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HomeMy WebLinkAbout2005-09-26 AFN Options Committee Minutes10/23/24, 10:50 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Learn about the City's plan to construct and move the water treatment plant -Clean drinking water is an essential right Agendas and Minutes City of Ashland V AFN Options Committee (vieWAll) AFN Options Committee Agenda Monday, September 26, 2005 Minutes September 26, 2005, 7:30am View Agenda AFN Options Committee Meetin, Siskiyou room, CDES Building, 51 Winburn Way CALL TO ORDER Michael Donovan called the AFN Options Committee meeting to order at 7:31 am on September 26, 2005 in the Siskiyou Room of the CDES Building, 51 Winburn Way Ashland, Oregon. ROLL CALL Committee members Barth, Collins, Donovan, Mace, Mackin, and Shultz were present. Councilor Russ Silbiger was present. STAFF PRESENT: GINO GRIMALDI, CITY ADMINISTRATOR https://old.ashland.or.us/agendas.asp?AMID=2368&Display=Minutes 1/9 10/23/24, 10:50 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon LEE TUNEBERG, ADMINISTRATIVE SERVICES AND FINANCE DIRECTOR RICHARD HOLBO, TELECOMMUNICATIONS ENGINEER MICHAEL AINSWORTH, CABLE TV MANAGER C I N DY HANKS, PROJECT MANAGER BRYN MORRISON, ADMINISTRATIVE ASSISTANT REVIEW COMMITTEE MINUTES Approval of minutes dated September 8 and 15, 2005 Don Mackin, Committee member amended the minutes of September 8 on page 4 in regards to CDS, bankrupt not bankrupted. Mackin/Shultz m/s to approve minutes as amended. All Ayes. DISCUSSION WITH ISP'S AND HUNTER COMMUNICATION Jim Teece from Project A, Gary Nelson from Ashland Home Net, and Allan Oppenheimer from Open Door Networks attended the meeting along with Richard Ryan from Hunter Communications. Jim Teece thanked the Committee for the hard work they are doing and spoke to what his company does as an ISP and there is more to what an ISP does than only service the customer for the internet service. He added that the City must realize that more staff would be required if they were the only ISP. Gary Nelson added that as an ISP, they are the face of AFN to the public and are the first ones called for service. He stated that he receives an average of two phone calls per day from customers not satisfied with the speed that they are paying for. He feels that they need to upgrade equipment and service to be competitive. He added that a majority of his customers are proud to be a part of AFN. The Committee inquired to the speed problems with Ashland Home Net. Mr. Nelson wasn't sure what the problem was, he thought it could possibly be an overload on the system and that upgrades need to take place. Mr. Nelson added that customers are paying the high speed price and expect the service. He added that AFN should have the proper funding to upgrade the equipment and as things stand now, the City is not allowing AFN to move forward. https://old.ashland.or.us/agendas.asp?AMID=2368&Display=Minutes 2/9 10/23/24, 10:50 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Allan Oppenheimer stated that with the multiple options presented for AFN, the focus has been lost. The City needs to keep the focus on the fundamentals. He added that they need to focus on the utility of AFN. Certain parts of AFN need reinforcing: investment in new utility services and capital improvements. The City needs to invest in wireless and higher speed. His question is can the internet exist without television. He added that AFN cannot be competitive without HDTV or DVR. He also feels that the City needs to hire an IT Director as soon as possible for direction and feels that the City needs to do more with the presentation of the open position. Mr. Teece explained that the three ISP's represented at the meeting offer AFN exclusively. He added that Project A uses AFN as a main conduit for the websites that they maintain. He feels that the community is in limbo and the City needs to hurry up and get through the process. The Committee discussed the economic development aspect of AFN. Mr. Teece stated that AFN is a huge draw for companies to move to Ashland. They also discussed that some of the businesses are not paying the business level internet charge, only the residential charge. Mr. Nelson added that he thought that there should be more levels of service to charge. The Committee discussed the ability to audit companies on what level they are charged. Councilor Russ Silbiger added that some staff have suggested the businesses be undercharged and the under charging has been happening for years and has never been addressed. The Committee discussed the possibility of regulating with the business licenses issued by the City and Richard Holbo, Telecommunications Engineer stated that staff made the decision not to pursue it that way. The Committee asked the ISP's what the impact would be on them if the City were the only ISP. Mr. Teece explained that is only a portion of his business and he would transition the personnel currently working on that to another aspect of the business. Mr. Nelson responded that would most likely put him out of business because of the cost of equipment to switch providers. Mr. Oppenheimer stated that it would depend on whether it was the only ISP or another ISP and then that would create more competition. He feels it does not make sense for AFN to be the only ISP and would cost the City too much. Richard Ryan from Hunter Communications addressed the Committee. He stated that the interim pricing for the business model is intelligent and suggested that one size does not fit all. He added that there has been no marketing done by AFN. He added he has offered his services and would like to put the past unfair criticisms behind them and move forward. He added that Hunter may have to sever the relationship with the City if they cannot find a way to solve their problems. He stated that Hunter has just completed an upgrade on their network https://old.ashland.or.us/agendas.asp?AMID=2368&Display=Minutes 3/9 10/23/24, 10:50 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon and now has a difficult time operating the network because of technology of AFN not being up to standard. He feels that the Directors that have been in place have not been marketers or business people. Mr. Ryan discussed with the Committee and staff the problems with the equipment that AFN has currently. He stated that the company that the equipment was originally purchased from is no longer in business so AFN has to purchase replacement parts on EBay. He feels that the City will never get the money back that was invested in AFN and right now they need to upgrade their switches and some equipment. Mr. Ryan added that he feels no one would purchase AFN at a prime price because of so much upgrading that needs to take place. The Committee asked Mr. Ryan how much money he thought AFN would require for upgrading. Mr. Ryan responded that his company recently upgraded their switches and it was $40,000. $50,000 should upgrade all the switches that AFN has on the network and last 18-36 months and possibly beyond. Mr. Ryan suggested that if the City would purchase new switches, they could develop a new relationship with that company. Mr. Ryan spoke to Hunter's relationship with Qwest and the City. He stated that Hunter connects with Qwest in Medford and provides bandwidth back to Ashland. Ashland connects into Qwest internet in Ashland. When one of the two networks goes down the other picks it up. The Committee questioned if Hunter is selling a fractional DS3 and the amount that they are paying the City for bandwidth. Mr. Ryan responded that Hunter and the City entered into the relationship for 10 megs of service that they guarantee and it is a back up circuit and if one side of the network goes down, the other side sustains it. Councilor Silbiger asked if Hunter is paying the City $1,800 per month for 16 customers. Mr. Ryan responded they are paying $1,800 but he does not have the exact number of customers. He explained that of the $300 that he charges, $200 goes to the City. The Committee discussed with Mr. Ryan the future competition of AFN. Mr. Teece would like to see more than the four options; he would like to see 15 or more. He would like to see AFN provide for the community the ultimate communication network. He added that they should not focus on paying the debt down; they need to make an investment in the infrastructure. He warned against singling out Charter as the only company that may possibly purchase AFN. The Committee discussed there may be others that want to get into the telecommunications field that would buy as a start up. Mr. Ryan stated that the City needs to run AFN like a business and cannot run it as a municipality against private businesses and expect to get results the private would. The Committee discussed if marketing would solve the competition problems with AFN. Mr. Ryan responded that it would not solve all of the problems and suggested collaborating in https://old.ashland.or.us/agendas.asp?AMID=2368&Display=Minutes 4/9 10/23/24, 10:50 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon engineering services. He suggested merging with Hunter to take on engineering and to manage data. He stated that Hunter would be able to absorb some of the staff that now works for AFN. COMMITTEE DISCUSSION A. Update on matrix for end report to Council Paul Collins, Committee member presented matrix to Committee and staff. See attached. The Committee discussed the matrix and the Maintain/Enhance section and the foreseen list that will be given to the Director. They commented that they should ask Council to prepare and support the next Director on the options. Paul Mace, Committee member suggested adding another option of Public Good. He would like to see what public good is derived from this ongoing expense. He would like a category where they look outside the competitive business. B. Update on Debt Service and what funds were spent internally and externally Postponed, will report next meeting. C. Additional assignments completed and/or update The Committee discussed the valuation assignment. Mr. Shultz and Mr. Mackin met with Gino Grimaldi, City Administrator. There are theoretical values and market values for AFN. The Committee felt that the City needs to make inquiries to the natural players in the market on the value of AFN. Mr. Mackin stated the need to find what of the $15.5 million bond was external and internal is futile at this point and they need to find the value of what is present to look at the spin off option. The Committee directed Mr. Grimaldi to look at the value of selling all or pieces of AFN. Mr. Grimaldi will work with Mr. Mackin and Mr. Shultz. Mr. Mace added that members of the Committee will be meeting with Tom Reid and Jim Watson, and are waiting on call backs from Mark Marchetti and Paul Nicholson. The members will report any findings back to the Committee. Mr. Collins stated that they have identified 6 cities that will be used in a comparison for AFN. Councilor Silbiger asked for peg fees from the last meeting. Staff will provide. https://old.ashland.or.us/agendas.asp?AMID=2368&Display=Minutes 5/9 10/23/24, 10:50 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon The Committee asked for input from Mr. Holbo and Michael Ainsworth, Cable TV Manager on the meeting. Mr. Holbo stated that he can't disagree with the need for equipment. We are not upgrading to where technology is going today. He stated that they need to have a plan to move forward. Mr. Ainsworth stated that word of mouth is critical and AFN has the worst word of mouth. He added they are lacking a figure head. He responded to Charter charging less in Ashland and that everyone knows that. He added that marketing high speed data is very difficult and they did not get state designation and are competing against Medford. He added they need a cohesive economic development plan. Kevin Shultz, Committee member asked for a realistic dollar figure for cost of upgrade. Mr. Holbo responded that the City needs to decide if they are going to do it first and then they would need a person and then $100,000-150,000 per year. He feels that the $15.5 million debt is not all attributable to equipment, it is how it was chosen to be spent. Mr. Shultz asked in the long term, if he sees more money required. Mr. Holbo responded that he cannot foresee it and the advantage that they have is that they can scale to any amount of bandwidth. An investment would be required to maintain the HVC possibly in the future. The Committee discussed the possibility of rolling out the HDTV incrementally and charging accordingly. They also asked if changing the switches was a critical need. Mr. Holbo responded that changing the switches is not a horrible need and installing HD in the head end would be incremental and they could roll out the boxes slowly but don't know if they could charge enough extra to cover the costs. The cost would be $4,000-5,000 per channel plus the cost for control. The Committee discussed if Cable TV was split from AFN and the costs that would be absorbed. Mr. Holbo stated that right now, 40% of personnel is charged to cable modem, 40% to cable TV and 10% to high speed data. The 40% of cable TV would be absorbed by cable modem costs. There would have to be an extremely complicated contract with the buyer for the technical side. NEXT MEETING (S), The Committee decided that they would like finish the options meetings by the end of October. Mr. Mace would like have a study session soon where the Committee could add to the matrix. There would not be public input but it would be open to the public. There will be meetings on October 3, 10, 17, 24, and 31 at 7:30 am in the Siskiyou Room of the CDES Building. https://old.ashland.or.us/agendas.asp?AMID=2368&Display=Minutes 6/9 10/23/24, 10:50 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon The Committee discussed inviting the Programming Committee to the next meeting and Lee Tuneberg, Administrative Services and Finance Director will at the next Programming Committee meeting on September 29. PUBLIC INPUT Thomas Gaffey, 680 Oak St- Mr. Gaffey stated that he doesn't understand how anything can be decided without numbers. He would like to see a breakdown of the $15.5 million bond, the 2004-05 operating statement of AFN, and a personnel breakdown. Staff will provide to Mr. Gaffey. Mr. Shultz would like a copy of the operating statement as well. Mr. Tuneberg stated that the 2005 numbers are not finalized yet, but will be soon and will be provided. The organizational chart for personnel is in the 2006 Budget document and he and Mr. Mace will meet on where the $15.5 bond money was and report back to the Committee. Mr. Gaffey added that he thinks it is premature to discuss a possible buyer at this time without the numbers. John Jory,188 Sunnyview- Mr. Jory stated that he asked a friend of his in Talent on what he pays for Charter service and for a digital, HD box and internet is $127 per month and is significantly more than anyone in Ashland pays. He feels that all discussions regarding AFN are negative as far as the public is concerned and there is never anything good heard. He added that if the press were present, the City should create an interview on what is really done to see the benefits of AFN. He feels that the public doesn't realize that if AFN went away, Charter would raise their rates considerably. He has also heard that the City doesn't operate as a business, any profit AFN makes has to go to other parts of the City and doesn't feel that has been explained to the public. He stated that if he was new to the area, he would not hook up to AFN because of all of the bad press. He feels that AFN is advertising to the wrong group, they need to advertise to non customers. He also added that if all of the people that currently have Charter in Ashland were to switch to AFN, there would not need to be the electric surcharge. ADJOURNMENT The meeting was adjourned at 9:38am. Respectfully Submitted, https://old.ashland.or.us/agendas.asp?AMID=2368&Display=Minutes 7/9 10/23/24, 10:50 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Bryn Morrison Administrative Assistant Administrative Services Department Online City Services Email Updates Sign up to receive local important News & Events. 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