SUMMARY: The basic read is Verizon can pull out whenever it wants by paying chump change. It is allowed to pass-through costs, including franchise fees, and there is absolutely no reference to the underlying question - What happens to the utility when Verizon starts pulling out the copper or it uses 'local' phone products and services to deploy FiOS, from staff to advertising.

1) This cable franchise does NOT make sure that Verizon rewires anything. If the company doesn't make it's 'checkmarks', it seems clear that it can simply stop doing anything and pay chump change for stopping. -- notice, the company has an option to "not seek the right to an extension of its deployment --- thus it can say, we want out of the franchise.

5.1.3. In the event Franchisee seeks to exercise its right to an extension of its deployment and service availability obligations at any Checkpoint pursuant to this Section 5.1, Franchisee shall, within sixty (60) days from the applicable Checkpoint, provide the City with written documentation, in a format to be reasonably determined by Franchisee, justifying the basis for Franchisee's exercise of such extension. Such written documentation shall be treated as confidential and proprietary consistent with Section 11.1 hereof, and shall include, the number of residential units within FTTP Network Created MDUs and FTTP passed single family units (hereinafter, "SFUs,") along with other elements of the formula set forth in Section 5.1.2.4 of this Agreement, as may be reasonably necessary to satisfy the objectives of this Section 5.1.3.

2) The checkpoints are:

5. DEPLOYMENT; PROVISION OF CABLE SERVICE

5.1. Initial Deployment: Subject to the exceptions and checkpoint extensions set forth

in this Article, the FTTP Network will pass all households served by Franchisee's wire centers within the Franchise Area in accordance with the table attached hereto as Appendix F, with final completion no later than June 30, 2014. For purposes of this Agreement including Appendix F, "pass" or "passage" of a household shall mean MDU's whether or not network created and single family units whether or not a drop is installed.

5.1.1. Exceptions: The FTTP Network deployment schedule set forth in Appendix F shall be subject to the following exceptions: (A) for periods of Force Majeure; (B) for periods of delay beyond the normal permitting or approval time period, or due to issuance of a stop work order issued by the City, where such stop work order is not caused by action on the part of Franchisee; and (C) for periods of delay resulting from Franchisee's inability to obtain authority to access private rights-of-way.

5.1.2. Checkpoint Extensions: Within thirty (30) days of each of the dates set forth below (each, a "Checkpoint"), the Franchisee shall conduct an evaluation of its "video penetration rate" (as hereinafter defined) in the Franchise Area and, in the event such evaluation determines that Franchisee has not achieved the applicable video penetration rate at each such Checkpoint, the Franchisee shall be afforded an extension of its deployment and service availability obligations pursuant to Sections 5.1, 5.2 and 5.3 hereof, in accordance with the following:

5.1.2.1. First Checkpoint: If, by June 30, 2010, Franchisee has achieved a video penetration rate in the Franchise Area which is less than fifteen percent (15%), then: Franchisee will be granted a twelve (12) month extension to complete final City-wide deployment and service availability, with the annual per borough deployment schedule from the date of such checkpoint being proportionately extended to reflect the extended final completion date.

5.1.2.2. Second Checkpoint: If, by June 30, 2011, Franchisee has achieved a cumulative video penetration rate in the Franchise Area which is less than twenty percent (20%), then: Franchisee will be granted a twelve (12) month extension to complete final

City-wide deployment and service availability, with the annual per borough deployment schedule from the date of such checkpoint being proportionately extended to reflect the extended final completion date.

5.1.2.3. Third Checkpoint: If, by June 30, 2012, Franchisee has achieved a cumulative video penetration rate in the Franchise Area which is less than twenty-five percent (25%), then: Franchisee will be granted a twelve (12) month extension to complete final City-wide deployment and service availability, with the annual per borough deployment schedule from the date of checkpoint being proportionately extended to reflect the extended final completion date.

3) Chump Change for Stopping --- If the entire project goes south, Verizon has to pay chump change ---

15.9.2.1. Reduction Schedule: The required amount of the Performance

Bond shall be reduced in accordance with the following schedule as of December 31 of the year indicated so long as Franchisee has attained the "NYC Total" percentage of households passed required as of that date as set forth in Appendix F, except that the date for reduction in calendar year 2014 shall be June 30 of that year, subject to the same requirement. If Franchisee does not attain the "NYC Total" percentage of households passed required as of the date as set forth in Appendix F due to the triggering of one or more of the Checkpoint Extensions provided for in Section 5.1.2 or otherwise, then the required amount of the Performance Bond shall be reduced only when the "NYC Total" percentage of households passed thereafter is attained.

2008: Thiry-Five Million Dollars ($35,000,000)

2009: Thirty Million Dollars ($30,000,000)

2010: Twenty-Five Million Dollars ($25,000,000)

2011: Fifteen Million Dollars ($15,000,000)

2012: Ten Million Dollars ($10,000,000)

2013: Five Million Dollars ($5,000,000)

2014: One Million Dollars ($1,000,000)

While you might say that $30 million in 2008 would be expensive or even $25 million, Verizon, New York raked in almost $7 billion in 2004 according to the FCC, not to mention DSL, long distance, directory and yellow pages revenues. --- $30 million is less than 1/3 of 1% or revenues of just the 'intrastate' rates.

4) Recovery of Costs - what this item says is that whatever the company spends on peg channels, etc. even the grants, It can recoup them as a separate line item.

8.5. Recovery of Costs: To the extent permitted by federal law, the Franchisee shall be allowed to recover the costs of the grants referenced in this Article 8 and Section 5.7 from Subscribers and to include such costs as a separately billed line item on each Subscriber's bill. Without limiting the forgoing, if allowed under state and federal laws, Franchisee may externalize, line-item, or otherwise pass-through interconnection and any franchise-related costs to Subscribers.

5) Verizon also Ilies as it says that the Franchisee is paying the 5% franchise fee. This is not true.

10.1. Payment to City: Franchisee shall pay to the City a Franchise Fee of five percent (5%) of annual Gross Revenue (the "Franchise Fee").