To: Venture Out Residents From: Doug Gale Vice President Subject: TV Contract with ES (Dish) Cable TV Satellite Update September 21, 2007 On September 18, 2007 during a teleconference call meeting of the Condo the following motion was unanimously passed Moved That Venture Out at Mesa, Inc. is authorized to enter into an agreement with Echostar Satellite, L.L.C. The agreement is entitled Exclusive Installation and Video Programming Service Agreement in the form of a draft described as, Venture Out VI. Doc. The board authorizes any one of three people to sign the agreement. President (Ron Luciuk), Vice President (Doug Gale) or General Manager (Mary Schmit). If any further changes are needed to the agreement the above mentioned signers are authorized to do so. The passing of this motion was the culmination of very intensive negotiations and long and hard work by the Communication Committee, General Manager Mary Schmit and the members of the Condo Board. The contract will be signed by President Ron Luciuk then forwarded to ES for their signature. After the long negotiation cycle, we anticipate Echostar will sign the contract without any further changes. Until we receive the signed contract back from Echostar, the agreement is not finalized. This process will take sometime since documents must be sent and returned by Federal Express to Ron Luciuk in Canada Before we get into the highlights of the contract I would like to take the opportunity to express some of my personal thoughts. Why did we decide to go with Echostar? This is an easy question to answer. After sending out several Request for Quote and discussing our situation with several companies Echostar was the only company interested and willing to make the investment. First it is important to step back and look at what we were trying to achieve. We wanted to provide a Bulk Programming Amenity for the park. We were given this direction and authority by a vote of the people. Our goal was to provide a good channel lineup at a low cost. We negotiated a package that did not limit us to the standard packages offered to Echostar s residential customers; instead we were able to choose 48 channels from the standard packages offered by Echostar. Not only were we allowed to choose channels a la carte we negotiated a starting rate of $7.90* per month per unit. I am sure that if you have either a cable or a satellite system you are paying much more per month probably above $35.00 per month. This is a great deal with respect to Bulk Programming. What we were NOT negotiating was Digital Upgrades, High Definition and other packages and products offered by Echostar. The very first contract we received from Echostar it was clearly stated any upgrades to Digital etc. were between each resident and Echostar. It specifically stated that the VO HOA was not involved. We negotiated a Bulk Programming Contract; Digital Upgrades, Etc. are between Individual Residents and Echostar.
We should all step back and understand that having a cable system in the park goes far beyond providing a TV signal. 1. If we do not offer some sort of TV signal inside the park we will be one of the few parks in the valley that has no system. I personally do not know of any other park that does not have a TV system. We are in competition with other parks for new residents and rental residents; not having a TV system will be a negative. We advertise ourselves as a Premier Park; not having a TV system is not very progressive. 2. We have 33 RV Pull thru slots. These Pull Thrus generate approximately $45K of profit per year for V.O. Without the availability of cable, one would expect our Pull Thru business to decrease. We will have to install some other system for the Pull Thrus. The cost of installing and paying for another system will far exceed the $7.90* per slot per month. I am an RVer having owned and traveled extensively in the last 12 years. Most RVers do not have Dishes. I would estimate at least 80% of all commercial RV parks offer some TV system. We have Pull Thru residents who stay for several months. If they do not have their own Dish they are not likely to choose V.O. 3. During our peak season 38% of all units are rentals. Most rentals are hooked up to our cable system. If we no longer offer a cable system, owners of rentals will have to install their own system. Again the cost of installing your own system will far exceed $7.90* per month. 4. In February 2009 the Federal Government has mandated that all US networks will have to broadcast using a Digital format. What that means is that unless you have a TV set capable of receiving a Digital signal you will not be able to utilize your own antenna. Most TVs installed today have an Analog tuner and are not capable of receiving a Digital signal. In most cases if you are relying on your antenna you will have to select one of two options. 1. Purchase a TV with a Digital Tuner. 2. Purchase a Conversion box that will sit on top of your TV. The Federal Government has a plan to assist people with the purchase of a conversion box by providing $40.00 on first come first serve basis. 5. Without the cable we will have many more dishes on units. With the cable there will be no requirement for a satellite dish to receive Digital signals. The Digital signal will be transmitted over the cable system that is available at every unit. Highlights of Contract The contract we have signed is 13 pages long, which includes 2 Exhibits. Once both parties sign the contract copies will be made available to residents. ES will install new equipment and repair the current cable infrastructure as required. The system will be changed from a 400MHZ system to an 850MHZ. increasing the Bandwidth thus allowing more choices over the current cable infrastructure. The Bulk Programming Contract will provide 48 channels for an initial cost of $7.90* per unit per month. (Attachment A is a copy of the channel line up). VO can request changes to the channel line up however the changes must not reduce the cost below this initial rate and Echostar has the right of refusal. We would expect changes in channel selection to occur infrequently perhaps once a year. A simple request from an individual resident will not necessarily trigger a channels selection change.
The $7.90* per month cost is subject to change however the increase in cost cannot exceed the cost Echostar charges their other Multiple Dwelling customers. In other words Yes we would expect cost increases over the life of the contract; however, VO will be treated the same as all other Multiple Dwelling Customer in the USA. Residents will not receive bills for the Bulk Programming. VO will pay the bill monthly and the funds will be budgeted and included as part of your monthly assessments. The term of the contract is for ten years. Yes, this is a long time; however, Echostar would not consider anything less, since their financial models indicated that anything shorter then 10 years would not make sense when they considered their investment. A significant factor within Echostar s financial models is that VO is a Seasonal Park. The Board understood that we had just finished a 15-year contract that left a lot to be desired. Our previous contract was with an extremely small company who had neither the desire nor funds to keep up with technology. Echostar is one of the biggest companies in the US satellite industry. They have both the resources and funds to stay current. They are in a very competitive business. If they do not stay competitive, they are out of business. The contract does not prevent individual residents from installing a satellite system at their residence from another vendor. To prevent residents from installing dishes would be a violation of Federal law. For the length of the contract VO cannot allow another company to install equipment within VO that would compete with Echostar. The contract gives Echostar the right to market both upgrade Digital packages and any other products they sell. Attached to this document is a list of the 48 channels that have been selected for the Bulk Programming Package, provided to all lot owners. The following has been provided by Echostar to communicate to residents what will occur: Proposed Timeline to Provide Service to Residents of Venture Out: Once the agreement has been approved by ES, that will trigger the DISH/EchoStar team to start the deployment of equipment, upgrade of the distribution plant and work to complete the 48 channel bulk lineup. During the first 30 days of the contract the current channels will be kept active. Here are the following timelines: 1. Phase 1 - once contract with ES approved, within 30 days ES will offer local channels at no charge until the entire upgrade is complete and have the equipment in place so that any resident who wants upgraded programming can do so. 2. Phase 2 - once contract with ES approved, in addition to the previous timeframe, this also triggers the 90 day commitment from ES to have the plant upgraded and install and activation of the 48 channel SMATV bulk system. The reason for these two phases is so that we activate all 48 bulk channels to the entire community at the same time.
Please note: In addition to the work being completed in these two phases, there are two other aspects involved in providing service to each resident of the property. The first aspect pertains to service being brought from each outside pedestal to the outside of each unit. The second aspect involves bringing the signal inside from each outlet to each TV. Please keep in mind that ES will be responsible for taking care of each aspect. For the first aspect, that will be considered a non-install type of task and no resident will have to risk being charged for the work. For the second aspect, that will be considered a normal installation type of task and for initial installations, there isn t any charge as the initial installation fee of $49.99 will be waived. If, after an initial installation, a resident calls ES and arranges for the technician to come back out to connect a TV or add a set top box, then for that second trip, there will be an installation charge for $49.99. Marketing and Customer Service Support to Venture Out in Preparation for Launch and Ongoing Support: As part of ES s commitment to Venture Out, they have a dedicated Customer Service Call Center that will answer resident s questions and arrange for all service and installation work orders that need to be arranged for the property. In addition to the call center, ES also assigns a Community Promotions Executive (CPE) to serve as a liaison for the staff and residents of the community should a resident need help with any questions or concerns relating to the VO community. The CPE for VO is Cornelius White. Corn will be available by either phone or e-mail and will also from time to time, travel to the property to conduct sales events, make sure all marketing information is up to date and in-stock and attend any specific functions or Board Meetings he s asked to attend. As ES prepares to launch the service at VO, Corn will provide more specific information relating to the launch of service, the phone number to the Customer Call Center (please note: VO is not yet in the ES system, so they are not in a position to answer any questions from the residents at this time. Their call center for us is separate from their main call center number advertised, yet is fully staffed by ES employees). Corn will also arrange dates and times to be at the property during the launch to answer residents questions and help arrange the switch-over from STS to ES. Once a launch date has been established based on the acceptance of the agreement by ES, Corn will coordinate the marketing plan to launch the property and provide all pertinent information relating to the launch and the call center. At that time he will also make his contact information available so that the residents can contact him, if questions are not answered by the call center. For the staff at VO, please know Corn is also available to support you as well. As part of the launch, Corn will be coordinating a crew of technicians to make the transition from STS to ES as smooth as possible. *The cost of Bulk Cable Channels has changed from $8.35 to $7.90 (updated 10/02/2007)
VENTURE OUT OF MESA Television Bulk programming line up 42 Channels USA BROADCASTERS Bloomberg Cable News Network C-Span QVC Shopping C-Span 2 Trinity B Broadcasting (Religion) Fox News Turner Broadcast System Weather Channel Turner Network Television USA Network Discovery Channel, The Discovery Health Fine Living ABC Family American Movie Classics Animal Planet (Educations & Learning) Bravo (general entertainment) WE- Women s Entertainment Turner Classic Movies Court TV Hallmark (family category) Arts & Entertainment History Channel Lifetime (Women s programming) SCI FI BITV CNN CSPAN QVC CSPAN2 TBN FXNWS TBS TWC TNT USA DISC DHLTH FIVNG ABCFM AMC ANIML BRAVO WE TCM COURT HLMRK A&E HIST LIFE SCIFI CNBC MSN BC Home & Garden TV Food network Travel Channel Tennis Golf Do It Yourself) Net Speed Channel (NASCAR) BBC America Versus ESPN PAK ESPN ESPN2 ESPNEWS ESPN CLASSIC ESPNU CNBC MSNBC HGTV FPPD TRAV DIY SPEED BBC VS ESPN ESPN2 ESPNWS ESPCL ESPNU 6 Channels LOCAL PHOENIX CHANNELS KTVK-PHX Channel 3 8327 KPHO-CBS Channel 5 6447 KAET-PBS Channel 8 8326 KSZ-FOX Channel 10 6449 KPNX-NBC Channel 12 6448 KNXV-ABC Channel 15 6446
ADDENDUM October 2, 2007 TO: Subject: All Venture Out Residents Credit Information Required by EchoStar to Purchase Digital Upgrade Options. The following information is NOT REQUIRED to receive V.O. s 48 channel Bulk Programming package only. It applies only if an individual contracts directly with EchoStar for a Digital Upgrade package. EchoStar has advised the Board that, as with all their customers, they will require certain credit background information from each individual during the signup process for Digital Upgrades. You must provide one of the following items: U.S. Social Security Number, Green Card number, U.S. Tax Identification Number (an IRS tax number) Or whatever U.S. ID. you use for credit identification purposes in the U.S. In addition, you must have a level of credit worthiness acceptable to EchoStar that can be verified with the U.S. credit rating company used by EchoStar, using one of the abovementioned IDs. We understand it is not acceptable to simply provide either a credit or debit card. If you cannot supply an acceptable Identification number and/or do not have an acceptable credit rating, you will be required to pay a non-refundable processing fee of $200 to set up an account with EchoStar. Our understanding is this is a one time charge; however, the Board recommends if you pay this fee, you check that you will not have to pay the fee again if you suspend and restart your upgrade service. We understand that other U.S.TV suppliers have similar policies. Therefore, had V.O. not signed the contract with EchoStar, every individual in V.O. affected by this credit information problem would not only have missed out on getting the 48 Channel Bulk Programming package but would have had to pay a similar fee to a U.S. supplier to get any channels, other than the few local ones which can be received by antenna. Doug Gale (Vice President)