WHY MUNICIPALITIES CAN DELIVER WHAT INCUMBENTS CANNOT

• Investment driven by factors other than profit (i.e. economic growth & quality of life)
• Competitive Pricing, as there are no shareholders to take profits from system
• Property tax exemption yields less costs
• Fiber is more efficient to operate and maintain than traditional copper or cable systems
• Tax-exempt financing may be utilized (situation permitting), thus lowering interest costs
• Municipalities often have utility divisions (electrical, water, etc.) which provides for cross-utilization of resources

MARKET FOCUS:
MCM intends to structure financings for fiber optic ultra-broadband networks that are:

• Owned by municipalities
• Demanded by residents based on lack of alternatives from incumbents
• Capable of providing multiple services (e.g., telephone, internet, video, etc.)
• Supported by a financially sound business plan
• Deployed using a cooperative effort with the municipality's existing utility

MCM will focus on projects in communities with populations ranging from 15,000 to 250,000, (representing $50 - $100 Billion of potential construction over the next 5 years).

OBSOLESCENCE RISK
When evaluating any technology, obsolescence risk is certainly a major consideration. In the case of an ultra-broadband fiber system, obsolescence risk is mitigated because:

• Fiber is very dynamic and adaptable, and if appropriate can be integrated with other technologies (such as wireless, powerline technologies, or radio frequency transmission)
• Fiber transfers data at the speed of light (other technologies utilize fiber optic backbones so it is unlikely anything faster can prevail)
• Engineering is relatively flexible
• Systems are designed and built with excess capacity (once the trenches are open, the costs to lay additional capacity is nominal)
• Although some system components have an expected life of 7-10 years, the Fiber (which represents the largest percent of project costs) is expected to have a useful life of 20-25 years (note that cable technology has lasted 20+ years and copper has lasted 100+ years)

The case for fiber is substantiated by the fact that countries leading broadband deployment (such as Canada, Korea, Japan, Sweden) have continually implemented fiber systems.

MUNICIPAL CONTRIBUTIONS
The municipality and/or its utility division will provide certain financial and non-financial contributions to the Project, as follows:

• Funding for initial studies to estimate demand, project costs, and deployment strategies
• Acquisition of required permits and rights-of-way
• Contribution of existing fiber optic and other telecommunications facilities owned (e.g., dark fiber, fiber links between municipal buildings, etc.)
• Accessibility of infrastructure to facilitate deployment (including pole attachments and underground conduit access)
• Contractual arrangements, committing the utility and/or the municipality to provide service and maintenance equipment and personnel for the project
• Contractual arrangements committing local governmental agencies which use high-speed telecommunications (such as administration, libraries, schools, police, fire, and hospitals) to take services provided by the Project (thus creating an anchor tenant)
• Marketing support will be provided by the utility to take advantage of its customer base

SECURITY:
Lenders will have a collateral interest in the assets that make up the Project, including:

1. Security interest in Project assets
2. Rights to receive all revenues and receivables from the Project
3. Security interest in all licenses and contracts
4. Security interest in all cash balances
5. Other revenues or security, determined on a case by case basis

STRUCTURING:
If deemed appropriate, a Senior/Subordinate Structure may be utilized as follows:

TAX STATUS
Depending on the structure of each particular transaction, there exists a possibility that revenues generated through contracts with for-profit service providers could prohibit the use of tax-exempt financing; accordingly, financings may be structured as taxable or tax-exempt debt.

RECURRING INVESTMENT PROGRAM
It is anticipated that capital requirements for individual projects will begin in the $20 - $30 Million range, and larger projects may require funding in the range of $100 Million. Continued growth in this sector, and MCM's commitment to be a leader in this industry, present the opportunity for a recurring investment program.

MUNICIPAL TELECOM SUCCESS STORIES
Following is a summary of penetration rates experienced by municipalities which have successfully offered cable TV and internet service to their communities:

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