WindWave Communications Proposal to Acquire Heppner TV

Morrow County's only locally-owned and operated broadband telecommunications company, WindWave Communications, has entered into discussions with Heppner TV regarding a proposal to combine Heppner TV's existing cable television operations with WIndwave's telecommunications facilities and expertise in order to produce a system capable of providing state-of-the-art, high-speed broadband telecommunications, internet and entertainment services.

Increased Competition From Satellite Services Makes Heppner TV's Long-Term Viability Questionable

Heppner TV has recently confirmed that due to continued financial losses, it's only short-term alternatives are to continue to increase rates and/or cease its operations in Heppner. Increased competition from satellite television providers and decreasing memberships generally have caused Heppner TV to post a net loss of over $13,000 in the fiscal year ended January 31, 2005. Based upon current projections this loss is expected to widen in the current fiscal year.

Windwave's Proposal Offers An Opportunity To Maintain Existing Service Levels and Offer Services The Competition Does Not Provide.

Windwave Communications has been expanding its telecommunications system in Morrow County and would like to enhance the service it makes available in Heppner. Upon acquisition of Heppner TV, WindWave would begin the process of upgrading the current cable TV services to bring additional services to Heppner and the surrounding area. WindWave is committed to maintaining and increasing service levels over the next five years to compete with those of satellite services.

As such WindWave proposes the following:

• WindWave would commit to upgrading all current Heppner TV customers cable TV service by installing fiber optic lines to residences, while waiving the non-recurring charge for this type of service (this would only cover existing members currently receiving services). The committed timeframe for this upgrade would be over the next five years.
• WindWave would maintain existing pricing and service levels for at least the next 12 months.
• Using upgraded capabilities, WindWave would expand the quality of services, to better compete with satellite offerings. This might include HDTV channels, local programming, pay-per-view, video on demand, and additional local educational content.
• WindWave would attempt to expand the footprint of TV services which might include future services to the communities of Ione and Lexington .
• WindWave would maintain the existing employee base at Heppner TV, including the addition of company benefit packages identical to that of its existing employees.
• WindWave would also commit to keeping the current headquarters for all cable TV service local to Heppner, with no changes to current staffing.
• WindWave would assume all liabilities and assets of Heppner TV, with the exception of any patronage capital or membership certificates (in lieu of upgraded facilities to member's residences).

WindWave believes it is important to continue providing a cost effective local cable TV solution to compete with continued consolidation of satellite services nationally. Maintaining and improving cable TV services locally is complimentary to WindWave's mission to improve and provide cost effective advanced telecommunication services in Morrow County .

As is required in the by-laws of Heppner TV, the members will need to vote to decide the outcome of this acquisition. A general notice will be made to all current members in the near future, with a vote scheduled to occur during the August board meeting.