Loading...
HomeMy WebLinkAbout2005-10-31 AFN Options Committee Draft Minutes and PacketAFN OPTIONS COMMITTEE MEETING OCTOBER 31, 2005 - PAGE 1 OF 3 CITY OF , L AFN Options Committee Meeting Draft Minutes October 31, 2005, 7:30am Siskiyou room, CDES Building, 51 Winburn Way CALL TO ORDER Michael Donovan called the AFN Options Committee meeting to order at 7:34 am on October 31, 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 LEE TUNEBERG, ADMINISTRATIVE SERVICES AND FINANCE DIRECTOR RICHARD HOLBO, TELECOMMUNICATIONS ENGINEER C I N DY HANKS, PROJECT MANAGER BRYN MORRISON, ADMINISTRATIVE ASSISTANT REVIEW COMMITTEE MINUTES Approval of minutes dated October 27, 2005 Rick Barth, Committee member amended page 4 paragraph 6, stilling to still. Page 5 paragraph 2, cultural to culture. Collins/Mackin ms approval as amended. All Ayes. COMMITTEE WORK SESSION Kevin Shultz and Paul Collins, Committee members spoke to the draft report. Members of the Committee felt that the report should not be called the final report and that it should only be a draft. There should be a dialog between the Committee and Council. The Committee discussed that they hope Council will see their effort and wisdom and any recommendation that they make has to make financial sense with the current potential and the current penetration. They also discussed that for enhancements, they AFN OPTIONS COMMITTEE MEETING OCTOBER 31, 2005 - PAGE 2 OF 3 could refer to the Navigant study. The proposed enhancements and implementation would show that the City would be in the same place in 2012. The Committee discussed doing a comparison to Spanish Fork and what was written in the Tidings to what AFN is doing currently. The Committee discussed that the Tidings article was unrealistic, Spanish Fork does not show their debt clearly and they should not do a comparison. No further financial items were needed from staff. The Committee discussed presenting the report to Council. The Committee will include the report in the November 15 Council meeting packet and ask to hold a study session after that with Council. Councilor Russ Silbiger mentioned that there is concern with the draft report that he has heard from Council and there needs to be more financial analysis. The Committee discussed that there may be financial information that Council should instruct staff to develop. The Committee decided to include a spreadsheet that Lee Tuneberg developed and narrative that Paul Mace developed on keep and enhance and spin off. In the sale option, the Committee discussed the savings to AFN cable customers and Charter customers due to AFN, in the relation to the possible sale of AFN. They discussed if there are multiple offers, they may not want to accept the Charter offer, even if higher, due to the possibility of reducing the competition and Charter possibly increasing rates. They discussed the possible buyer may or may not increase rates and/or services. The Committee discussed the possibility of reconvening if the City received several offers. The Committee discussed that they need to add to the report what exactly the City would be willing to sell or not sell. The Committee discussed it would differ depending on the proposals. Councilor Silbiger mentioned that the City wanted to retain the fiber and own network and it should not be included in sale. Richard Holbo, Telecommunications Engineer mentioned that they can reserve fiber around the ring for own use and the physical fiber 6 count the City would keep, but it would not retain ownership to the house. The City would need to build the plant again for meter reading capabilities. The buyer may want to wholesale the product and they may need a non compete agreement and include meter reading capabilities in the contract. The contract with the buyer would vary depending on what portions they would need to buy, if they needed the plant. The Committee discussed that the City needs to obtain the real figures of customers it has. At this point the City does not have the figures for exactly how many internet customers it has. Mr. Holbo responded that the City has seven ISP's and those are their customers. He can get a list from the ISP's and could compare to cable customers for more accurate figures on customers that have only CATV, Internet, and both. The Committee discussed for a true valuation, they would need to remove internet only from customer counts. The Committee will include in the report that the valuation can vary significantly depending on several items. AFN OPTIONS COMMITTEE MEETING OCTOBER 31, 2005 - PAGE 3 OF 3 The Committee discussed the possibility of selling the wholesale relationship. It would be a revenue stream that would be sold. The Committee discussed that the buyer would want the ability to bundle so they can compete against DSL. The Committee will attach an article to the report in reference to common carrier. See attached. The Committee discussed that a key question the Councilors need to ask themselves is the present potential future savings in local content and service control worth the risk of tax payer dollars. They need to think about if fiber to the home will become too expensive to make a profit. The Committee discussed that some amount of tax payers dollars cannot be recovered and the Council should look at how they risk future tax payer dollars. The Committee discussed adding this thought to the conclusion paragraph. The Committee decided that Rick Barth, Paul Collins, and Kevin Shultz will make the revisions to the report to include in the Council packet for November 15. NEXT MEETING(S) There was no future meeting scheduled. ADJOURNMENT The meeting was adjourned at 9:34 am. Respectfully Submitted, Bryn Morrison Administrative Assistant Administrative Services Department Open Service Provider Networks: Taking Americas Communities Into the Digital Age An answer to our broadband decline and to the need for fair telecom in afree-market economy By Ben Gould Vice President and Chief Marketing Officer, DynamicCity, Inc. rom the telegraph to the tele- iiiiiiiiiiiiiiiiiiiiiillillilill,llllllllllllq phone to the cell phone; from commercial radio to the televi- JL sion set; from the personal com- puter to the Internet, America has paved the way toward bringing new forms of communication, entertainment, and education to the home and workplace. But Americas current telecommunica- tions business models are sending the nation into broadband decline relative to the rest of the world. While U.S. consumers and businesses are struggling with decisions about DSL, T1, or other slow, limiting, and expensive broadband mechanisms, our global competitors are leaving us by the wayside as they deploy affordable, very high capacity broadband service. U.S. communities need to take notice and consider a new model for providing real, value-added broadband. I call it the Open Service Provider NetworksTMmod- el. These community -owned OSPNs can bring complete availability of true broadband connections, service provider independence, economic infusion, and life -enhancing services to residents and businesses. Despite being the electronic commu- nications pioneer, the United States has fallen woefully behind in global broad- band competitiveness. By some mea- sures, America has dropped as low as 20th in the world in proportion of premises served by broadband, down from as high as 4th a few years ago. The oft -cited ITU WW Telecommu- nications Indicators Database lists the United States as 13th but Charles Fergu- son of the Brookings Institute suggests a lower ranking. d. While a few communities get some level of "broadband service," there are misconceptions about what broadband really is. The Regional Bell Operating Companies as well as multi -service op- erators (cable companies) sell 256 Kbps to as high as 5 Mbps as broadband. Even as these speeds are touted, these are download speeds only and the top speed is rarely above 1.5 Mbps. Newton's Telecom Dictionary, the de - facto standard in the telecom industry, defines "broadband" as a minimum of 45 Mbps. The FCC says it is 200 Kbps. Many of our international competitors understand what real broadband is, and they are finding ways to make it avail- able to their businesses and citizens. For example, Japanese residents have access to Internet connections of 47 Mbps for only $26 per month. That speed is not generally available in the United States for less than tens of thousands of dollars a month. On a monthly price per mega- bit, the United States averages around $35 while Japan averages 90 cents. But things are about to change for some communities in this country. Some innovative and dynamic communities, like those involved in Utah's UTOPIA project, have recognized the need for true broadband and are beginning to deliver connections of 100 Mbps of symmetri- cal (both download and upload capacity) bandwidth, to 1 Gbps and even more. On a price per megabit, UTOPIA citi- zens are receiving this capacity at prices as low as 89 cents per Mbps per month — comparable to Japan! The U.S. failure to keep pace is due in large part to our upsetting the laws of supply and demand — violating a basic tenant of a free market economy. Re- gional telecommunications operators are an offshoot of the original Bell System in America, an organization that was funded through a set of captive rate pay- ers, captive rights of way, and guaranteed rates of return on capital. This system was necessary for us to become competi- tive on a global scale. In 1984, Federal courts broke up the monopoly for the long distance market, but local "baby bells" were formed for lo- cal services and the monopolies contin- ued on a regional level. The resulting local communications services have suffered since due to stifled competition. Impact .1... w'10t ies The effects of the broadband deficit on local communities are immense. Mo- nopolistic service delivery is negatively impacting economic development op- portunities by creating barriers to the at- tractiveness of communities. What's more, many communities have limited or no access to broadband servic- es, with cable and phone companies by- passing small towns because of expensive installments and maintenance costs. This digital divide between Americans that have access to broadband services and those who don't is becoming increas- ingly important. Forward -looking municipalities are se- riously looking at alternatives that bring true broadband networks to their com- munities to improve the local tax base, retain and attract residents and business owners, and deliver cutting -edge services at significantly reduced cost. 40 1 BROADBAND PROPERTIES I www.broadbandproperties.com I MAY 2005 Pi pull iti l Of course the threat of open, com- petitive, high -capacity network infra- structures has led regional Bell operat- ing companies (RBOCs) and multiple service operators (MSOs) to vehemently oppose municipal fiber projects. The real problem is one of motivations. An in- cumbent provider is (and should be) mo- tivated by returning shareholder value. When it comes to building infrastruc- ture, the return for a shareholder is often low and long in coming. As a result, pri- vate industry rarely (if ever) funds infra- structure without some form of govern- ment involvement. That was exactly the situation when the legacy infrastructure we currently have was funded. The origi- nal Bell system was given, among other things, guaranteed rates of return and captive rate payers. It is unreasonable for us to think that baby Bells would be motivated by the public good when their shareholders are holding them to a dif- ferent standard. In other words, as a society we shouldn't expect private industry to fund an advanced communications network, because it is really infrastructure. We don't expect private industry to own and operate roads and highways, airports, water systems and other forms of infra- structure (although they occasionally do), so why should we expect it of the new information superhighway? These infrastructures have generally been left to local governments with subsidization from state and federal governments when it makes sense. So what role should local government play in the broadband debate? The Bell companies argue that communities have no business being in the service delivery industry, as it is a conflict of interest. They argue that municipalities that own fiber deployments are not only their reg- ulators but are their competitors as well. "With so much money being invested for better services and more bandwidth into homes, cable and the Bells consid- er government efforts unfair to private businesses. `The issue is (that the mu - THE OSPN PRINCIPLES Principle 1: Open and wholesale The key ingredient is that the network ownership is separated from the private enterprises that provide content and retail services. Principle 2: Carrier -class Quality of Service There is the need to assure the highest levels of reliability and redundancy. Principle 3: High, scalable bandwidth Provides true broadband service. Principle 4: Open and independent architecture Standards -based solution to accommodate a broad range of service providers and the lowest possible cost per megabit. nicipalities) control rights of way, and to regulate us at same time they're compet- ing with us is a recipe for trouble,' said Dave Pacholczyk, an SBC spokesman," according to a recent CNET article (at http://news.zdnet.com/2100-1035-22- 5471897.html). It is no surprise that the incumbents are actively influencing state legislatures to outright ban the practice. Pennsylva- nia has perhaps the most odious anti - municipal law in this regard. It started when the Borough of Kutztown, with a population of 5,200, began a municipally led broadband project and Philadelphia soon followed. Verizon initiated action against the projects in the legislature. "I cannot see justification for the legis- lation," said Frank P. Caruso, director of IT for the Borough of Kutztown. "This legislation delays advanced technology from reaching rural Pennsylvanians. Ve- rizon has essentially bought time, again, and it accomplished its primary objec- tive to thwart competition by stopping further municipal deployments." 11) �.� 1 : . . .A : � pppp u�: .r. ~t ie ('", That brings us to OSPN. The OSPN model has been developed and imple- mented by DynamicCity, an Open Access Architect company expert in designing, financing, building and operating trans- formational fiber -to -the -home projects. The OSPN starts with a principle - based business model that places owner- ship of networks in the hands of cities while provisioning wholesale broadband service from competitive service carri- ers. Based on a clear set of principles, the OSPN business model avoids the problem of government competing with private enterprise; it fosters robust com- petition and innovation and introduces the laws of supply and demand into the delivery of advanced communications services. The principles are basic — and they work (see box above) . The OSPN overcomes the monopo- listic forces of incumbent carriers by allowing a community to make its net- work infrastructure available to as many competing third -party service and con- tent providers as possible. The outcome is not only greater consumer choice, but also breakthrough telecommunications services and true broadband capacity to consumers at significantly reduced cost. Superior video, voice, and data services, distance education, telemedicine, and video conferencing all become common- place in the dynamic cities that provide an OSPN. These types of services are ac- tively sought in communities across the country; their proliferation is inevitable. From existing and prospective busi- ness and residential consumers to com- munity governments, to service carriers and content providers and even real es- tate developers, OSPN offers tremendous MAY 2005 1 www.broadband properties. corn I BROADBAND PROPERTIES 1 41 ���� Illllllllllllllllllu��� IIIII �� P � e L of0� u d '1I"I Get closer to your customers with IIIIIII The �����������,IIIIIII "' ""' IIIIIII IIIIII � �� IIIIIIY IIIIIIY °°°° displays two hours of current and upcoming programming. provides a place to post community information, notices and ads. 800,11,111,111,111,11737,111,111,111,111,10852 IIIIIIII� uuuuu uuuuu um tv advantages. The open and wholesale ap- proach, combined with carrier class reli- ability, extremely high capacity, and an open architecture, deliver a municipal infrastructure model that is unparalleled (see box below) . The OSPN model is being evaluated in dozens of municipalities throughout the nation and is already at work in the largest municipal fiber network project in the country, UTOPIA, including 14 founding cities and 160,000 potential subscribers throughout Utah. Open access works! °Illilllllllllllulll. About the Author Ben Gould can be reached at bgould@dynamiccity.com. Before joining Dynamic City, which aims to be the catalyst for the digital revitalization of metro mar- kets across America, Gould was chief execu- tive officer at Apollo Health, Inc., a manu- facturer of medical devices. What OSPN Stakeholders Get Business & Residential Consumers • True broadband—10OMbps to 1 Gbps connections and beyond. • Symmetrical service — faster data downloads and uploads. • Competition — better service, lower cost, more choice. • Higher quality video experience. • New breakthrough services and content. • Converged voice, video, and data services. • More satisfied businesses and residents. • A better infrastructure for economic growth and development (higher home values, better business environment) . • More empowered community involvement. • Globally competitive community. • New revenue source. • Promotes competition. • Ubiquitous coverage. • A community at the cutting edge — a Dynamic City. Carriers,Partners, • An economically compelling, open and level playing field in which to compete for share of consumer wallet • A willing network partner with best possible infrastructure • A network owner that won't compete • New, untapped networks and regions that might otherwise be uneconomical to reach • Minimized capital entry costs • Critical mass of subscribers • Success -based pricing model Real Estate rs • Value-added broadband services to attract home -buyers • Progressive new model to promote development in communities • Boost land/home values • Bundling/co-marketing opportunities for new fiber -ready homes • Introduce concept of dynamic home • Promote enhanced lifestyle and improved interaction with family/friends • Differentiation for developers 42 1 BROADBAND PROPERTIES I www.broadbandproperties.com I MAY 2005