1999 12,998 2000 25,548 2001 32,200 Thereafter 196.000 In connection with the issuance of the Senior Subordinated Notes, the Partnership agreed to a Contingent Payment Obligation ("CPO') representing 10% (11 % after June 1, 1994) of the net fair market value of the Partnership, as defined. When the Partnership was restructured (Note 1), and the Senior Subordinated Notes were paid in full in August 1996, the CPO amount was determined to be zero. The Partnership assumed various preferred stock redemption obligations from Illinois IV associated with preferred stock of the Illinois IV partners (Note 1). The preferred stock was held by the sellers of the related cable properties and was issued to them in connection with such sales. The Partnership assumed all obligations with respect to the preferred stock and it was therefore accounted for as debt. The obligations consisted of Series A and Series B preferred stock. The Series A preferred stock, which provided for cumulative dividends of 8% through 1989 and 9% thereafter, had a redemption price of $1,500,000 plus accrued dividends of $1,170,000 at December 31,1995 and $1,500,000 plus accrued dividends of $1260,000 at August 30, 1996. The accrued dividends for each period are reflected as interest expense in the accompanying statements of operations. The Series A preferred stock was redeemed on August 30, 1996 at its redemption value of $2,760,000. The Series B preferred stock was redeemed on December 27, 1990 at its redemption price of $2,000,000. In addition, the shareholders of the Series B preferred stock held warrants to acquire, for a nominal amount, a portion of the limited partnership interests in the Partnership held by PK Triax and Triax investors, L.P. These warrants were also redeemed December 27, 1990 at their redemption price of $978,707. (5) RELATED PARTY TRANSACTIONS During 1995 and the eight month period ending August 30, 1996, TCC provided management services to the Partnership for a fee equal to 5% of gross revenues, as defined. Charges for such management services amounted to approximately $2,219,000 in 1995 and $1,567,000 in 1996. TCC also allocates certain overhead expenses to the Partnership which primarily relate to employment costs. These overhead expenses amounted to approximately $544,000 in 1995 and $371,000 in 1996. Commencing August 30, 1996, the Partnership entered into an agreement with TTC to provide management services to the Partnership for a fee equal to 4% of gross revenues, as defined. The agreement also states the Partnership will only be required to pay currently a maximum fixed monthly payment of $275,000 relating to these fees. The fixed monthly payment can be adjusted for any acquisitions or dispositions by the Partnership at a rate of $.8333 per acquired /disposed subscriber. The remainder of the management fees earned but unpaid W11 be distributable to TTC only after Triax Cable GP and the limited partners have earned a 7.5% Priority Return, as defined. Charges for such management services provided by TTC amounted to approximately $1,100,000 for 1996. Page 9of10 During 1995 and the eight month Pe g riod ending August 30,1996, the Partnership purchased programming from TCC at rates which would be available to the Partnership if purchased directly from the program supplier. Commencing 9 � ncin August 30 1996, the Partnership entered into a programming agreement with InterMedia Capital _ Management 11, L.P. ("InterMedia"), an affiliate of DD Cable, to p urchase P rogramming at lnterMedia s cost, �-- which inc ludes volume discounts InterMedia, might earn. Included in this agreement is a provision that requires the Partnership nershi to remit to InterMedia an administrative fee, based on a calculation stipulated in the programm in g agreement a which amounted to approximately $426,000, during the four months ended --; December 31, 1996. (6) LEASES The Partnership leases office facilities, headend sites and other equipment under noncancelable operating agreements, some of which contain renewal options. Total rent expense, including montfiA lease agr , month rental arrangements, as approximately ements $364,000 in 1996 and $206,000 in 1995. Pole attachment fees totaled approximately $496,000 in 1996 and $348,000 in 1995. T • • under noncancelable Future minimum rental commitments operating lease subsequent to December 31,1996 P are as follows (amounts in thousands): Year Amount 1997 $406 1998 297 1999 211 2000 140 2001 98 Thereafter 363 (7) FAIR VALUE OF FINANCIAL INSTRUMENTS cash equivalents • The carrying amounts of cash and ca q fair value because of the nature of the investments and the length of maturity of the investments. r The estimated fair value of f the Partnership's debt instruments are based on borrowing rates that would be tiall e quivalent to e)astin rates, therefore, there is no material difference in the fair market value and substantially eq 9 the current value. (8) REGULATORY MATTERS greatly expanded In October 1992, Congress enacted the Cable Television Consumer and Competition Act of 1992 (the "1992 Cable Act"} which read a anded federal and local regulation of the cable television industry. In April 1993, the Federal Communications Commission ("FCC') adopted comprehensive regulations, effective September 1 1993 governing rates charged to subscribers for basic cable and cable programming services (other than g 9 9 programming rammin offered on a per-channel or per- program basis). The FCC implemented regulation which allowed cable operators to justify regulated rates in excess of the FCC benchmarks through cost of service showings at both the franchising authority level for basic service P P � and to the FCC in response to complaints on rates for cable programming services. Page 10 of 10 On February 22, 1994, the FCC issued further regulations which modified the FCC's previous benchmark approach, adopted interim rules to govern cost of service proceedings initiated by cable operators, and lifted the stay of rate regulations for small cable systems, which were defined as all systems serving 1,000 or fewer subscribers. On November 10, 1994, the FCC adopted "going forward" rules that provided cable operators with the ability to offer new product tiers priced as operators elect, provided certain limited conditions are met, permit cable operators to add new channels at reasonable prices to existing cable programming service tiers, and created an additional option pursuant to which small cable operators may add channels to cable programming service tiers. In May 1995, the FCC adopted small company rules that provided small systems regulatory relief by implementing an abbreviated cost of service rate calculation method. Using this methodology, for small systems seeking to establish rates no higher than $124 per channel, the rates are deemed to be reasonable. In February 1996, the Telecommunications Act of 1996 was enacted which, among other things, deregulated cable rates for small systems on their programming tiers. To date, the FCC's regulations have not had a' material adverse effect on the Partnership due to the lack of significant certifications by the local franchising authorities. (9) REPORTING OF PRE AND POST PARTNERSHIP RECAPITALIZATION RESULTS OF OPERATIONS Eight Months Ended Four Months Ended Year Ended Auqust 30, 1996 December 31, 1996 December 31, 1995 REVENUES $31 $29,059 $ 60,531 Operating Expenses: Programming 7 6 13,378 Operating, selling, general and administrative 88,977_ 7_417 16.394 16 13,697 29,772 Operating Income 15 15 30,759 OTHER EXPENSE: Management fee 1 1 2 Depreciation and amortization 12,745 14 26 Interest 10,042 7 17 Other 65 -- 65 NET LOSS (10) SUBSEQUENT EVENTS During February 1997, the Partnership agreed to acquire certain cable television assets, primarily in Indiana, from Triax Associates I, L.P. ("Triax I' for approximately $52 million in cash, subject to certain working capital adjustments. The Triax I acquisition is expected to close in the second quarter of 1997. During March 1997, the Partnership agreed to acquire certain cable television assets, primarily in Illinois, from an unrelated third party for approximately $20.1 million in cash, subject to certain working capital adjustments This acquisition is expected to close in the second quarter of 1997. .. 1J�? August 28 1997 General Manager Triax Cablevision 2381 Wilshire Blvd. Mount MN 55364 Attention: General Manager This letter is to advise you of our dissatisfaction with the service, or better yet, the lack of service we are receiving from Triax Cablevision. In the past months we have experienced far to many complete, or partial cable interruptions. Just recently we received notification of cable rate increase. The explanation given for this increase was to provide better service to it's subscribers. As one of your subscribers, we feel that the rate increase is completely unjustified as your service has not improved, matter of fact it has declined. In comparison with other cable companies, your cable choices are fewer, your service the poorest and rates the highest. sincerely hope that the Chanhassen city council will take this matter under advisement the next time Triax Cablevision requests rate increases. Regards, Mr. & Mrs. Bill H. Fry 7320 Po ntiac Circle Chanhassen Mn. 55317 Phone 474 - 5688 Copy: Chanhassen City Council