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HomeMy WebLinkAboutProposal to Provide Cable Television Franchise Renewal Consulting Services RICE, WILLIAMS ASSOCIATES PROPOSAL TO PROVIDE CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES TO THE CITY OF ITHACA, NEW YORK June 12, 1997 Prepared by: Rice, Williams Associates 601 Pennsylvania Avenue,NW 774-C Walker Road,P.O.Box 765 Suite 900 Great Falls,VA 22066 Washington,DC 20004 Phone:(703)757-0570 Phone:(202)737-2400 Fax:(703)757-0573 TABLE OF CONTENTS I. SCOPE OF SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Project 1 - Overview for Cable Television Franchise Renewal Process . . . . . . . . I - 1 Project 2 - Overview for Municipal Ownership Study . . . . . . . . . . . . . . . . . . . I - 4 PROJECT 1 - CABLE TELEVISION FRANCHISE RENEWAL . . . . . . . . . . . . . . I - 6 Task I: Initial Briefing on Legal, Economic, and Regulatory Matters . . . . . . . . . I - 6 Overview/Implications of The Cable Act/Telecommunications Act . . . . . . I - 6 Broad Economic, Regulatory, and Legal Issues . . . . . . . . . . . . . . . . . . I - 7 Identification of Local Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . I - 8 Local Cable TV Service Performance/Goals . . . . . . . . . . . . . . . . . . . . I - 9 Task II: Community Needs Assessment and Consumer Market Survey . . . . . . . 1 - 10 Community Needs Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . I - 11 Consumer Market Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 12 .e Task III: Technical Evaluation of the Existing Cable System . . . . . . . . . . . . . 1 - 13 Test Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 15 Technical Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 16 Task IV: Review of Cable Operator Compliance with the Cable TV Ordinance/Franchise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 16 Task V: Updating Relevant Ordinances . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 18 Task VI: Preparation of a Request for Renewal Proposal . . . . . . . . . . . . . . . . 1 - 19 Task VII: Evaluation of Renewal Proposal . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 21 Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 22 Technical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 23 Service Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 25 Public, Educational, and Government Access and Other Institutional Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 25 Final Evaluation of Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 26 Task VIII: Drafting the Franchise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 27 Task IX. Assistance with Public Hearings and Negotiations . . . . . . . . . . . . . . 1 - 28 OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 29 A. Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 29 B. Franchise Fee Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 31 PROJECT 2 - MUNICIPAL OWNERSHIP STUDY . . . . . . . . . . . . . . . . . . . . . . 1 - 33 Task 1: Initial Consultation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 33 Task II: Consumer Market Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 35 Task III: Institutional Needs Ascertainment . . . . . . . . . . . . . . . . . . . . . . . . 1 - 36 Task IV: Preliminary Technical Analysis and Cost Assessment . . . . . . . . . . . 1 - 37 Task V: Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 39 i II. FIRM QUALIFICATIONS AND EXPERIENCE . . . . . . . . . . . . . . . . . . . . . II - 1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II - 1 Current Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II - 1 Key Strengths of Our Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 2 Qualifications and Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 3 Cable Television Franchise Renewals: Qualifications . . . . . . . . . . . . . . . . . . 11 - 5 Representative Cable TV Franchise Renewal Clients . . . . . . . . . . . . . . 11 - 7 Examples of Franchise Renewal Assignments/Results . . . . . . . . . . . . . 11 - 7 .. Consumer Satisfaction Surveys and Community Ascertainments: Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 12 Consumer Satisfaction Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 12 Community Needs Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 12 Representative Consumer Survey and Needs Ascertainment Clients . . . II - 13 Telecommunications Network Design: Qualifications . . . . . . . . . . . . . . . . . 11 - 14 Representative Telecommunications System Design Clients . . . . . . . . . . . . . II - 15 Local Cable/Telecommunications Regulatory Support: Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 17 Representative Rate Increase Analysis Clients . . . . . . . . . . . . . . . . . 11 - 18 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 - 18 III. PERSONNEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III - 1 IV. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV - 1 ' ii I. SCOPE OF SERVICES Project 1 - Overview for Cable Television Franchise Renewal Process From the request for proposals, we understand that the City will be taking a very thorough approach to the renewal of the cable television franchise in New York. Rice, Williams Associates hasWorked with many consortiums in the past, and found such arrangements to be beneficial to all concerned. The cover letter to this proposal discusses some of the .. possible benefits of a consortium based approach. We have addressed the City of Ithaca throughout the proposal, but would be happy to work with other area communities. Rice, Williams Associates is prepared to assist the City in carrying out its franchise renewal •• process in a manner that we believe will meet your needs for maximum efficiency, thoroughness, and effectiveness. Rice, Williams Associates has unique capabilities to assist the City in this area. ■ We have and are conducting renewal proceedings for numerous municipalities including:Department of Public Utility Control,Connecticut;Kalamazoo,Michigan; Atlanta, Georgia; Owensboro, Kentucky; Baltimore, Maryland; Bayonne, New Jersey; McAlester, Oklahoma; Wichita Falls, Texas; Charlotte, North Carolina; Titusville, Florida; Tallahassee, Florida; Wilmington, Delaware; Sarasota, Florida, and Fairborn, Ohio. (See Background for further listing.) ■ We have been extremely successful in working with our client cities to obtain renewal agreements that have state-of-the-art rebuilds, substantial provisions for .. access, fiber and coaxial institutional networks, and long term regulatory authority. For example, in Atlanta, Georgia, and Greensboro, North Carolina, the cable companies agreed to provide sophisticated institutional networks. ■ We have worked for cities which have had requests for competitive franchises in several states, including Florida, Pennsylvania,North Carolina, and Georgia. ■ We are working with cities where the current cable provider is in a renewal process and the telephone company has requested a franchise. ■ We successfully negotiated a settlement for Bayonne, New Jersey after the City _ preliminarily denied the cable company. Bayonne has a franchise for a rebuild which will be two-way active to the home, excellent access equipment and services, state- of-the-art equipment and services clauses, and strong consumer protection provisions. I - 1 ■ Commissioners that regulate cable television for States of New York and New Jersey have called franchises we have worked on in those states the best renewal packages in the state, ground breaking, and leaders for other cities to follow. ■ We have conducted scores of community needs assessments and consumer market surveys on behalf of municipalities. These assessments and surveys provide a solid basis for designing effective cable/telecommunications plans and for ensuring that operators meet consumer needs. Additionally,we have assisted cities in planning for access and institutional networks. ■ We are performing full rate regulation services for many clients. ■ We are extremely familiar with the requirements and authorities placed on cities by the Cable Communications Policy Act and the various interpretations of the Act held -� by cable companies. This familiarity was gained by negotiating with many MSO's on behalf of cities. In addition,we have experience with the preliminary denial and administrative hearing processes of the renewal process under the Cable Act. ■ We have experience assisting cities with ongoing regulatory compliance analysis. _ We are assisting several cities in assessing consumer service standards,franchise fee reviews,and technical testing to assess compliance with construction and operating requirements. ■ We have worked with a number of cities and counties with multiple franchises and are familiar with establishing regulatory structures that are fair,but consider size and .. other pertinent aspects of the systems. Some of these cities and states are Hillsborough County, Florida; Charlotte,North Carolina;Talbot County, Maryland; and the State of Hawaii, Office of Cable Television. ■ We have assisted in negotiations that have resulted in agreements for companies to provide fiber optic institutional networks and to have fiber optics as a part of the cable system architecture. ■ We have conducted major reviews of cable company compliance with its city franchise such as five year reviews conducted for Raleigh, North Carolina and Baltimore, Maryland. These reviews included customer satisfaction, system testing, financial, and other compliance issues. ■ We have worked with cities of all sizes such as Cleveland, Ohio; Cambridge, Massachusetts;Oberlin,Ohio;New Orleans,Louisiana;and Tarboro,North Carolina. I - 2 ■ We have conducted many municipal overbuilds and buyout studies including those for Easton, Maryland; Jackson, Tennessee; Traverse City, Michigan; and Belmont, Massachusetts. ■ We were the consultants for Morganton,North Carolina which denied a renewal to TCI and has constructed a state-of-the-art municipal cable system. ■ We have been active in the passage of the Cable Television Consumer Protection and .. Competition Act of 1992, and the Telecommunications Act of 1996. The tasks that we propose to carry out for Project 1;the cable franchise renewal process are: ■ Task I: Initial briefing on relevant legal,economic,and regulatory matters that affect interests of the City of Ithaca including competition, new technologies and institutional networks. ■ Task II: Community needs assessment and consumer market survey ■ Task III: Technical evaluation of the existing cable system ■ Task IV:Review of cable operator compliance with the cable TV ordinance/franchise ■ Task V: Updating relevant ordinances ■ Task VI: Preparation of a Request for Proposal ■ Task VII: Evaluation of Renewal Proposal ■ Task VIII: Drafting Franchise Agreement ■ Task IX: Assistance with public hearings and negotiations OTHER SERVICES A. Financial Analysis B. Franchise Fee Audit I - 3 �- Project 2 - Overview for Municipal Ownership Study The RFP also indicated possible interest in investigation of a municipally owned system. Rice, Williams Associates has prepared a consulting service plan to assist the City of Ithaca in studying the feasibility of a municipally-owned broadband fiber optic communications .. system. We have worked and are working with several cities and utilities in municipal ownership feasibility studies, including studies of the feasibility of municipal overbuilds of existing cable systems and the feasibility of fiber optic systems serving local government and other institutions. We have also worked with several cities on fiber optic projects. Some of our other municipal ownership clients are Bryan, Ohio; Burlington, Vermont; .. Danvers, Massachusetts; Cambridge, Massachusetts; Easton, Maryland; Springfield, Missouri; Tallahassee, Florida; Shawano, Wisconsin; Philippi, West Virginia; and Ponca City, Oklahoma. We are also working with cities and utilities on municipal purchase of -- operating systems. Rice, Williams Associates has assisted Springfield, Missouri; Easton, Maryland; Philippi, West Virginia; and Belmont, Massachusetts and Morganton, North Carolina study and actually build and operate their own municipally owned cable systems. For these studies, we analyzed the following areas: a technical analysis of underground and aerial construction, including channel capacity options and use of fiber optics; financial analysis of a City system; and structural options. This type of hands on experience in all aspects of municipal cable feasibility work, from study to system construction, will be of assistance to the City of Ithaca in examining the opportunities and risks of municipal ownership. Rice, Williams is currently working with the City of Hope, Arkansas on the feasibility of a municipally owned fiber optic institutional network serving utility, telephone, and educational functions. .. The Project 2;municipal ownership study services Rice, Williams Associates could provide to the City of Ithaca are: Task I: Initial Consultation Task II: Consumer Market Survey (on municipal ownership) Task III: Institutional Needs Assessment (Not needed if done for the cable renewal process) Task IV: Preliminary Technical Analysis and Cost Assessment Task V: Financial Analysis. These services for municipal ownership are contained in Part 2 of this proposal. I - 4 We would be pleased to modify our list of tasks, if the City so desires, and to provide additional services, if needed. i r I - 5 PROJECT 1 - CABLE TELEVISION FRANCHISE RENEWAL Task I: Initial Briefing on Legal,Economic,and Regulatory Matters Rice, Williams Associates will work for the City by providing consultation how the latest legal, regulatory, technical, and economic developments affecting the cable/telecommunications industry impact the City's management of its rights of way. We will be pleased to be working with staff and the City Cable Commission that are extremely knowledgeable in this area. Overview/Implications of The Cable Act/Telecommunications Act Since Rice, Williams Associates has worked on behalf of cities to advocate cable rate re- regulation legislation,we are very familiar with all of the provisions of the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") and the Telecommunications Act of 1996. At our initial consultation sessions with the City,we will share the insights we have obtained as a result of this experience over the last several years. Specifically, we will provide the City with overviews of: ■ Practical implications of the Cable Communications Policy Act of 1984 ■ The current status of cable TV regulation, including: • Rate regulation for basic cable service • Regulation of prices for cable equipment • FCC rule makings related to the 1992 Cable Act ■ How the Telecommunications Act of 1996 affects the City's renewal process, for example: • Factors for approval of a second franchise • Process for renewal • Areas in which municipalities are allowed to establish requirements of the cable operator • Factors for denial ■ How the Telecommunications Act of 1996 affects telecommunication competition in the City ■ Rate regulation and the impact of Social Contracts ■ The FCC's recent OVS decision; potential impact on the status of existing cable operators; role of utilities I - 6 ■ Consumer protection issues, including anti-buy through, negative option billing, consumer notice of free movie options; uniform rate structures; customer service standards and privacy provisions ■ Must-carry and channel positioning provisions, including: • Carriage of noncommercial stations and low-power TV • Maintenance of public,educational, and government access channels on the basic tier • Retransmission consent ■ Requirements for operators, including EEO, emergency announcements, home wiring, leased access, and ownership and control. During our initial consultation sessions, our first objective will be to inform the City about all practical implications of the 1992 Cable Act and the Telecommunications Act of 1996, and to make recommendations to the City's procedural and material compliance with it. We will work with the City to confirm the specific procedures that must be followed prior I 6m to and during the cable franchise renewal processes in the City of Ithaca,New York. Broad Economic, Regulatory, and Legal Issues With the recent passage in Congress of the Telecommunications Act of 1996 to deregulate the telecommunications industry on a much broader scale, it is important for the City to understand the impact that this new bill will have. We would discuss the potential impacts within a broad context of industry dynamics, court decisions, and other pertinent rule makings. Thus, our initial consultation sessions will also address: ■ Implications of industry changes upon franchising authorities, for example: • Telephone company entry into cable • Cable TV operator entry into telephone and data service • Consolidation among cable industry players resulting from recent mergers and acquisitions • Technology developments that alter the prospects for cable television ■ Recent legal/regulatory developments, including House and Senate proposals affecting the telecommunications and cable industries,and how these changes would have an impact upon franchise authorities ■ Newly adopted FCC technical standards w I - 7 .. ■ Pertinent court cases affecting franchise authorities'regulatory power. Rice,Williams Associates will give special attention to advising the City about the potential �- impacts of emerging industry, economic, regulatory, or legal outcomes upon future telecommunications/cable TV plans and policies that the City might be considering. Most importantly, Rice, Williams Associates will identify specific areas in which proposed telecommunications legislation and court decisions may have an impact upon the City's ability to regulate cable and other telecommunications. Throughout the period in which we perform service to the City, Rice, Williams Associates will keep City informed of emerging regulatory issues and policy making initiatives in which the City may want to participate or comment. Identification of Local Policy Issues Rice, Williams Associates will also provide insights and advice on policy issues related to local telecommunications franchise administration and regulation. We will place highest .� priority upon providing advice and consultation on the City's most pressing issues. Drawing upon our firm's extensive experience in working with other franchising authorities, we are familiar with a complete range of local policy issues of concern to local policy makers. We are prepared to address the implications of any of the following: ■ Use of streets ■ Organizational structures for access center ■ Rights-of-way management ■ Extension of service ■ Technical requirements ■ Upgrade to expand channel capacity L ■ Regulatory structure ■ System financing provisions ■ Fees ■ Access programming and facilities I - 8 r.. ■ Access provisions ■ Buy-back options ■ Transfer of ownership ■ Competitive Access Providers ■ Institutional networks and services ■ Consumer service practices ■ Competition for the franchise. ~ Investigation and analysis of some of these policy issues may require embarking upon special research, conducting public hearings, and/or requesting information from the cable company. Should any of these activities be required, Rice, Williams Associates will work ` closely with the City to coordinate research, develop information requests, and develop schedules and procedures to enter information most appropriately into the public record and related procedures. We will also be available to attend the City's public hearings. Rice, Williams has several municipal clients which have received requests and/or have granted second franchises. We are well aware of the primary issues including how to achieve a level playing field that meets subscriber, City,and institutional needs. Of particular public benefit in construction of fiber based systems is the provision of fiber optic capacity for City •- utilization. We have negotiated on behalf of municipalities with many companies and have been successful in obtaining a large amount of capacity for our clients. We can advise the City regarding methodologies for obtaining competitive services. We will advise the City on obtaining Internet access. NCTA and FCC initiatives to have Internet provided to the schools will be reviewed and we will discuss strategies for receiving Internet access for the schools and public buildings. Local Cable TV Service Performance/Goals Although we would assess the cable operator's compliance with the local cable ordinance at a later step in the franchise renewal process, the City would provide Rice, Williams Associates with an broad overview of the cable operator's track record of regulatory compliance, cable service, and support for access channels and programming. In addition,we would be briefed on the City's goals for the future to ensure that we have a full, complete understanding of the City's objectives as we work together to design the franchise renewal process. 1 - 9 ~ In the initial consultation session, we would address the technical and financial considerations of reaching the service goals identified by the City. As part of subsequent tasks discussed in this proposal, Rice, Williams Associates would work with the City to .. assess the technologies required to meet the community's future communications needs. Task II: Community Needs Assessment and Consumer Market Survey _ Rice, Williams Associates is firmly committed to the belief that local cable communications can provide: ". ■ A vehicle for community dialogue on local issues ■ A cost-effective method to disseminate information and services to the public by the -- City, local governments and public institutions ■ Improved entertainment, information, and service options to the public. An important step in the cable refranchising process is the City's estimation of its "future cable-related community needs and interests," as stated in the Cable Communications Act of 1984, the Cable Television Consumer Protection and Competition Act of 1992, and the Telecommunications Act of 1996. Rice, Williams Associates will assist the City in conducting a thorough assessment of municipal, community, and consumer demand for enhanced local programming,additional communications capabilities,and improvements in other types of cable service. Rice, Williams Associates would conduct two types of surveys: ■ A community needs assessment, which would consist of a workshop and survey of the current and potential users of the government, public, and educational access channels and facilities and other existing and proposed institutional services such as data communications, traffic signalization, video surveillance, and telephone line replacement, among many others ■ A consumer market survey that would measure cable subscriber satisfaction on a wide variety of issues including repair, installation, picture quality, among others, demand for expanded cable service, Internet access, facilities, special services, competition,and local government,education,and community access programming. The methodologies for performing each of these activities follow. I - 10 r. Community Needs Assessment Rice, Williams Associates will work with City staff and the City Cable Commission to identify the local government departments, schools, public service agencies, and other organizations to be surveyed for this ascertainment. If desired, an information seminar would be held to inform organizations about the potential of using cable access channels. Rice, Williams Associates will consult with the City on the design and administration of the survey used in the ascertainment. The specific outcomes of the survey would be to identify: ■ The community's need for public,educational,and governmental access channels and programming support over the long term ■ Public buildings and institutions that currently or in the future want to utilize access and institutional channels,video equipment, and cable drops •.• ■ The need to replace or upgrade access equipment,facilities, and access services that are currently being provided .. ■ Interest in and benefit from utilization of institutional telecommunications capacity ■ Current and future demand by the City for use of an institutional network. This would include identification of specific ways in which the City would achieve cost savings via intra-governmental communications and cable/fiber optic delivery of information and public services ■ Identification of current and potential applications, such as: • energy management • closed-circuit training program delivery to work sites • security services • delivery of library information • data transmission -- • traffic signalization • video surveillance, and • leased telephone line replacement. Mailed questionnaires will be used to collect the information. Once the data has been collected and verified, Rice, Williams Associates analyze the results and provide a report, and a summary to the City, including specific recommendations. I 11 This activity would provide data to evaluate how well the current cable operator is supporting public access and how future needs for public, educational, and government access might be met. Once we have identified potential improvements to enhance the quality -- of service cable television service,Rice,Williams Associates would then assess the technical and financial feasibility, public benefit, and cost-effectiveness of implementing these potential improvements. Our activities will support the City's decision making on the scope of the access support, technical parameters, and services to be specified in any new cable franchise agreement. Additionally, full documentation of city and community needs and interests enables the City to present the strongest case during final franchise agreement negotiations. Consumer Market Survey ,,. Our consumer market survey provides a means to receive input on the existing and potential cable services from a cross-section of subscribers. This survey would be designed to determine: ■ Customer satisfaction with installation, sales, repair work, response time, picture reception, billing, appointment scheduling, and outages s ■ Consumer interest in specialized subscriber terminal options, such as picture-in- picture a Consumer penetration of computers ■ Consumer interest in competitive cable service ... ■ Public interest in telecommunications competition ■ Consumer interest in expanded cable services,increased channel capacity,additional local access programming, additional programming, and special offerings -- for example, computer services ■ Consumer interest in Internet access,computer services, personal business services, government interactive services, and interactive programming. The approach to determining customer satisfaction and needs that we recommend is as follows: Following discussions with City staff and the City Cable Commission, and a review of existing program and service offerings,a questionnaire would be designed by Rice,Williams Associates. Rice, Williams Associates will insure that the survey provides a valid I - 12 representation of cable subscribers. The survey design will be cross-sectional. A random sample of residents will be scientifically generated to ensure that representative results are obtained from all geographic areas. The data from the survey will be elicited, coded, and verified to ensure valid results. Computer data analysis will be used to calculate relevant frequency distribution, r- corresponding Statistics and any relevant cross tabulation of data. Pre-tests will be conducted prior to the start of the project with input as to specific language and question content. All telephone interviews are conducted using trained and monitored interviewers. Call backs are made at the completion of the survey process to assure compliance with proper survey procedures. The sample will yield statistically valid results at the ninety-five percent(95%) confidence interval,and a not-to-exceed two-tailed error level. The error level is based on the standard .. error of the estimated percentages for the sample which is the difference between the survey results obtained with the sample and the result that would be obtained by a complete census of the population. This means that for any question in which fifty percent (50%) of the respondents answered"yes," the true population value lies in the interval between forty-five and fifty-five percent(45%-55%),and that ninety-five percent(95%) of all samples would yield results within this interval. A report on the findings of the consumer market survey will be prepared for the City to provide a solid basis for analyzing the existing cable operation and documenting the interest in new offerings. All surveys will be accompanied by a report summarizing and interpreting the relevant data, including recommendations for incorporating the results into the public record and using them as the basis for future planning and evaluation. .... Task III: Technical Evaluation of the Existing Cable System Rice, Williams Associates will conduct a technical analysis to determine the level of technical performance achieved by the existing cable system, compare the findings to industry standards,and analyze proposed options for upgrading and/or rebuilding the system. We would devote special attention to assessing the useful life remaining of the following types of equipment and systems: ■ Tower and antennas ■ Satellite earth stations I - 13 RICE, WILLIAMS ASSOCIATES October 7, 1997 Mr. H. Matthys Van Cort a 'ig97 Director of Planning &Development City of Ithaca DEPARjpENT OF 108 East Green Street IN Ithaca,NY 14850 Dear Mr. Van Cort: Please accept this letter as the response to your letter of August 29, 1997. 1. Legislative Review Review provisions of the Cable Communications Policy Act, review of the Telecommunications Act and related FCC decisions. As indicated in our proposal, we would review the provisions of Cable Communications Policy Act of 1984, the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act"), and the Telecommunications Act of 1996, and related FCC decisions with the City during the initial consultation with the City. The cost for Task I - Initial Consultation is $1,560. Please see pages I-6 - I-10 of our proposal. 2. Customer Information Survey of customers and focus groups to identify community needs. A telephone-based consumer market survey was included in our proposal at a cost of $11,500. Please see pages I-10 - I-13 of our proposal. The telephone based survey will provide the most reliable information regarding consumer needs and interests. We selected this methodology as it is not self selecting as mailed surveys are and the results are considered valid by the cable industry. We would be pleased to add conducting focus groups to our proposal should this be deemed necessary by the City. We would propose conducting five focus groups and preparing a report on the results for a cost of$4,500. As determined by the City, we would be prepared to conduct more or fewer groups. We will work with the City to determine the optimum configuration for the groups. Focus groups could include: general consumers; educational institutions; government departments and bodies; public access users; businesses, and other 601 Pennsylvania Avenue,NW Suite 900 774-C Walker Road,P.O.Box 765 Washington,DSC 20004 Great Falls,VA 22066 Phone:(202)737-2400 Phone:(703)757-0570 Fax:(703)757-0573 Mr. H. Matthys Van Cort October 7, 1997 Page 2 community leaders. For the focus groups we will prepare the focus issues and questions after discussions with the City. The questions will focus on the main issues for the process including, channels,future services such as digital and Internet; institutional network needs; interconnection access equipment, facilities, financing, and access organizational structure. 3. Plant Technical audit, planned changes to plant and changes to programs and services. Task III of our proposal includes the technical evaluation of the system which includes a review of company plans for the future and our recommendations,at a cost of$9500-$13000 and$6,500 for a technical evaluation of the current I-net. Please see pages I-13 - I-16 of our proposal. 4. Accounting, Financial Analysis Financial analysis, franchise fee payment review and review of local property tax deduction. A description of the financial analysis and the franchise fee audit is included in our proposal under Other Services.Please see pages I-28-I-32 of our proposal. The cost for these services is $6,890. In addition, we would review the local property tax deduction for$2,405. 5. Compliance Review Review for compliance with existing franchise including payment of all fees. In Task IV of the proposal, we indicated that the cost for compliance analysis would be between$3,200 and$6,200. Please see pages I-16 -I-17. 6. PEG PEG analysis, development of not for profit access management organization. Public and governmental analysis is included in several tasks within our proposal from the viewpoint of subscribers and local organizations. RWA would also recommend and assist in the development of a not for profit access management organization. 7. I-NET Institutional network and expanded community needs. Institutional network analysis was covered in our proposal in Tasks, I, II, III, VI, VII. A more detailed assessment of I-net needs would include in-depth interviews with individuals representing organizations. The cost for such additional interviews of pre-screened I-Net site users if deemed necessary would be $3,120. Mr. H. Matthys Van Cort October 7, 1997 Page 3 8. New Agreement New franchise and agreement franchise renewal negotiation. Task VII and IX describe the work we would conduct on the behalf of the City for drafting the franchise 9. Municipal Ownership Strategic and long-run plans of the community,competitive options. RWA proposed a municipal ownership feasibility study as Part II of our proposal. The task called Initial Consultation for Municipal Ownership would provide a great source of current information on municipal ownership and other competitive options. Focusing on"strategic" and "long-range plans" would, of course, be premised on a thorough feasibility study. 10. Consultant Fee Payment of consultant fee by Time Warner. During the initial consultation,we will discuss the City and Company interpretation of the law and related court cases. Options to discuss are including it as a requirement in the RFRP and/or making it a major issue in negotiations. Past experience and existing franchise and ordinance will be discussed Sincerely, lean Rice Partner JR/jms Attachment THE TELECOMMUNICATIONS INVENTORY RICE, WILLIAMS ASSOCIATES Analyzing the types of telecommunications networks,services,and competitive alternatives that are already in place and in use within the community is an important component of building any local government telecommunications plan. Taking this telecommunications "inventory" is the first step towards making the local government's telecommunications initiatives more concrete. This chapter discusses how a local government might conduct this inventory as it progresses toward two complementary goals: • To develop a framework for a broad telecommunications policy for the local government that promotes competition and fair deployment of .services • To provide the foundation for planning the next phase of the local government's own internal telecommunications network for more efficient implementation of local government functions. The first goal involves high-level policy making, while the second per- tains to functional, day-to-day operations; nevertheless, the framework for taking a useful inventory for local government planning remains the same. 56 Telecommunications:Planning for the Future Tablell Elements of an Effective Telecommunications Inventory Policy Level Operational Level Inventory goal To provide data to support broad To provide data to plan more economic and social planning efficient telecommunications initiatives support for public sector operations Technical Level of telecommunications Physical and logical network inventory competition within the components community Service contracts Network/service deployment Potential market entrants/new services Environmental User applications driving growth Public sector telecommunications inventory State regulatory authority and utilization (external) competition initiatives Public sector user needs Capabilities Local regulatory authority Internal telecommunications staff inventory Local regulatory capabilities Network design/management (internal) Existing policies/licenses capabilities Financial resources Y�T Result Establishment of plan that aligns currently existing policies(if any) Identification of public sector and private sector resources that might be utilized within a comprehensive telecommunications network plan Table 1 introduces the key inventory elements that will be addressed in detail within this chapter and suggests the role each plays in providing data upon which to build highly effective telecommunications plans. When a local government conducts its inventory across these two dimensions simultaneously—the broad policy dimension and the internal network dimension—the result is that it will identify a broad range of pub- lic sector and private sector resources and capabilities around which a more comprehensive network can be designed. This chapter first describes procedures for conducting a technical, envi- ronmental, and capabilities inventory to achieve a local government's broad policy making goals. Then follows a discussion of inventory procedures to support internal telecommunications network planning. Chapter 6, "Set- ting Goals and Analyzing Alternatives,"provides the methodology for com- bining and analyzing the results of these two initiatives. The Telecommunications Inventory 57 Inventory to Support Policy Development Defining the existing telecommunications environment within the commu- nity is the first step toward effective formulation of a telecommunications policy that encourages competition, supports economic development, and provides necessary services to all constituents. Increasing competition among players in telecommunications markets, new federal and state telecommunications regulations, and rapid advances in transmission technology are three trends that challenge local govern- ment policy makers in mapping and defining this changing market. The following"inventories"will help them understand how supply and demand are reflected in the local economy and decide upon the appropriate role for the local government in the process: • Technical inventory—defines the range of telecommunications service providers competing in the community (i.e., supply of services) • Environmental inventory—focuses on the degree to which demand from telecommunications users, actions of state regulators, and the new federal telecommunications legislation are fostering growth and com- petition in telecommunications services (i.e., demand) • Capabilities inventory—addresses the local government's authority and resources to regulate current and future telecommunications services and providers. The Technical Inventory At a very basic level, simply defining the number of telecommunications service providers operating within a community and understanding the ser- vices each provides is useful to policy makers. This supply-side inventory will identify commercial and public sector providers of telecommunications service. Table 2 presents a very broad classification of the types of service providers that are likely to be operating in a large metropolitan or subur- ban area. Defining the local telecommunications service market. This sum- mary is a useful sketch from which to begin drawing a profile of a local commercial telecommunications market. Policy makers should identify: • The number of service providers in each of the categories shown in Table 2 • The names of service providers and contacts at each company 58 Telecommunications:Planning for the Future •The types of network facilities owned by each, for example: ■ The degree to which fiber is utilized ■ The degree to which networks interconnect with local exchange carrier(LEC)facilities ■ Points at which LEC interconnection occurs •The geographic reach of these networks within the community • The types of services offered (e.g., voice, data, video) •The degree to which additional companies are reselling services over facilities owned by others • The estimated local revenue generated by each service provider, indi- cating the percentage that is generated by consumers versus business users. Although local revenues generated may not be information readily available from service providers in a community, even rough estimates based upon discussions with different service providers can produce a valuable indica- tion of the total market for telecommunications services in the community. Although most entries in this technical inventory will be commercial Table 2 Categories of Telecommunications Service Operators Type/ Facilities-Based Non-Facilities-Based Technology Operators Operators Wired Local exchange carriers(LECs) Long-distance service resellers • Twisted pair Long-distance carriers Local service resellers (future?) • Coax Cable television operators • Fiber Competitive access providers Wireless Cellular carriers Wireless resellers • Radio Paging services • Microwave Competitive access providers Specialized mobile radio services Personal communications networks (PCN) Wireless cable (MMDS) Direct satellite services The Telecommunications Inventory 59 service providers, it is important also to include any private non-commer- cial networks that are owned,operated, or shared by organizations or insti- tutions that might be encouraged to pool facilities in the future: • Universities or other educational institutions • Hospitals and health care facilities • State or county agencies located in the community •Area public safety organizations • Public utilities • Other non-profit organizations. Some of these entities may be operating their own facilities (e.g., fiber optic links among hospital facilities in a campus environment). Others may be leasing facilities from commercial operators or other non-profit organiza- tions and institutions. (A more detailed discussion of how to inventory the local government's own internal telecommunications infrastructure is pro- vided later in this chapter.) Determining future services and networks. New federal telecom- munications legislation, strategic repositioning by service providers, state regulation, and technology improvements will undoubtedly cause the list and type of service providers in the community to change over time. To en- sure that policies that are enacted today provide the best environment for local telecommunications development,local government policy makers must understand and anticipate the types of changes that might occur. Table 3 summarizes some of the potential shifts of which policy makers should be aware. As discussed in Chapter 3, recent federal telecommunications legisla- tion has opened to all of the above players markets that were formerly closed to them. Local government planners must keep in mind, however, that new competition rules alone do not dictate whether a particular service provider will feel that entry into a particular market is a good business move. Much depends upon the size of the market, the level of existing competition, the difficulty and expense of building and/or leasing the necessary network facilities, and whether such activity is likely to be profitable. Thus, in developing an idea of the eventual shape of the telecommuni- cations market in their particular community,planners will find it useful to find out more about the plans of each of the current service providers over the next two to three years.A local government can approach local service providers directly to discuss the following issues: 60 Telecommunications:Planning for the Future Table 3 Potential Changes Affecting Service Operators Telecommunications Service Providers Emerging Issues Local exchange Entry into the long-distance market carriers(LECs) Provision of video services to homes Subject to increased competition from CAPS for business revenues Competition in the local market(i.e., loss of monopoly) Long-distance carriers Potential entry into local service market(as permitted by competition rules) Cable television operators Entry into local service market(i.e.,consumer telephony) Provision of high-bandwidth data connections (i.e., Internet connections) Investments in telecommunications businesses (e.g.,wireless,satellite) Competitive access Entry into local private-line and switched services providers Vigorous price competition for LECs Wireless carriers Competition to traditional telephone companies (cellular, paging, PCN) Entry of PCN into existing cellular markets Migration from analog to digital networks Wireless cable(MMDS) Competition posed to cable TV Direct satellite services Proliferation of small-dish TV receivers and direct satellite services Competition posed to cable TV • The degree to which each will be upgrading its network technology • Whether geographic network expansion is planned(e.g.,whether com- petitive access providers will run fiber to new parts of town) • The types of new services that will be offered over the next two years. Smaller communities should recognize that many of the types of net- works and service providers discussed here may not be present in their local markets. For example, competitive access providers (CAPS) and wireless cable operators are not active in all cities of all sizes. Understanding the reasons that competition to the local telephone and/or cable company has not emerged is very important. Planners should approach particular types of service providers in other,larger places and discuss the reasons that they have not chosen to enter the local market. Fact-finding through discussion with all types of network operators will The Telecommunications Inventory 61 provide local staff with a thorough understanding regarding the plans,technical issues, business issues, competition, strategic thinking, and financial constraints affecting commercial and public sector network operators. The insights gained in this manner will provide: •A valuable framework for assessing a community's relative standing as a market offering a diverse supply of telecommunications services •A basis for judging the realism of telecommunications proposals that will be presented to the local government over time. Environmental Inventory (External) Two primary factors that influence the extent and nature of telecommunica- tions services in any local market are: • The demand for various types of telecommunications services from users—consumers, businesses, and the public sector • The degree of competition that is allowed by state regulators and new federal legislation. These are forces outside the control of local government regulators and are therefore termed "environmental" factors. Taking an inventory of tele- communications use in the community and understanding drivers of future demand for telecommunications services can be conducted through a formal analytical process; taking an "inventory"of competitive opportunities insti- tuted at the state level is done qualitatively via a less formal method. Inventory of local telecommunications use. Utilization of telecom- munications networks has been increasing, driven by lower prices to end users and proliferating computer and data applications that are enabling businesses to conduct business very efficiently over great distances. Inter- est in the Internet, online services, and telecommuting is driving network usage from homes as well as businesses. Earlier chapters of this book have discussed the importance of high- quality telecommunications infrastructures to the economic well-being of most communities, particularly those with information-intensive business sectors and institutions. Local government officials must understand how local businesses and institutions actually use telecommunications services in order to understand how the local government might play a role in enhancing the appropriate infrastructure. This "inventory" approach identifies the degree to which: • Different sectors of the local economy are utilizing different applica- tions and network configurations 62 Telecommunications:Planning for the Future • Communication links are contained within the community,versus long- distance or international links • Consumer demand for telecommunications is growing. Business and institutional users. Large businesses and institutions,such as health care facilities and universities, are the most significant users of high-bandwidth telecommunications capacity and are the leading innova- tors; thus, these types of users have the most to gain from deployment of state-of-the-art networks within a community—networks that facilitate LAN- to-LAN interconnection,high-speed data transmission,and networked mul- timedia applications. Local government planners should probe the types of networks used by some of the larger,more important businesses and institutions—for example, the degree to which: • Services other than plain telephone service are being utilized • Dedicated lines (i.e., private networks) are used • Local links connect the primary site to: • Other sites within the community(e.g., manufacturing plants, data processing facilities, health clinics) Long-distance carrier point-of-presence • Demand will vary over the next two years: Different applications a Different types of network services/capacity required. Results from these discussions can be used to generalize about other companies or institutions in these sectors. This inventory will yield valu- able insights regarding the typical pattern of telecommunications use in the community and the trends that various sectors believe to be important. Consumer demand. Discussions with service providers should yield some insight into the factors driving consumer demand for voice and data ser- vices within the community.Although wireline and wireless operators may be reluctant to reveal exact usage statistics, they should be able to provide general observations on consumer(vs. business) trends in the community: • Growth in wireline and wireless voice services(e.g., static,increasing, or decreasing) The Telecommunications Inventory 63 • Demand driven by increased Internet and online connections from home. Inventory of federal and state regulation. Where competitors have been allowed to enter markets long dominated by telephone company mo- nopolies, telecommunications users have benefitted from lower prices and better response time for service. Regulators in states such as California, Illinois,and New York have pioneered telecommunications competition rules, setting an example that other states have followed. Recent federal telecom- munications legislation has built upon this base, affirming the goal of maxi- mizing the benefits of competition. Local government planners must familiarize themselves with the new federal law in order to understand how it might affect their local markets. The law recognizes that competition cannot be expected to emerge without the existence of fair ground rules: rules that protect the newcomer from unfair advantages that might be used against it by the dominant player in the market. The local government's inventory of federal competition initiatives should include: • The ground rules for fair competition • The competitive market conditions that must be met before a service provider is no longer considered a monopoly. Analysis of the local market will include: • The degree to which competitive market conditions have been met in the community • Identification of companies (or types of companies) that are likely to enter the local telecommunications markets as new competitors. In many states, regulators have already established ground rules for fair competition that are grandfathered under the new law.Competitive access providers (CA-Ps), for example, have been allowed to compete against tele- phone companies in many cities.Many state regulators felt that CAPs would not have a chance to compete successfully unless they were given permis- sion to interconnect with the telephone company network.Today,most states have specific provisions for interconnection (i.e., virtual co-location) of fa- cilities. The first services offered by CAPS were high-capacity, dedicated lines, which linked users via optical fiber either to nearby buildings or to the long- distance carrier point-of-presence.Today, state regulators are working with all of the players to iron out the details of how competition can be expanded to switched service: 64 Telecommunications:Planning for the Future • How LECs should unbundle network components so that interconnec- tion charges are fair • How competitors should be compensated for using each other's net- works to connect calls • How customers will be able to keep the same telephone number as they move (known as "number portability"). Local government planners should be aware of the progress being made at the state and federal level to determine these types of fair-competition ground rules.Although local governments may not play a direct role in the establishment of such rules, their determination may affect the timing of market entry by new competitors. The new federal legislation sets the stage for competition to provide local services—a business long operated as a monopoly by local telephone companies. Several cities are currently experimenting with models for local competition. Rochester,New York,provides a good example of how competi- tion could emerge. In this community, the local telephone company has organized itself strictly as a common carrier and is leasing its network to all service providers at wholesale. Competitors include: •A fully separated subsidiary of the parent company that owns the tele- phone network •A facilities-based long-distance carrier as well as long-distance resellers • The local cable company •A subsidiary of a fiber-based competitive access provider. Although the future shape of the competitive telecommunications mar- ket remains unclear, the Rochester model suggests that new competitors may not put extensive emphasis on building new networks to every home; rather, the competitive framework in Rochester is based more on the eco- nomics of service, sales, and marketing. The lesson for local government planners is that they must anticipate many different models for competition over the next several years and ana- lyze the potential role of the local government in each. Capabilities Inventory (Internal) Local governments across the U.S. have had significant experience in fran- chising cable television service. Since the emergence of CAPs, many cities have written ordinances that regulate the institution of CAP service in the area. Under the new federal telecommunications legislation, telecommuni- The Telecommunications Inventory 65 cations and media companies have permission to enter each other's former monopoly businesses. Local government regulators are faced with an entirely new set of market issues and changes to the traditional regulatory structure. This portion of the inventory activity serves mainly as an issues check- list to be used by the local government as it considers its regulatory author- ity and capabilities under the new law. Broadly, the internal capabilities inventory addresses: •Assembly of the existing body of policies and licenses for telecommu- nications and media companies that the local government has instituted • Identification of the local government's ability to regulate or other- wise participate in the establishment of new telecommunications and media competitors within the community. Unless the local government has a large telecommunications staff, review of existing telecommunications and media franchises is typically provided by consulting firms specializing in local telecommunications issues.The first step for the local government is to understand the extent to which it has legal authority to regulate or license new telecommunications activities, for example: • Telephone company provision of video services via the telephone com- pany network in competition with the licensed cable TV operator • Cable TV company provision of leased lines for private networks in competition with the telephone company • Distribution of video programming direct to homes via wireless trans- mission technologies—that is, satellite or wireless cable • Networks constructed for distribution of other wireless voice and data services (for example, personal communications networks). Whether or not a service is facilities-based will affect licensing deci- sions for new competitors. Cable franchises and CAP franchises have tradi- tionally included fees to cover use of public streets and property. In many cases,the local government will retain some powers involving rights-of-way. For example, traditional licensing provisions on rights-of-way included: • Line placement • Sharing of underground conduit i 66 Telecommunications:Planning for the Future •Joint planning with other carriers and utility companies • Reconstruction of streets • Insurance issues. Local governments will have to understand the new rules of competi- tion and their implications locally to ensure that actions by the local gov- ernment do not hinder competition under the law, as facilities-based and non-facilities-based competitors enter the local market. Information derived from the technology, environmental, and internal capabilities inventories will drive formulation of a broad telecommunica- tions policy that sets the stage for competition and development of the local infrastructure. The following section addresses the local government's in- ternal telecommunications capabilities. This aspect of the telecommunica- tions inventory will complement the process of assembling a comprehensive local government telecommunications plan(detailed in Chapter 6). Inventory to Support Development of a Public Sector Telecommunications Network The core purpose of the inventory activities described below is to provide sufficient data to plan more efficient telecommunications support for public sector operations. A chief characteristic of the inventory activities described below is the reliance upon personal interviews and other types of systematic data gathering. The operations segment of the telecommunications inventory follows the same conceptual model as outlined above, but focuses strictly upon the internal operations of telecommunications networks owned,leased,or oper- ated by the local government. • Technical inventory—defines the technical components of the existing network and contracts for service from other suppliers (i.e., supply of telecommunications services to the local government) • Environmental inventory—examines public sector use of the existing network and looks ahead to future utilization patterns (i.e., demand for service from departments, agencies, public safety, and health sectors) • Capabilities inventory—examines the role of telecommunications staff in managing, maintaining, planning, expanding, and financing the network. The Telecommunications Inventory 67 Inventory procedures described here are similar to those followed by most telecommunications managers planning, upgrading, or consolidating any private network. Like most other network operators,local governments should strive to maximize resources,eliminate redundancy in facilities,use telecommunications to streamline the work being performed by local gov- ernment workers,and allocate enough resources(budget permitting)to meet the challenges faced in the public sector in the coming years. Technical Inventory The purpose of conducting a technical inventory is to understand the nature of existing telecommunications and computing networks operated by the local government.This inventory focuses on the operators of major data centers and networks within the local government. Coupled with the output of the environmental inventory (i.e., the manner in which local government departments use these facilities), the data collected will provide the local government with input required to map a technology/applications migra- tion strategy to meet needs for the coming years. All departments and agencies of the local government should be included in the technical inventory to determine the degree to which each supplies or is supported by existing networks and telecommunications services. When completed, the technical inventory will map: • The number and type of networks supported by each local government department • The types of interconnections within and between local government departments or other locations/organizations Locations connected Transmission circuits utilized Special characteristics Quantification of network hardware and components. In order to collect information most effectively, it is useful to distin- guish the suppliers of information within local government from the users within local government. Suppliers of internal data will have the responsi- bility for organizing the manner in which information is distributed; thus, major information-processing centers will play a larger role in the choice and acquisition of telecommunications and computing resources. Thus, the technical inventory should begin by focusing upon any department known 68 Telecommunications:Planning for the Future to have a computing center of significant size, working down to sectors of the local government organization with comparatively minor facilities, as shown in Table 4. Identification of major data centers and overview of key network facilities. The first step in the technical inventory is to identify locations of key databases serving local government departments. Large, sophisti- cated call centers that depend on information processing systems (e.g., 911 facilities) should also be included within this first phase of the inventory. Discussions with each significant data center (or call center) operated by the local government should identify the general characteristics of the computing environment: • The general architecture of each data center. Distributed computing environments(e.g., client server architectures) are rapidly proliferat- ing within the U.S., but many applications within local governments continue to rely upon mainframes. • General locations of key elements of the information system, for example, mainframes, minicomputers, file servers • Data protocols • Names and locations of the departments that use these information systems. Locations connected. The information gathered at this stage of the in- ventory provides a broad understanding of the nature of the local government's networks—where the information is being sent and how it is being sent. One aspect of the inventory should focus upon the extent to which the infor- mation being processed within a department is being received or sent by workers on other floors and other local government buildings. For example, the inventory should identify the degree to which each major data center or call center uses: • Direct connection of terminals to the primary computer • Local area networks(LANs),which are commonly used in most offices to link desktop computers or terminals into a data network so that data can be more easily shared and manipulated • Other connections provided by a telecommunications carrier, for example: ■ Switched circuits that are priced according to usage(i.e.,dial-up lines) The Telecommunications Inventory 69 • Point-to-point, dedicated circuits that are leased from the carrier for a fixed fee These latter dedicated point-to-point links function as the local government's • Metropolitan area network (MAN) that connects different buildings within the local government's network • Wide area network(WAN)that connects sites over long distances—for example,public safety departments are often interconnected with state databases via the state's WAN. Network planners should also be asked about the general topology of the transmission network, that is, whether the general topology is a star, mesh, bus, or other configuration. Table 4 Technical Inventory Approach Priority User Type General Information Sought 1 Major data center supplying Locations connected information to many internal users Transmission circuits obtained Special requirements Data center/network hardware 1 Major call centers, handling many Dedicated transmission links incomingloutgoing calls with the Special telecommunications public(e.g., 911) requirements Call center hardware 2 Departments/agencies supplying Locations connected video transmissions for internal Transmission circuits utilized applications (institutional network) Special requirements Video hardware 2 Significant user of information Locations served supplied by other departments or Transmission circuits required outside sources; reprocessing data Special requirements for further distribution Hardware inventory 3 Departments or agencies using only Hardware inventory(e.g., desktop simple telecommunications or computers,telephones) computing technology(low-tech departments) 70 Telecommunications:Planning for the Future Ransmission circuits used. To evaluate whether greater efficiencies can be achieved by reconfiguring portions of the existing network or by switch- ing suppliers, the inventory must next examine the technical nature of the links more closely. The inventory should document the number and type of dedicated circuits used by each data center: •Whether the type of circuit is twisted pair, coax, or fiber. For some applications (e.g., dispatch of repair trucks by utilities),wireless con- nections might also be used. • The number of dedicated circuits/total bandwidth per link(e.g., DSO, DS1) • Nature of applications on circuits (e.g., data, voice). In each case,sources and pricing of telecommunications capacity should also be identified: • Suppliers (e.g., telephone company, cable company, CAP, municipal utility, local government-owned fiber or microwave network) • Nature of service contracts (e.g., duration of agreement, stipulation) • Fees charged to the local government by the telecommunications car- rier for these dedicated links. Special characteristics. In planning for the future, it is important to understand the special characteristics that are necessary to achieve opti- mal performance of the information system. Thus, discussions with data center planners and managers should capture insights on why certain net- work arrangements have been made, for instance,why a dedicated line has been chosen instead of a dial-up line.In another example,users who require higher reliability of circuits will often use optical fiber links when they are available. The inventory should note any special transmission features that have been implemented, such as: • Security features to protect databases from hackers and other privacy precautions • Performance minimums that are required by the data center as it evalu- ates transmission options 0 Network management systems The Telecommunications Inventory 71 •Alternate routing,back-up systems,or other precautions for emergencies or power outages. Quantification of network hardware and components. The technical in- ventory should include a detailed listing of the physical components that compose the local government's network—that is, the number and type of: • PBXs and multiplexers (if any) • Other network components, such as modems, CSUs, and/or DSUs •Workstations and personal computers • Other components to facilitate communications in the local computer network, such as bridgers and routers • Other communications devices, such as fax machines and printers • Telephones and other customer premise equipment. For major equipment items, it is also necessary to inventory the types and nature of service contracts that are in force. Inventory of other telecommunications users. As Table 4 summa- rized, the subsequent stages of the technical inventory focus upon second- ary and tertiary users. A technical inventory of users generating video transmissions will focus upon quantifying very different types of facilities than those used by large data or call centers. The bandwidth required for video is significant; thus, the technical inventory should also provide information on: • The frequency of video transmissions • Suppliers of telecommunications capacity for video • Contracts in force to assure availability of capacity for the long term. Many local government departments and agencies are relatively low- tech users of computer and telecommunications technology.For these users, the technical inventory can be limited to: • Counting hardware, such as desktop computers and telephones • Noting the degree to which dial-up or dedicated data lines are utilized day-to-day. 72 Telecommunications: Planning for the Future The manner in which these low-tech users might expand their internal facilities to achieve higher productivity is a critical topic addressed in the environmental inventory discussed in the following section. Environmental Inventory (External) The key factor that influences the development of the local government's internal communications network is the demand for various applications and services by the entire range of local government departments and agen- cies. Local government telecommunications users are likely to expand their use of systems and networks from a single, successful application to addi- tional applications over time.A local government may not be able to afford to implement every application desired; nevertheless, taking an inventory of these"environmental"factors is a necessary input to determine the plan for future system development. The process for carrying out this environmental inventory is similar to that described earlier in this chapter for commercial telecommunications users in developing policy; however, this process focuses upon internal departments and agencies. This environmental inventory will document the manner in which users prioritize their plans for the future, and serve as a key input to the comprehensive planning process described in Chapter 6. The scope of this investigation should include public sector organiza- tions and institutions that reside within the community but that do not come directly under local government supervision: • Universities or other educational institutions • Hospitals and health care facilities • State or county agencies located in the community •Area public safety organizations • Other non-profit organizations. This inventory provides a demand-side baseline against which future development can be measured.The survey should focus on documenting the following for each department, agency, or public sector organization: • The broad goals or mission of the organization • Existing applications supported by telecommunications and comput- ing facilities The Telecommunications Inventory 73 • Telecommunications links established with other organizations or agencies • Planned growth in telecommunications utilization, if any, to achieve the organization's goals in the next three to four years. For example: E-mail and Internet utilization * High-speed LAN-to-LAN interconnection x Dedicated local or long-distance circuits • The organization's rationale for this increased telecommunications utilization • Planned system integration activities with other internal or external systems • Presence of financial capacity to implement this plan. This inventory should consider the long-range telecommunications infrastructure needs of the public sector. It must include indications of the extent to which applications could be adopted over the long term if the facilities, funding, and personnel were available. For example: • Long-term need for additional applications, such as: Teleconferencing or training via desktop multimedia or two-way video Telemetry or monitoring • Increased or higher-performance telecommunications capacity for: * Dedicated links F Telecommuting * Wideband interconnections to other organizations Disaster recovery • Potential need for integration/interoperability with other public sector systems 74 Telecommunications:Planning for the Future • The priority for these applications for staffing and budgets in the future—that is,are they deemed critical in meeting the organization's goals in the long term. From this investigation will come information as to the: • Telecommunications users in the community likely to be driving future public sector telecommunications growth • Future capacity requirements •Types of infrastructure required (e.g., wireline, wireless, broadband) to accommodate future demand • Priorities for spending and the need for a more comprehensive facili- ties plan. Capabilities Inventory(Internal) The capabilities inventory focuses upon the degree to which the internal telecommunications staff working for the local government is currently pro- viding the services necessary to plan for and maintain the local government's existing network. The idea is to establish a baseline of information as to: •The centralization versus distribution of network planning and operations activities for the local government's telecommunications and information systems • Management organization of telecommunications and systems func- tions • Functions of existing staff •Manner in which various tasks are carried out. The local government should identify how the following tasks are carried out: • Network design and planning ■ Systems and telecommunications • Emergency and contingency planning • Security The Telecommunications Inventory 75 • Facilities/capacity purchasing • Day-to-day network management and technical support K Network configuration Work orders F Repairs Help desk for users Trouble shooting • Inventory management • Operations management. This investigation provides a baseline for the current level of activity among telecommunications and information-systems experts within local government. The documentation of user demands for future telecommuni- cations and systems improvements should be compared against the capa- bilities of the internal staff to plan for,implement,and manage these enhanced applications. This side-by-side analysis of the future technical demands and the skill set of the current telecommunications department will show where there are gaps in the internal capabilities of the local government staff to carry out potential upgrades and enhancements. Where gaps occur, the local gov- ernment must choose whether to engage outside consultants,hire additional specialists, or train current staff in new disciplines as new situations arise. Naturally, all plans for improvements and expansions will be mitigated by the financial and personnel resources available to the local government. Setting priorities for upgrades and expansion in a comprehensive manner is addressed in the following chapter. .t SETTING GOALS AND ANALYZING ALTERNATIVES RICE, WILLIAMS ASSOCIATES Use of the information gathered in the telecommunications inventory (de- scribed in Chapter 5) occurs throughout the planning process undertaken by the local government—a process that relies heavily upon public partici- pation and input. As shown in Table 1, the information regarding future demand (infor- mation gathered in the environmental inventory)is used to provide a framework for the capacity and nature of the telecommunications network and policy needed over the long term. After considering the current state of the net- work, services, and other facilities in existence today(information from the technical inventory), a clear picture emerges of what the local government must obtain for its constituents through policy making,encouraging compe- tition, or obtaining facilities itself. Information pertaining to the local government's internal policy mak- ing and regulatory, financial, and telecommunications management capa- bilities guides the local government in assessing the types of outside resources required to achieve this vision. This chapter outlines the processes and analysis that a local govern- ment should undertake to support a telecommunications plan that reflects 78 Telecommunications: Planning for the Future the best interest of the public and acquires the facilities it needs to operate most efficiently: • Setting goals and objectives to drive the telecommunications policy making and the local government's internal network design,based upon public input • Designing alternatives for consideration •Analyzing and choosing from among the options that best meet the local government's goals and objectives. Table 1 Use of Information Gathered in Inventory Future Demand (Environmental) Goals of telecommunications users User applications driving growth New competition initiatives V Current Supply(Technical) Local telecommunications networks in community Service providers Local government facilities/service contracts Other public sector facilities T Gap in Networks/Services/Capabilities Required for Future V Local Government Resources(Capabilities) Regulatory authority Internal telecommunications staff capabilities Network management Network planning Financial resources T Result Establishment of plan that aligns currently existing policies(if any) Identification of public sector and private sector resources that might be used within a comprehensive telecommunications network plan Setting Goals and Analyzing Alternatives 79 Setting Goals and Objectives Understanding the needs of telecommunications users is critical to develop- ing a plan that is realistic and appropriate. The public participation activi- ties suggested here are relevant both to developing broad telecommunications policy as well as to setting the agenda for the public sector's own telecom- munications network development. Advisory groups can help create consensus on the specific objectives of the ultimate plans. Possible approaches include establishment of a: • Citizen task force, which can include representatives from key busi- ness segments in the community and large public sector telecommu- nications users • Local government telecommunications task force, which can include representatives from the large data centers being operated by the local government, other important telecommunications user groups, and other public sector organizations that might share facilities on the local government network. Although both parties will be addressing similar issues,the first group's principal focus will be to determine the goals to be achieved from broad policy making, while the second group will focus on determining the goals for the local government's internal network. The creation of broad state- ments of purpose will keep each group focused through subsequent, more detailed steps of the planning process. (See Chapter 7 for examples of the use of advisory groups.) Setting Objectives for Telecommunications Policy Although the establishment of a broad-based citizen task force is recom- mended,no single approach to telecommunications policy planning will suit all local governments. Regardless of which approach is used, the local gov- ernment should convene a working group to identify the broad goals of the local government's plan. Typically,communities engage in telecommunications and media licensing in order to: • Ensure the public interest is served by enhancing the community's telecommunications infrastructure,addressing business and consumer needs, and guarding the public interest • Promote maximum levels of competition, reducing costs to customers and expanding service • Receive fair compensation for use of public property and streets 80 Telecommunications:Planning for the Future • Fill gaps in federal and/or state regulation and policy. In order to craft a local telecommunications policy that is suitable to the particular characteristics of the community, the citizen task force (or what- ever planning body is responsible for this step) should receive information pertaining to: • The current status of telecommunications competition locally r Telecommunications Policy Objectives for, an;Jose;California 41 The following telecommunications policy objectives were adopted by the city council of Sab'Jose California, in November 1993'to guide the city's involvement inthe telecommunications arena: 1. Rapid infrastructure Development=lt is in the best interest of the City's residents and businesses to encourage and support the most rapid installation possible of leading edge networks within San Jose and all of Silicon Valley.This support might include special handling of project applications,system marketing, regulatory relief,and other incentives. 2. Competitive Service Delivery—It is in the best interest of the City's residents and businesses to develop a competitive marketplace for the provision of telecom- munications services. In the absence of a competitive marketplace,greater regulatory controls will be required to prevent potential excesses of a monopoly which utilizes the public right of way. 3. Universal Access—It is in the best interest of the City's residents and businesses to ensure the broadest access possible to advanced telecommunications services and resources.This access will require both physical and economic consider- ations, as has previously occurred with both telephone and cable service delivery., 4.Public Resource Utilization—It`is in the best interest of the City's residents and businesses to require equitable and consistent fees and taxes associated with private use of the public right of way. Franchisefees,the utility users tax,and public access to systemcapacity are all mechanisms for ensuring appropriate art¢faii4fiscal policies and structures are developed and implemented..: , 5`Regulatogi Slmpl ti– It" :t 1� n tl best f 6terest of the City's residents and klusinesse to support the leastburdensome ancf overlapping.regulatorysystem r_> possible,while recognizing toca['governmentr�firiique responsibtlitestyith regard to iraintaining and way managing the public right of :' Setting Goals and Analyzing Alternatives 81 •The manner in which the federal telecommunications law might affect competition among service providers locally over the next five years •The types of public sector and private sector applications that will be driving telecommunications demand locally over the near term and long term • How the key sectors of the local economy currently use and plan to use telecommunications. Discussion of these issues will focus the group upon telecommunica- tions development issues that are critical toward supporting the local economy. The group will consider where the economy is now and how it should be shaped for the future. Discussing the impact of increased competition among service provid- ers—potentially more choice in local,long-distance,and broadband services— will trigger thoughts on the types of policies and initiatives that will support this new service environment. The planning group should focus on how to bring the existing telecom- munications policies established by the local government(if any)into align- ment to support this vision. Groups that have a clear sense of purpose are highly effective; thus, it is critical for the planning group to craft a broad statement of purpose for the local telecommunications policy that will guide subsequent decision making and planning. Setting Objectives for the Local Government's Network Understanding the broad goals and the information and communication needs of the telecommunications users in the local government is the first step toward planning a better, more efficient use of available facilities and net- work capacity. The information provided to the local government telecom- munications task force should summarize: • The principal goals of the: • Primary user groups within local government ■ Other public sector service organizations that are currently sharing facilities or might consider sharing in the future • The existing interconnections among these groups • Short-term and long-term requirements (e.g., anticipated expansion or contraction of demand) 82 Telecommunications:Planning for the Future • Telecommunications links • Information systems improvements • Rationale for these expansions and/or changes in facilities and capacity • Categorization of future plans into higher and lower priorities. The most important, broad goals driving the operation of local govern- ment should be acknowledged in order to provide a clear direction for any future decision making regarding telecommunications expansion. Just as corporations are firmly linking information systems development to high- level corporation strategy, the local government telecommunications task force should clearly identify the social, political, and economic goals being pursued. For example: • Economic development initiatives • Reduction or expansion of sectors in the community's workforce • Highest priority goals for the local school system • More efficient delivery of social services. The local government telecommunications task force should keep in mind how the highest priority goals will be supported by specific telecommunica- tions initiatives that it will recommend.Having a firm understanding of the primary and secondary public sector priorities will guide prioritization of the telecommunications facilities to be obtained and projects to be autho- rized and financed. After identification of these broad goals, more specific goals can be ad- dressed—more specific goals and missions of the telecommunications users as well as specific goals related to technology implementation. Information from the inventory should summarize how technology and information sys- tems are being used to support the particular missions of the local government's departments and agencies. Later phases of the planning process will deter- mine whether consolidation of facilities or communications capacity could bring greater productivity or financial savings. Discussing telecommunications and information systems goals is very important, since many IS decisions (e.g., LAN interconnection, data center consolidation)will have a direct impact upon the telecommunications trans- mission capacity and configuration required. The planning group should acknowledge any significant local government-wide information-systems/ communications initiatives currently in effect, since these will be key fac- Setting Goals and Analyzing Alternatives 83 tors in mapping out future system design.Examples of such initiatives might include: • Making productivity improvements • Reducing information systems costs • Systems integration projects • Efforts to migrate data off mainframes • Linking schools with video or Internet connections. The outcome of these planning activities should be a clear statement of the broad goals for local government telecommunications,accompanied by a statement of more detailed telecommunications and IS goals for the short term and long term. Designing Alternatives Once the local government telecommunications task forces have identified broad goals for their planning initiatives, each isolates the more specific issues that require discussion and decisions: • The range of potential policies and powers that could be included within the broad telecommunications policy • The technical alternatives that could be incorporated within a public sector network plan. Alternatives for Broad Telecommunications Policy Based upon the information gained from the telecommunications inventory, the policy work group will have a clear picture of the extent to which the local government has implemented existing regulations and policies. Hav- ing discussed the intent and objectives of a broad local government telecom- munications plan and understanding what users and consumers need, the group can then focus on discussing the types of policies and powers that should be invoked to encourage existing and future telecommunications pro- viders to develop the most appropriate infrastructure. To encourage the emergence of different types of competition,individual local governments will likely seek different solutions. Provisions contained currently in local government telecommunications policies and licenses typically pertain to a facilities-based service provider, such as a competitive access provider(CAP)or a cable TV company. For facilities-based telecommunica- 84 Telecommunications: Planning for the Future tions service providers, the local government planning group should decide the specificity of provisions to be included in future licenses and policies: • The geographic areas to be served and routes used • The types of customers that should be served • Facilities construction parameters • Provisions for use of local government rights-of-way • Interconnection guidelines or policies for linkage with other carriers and/or emergency service providers • Service activation provisions • Whether penalties will be assessed for nonperformance • Conditions for revocation of licenses • Fees to be levied by the local government • Economic incentives for new service providers. Many competitors that are expected to emerge under the new federal telecommunications law will simply lease telecommunications capacity from existing providers and resell the capacity and other services to end users. The planning group should consider whether policies or other provisions should be established to facilitate market entry by these new competitors and provide protection for users. For services that are targeted to consum- ers, the planning group should consider the advisability of including: •Anti-discrimination provisions • Consumer protection provisions (in particular, how disputes will be resolved and provisions for unanticipated service outage) • Provisions for connection of service to public agencies, other govern- ment users, and public sector institutions. The planning group should identify the alternative types of provisions that could be included. For example, methods of assessments for service providers have sometimes been based upon the service provider's revenue; in.other cases, they have been based upon the length of the network. When local government boundaries are crossed by a service provider, the license Setting Goals and Analyzing Alternatives 85 must indicate how an equitable allocation of fees will be achieved with neigh- boring municipalities or counties. Reviewing the telecommunications policies and licenses in other com- munities will provide a menu of provisions to be considered for inclusion in the local government telecommunications plan.Appendices A and B present a model telecommunications ordinance and model agreements for imple- menting it. Alternatives for the Public Network The telecommunications inventory provided the local government network task force with information on which telecommunications users within local government are currently linked and which might be linked in the future. Understanding the nature of current relationships among local government information/telecommunications users is critical.As part of its mission, the planning group should map the existing communications links among local government departments and other users, showing: • Capacity/type of dedicated links • Providers of these links • Broad indicators of other public network use (e.g., incoming call vol- umes at call centers, current utilization of wireless services). This exercise will show the traffic capacity of current dedicated links, how much capacity is typically used, and concentrations of traffic at various points throughout the city or county. Taking into account the various users' communications and information systems plans (e.g., investments or up- grades planned) for the next five years, the planning group can determine whether the current telecommunications capacity is sufficient to accommo- date future expansion. Next, the group should map several future configurations of interde- partmental and/or public sector telecommunications linkage, as suggested by the telecommunications inventory. The objective of this activity is to de- velop a broad sketch of how different entities might interoperate or exchange information under several future scenarios. The task force should broadly identify: • Whether future information system upgrades will affect the types of telecommunications links and interconnections required •Whether expansion of user applications at specific points requires new links to be established. 86 lelecommumcations:Manning for the ruture The telecommunications inventory will identify the locations of impor- tant types of telecommunications equipment(e.g.,PBXs,multiplexers)within the local government's current private network.At this point,the group will be able to determine whether integration of user facilities or consolidation of traffic would cut costs, increase efficiency, or in any way serve local gov- ernment users better. A key issue will be whether interoperability of communications equip- ment and systems will enable the type of consolidation suggested. Should equipment incompatibility present a problem, planners should investigate the cost of purchases or replacements necessary to achieve satisfactory interoperability. As different public network possibilities are examined, the task force will discuss the relative merits of: • Use of public network facilities for voice traffic and dial-up data • Advantages of operating a private network: Leasing facilities from a commercial carrier • Building facilities with local government funds * Entering into an agreement for sharing facilities with another private network operator or utility. Many local governments, for example, have examined the feasibility of using dark cable/fiber capacity offered by the cable television operator for data and video transmission(see the Wadsworth, Ohio, case study in Chap- ter 7, for example). This type of institutional network arrangement may require investment of special equipment either by the local government or the cable operator, but has been successfully implemented in many commu- nities on behalf of the local governments and schools. The task force should examine the locations where a private network makes sense and identify the pros and cons of various network configurations to link in user groups. The planning group should identify its options for suppliers of these different links and estimate costs of the different sce- narios for each of the departments involved. The development of alternatives should include observations on how the local government would handle: • Network management •Emergency back-up protection for critical data call centers Setting Goals and Analyzing Alternatives 87 •Availability of additional capacity if growth of traffic occurs more rapidly than anticipated. Analysis Based on Goals and Objectives The refinement of the local government telecommunications policy will be made through discussion of the various alternative provisions in light of the local government's broad economic and social objectives.The specifics of each community's situation will determine how much or how little is required or outlined in the local government telecommunications plan. For example: • Some communities may place a high priority on establishing frame- works for contributions of facilities to schools and other public sector organizations from cable operators and CAPs, while others may not. • Some communities may be growing high-tech industries and service centers,while others may be in areas where there is less demand from users for telecommunications capacity. • Some communities may choose to target specific geographic areas for infrastructure development and provide incentives for telecommuni- cations service providers to do so; other communities may prefer to leave choices on infrastructure for the marketplace to decide. Decisions on the best network for the local government's own internal use can be made by proposing several network alternatives that all have merit. The alternatives should be analyzed based upon how well each: • Meets the applications needs of the users for the long term with sufficient capacity, connectivity, and growth and expansion capabilities • Provides a cost-effective solution, that is, how well the proposed net- work would enable the department to reach its stated objectives: • Make productivity improvements ■ Function compatibly with information systems and upgrades ■ Lower departmental costs. Much of this evaluation will be affected by the user's plans for informa- tion systems and/or voice lines that require dedicated circuits. The ultimate 88 Telecommunications:Planning for the Future ranking of how well each alternative suits the user will be based upon how well this choice supports the objectives of the local government department. The cost of each alternative network solution is a critical evaluation point, as is the cost of not implementing the network as proposed.The plan- ning group should understand: • The cost of current service contracts and arrangements • The cost of maintaining local government owned and operated facili- ties • Costs associated with use of any shared facilities. When each of these evaluation points is established,the planners should list all of the proposed network arrangements and combinations, document- Private Interest in Public Communications In the current climate of competition and market development, many private telecommunications companies are willing and even eager to work with local governments to encourage citizens to use new means of communicating.The Mosaic Projectsupported by GTE is an example. Five southern California cities are participating in this public-private partner- ship with GTE and a local non-profit organization to create and update home pages for the Internet that profile the positive features of the five cities. Each city has contributed$5,000 and GTE has contributed an equal amount toward each home page. The Mosaic Project is one of GTE's long-term strategies"to help people become generally indoctrinated to the information age,"GTE Program Manager Steve Wright explains. "We need to understand how our customers relate to it.That's why we're excited about this exercise. "We know the future of our business is electronic messaging.A lot of local governments have never been on the Internet.They're not sure what it means or if it's a good idea.With government entity participation in this project,we're trying to - leam what telecommunication services will sell." The Mosaic Project"is more than putting a,home page on the Internet,"Wright emphasized."From the home page we can go to a number of interactive forms of gthe information age that are more complex, ranging from online databases to, � permtt'proCesstng"� A Weight said his company intends to work closely with local government f .offictats as they determine how they can use the information superhighway to better � �serve,tFielr constituents. 5ourcer`California County,)anuarytFebruary 1995. Setting Goals and Analyzing Alternatives 89 ing the pros and cons of each. This evaluation will serve as a record of the group's thinking and planning, a useful checklist for future network and planning evaluations. Because technology and telecommunications capabilities evolve so rap- idly, network and systems planning is an ongoing process for all public and private enterprises. The local government should establish schedules for updating and revising these plans to reflect the changing needs of the local government and the local economy. Based upon the local government's overall goals, as established by both working groups, the internal telecommunications task force should rank implementation of network components and new applications that have highest priority and greatest likelihood of success (e.g., intelligent highway, video arraignments, school teleconferencing). The planning group should identify funds and resources available for telecommunications projects and set imple- mentation schedules for these. Evaluations should identify appropriate solutions toward achieving the departments' goals. In cases where transmission capacity is available from a facilities-based carrier, the local government should negotiate for lower rates or facilities for public sector use.Arrangements for use of the network can often be made when the carrier is negotiating with the local government for use of public rights-of-way, an event that could become more common as telecommunica- tions competition increases in both large and small markets. RICE, WILLIAMS ASSOCIATES JUL 1 11997 DEPARTMENT OF July 9, 1997 PLANNING&DEVELOPMENT Mr. Thys Van Cort Planning & Development Director City of Ithaca 108 East Green Street Ithaca NY 14850 Dear Thys, Please substitute the attached resume of Jim Reeve for the technical personnel included in our proposal to the City. Mr. Reeve has over twenty years of experience with cable television and telecommunications system testing evaluation and design. He will personally be conducing the technical evaluation for the renewal process as per our proposal. Thank you for your attention to this matter. Sincerely, Jean Rice JR/jms Attachment 601 Pennsylvania Avenue,NW 774-C Walker Road,P.O.Box 765 Suite 900 Great Falls,VA 22066 Washington,DC 20004 Phone:(703)757-0570 Phone:(202)737-2400 Fax:(703)757-0573 1W RICE, WILLIAMS ASSOCIATES June 12, 1997 u Mr. H. Matth s Van Cort Y Director of Planning & Development JUN 1 3 "r" U City of Ithaca 108 East Green Street PLAN�NG R EENT OFy�EidT Ithaca, NY 14850 Dear Mr. Van Cort: Enclosed please find a proposal to provide cable/telecommunications consulting services. We have responded to the RFP for cable television franchise renewal and the feasibility of a municipally-owned cable system. The franchise renewal process is an excellent opportunity to obtain the necessary and appropriate development of public, educational, and government access programming, as well as a variety of institutional telecommunications service through the development of a fiber optic institutional network. Rice, Williams Associates has worked with several consortiums on cable television franchise renewals, rights-of-way management, and telecommunications planning studies. In all cases, the consortium model has worked very well. A consortium of franchising authorities may bring greater leverage to the negotiation table, in addition to facilitating more consistent and broader based telecommunications planning. Finally, a consortium may realize cost savings in consulting fees. As always, Jean Rice or myself would be pleased to discuss the proposal or other issues that may arise. Please do not hesitate to call with comments or questions. Sincerely, _D6� c A I Don C. Williams, Ph.D. Partner DCW/jms Enclosures 601 Pennsylvania Avenue,NW 774-C Walker Road,P.O.Box 765 Suite 900 Great Falls,VA 22066 Washington,DC 20004 Phone:(703)757-0570 Phone:(202)737-2400 Fax:(703)757-0573 A � 16V RICE, WILLIAMS ASSOCIATES November 18, 1997 n �y7 F, ! Mr. H. Matthys Van Cort Z Q �L) Director of Planning& Development City of Ithaca PLANNING&DEVELOPMENT 108 East Green Street Ithaca,NY 14850 Dear Mr. Van Cort: Jean Rice and I enjoyed meeting with the Cable Refranchising Committee on October 15. It is a very exciting time in telecommunications and the Committee is aware of many of the opportunities the refranchising process and the development of a telecommunications ordinance may present to the City. The Committee requested that RWA provide additional references and materials and sought information on the financial analysis, financial audit and financial projection analysis in our proposal. As indicated in my letter of October 7, 1997, RWA provided a financial analysis and a franchise fee audit as part of our proposal. The paragraph from that letter follows: Accounting, Financial Analysis Financial analysis, franchise fee payment review and review of local property tax deduction. A description of the financial analysis of the company's past and current operations and the franchise fee audit is included in our proposal under Other Services. Please see pages I-28 - I-32 of our proposal. The cost for these services is $6,890. In addition, we would review the local property tax deduction for $2,405. As indicated in our proposal, the financial review will begin with an examination of the company's records and audited financial statements. If further information is needed, a request for additional information would be prepared for the City to provide to the company. The information received from this request would be analyzed together with the previous records of financial statements from both the local operating entity and the parent company. Our report will include a review of the following areas: revenue development; expense trends; operating ratio; interest expenses;management fees and/or payments to parent;leverage measures;cash flow;free cash flow; and internal rate of return. 601 Pennsylvania Avenue,NW 774-C Walker Road,P.O.Box 765 Suite D 7 20004 3 Great Falls,VA 22066 Washington, Phone:(703)757-0570 Phone:(202)737 2400 Fax:(703)757-0573 Mr. H. Matthys Van Cort November 18, 1997 Page 2 The audit of franchise fee payments includes an audit of payments to the City's access organizations (See page I-31) of our proposal. In Task 7, RWA proposed as part of the Evaluation of the Company Proposal, a financial analysis of the cable operators projections. Please see page I-21 - I-22 of our proposal. The financial analysis of company projections is subject to manipulation by RWA as to the effects of differing expense and revenues assumptions, as well as other variables. As we discussed with the Committee, it is difficult to gauge the precise number of negotiation meetings that will be required. The greater the needs of the community for funding of local public, education and government programming, and the development of an institutional network, the greater the possibility of lengthening negotiations. One could reasonably assume ten negotiation sessions in Ithaca. I would estimate $15,000 for the above negotiation sessions which would include preparations of agendas, position notes for the City side, and teleconferences to refine ordinance and franchise language to conform to what has been agreed to. Our services for negotiations would be provided on an hourly cost basis. The $15,000 cost would not be exceeded except by written authorization by the City. In addition, you indicated the Committee desired references to call in addition to those provided on Page II-18 of our proposal, that had been involved in a consortium, as well as a reference for a city that has had an ordinance and franchise agreement in effect for a few years that was drafted and negotiated by RWA. These references follow: Mr. Jesse L. Warren City Attorney City of Greensboro One Governmental Plaza Greensboro, NC 27402-3136 (910) 373-2320 Consortium Mr. Jim Kier Mr. Ralph L. McClellan County Manager Assistant to the Manager Greenwood County Admin. Township of Northampton Suite 102 Park Plaza 55 Township Road 600 Monument St., Box P-103 Richboro, PA 18954-1592 Greenwood, SC 29646 (215) 357-6800 (864) 942-8502 Mr. H. Matthys Van Cort November 18, 1997 Page 3 Finally, the Committee requested copies of franchise agreements and ordinances prepared and negotiated by RWA. Please see attached. We have provided them to the City of Ithaca with the hope that the documents will not be distributed beyond City staff and Committee members. Once again, should the Committee members or City staff have any additional questions, please do not hesitate to call. Sincerely, "T)66C�j4i-p'�- Don C. Williams, Ph.D. Partner DCW/jms Enclosures JIM REEVE SENIOR ENGINEER Mr. Reeves, an associate of Rice, Williams Associates, has over twenty years of experience with cable television and telecommunications system testing evaluation and design. James Reeve has been associated with CTIC since 1979, when his services were first provided to the firm under a contract support agreement with Atlantic Research Corporation. Now as Senior Engineer for CTIC, Mr. Reeve is responsible for conduct of all system technical evaluations and performance appraisals. In addition, he provides advice to local government cable regulators on a variety of engineering topics including channel capacity questions, the resolution of signal quality and reliability problems and the feasibility of upgrade or modernization proposals. In connection with new franchises, renewals or transfer or ownership cases, Mr. Reeve reviews the technical aspects of the proposals set forth by the companies and makes suggestions as to improvements, alternatives and modifications to those plans. He inspects the exiting plant and facilities of present operations, conducts system performance tests and measurements and interview the cable company's key operating personnel in order to gain an understanding of the capabilities and limitations that may influence the decision of local government cable administrators. He has recently provided such services in connection with CTIC programs for Cleveland Heights, Ohio; Hanover County, Virginia; Cathedral City, California; Collier County, Florida; Beverly Hills, California; Loudoun County, Virginia; Arlington, Texas; Tempe, Arizona; Los Alamos, New Mexico; Farmington Hills, Michigan; Tucson, Arizona and Portsmouth, Virginia. Mr. Reeve holds a bachelor of science degree in Applied Mathematics and Engineering Physics from the University of Wisconsin. He also hold a First Class Commercial Radio Operator's License and is a member of the Cable TV Pioneers. Active in the cable television field since 1963, his professional experience includes appointments with the Hawaiian Telephone Company, Multichannel Northwest and Atlantic Research Corporation. As manager of the Atlantic Research Telecommunications Department, Mr. Reeve supervised a professional services work group engaged in communications network engineering, system construction and consulting. Additionally, he ad direct responsibility for several closed circuit and cable television projects. This work included system design tasks, franchise application evaluation programs, technical appraisals and fair-market valuations. Clients included both foreign and domestic governments as well as private companies. Prior to Atlantic Research, Mr. Reeve was Chief Engineer and General Manager for Multichannel Northwest, the franchised cable operator in Dalton, Georgia. In addition to his operational responsibilities, he also designed and supervised the construction of system extensions and of both mobile and fixed teleproduction facilities. -1- MR. JIM REEVE Mr. Reeve began his work in the cable field with Hawaiian Telephone Company where he was responsible for the design and maintenance of all closed circuit and cable television facilities operated by the telephone company in the State of Hawaii. At that time, Hawaiian Telephone was the sole provider of cable television transmission service along the public right of way. -2- ■ Headend equipment ■ Fiber architecture ■ Fiber optics ■ Distribution trunk ■ Fiber nodes ■ Feeder cables ■ Upstream activation ■ Telephone and data service equipment ■ Institutional network ■ Subscriber and institutional terminals .. ■ Emergency alert ■ Enhanced services capacity(e.g. telephone, PCS, multimedia) ■ Line extension. Technical tests would be undertaken of many different aspects of system performance, including: ■ The current operating status and components of the headend and distribution system ■ Connections,drops and amplifiers to determine the overall integrity and construction quality of the plant in accordance with National Electrical Safety Code practices. ■ Signal quality, level and the attenuation in the cable itself, and outages ■ Individual trunk and distribution amplifiers to ascertain physical condition to determine the network performance characteristics. Test Methodology After reviewing the NYS Public Service Commision audit of 1996, our first step in the technical analysis will be to review the most recent proof-of-performance tests and system I - 14 maps submitted to the City over the term of the current franchise. Such information can also be requested of the cable company. This record of tests, system deployment,performance, outage logs, and other information will provide the baseline for the next stage of our technical review. Next, we would define the expected performance levels for the system. The expected performance levels are defined by the operating parameters for the individual elements of the system such as amplifier output levels, physical spacing, and other operational characteristics. We would examine the specifications provided by cable system equipment manufacturers and evaluate whether the City of Ithaca, New York system is properly adjusted to each manufacturer's specifications. To analyze the system's theoretical performance capabilities,we will request information on specific engineering design parameters directly from the cable system engineering staff. ,,. Parameters to be examined will include technical performance specifications of the electronic amplifiers and passive components, coaxial cable, headend, and subscriber coupling equipment. A mathematical computer model will calculate the expected performance characteristics for the cable system based on the number of cascaded trunk amplifiers, distribution amplifiers, and subscriber tap levels. �- For the next phase of our technical evaluation,we will prepare the testing procedures for a spot check evaluation of the system to determine the current operating status of the headend and distribution system. The specific tests to be conducted will be outlined in our test procedure protocol. Equipment block diagrams will be provided for each test. Data sheets will be prepared to summarize the results of the testing at each test location and serve as a permanent record of test results. Tests for the following performance parameters will be performed as a part of our proof-of- performance testing: ■ Carrier-to-noise ■ Visual carrier variation ■ Composite triple beat tests ■ Intramodulation tests ■ Hum modulation ■ Subjective viewing tests. I - 15 The tests will be based on generally accepted test procedures for key parameters. Rice, Williams Associates's engineer will select test locations and perform the tests in conjunction with TWC's technical staff. Our past experience with testing numerous cable systems indicates that this is the most desirable procedure since it affords us an opportunity not only to perform the test,but also to evaluate the ability of the cable system staff to perform regular tests. In addition,Rice, Williams Associate will inspect the major components of the cable system headend facility that receive satellite and off-air broadcast signals -- antennas, satellite dishes,receivers,modulators,and demodulators. Tests will be performed to evaluate picture quality, clarity, and signal-to-noise characteristics using standard equipment. Technical Evaluation The results of our field inspection process and other test results will be summarized and compared to current FCC specifications, proposed FCC specifications, and all technical performance claims made in the franchise agreement. A report will be prepared to document the testing process. The report will include our ultimate findings on the system's technical performance, and whether it meets or exceeds them. We will prepare and review possible channel capacity configurations under the current system design and under upgrade and rebuild scenarios. Our report will conclude with an analysis of whether a system upgrade or rebuild is desirable. If we recommend either a rebuild or an upgrade, our report will outline the most feasible options and provide the list of technical requirements that a system upgrade or rebuild must match. Should an inspection and analysis of the institutional network be desired, we would be pleased to conduct such an inspection. Task IV: Review of Cable Operator Compliance with the Cable TV Ordinance/Franchise Rice,Williams Associates will evaluate the company's compliance with the provisions of the existing cable TV ordinance and franchise to determine whether the City needs to strengthen them prior to refranchising or to address any major performance issues or problems. We will review the City's information and documentation of operator compliance with the franchise and the quality of the operators service. I - 16 Some issues will have already been identified by the City as part of our initial consultation sessions in Task 1. Rice,Williams Associates would analyze cable operator compliance in detail in a wide range of areas, for example: ■ Construction completion ■ Performance of street work ■ System technical standards ■ Consumer notification requirements ■ Adherence to City procedures(e.g. transfer of ownership or control) ■ Adherence to City consumer requirements(e.g. local office, local telephone number) ■ Insurance, indemnification, and performance bonds ■ Use of poles and facilities agreements ■ System extension, operations, standards, and procedures ■ Availability of books,maps,records,and specially requested information and reports ■ Compliance with state and federal laws ■ Community programming, equipment, and services ■ Consumer billing practices ■ Privacy protection for customers. After Rice,Williams Associates completes its initial evaluation of the City's franchise and ordinance and City records on system compliance, we will discuss any major issues and problem areas and determine whether additional information is needed. If additional information is required, Rice, Williams Associates will prepare a Request for Information (RFI) that the City will present to the cable company. After analyzing the information that is received, we will work with the City to make a determination of the company's compliance with the legal and technical elements of the franchise and ordinance and will make suggestions to the City on reimbursement of renewal related expenditures. I - 17 — Task V: Updating Relevant Ordinances Rice, Williams Associates will also analyze the City of Ithaca, New York cable TV ordinance and franchise to ensure that the City is in compliance with recent changes in cable and telecommunications regulatory policy. Provisions to be reviewed and discussed will — include: ■ Definitions: • Regulation of the franchise • Supervision of the franchise -- • Performance evaluation ■ Design and construction provisions: • Construction and technical standards • Dedicated institutional and access channels • System construction schedules • Extension of service • Special agreements • Construction reporting requirements • Use of streets • Tests and performance monitoring ■ Service provisions: • Community programming and services • Timetable for the provision of programming equipment -- • Personnel and facilities • Community programming funding structure and payment ■ Schedule: — • Services to subscribers • Services to institutions • Lockout devices ■ Operation and maintenance • Required reports • Required records • Service calls and complaint procedures -� • Billing and collection procedures I - 18 • Antennas and antenna switches • Grantee rules and regulations Working with City staff and the City Cable Commission, Rice, Williams Associates will conduct a general review of the franchise and ordinance to ensure that they contain key provisions to enable the City to exercise ongoing regulatory authority and administration of the franchise. , We will identify the specific regulatory and contractual controls that are available to the City and discuss the degree to which various provisions can be enforced and are practical. At the final stage of this process, we will discuss the degree of future regulatory authority that the City feels desirable. Due to our extensive experience in developing quantifiable methodologies for regulating customer service, we are capable of recommending how the City can strengthen consumer protection provisions. We will work closely with the City to identify areas of oversight in which current regulatory problems, if any, should be addressed in a revised ordinance. Where the provisions of the ordinance and franchise are deemed insufficient, we will assist the City in rewriting those areas of the ordinance and franchise. Task VI: Preparation of a Request for Renewal Proposal We will work closely with City staff and the City Cable Commission to develop a formal Request for Proposal(RFP)to provide cable television service. This document serves as the foundation for the renewal process,since it establishes priority areas and guidelines for cable service. The cable company will be asked for their proposal to response to this document. The Request for Proposal will request the following information: ■ Ownership experience and financial resources: • Experience of company and staff • Financial capability to upgrade or rebuild and operate the proposed system ■ Financial projections: • Realism of financial projections • Equity and depreciation • Completeness and accuracy I - 19 — w �- ■ System design: • Fiber optic architecture • Initial coverage and line extension policy • Reliability and capacity of proposed system design • Area-wide interconnection capability • Upstream activation plan • Underground requirements • Construction schedule • Equipment and installation capacity • Institutional channel capacity ■ Service to subscribers: • Variety and availability of program offerings • Variety and availability of consumer services • Variety of enhanced service offerings .- • System operation and maintenance plans and personnel • Billing practices • Subscriber complaint procedures • Subscriber privacy practices and procedures ■ Local programming: • Support for access • Quality and philosophy of access plans • Quality of local origination plans I - 20 • Experience with local programming Rice, Williams Associates would work with the City to establish a timetable for cable company submission of proposals, the manner in which subsequent information requests would be handled, and the time frame for decision making by the City. Task VII: Evaluation of Renewal Proposal Rice, Williams Associates will conduct a complete analysis of how well the cable company proposal meets the specifications stated in the RFP. The responses to the RFP will be checked for thoroughness,internal consistency,and accuracy of financial and technical data. A major factor for the City's determination of whether to award a franchise will be whether the applicant illustrates the financial, legal and technical ability to provide the services proposed. We will take a rigorous approach to our analysis of each component of the •- proposal as well as conduct a review of the integrated whole. Our analysis will include: ■ Economic analysis of the cable system operations, its potential for growth, and price elasticity in the consumer market. ■ Technical analysis, including a review of plans for rebuilds, construction, and interconnection ■ Service package analysis to evaluate the overall diversity and provision of service to consumers ■ Public,educational,and government access evaluation to assess channel allocations, facilities support, and related services. •— The remainder of this section provides further detail of the methodology we will use to perform these analyses. Financial Analysis Rice, Williams Associates will conduct a financial analysis of the proposal, which will include a review of company's financial proforma and capital spending. The financial analysis will be consistent with the spirit of the Cable Act, which states: "...the cable operator shall ensure (A) that the safety, functioning, and appearance of the property and the convenience and safety of other persons not be adversely affected by the installation or construction of facilities I - 21 60 �- necessary for a cable system; (B) that the cost of the installation, construction, operation, or removal of such facilities be borne by the cable operator or subscriber,or combination of both for any damages caused by the -- installation,construction,operation,or removal of such facilities by the cable operator; and(C)that the owner of the property be justly compensated by the cable operator for any damages caused by the installation, construction, operation,or removal of such facilities by the cable operator. Sec. 621.(a)(2), 47 U.S.C. Sec. 541(a)(2)." — This approach evaluates the applicant's financial capability to provide services,facilities,and equipment and provides for better understanding by the City of the cable operator's plans for the system. Our first step in the analysis will be to describe and analyze the system's basic subscriber — characteristics, which includes such factors as homes passed, subscriber levels, and penetration. Next, we will examine the cable operator's financial proforma in detail. This analysis should have great relevance to the City,since franchise fee payments are based upon �- gross receipts that rise or fall according to the sales performance of the system. Our approach provides the City with a profile of the cable operator's plans for the future, since the proformas contain data from Year 1 forward ten or fifteen years. We will provide detailed examination of operating expenses from two perspectives. The operating expense budget will be reviewed from the viewpoints of: ■ Adequacy. For example, are staffing levels and the salaries budget adequate to provide satisfactory service to subscribers? Are projected expenses for community programming sufficient? •. ■ Efficiency. For example, are amounts allocated as corporate overhead expense reasonable or excessive? Capital spending plans will be reviewed to determine the rate of reinvestment in plant and equipment. Are capital expenditures consistent with normal industry practices on replacement and maintenance? In conjunction with an analysis of balance sheet data,we will calculate rates of return on invested capital. In addition, we will assess the overall financial ability of the company to meet the future needs of the community. We will review income statements and sources and uses of funds statements to assess the cable operator's profitability. Because financial inability to perform is basis for denial of a franchise application, long-term corporate and cable system financial stability will be assessed during the analysis. I - 22 r.. the reliability and general operation of cable systems. For example,the hardware used,such as cable,taps, and other passive elements, and amplifiers tend to be rugged and of standard construction. In contrast, the placement of cable, cable splicing, and other such implementation decisions can greatly influence the ultimate performance of the system. We will review the construction manual,provided by the applicant,for adequacy and consistency with current industry practice. The key elements of system design are the transport system, bandwidth and transmission characteristics,processing equipment,satellite receiving equipment,and overall system level design criteria. These and other factors involved in the overall system design will be reviewed,including subscriber terminal equipment, system reliability and maintenance, and interconnection to neighboring cable systems and facilities. We will also analyze the cable operator's plans to activate upstream capacity on the network. .- Specialized items, such as standby power,subscriber terminals,fiber optics, and emergency alert systems,will be analyzed to determine whether they reflect state-of-the-art technology and how they will be integrated within the entire network. Interconnection plans that might be included in the plan will also be reviewed. Another area that will be reviewed is how the design will impact overall technical system performance. If an institutional network is included in the applicant's proposal,Rice, Williams Associates will perform an additional technical design analysis similar that conducted for the technical components of the consumer cable system. The technology used, fiber optics and coaxial .. cable, will be reviewed for its capacity and compatibility with existing data terminal and processing equipment. Our report will examine transmission characteristics between the subscriber network and any institutional network as proposed. Due to our experience in developing institutional networks for many cities,we can assess whether the cable operator's stated operational plan for this network is reasonable and suitable for the purposes to which it will be used. Our technical report to the City will include an overall description of the system proposed by the applicant, the system characteristics, system channel capacity, program reception facilities,the number of plant miles,and any special equipment noted in the application,such as off-premises equipment. The report will include our analysis and judgment of whether the system, its components, and equipment reflect state-of-the-art technology and are able to perform reliably. Our final report to the City will integrate the results of the financial analysis with our technical findings to determine the financial viability and practicability of the proposed system design and construction schedule. I - 24 Service Analysis Rice, Williams Associates will review the services proposed by the applicant. Our report will provide charts summarizing the applicant's proposed signal carriage and channel allocations, including the manner in which various services will be tiered. The categories of service that,will be described and analyzed are: ■ Local broadcast signals ■ Imported television broadcast signals .. ■ Satellite services ■ Pay cable service ■ Nonbroadcast television channels ■ Channels designated for public, educational, and government communications ■ Channels designated for local origination ■ Audio services ■ Nonbroadcast audio simulcasts ■ Other services proposed by the applicant. For our report to the City,we will evaluate the overall diversity and provision of service to �- different classes of users to be served by the cable operator. Public, Educational, and Government Access and Other Institutional Services Rice, Williams Associates will evaluate applicant's proposal for: ■ Public, educational, and governmental access facilities, equipment, and services ■ Institutional network and services. We will begin our analysis by determining whether the proposed operating budget for either or both of these activities falls within the confines of the services aspect of cable under the access provisions of the Cable Act or whether the applicant anticipates that franchise fees will be utilized. I - 25 Access and other related public benefits will be evaluated in a thorough, comprehensive manner,and will entail an analysis of the applicants equipment package,budget,operational support and expenditures and adequacy of the overall plan. We will review the operator's plans and City's plans in this area and analyze the degree to which both match. The operating budget specified by the applicant will be analyzed to determine the levels of funding for equipment, annual services, and overall funding. Our analysis will identify whether the applicant's financial contribution is tied to per-subscriber values, percents of gross revenues, or to minimums that will be provided. If requested by the City, we will analyze the operating budget for the amount allocated to staff for maintenance,training, and public relations and/or advertising. Rice, Williams Associates will also provide a detailed review of the facilities and equipment that are proposed to be offered. We will examine the initial capitalization,replacement costs, .. and any renovation expenditures. We will also review the channel allocation proposed for access programming and institutional networks. We will work with the City to determine whether access channel allocations are adequate to meet community needs. Final Evaluation of Proposal _ With the conclusion of the analyses described above,Rice,Williams Associates will conduct a review summarizing and incorporating all of these analytical elements. We will summarize whether the applicant has met the minimum requirements as set forth by the RFP. This will be important in ensuring that residents receive the services that are needed and that the City is protected in the future. Any unmet minimum requirements will be identified in our report. We will alert the City to unanswered questions in any of the areas examined. If additional information or clarification of any information provided in the proposal is needed, Rice, Williams Associates will prepare clarification questions for the City to submit to the company. If we judge that an applicant has an inability to perform in any of the three areas, we will provide the City with a full explanation of our basis for making this determination to ensure that the City has firm, reasonable grounds in making an official determination and proceeding as appropriate. We will work with the City in making a determination of whether the applicant's proposal meets the future community needs. Based on this information, Rice, Williams Associates will make recommendations to the City on the renewal proposal and degree to which the proposal is compatible with the goals established by the City. I - 26 ... Task VIII: Drafting the Franchise Rice, Williams Associates will prepare a franchise which is based on the research conducted for this process,our experience and the needs of the City. This franchise will consist of the following: ■ Grant of franchise ■ Right of City to issue franchise ■ Effective date of franchise, effect upon existing franchise ■ Term ■ Franchise nonexclusive .- ■ Incorporation of the cable ordinance by reference and resolution of conflicts ■ Incorporation of proposal by reference ■ Definitions ■ Service area ■ Use of streets ■ System and capacity ■ Construction ■ System construction schedule ■ System services after rebuild ■ State-of-the-art ■ PEG access ■ Institutional network ■ Tests and performance monitoring ■ Subscriber information and policy ■ Equal employment opportunity and affirmative action ■ Rates ■ Franchise renewal •• ■ Police powers ■ Franchise fee ■ Regulation �- ■ Remedies ■ Cooperation ■ Waiver ■ Cumulative provision ■ Notices ■ Captions ■ No joint venture ■ Entire agreement ■ Severability Working with City staff, Rice, Williams Associates will conduct a general review of the franchise and ordinance to ensure that they contain key provisions to enable the City to I - 27 exercise ongoing regulatory authority and administration of the franchise. We will identify the specific regulatory and contractual controls that are available to the City and discuss the degree to which various provisions can be enforced and are practical. At the final stage of this process, we will discuss the degree of future regulatory authority that the City feels desirable. Due to our extensive experience in developing quantifiable methodologiesfor regulating customer service, we are capable of recommending how City can strengthen consumer protection provisions. We will work closely with the City to identify areas of oversight in which current regulatory problems, if any, should be addressed in a revised franchise. Where the provisions of the franchise are deemed insufficient,we will assist the City in rewriting those areas of the franchise. Rice, Williams Associates will develop a franchise which will reflect negotiated agreement and provide for increased public service components over the term of the contract. Task IX: Assistance with Public Hearings and Negotiations Rice, Williams Associates will be prepared to assist the City in public hearings throughout entire franchise renewal process. We will be available at public hearings to make opening remarks, which sets the regulatory framework for the hearing in layman's terms, and to answer questions as needed. Also, we are able to consult with the City in developing the hearing process,the agenda for public hearings, and participation in the hearings. We participate in many public hearings and council workshops each year and are well equipped to advise the City on the most effective formats for these sessions. Most importantly, Rice, Williams Associates will represent the City in its negotiations to develop the final franchise agreement. We have extensive experience in providing this type of assistance to cities,and have had great success in helping our clients to achieve their goals -- for renewal. OTHER SERVICES A. Financial Analysis Rice, Williams Associates will conduct a financial analysis of the cable operations. This analysis will include an analysis of past operating experience and the company's ability to continue to operate. I - 28 r.. The financial review will begin with an examination of City records and the company's audited financial statements. If further information is needed, a request for additional information would be prepared for the City to provide to the company. The information received from this request would be analyzed together with the City records. A thorough report,with exhibits, will be prepared. This report will include a review of the following areas: ■ Basic Assumptions • Subscriber penetration levels • Service rates ■ Revenue Sources • Basic revenues -- • Pay revenues • Non-subscriber revenues such as installation,converter deposits,other special services ■ Operating Expenses • Personnel costs ` • Marketing,promotion, and billing expenses • Plant costs • Converter maintenance costs ■ Programming Expenses • Local programming expenses • Satellite signal fees • Pay cable fees ■ Capital Expenditures • Capital expenditures • Construction schedule ■ Financial Expenses • Interest rate assumed on loans • Amount of equity,projected, and actual • Desired rate of return on equity investment. Special attention will be paid to the business structure of the applicant as it relates to the parent corporation. Related issues to be reviewed include: interest expenses; availability of credit; tax rates; and management fees and/or payments to parent. I - 29 r.. r- After the financial analysis is complete, Rice, Williams Associates will examine the cable company's financial standing. The company's operating efficiency will also be analyzed in comparison with industry norms. Line item data will also be reviewed in comparison with �— industry norms. Additionally, in-house financial data files are also used as a basis for analysis. Rice, Williams Associates would also be able to conduct a review of the revenues being provided to the City. To initiate this review,we will review the City's franchise fee reports and payments, as well as any financial statements provided by the cable company over the last two years. These statements will be checked to ensure cable revenue sources, such as subscriber fees, installation, home shopping, and advertising revenues are included. The .. amounts denoted for specific revenues would be compared with company financial statements and typical industry ratios. Any issues of typical revenue sources that are missing or at odds with similar systems can be brought to the attention of the City. In addition,we could sample revenue documentation from the cable company to assess the general accuracy of franchise payment. We will work with the City on a sampling method designed to ensure that revenue from City subscribers is being counted by the company for City franchise fees. One city we worked with received a one million dollar payment for back franchise fees. Rice,Williams Associates can provide these financial services and provide assistance to City accounting staff for some of the review. We conduct financial analyses of present operations or prospective operations for most of the municipalities we work with. Some of the cities we have conducted financial analyses for are: Altoona, Pennsylvania; Atlanta, Georgia; Charlotte, North Carolina; Cincinnati, Ohio; Ithaca,New York; and an eleven city consortium outside of St. Louis, Missouri. I - 30 B. Franchise Fee Audit A franchise fee audit which will audit the revenue records of the cable company to determine whether the City received the proper amount of the franchise fee from all sources. This task will be based on our firms day-to-day working knowledge of cable companies financial statements and revenue sources. The following items, for a three year period, will be required to be reviewed at the cable — company to conduct a complete a review of the City of Ithaca cable television franchise fee: ■ Complete records of the fee calculations, including worksheets used to determine the amounts and sources of revenues. ■ Backup and source documents for the various categories of income. ■ Records allowing the tracking of individual revenue items to their inclusion in the fee calculation. ■ Records allowing the tracking of revenues included or the fee calculations back to source of receipt. ■ Reconciliations, if any,of revenue reported to the City of Ithaca to revenue reported — for financial payments. ■ Third party payor documents, such as Home Shopping Channel, showing amounts paid to cable operator. ■ Payment calculations for the City and the City's access organization(s). Other items may be required after performance of our initial inquiries. Rice, Williams Associates may expand or contract the scope of our review based upon initial findings. — The audit will be conducted to determine the following: ■ Whether the franchise fee calculations used to pay the franchise fee are consistent with the definitions and terms of the franchise. ■ Whether the Company has been up to date on service area changes from annexation. (Note: City to provide test dates and locations for this analysis.) ■ Whether there have been any methodological errors in calculating payments to the City and the City's access organization. I - 31 A final report will be prepared for the City which provides detailed proforma, information on Company revenues, reconciliation of audit finding and general ledgers, and other pertinent information. A notice of default will be prepared, if required. I - 32 •.• PROJECT 2 -MUNICIPAL OWNERSHIP STUDY Task 1: Initial Consultation We wish to assist Ithaca and the City Cable Commission officials in continuing their efforts to be thoroughly informed about current broadband fiber optic telecommunications options so that citizens and institutions can be offered the best telecommunications services and the best cable television service in the coming decades. Therefore, Rice, Williams Associates will conduct consultation sessions with the City of Ithaca to review the legal, financial, technical and policy aspects of municipal ownership of broadband fiber optic communications as they relate to the Ithaca community. Additionally, we will review the state of the industry and changes in the regulatory environment as they relate to municipal ownership and operations of telecommunications facilities. During the consultation session, special attention will be given to informing local officials about the practical implications of the Cable Television Consumer Protection and Competition Act of 1992, the Telecommunications Act of 1996, and the corresponding -- FCC rulemakings might affect Ithaca's future broadband fiber optic communications activities. For example, the current Cable Act expressly acknowledges that a government unit may own a cable system, but requires that editorial control regarding programming be exercised through an entity separate from the ownership entity. It also provides that, if a franchise is revoked for cause or if renewal is denied, a municipality may acquire ownership of the cable system or effect a transfer of ownership of the system to another party. Rice, Williams Associates is well informed on the practical implications of telecommunications law and is working with several cities on studying municipal ownership in the current changing regulatory and economic environment. Rice, Williams Associates will also discuss current opportunities for using broadband fiber .. optic communications systems for the integration of voice, video and data. This is an exciting area of development and offers both near term and long range benefits to electric utilities, and city governments and schools. Finally, Rice, Williams Associates will -- discuss the technical, financial and practical aspects of using a fiber optic system for communications among institutions in the community such as local and state government offices, hospitals and others. Dr. Williams is a nationally recognized authority on municipal ownership and has made presentations at numerous conferences including at the New Jersey State League of Municipalities, the American Public Power Association, the South Carolina Association of Municipal Power Systems, and the Iowa Association of Municipal Electric Systems. Ms. Rice, president of the firm, has been in the field since 1973 and has made presentations on the 1984 Cable Act, the Cable Television Consumer Protection and Competition Act of 1992, and related issues at several cable conferences, including I - 33 •. conferences of the National League of Cities, the U.S. Conference of Mayors, the National Association of Telecommunications Officers and Advisors, and State Municipal Telecommunications Officers and Advisors, and State Municipal League conferences. A comprehensive analysis will focus on the following recent legal and regulatory developments: ■ Municipalities as telecommunications service customers and providers ■ Structural and organizational options for a municipally-owned system ■ FCC rules on rate regulation ■ FCC rules on home wiring ■ Direct Broadcast Satellite (DBS) as a competitive force ■ FCC rules on access to programming ■ Staffing and construction options ■ Financing possibilities ■ Case histories of municipal ownership success and failures ■ Business plans of telephone companies ■ Trends in cable system sales and acquisitions,valuation of systems,and implications for franchising authorities. ■ Rolla Cable System, Inc., v. City of Rolla,No. 89-2101 C (2). ■ Consolidated Television Cable Service,Inc. v. City of Frankfurt,No. 88-1278 ■ Paraimuld Cablevision. Inc. v. City of Paragould, Arkansas,No. 90-1820 ■ Warner. Inc. v. City of Niceville,No. PCA85-4414-RV Issues related to building a broadband fiber optic communications system and/or _ overbuilding a current cable system operation will also be identified and discussed with local officials. Items to be discussed may include channel capacity, local programming and facilities,energy management and data transmission,institutional services, system financing I - 34 provisions, and consumer service practices. The technical and financial considerations associated with these items and state-of-the-art technology will be discussed in detail. State-of-the-art technology will be addressed, including channel capacity, addressability, energy management services, monitoring services, data applications, fiber optic terminal equipment, and ring and star network designs. These are included because Rice, Williams Associates feels strongly that technologies with increased capacity and new services should be analyzed to determine how best to meet government, educational, business, and citizen needs in the long term. Technical capacity and design will be especially important to ensure that the system can satisfy future needs. Task II: Consumer Market Survey Rice, Williams Associates could design a market survey for the City of Ithaca to determine resident interest in an alternative cable television system, and resident willingness to switch to a proposed municipal system. This information will provide basic data for the financial analysis, such as penetration rates. The survey will be designed to assess current customer satisfaction so that the City may assess the quality of existing service. The survey will also address the interest in, and economic viability of, a competing cable system. This type of market survey is especially important in an existing cable market to determine the elasticity of revenues. The survey will enable the City of Ithaca officials to forecast potential demand for a second cable system. Furthermore, residents can be asked about their opinions concerning potential the City of Ithaca ownership of a competing system and satisfaction with a wide range of current cable and telecommunications options. Rice, Williams Associates, based on the results, will determine the extent to which demand parallels the findings of the market studies in other similar situations. A questionnaire will be designed by Rice, Williams Associates. The survey design will be cross-sectional. This design is one in which a random sample of respondents is used to describe a larger population. In this particular case, a random sample of City residents will be used. To obtain a statistically valid representation of the views of local households, a sample will be randomly selected using random start and systematic selection thereafter based on all working telephone numbers serving the City. This method ensures that the respondents are representative and geographically dispersed throughout the City of Ithaca. A mail survey,while easier,will not yield statistically valid results without significant survey cost increases. The data from the telephone survey will be elicited, coded, and verified to insure valid results. Computer data analysis will be used to calculate relevant frequency distributions, corresponding statistics and cross tabulations of the data. A report on the findings of the I - 35 .. consumer market survey will be prepared for the City of Ithaca. These findings will provide the basis for subscriber and revenue projections. Rice, Williams Associates has conducted demographic analyses and consumer market surveys for clients involved in renewal, franchising and alternative ownership processes. Some of the market surveys we completed for cities include those for: Albany, Georgia; Atlanta, Georgia; Jackson, Tennessee; Charlotte, North Carolina; Wilmington, Delaware; Rocky Mount,North Carolina; and Sarasota, Florida among many others. Task III: Institutional Needs Ascertainment (If one is not performed as part of the franchise renewal process) A institutional needs assessment will consist of: ■ workshop and a survey of current and potential users of the Cities' governmental, public, and educational access channels and facilities, and other existing and proposed institutional services, including E-mail,voice mail, use of real-time video, electronic document distribution, placing SCADA on a hardwire system, LAN bridging, and using a Wide Area Network. The results of the survey will be used to identify potential improvements that could enhance the quality of service to Ithaca citizens and institutions. The identified improvements would be reviewed in conjunction with the technical and financial analyses to assess their feasibility, cost effectiveness and overall public benefits. Following is a description of the institutional needs assessment. Institutional Needs Assessment. Rice, Williams Associates will assist the Cities in conducting a thorough assessment of municipal, educational, and community needs. The information collected through this process will provide part of the basis for Cities decision making on technical, and service parameters of a new telecommunications infrastructure. Rice, Williams Associates can conduct a survey to assess the Community's future cable communications needs for public, educational and governmental access programming and the need for replacement equipment,new facilities,and access services. The survey will also analyze interest in institutional telecommunications needs and detail current and future needs of for a fiber optic institutional network. The results of the survey will be used to identify potential modifications and improvements that could enhance the quality of service to Ithaca citizens and institutions. The identified improvements and modifications will be reviewed _ in conjunction with the technical and financial analyses to assess their feasibility, cost effectiveness and overall public benefits. I - 36 — Rice, Williams Associates is firmly committed to the belief that local telecommunications communications can provide: ■ A vehicle for community dialogue on local issues ■ More cost effective delivery of information and services by the Cities and public .. institutions. ■ Improved entertainment and service options to the public. The community needs assessment will aid in evaluating current provisions for public, educational,and government access and in meeting future needs for public,educational and government access. Rice, Williams Associates will work with the City in identifying local government departments, schools, public service agencies, and other organizations to be surveyed. Rice, Williams will work with the City to develop an interview format for interviews with local officials and institutions and will assist in tailoring the format to address the needs of specific types of organizations. Rice, Williams Associates will design the ascertainment survey and will administer the survey. A seminar can be held to inform organizations about the potential of a fiber optic telecommunications system. We have conducted numerous seminars for our clients. Survey questions will be designed to identify public buildings and institutions that would now or in the future be able to utilize access and institutional channels, video equipment, and cable .., drops. Items will be included to assess the adequacy of existing facilities and services, and to identify ways in which the City can achieve cost savings in intra-governmental communications, and delivery of information and public services. A review of institutional applications will be conducted to determine whether the City's local institutions will benefit from institutional channel capacity or an institutional network. Examples of institutional applications include energy management, closed-circuit training program delivery to work sites, security services,delivery of library information, interactive video, distance learning, Internet connections, LAN connections, and data transmission. Specific items will be included based on consultation with the City. Once the data has been collected and verified, Rice, Williams Associates will conduct an analysis of the results. A report and interpretive summary will be provided to the City, including specific recommendations. The results will also be important to the City in developing realistic and effective plans for future services and requirements. Task IV: Preliminary Technical Analysis and Cost Assessment Rice, Williams Associates will work with the City of Ithaca to develop a preliminary engineering analysis which will complement the telecommunications needs of the I - 37 — .. community. This study will include a review of aerial and underground wiring requirements. Capital cost estimates for initial capital expenditures and replacement capital expenditures will be determined. Rice, Williams Associates will review broadband fiber configurations for Ithaca. Rice, Williams Associates has worked with fiber optic technology including the use of fiber in completing construction of municipally-owned cable systems serving Morganton, North Carolina and Belmont,Massachusetts. During the course of providing construction review, coupled with our fiber experience in reviewing designs,we have gained practical experience ,. with this fast growing technology. We have reviewed a number of fiber optic systems proposed by private communications firms on behalf of our client cities. s We believe that trunking portions of an institutional network system should be constructed using fiber optics. Typically used to provide a high-quality, low-distortion path between .. hub sites or major network nodes, fiber optics is the technology of choice due to a lower active equipment requirement. This translates into fewer devices needed to convey signals over a given distance,enhancing reliability. w Working with the City of Ithaca staff and the City Cable Commission, the most advantageous and cost-effective design will be selected. The design will include the capacity and configuration of the network. Following are types of equipment that will be included in the overall cost estimates: ■ Tower and Antennas ■ LAN Interconnects ■ Fiber Optics ■ Central Computer ■ Optical Cable Boxes ■ Satellite Earth Station ■ Headend Equipment ■ Fiber Optic Plant ■ Feeder Cables(for service to residential homes) ■ Institutional Network ■ Subscriber and Institutional Drops ■ Institutional Terminals ■ Emergency Alert ■ Local Programming Equipment ■ Leased Telephone Line Replacement The cost estimates for capital expenditures and construction will be based on the latest costs. The cost estimates for constructing a new system in relation to providing entertainment services and those for telemetry will then be utilized to develop proforma financial statements. The implications of pole spacing for an overbuild will be analyzed. Special I - 38 '— attention will be given to this area as it has potentially high cost implications. We will discuss various options that are employed elsewhere with the City staff. This review would provide an estimated cost. If the City decides to proceed, we may recommend a complete walk out of the electric system. The overall capital costs of the system will be an important element in determining the economic viability of an overbuild. If the City of Ithaca desires, Rice,Williams Associates can also conduct an evaluation of the present technical system to determine the feasibility and cost of a potential system buy out. Rice, Williams Associates believes that a good technical design is the backbone of any broadband fiber optic system and that it should reflect the current and anticipated needs of Ithaca. Rice, Williams Associates conducts this type of technical analysis for most of its clients. Task V: Financial Analysis Rice,Williams Associates will conduct a financial analysis of a broadband fiber optic system owned and operated by the City of Ithaca. The financial analysis will include but not be limited to an examination of: ■ For Cable Television Services and/or Fiber Optic Institutional Network ■ Basic Assumption • subscriber penetration .- • service rates ■ Revenue Sources •• • basic revenues as a percent of total revenues • pay revenues as a percent of total revenues • nonsubscription revenues such as installation,advertising,converter deposits, other special services ■ Operating Expenses • personnel estimates • numbers and costs _ • marketing,promotion and billing expenses • converter maintenance costs • power and distribution system maintenance costs ■ Programming Expenses • local programming expenses _, • satellite signal fees I - 39 �. • pay cable fees • automated programming fees ■ Capital Expenditures • plant expenditures • subscriber terminal expenditures • converter costs ■ Financing Expenses • interest rate assumed on loan • desired rate of return on equity investment The system projections will be calculated for a fifteen year period. The following proforma financial statements will be provided: capital expenditures statements; revenue statement; income statement; and sources and uses of funds statement. The financial analysis will also include an overall assessment indicating revenue and capital expenditures, projected operating ratios, cash balances and cumulative cash, anticipated system worth at the end of 15 years, and rate of return. Rice, Williams Associates has conducted financial analyses for many cities and utility departments including Tallahassee, Florida; Danvers, Massachusetts; Belmont, Massachusetts; Morganton,North Carolina;Ponca City, Oklahoma; Easton, Maryland; and Burlington, Vermont, and has developed a computer model for this analysis which allows the financial projections to be recalculated with different interest rates with varying purchase prices, different levels of subscriber penetration, or changes in the other factors as may be requested. Additionally, in-house financial data files are also used as a basis for analysis. I - 40 II. FIRM QUALIFICATIONS AND EXPERIENCE II. FIRM QUALIFICATIONS AND EXPERIENCE Rice,Williams Associates: Overview Rice, Williams Associates is a telecommunications consulting firm that specializes in helping city and county governments to achieve the best levels of service for their constituents in the rapidly changing communications environment. Background We have been successfully working with government clients since 1981, when we began assisting cities of all sizes with cable TV franchising. We were one of the first firms to work exclusively for cities to draft cable TV ordinances,establish necessary public processes, set up fair bidding procedures, evaluate technical system designs, and conduct successful •. negotiations on behalf of the franchising authorities. We are also proud of our track record in helping cities and counties to plan for, obtain, and utilize institutional networks and public, government, and educational access channels. Current Services In recent years, the cable TV and telecommunications environment has undergone dramatic change -- changing regulation, law, media ownership, alliances, technology, and services. Rice, Williams Associates has been in the forefront of assisting city and county governments . to understand the impact of these changes upon their jurisdictions. We offer an extensive range of services: ■ Cable TV franchise renewal services ■ Cable TV and telecommunications satisfaction surveys for consumers and businesses ■ Design, utilization planning, and technical performance evaluation of fiber optic institutional networks and other telecommunications systems ■ Local cable/telecommunications regulation services/support,including cable TV rate regulation analysis ■ City/county telecommunications planning support. ■ Development of ordinances for Competitive Access Providers ■ Cable TV system transfer of ownership assistance ' II - 1 ■ Municipal cable TV ownership and overbuild feasibility studies. Key Strengths of Our Firm Rice, Williams Associates has a very high satisfaction rating from the clients it has served in developing successful cable television franchises and negotiating refranchise agreements. Our years of experience have taught us the most effective methods of working with franchising authorities and how to support them in their telecommunications-related endeavors. There are several reasons that our clients are very satisfied in working with our firm: ■ Successful track record. We have been extremely successful in working with our client cities to obtain renewal agreements that have state-of-the-art rebuilds, substantial provisions for access facilities and support, expanded institutional networks, and long-term regulatory provisions. ■ Direct involvement of experienced advisors. The principals of our firm,Jean Rice .. and Don Williams, Ph.D., are directly involved in the management and fulfillment of every client assignment. Each has over fifteen years experience in advising, strategizing, and negotiating for city and county governments, bringing uniquely informed perspectives to every assignment. ■ Ability to back up opinions and assertions with hard data. Due to its long history in serving franchise authorities and reviewing cable TV service proposals, our firm has an extensive database on cable system characteristics, subscriber rates,operating expenses, capital expenditures, and financing alternatives in many different cities. This resource enables us to compare local cable system characteristics with those of similar-sized cities across the country and to support our positions when we are asked to negotiate,testify, and provide documentation for our clients. ■ In-depth understanding of the issues facing local regulators and franchising authorities. As a Washington, D.C.-based firm that has been active in public-sector professional associations,we take pride in keeping up with the regulatory and legal changes affecting local governments and helping our clients to interpret the impact of these changes. We understand the issues from the public-sector perspective and continually seek ways to improve our clients' abilities to manage change to their constituents'best advantage. ■ Extensive interaction with clients. Because we communicate frequently and fully with our clients,satisfaction with our performance is high. We are there when clients II - 2 _ need us, working directly on site to support public officials at public hearings, community forums, and negotiations. _, ■ Our highly individualized service approach. Rice, Williams Associates provides a high level of personal service to each of its clients. We recognize that many local officials confront unique sets of circumstances; thus, we place an emphasis on working with clients to define tasks that will achieve the best results in the most cost- effective manner. Qualifications and Experience The following page contains a representative list of the cities, counties, and non-profit organizations with whom we have worked. As shown, our clients range in size from major urban areas to smaller communities throughout the U.S. The following sections provide details about our qualifications to perform the tasks described in Section 1 of this proposal. Specifically, we present our experience in performing: ■ Cable television franchise renewals .. ■ Cable TV and telecommunications consumer satisfaction surveys and other community ascertainments ■ Evaluations of technical network design ■ Local cable/telecommunications regulation support. This section concludes with a list of references for the firm. Additional references are available upon request. II - 3 REPRESENTATIVE CLIENTS ... Arkansas Maine Raleigh Hope Portland Rocky Mount Tarboro Alaska Maryland Wilson Metlakatla Baltimore Easton Ohio California Montgomery County Belmont Los Angeles Talbot County Cincinnati Santa Monica Cleveland Massachusetts Delaware Connecticut Belmont Fairborn Norwich Cambridge Oberlin Department of Public Utility Danvers Springfield Control, State of Connecticut Longmeadow Worthington Wakefield Delaware Oklahoma Wilmington Michigan McAlester Seaford Detroit Ponca City Grand Haven District of Columbia Grand Rapids Area Consortium Pennsylvania Washington, D.C. Kalamazoo Altoona Monroe Carlisle Florida Portage Central Bucks Consortium Clearwater Southfield Erie Hillsborough County Traverse City Lower Merion Township Longboat Key Pottsville Manatee County Missouri Upper Merion Township Panama City Beach Hannibal Pinellas Park Springfield South Carolina City of Sarasota Clinton Sarasota County Nebraska Georgetown Tallahassee Lincoln Laurens Titusville Union New Jersey Georgia Bayonne Tennessee Albany Morristown Jackson Atlanta Piscataway r. DeKalb County Texas Savannah New York Sherman Washington Ithaca Wichita Falls Westchester Consortium Hawaii Vermont State Cable Office North Carolina Burlington Cary Iowa Charlotte Virginia Iowa City Fayetteville Culpeper County Harlan Fort Bragg Fredericksburg Greensboro Front Royal Kentucky Greenville Manasses Owensboro Greenwood Consortium Suffolk Prestonburg Kill Devil Hills Laurinburg West Virginia ._ Louisiana Morganton Philippi New Orleans Nags Head Pope Air Force Base II - 4 �- CABLE TELEVISION FRANCHISE RENEWALS: QUALIFICATIONS Our long background in working with franchising authorities to obtain the best cable television service for their constituents enables Rice, Williams Associates to structure the franchise renewal process and to offer support effectively and efficiently. We have guided cities through the cable TV franchising and franchise renewal process successfully since 1981. Thus, our firm is well prepared to provide the City with a needs assessment at each step of the process that we outlined in Section I of this proposal. Informative briefings and strategic advice on relevant legal, economic, and regulatory matters affecting the cable franchise renewal process. We are thoroughly familiar with the implications of the national, state, and local issues that we will discuss with the City throughout the duration of this assignment: ■ The range of relevant legal/regulatory developments, including House and Senate competition legislation, court decisions, FCC rulemakings, and rate regulation issues. ■ Implication of industry changes, such as telephone company entry into cable, recent mergers and acquisitions among cable industry players, and technological developments. ■ Local policy issues, such as the local regulatory structure, service extensions, and franchise fees. Rice, Williams Associates is well informed on the implications of the Cable Television Consumer Protection and Competition Act of 1992, since we supported and advised the U.S. Conference of Mayors and the League of Cities on the advantages and disadvantages of the various proposed provisions of this legislation as it was being developed. We worked closely with these associations to support continued regulatory authority for franchising entities in the 1992 Act, and continue to advise these organizations on new legislative changes being considered by the current Congress. From our long track record in reviewing proposals offered by independent cable companies and large MSOs, we thoroughly understand the range of services offered to cities throughout the U.S. by the key industry players. We have seen first-hand the impact of ownership consolidation throughout the industry, rate increases and rollbacks, and introduction of advanced services and networks. Structuring and supporting the franchise renewal process. We have and are currently conducting renewal proceedings for numerous municipalities throughout the U.S., including Atlanta, Georgia; Owensboro, Kentucky; Baltimore, Maryland; Bayonne, New II - 5 Jersey; McAlester, Oklahoma; Wichita Falls, Texas; Charlotte, North Carolina; Titusville, Florida; Tallahassee, Florida; Wilmington, Delaware; Monroe, Michigan, and Fairborn, Ohio. The listing below describes in more detail the services that we have performed for different clients and the results achieved. _ Franchise compliance, financial, technical, and service evaluations. Rice, Williams Associates has developed an extensive database of service offerings and performance records of cable operators throughout the U.S. -- a knowledge base that assists our clients in developing realistic expectations on the type of service that their constituents should expect in today's market. Since Rice, Williams Associates has assessed the financial plans of many franchise renewal applicants, we are very experienced in evaluating a variety of financial plans, proformas, MSO ownership structures, and smaller, independent cable company ownership structures. Experience with public hearings and negotiations. We have participated in many types of public hearings and are well prepared to advise on the most effective format, to develop agendas, and to answer questions in layman's terms. We have extensive experience in assisting with final negotiations with cable companies, and have been extremely successful in working with our client cities to obtain renewal agreements that have state-of-the-art rebuilds, substantial provisions for access, fiber and coaxial institutional networks, and long-term regulatory authority. Commissioners that regulate cable television for States of New York and New Jersey have called franchises developed by Rice, Williams Associates the best renewal packages in those states, providing an example to other cities. For example, our firm successfully negotiated a settlement for Bayonne, New Jersey after the City preliminarily denied the cable company. Today, Bayonne has a franchise for a rebuild which will be two-way active to the home, excellent access equipment and services, equipment and services clauses, and strong consumer protection provisions. R - 6 WW Representative Cable TV Franchise Renewal Clients Among the many cities we have assisted in cable TV renewals/refranchising are: Delaware Maine North Carolina Wilmington Portland Cary Charlotte Florida Michigan Greensboro Tallahassee Kalamazoo Greenville Titusville Monroe Kinston Laurinburg Georgia Nebraska Rocky Mount Atlanta Lincoln Washington Ohio New Jersey Fairborn Hawaii Bayonne Worthington State of Hawaii Morristown Pennsylvania Kentucky New York Altoona Owensboro Ithaca Erie Westchester Consortium Examples of Franchise Renewal Assignments/Results The following examples of the work we have performed for several of these clients illustrate the ways in which the skills of Rice, Williams Associates are applied to the specific circumstances of each individual project. Client. City of Atlanta, Georgia Project. To provide general assistance in the renewal process Tasks Performed: Implementation of a consumer market survey Assistance with and community ascertainment Financial analysis Technical review Development of updated ordinance II - 7 Assistance in negotiating a new franchise agreement Analysis and preparation of stipulations for transfer Process: Informal renewal process Results Achieved for City: State-of-the-art cable system Extensive fiber optic institutional network Substantive PEG commitment Quality regulatory framework Client: City of Greensboro, North Carolina Project: To assist in the cable renewal/refranchising process. Tasks Performed: Analysis of operator compliance Consumer and community needs ascertainment Review of financial standing Technical analysis of the existing system Ordinance and franchise development Assistance in negotiating Process: Formal renewal process Results Achieved for City: Completely rebuilt cable system Public, educational, and government access support Service to all residential areas Upgrade of customer service r.. Construction of an extensive institutional network Client: State of Hawaii, including Islands of Oahu, Hawaii, Maui, Kauai, Molokai, and Lanai Project: To assist in the cable renewal/refranchising process II - 8 .. Tasks Performed: Consumer surveys Institutional ascertainment for local programming Preparation of production equipment packages. Results Achieved for State: Franchise areas received public, educational, and government access support Statewide programming interconnect plan implemented Client. City of Tallahassee, Florida Project: — To assist throughout the cable refranchising/renewal process Tasks Performed: Implementation of a consumer market survey Assistance with and community ascertainment Financial analysis ,.. Technical review Analysis of the system rebuild proposal submitted by the cable company Draft of questions for the cable company Assistance in negotiating a new franchise agreement Analysis and preparation of stipulations for transfer Process: Renewal process Results Achieved for City: Rebuild of cable system Fiber optic institutional network PEG access funding Clear regulatory authority Line extension policy -- Client. City of Bayonne, New Jersey Project. To assist in the administrative hearing process on denial of renewal To provide expert testimony To negotiate a settlement II - 9 — Tasks Per Analysis of operator strategies _ Analysis of local needs Development of franchise and settlement language Negotiate settlement terms Process: Formal administrative hearing on denial. _. Results Achieved for City: Rebuilt cable system Two-way activation to the home Educational and public access studios Government access equipment Institutional network for government and education Service to all households Client. City of Ithaca, New York Project: To provide refranchising assistance To prepare FCC waiver for rate regulation Tasks Per -- Implementation of community needs assessment and consumer surveys Evaluation of the past performance of the cable system Alternative ownership financial analyses Development of a Request for Renewal Proposal Evaluation of company proposal City cable TV ordinance development Final franchise agreement assistance Technical tests to determine eligibility to regulate rates Preparation of an FCC waiver Process: Formal renewal process Results Achieved for City: Rebuilt cable system Institutional network for government and education sectors Public access staff New access studio H - 10 Client: City of Altoona, Pennsylvania Project. To assist throughout the cable refranchising process To prepare a FCC waiver on the applicability of the competitive rulemaking Tasks Performed: _ Analysis of operator compliance Consumer and community needs ascertainment Review of financial standing Technical analysis of the existing system Ordinance and franchise development Assistance in negotiating Technical test to determine if the City would qualify to seek waiver to regulate cable rates from the FCC Process: Formal renewal process. Results Achieved for City: Rebuilt cable system Senior citizen discount delivery _ Access support Upgrade of customer service — e- II - 11 — •.- CONSUMER SATISFACTION SURVEYS AND COMMUNITY ASCERTAINMENTS: QUALIFICATIONS Rice, Williams Associates has conducted scores of community needs assessments and consumer market surveys on behalf of municipalities. These assessments and surveys provide a solid basis for designing effective cable/telecommunications plans and for ensuring that operators meet consumer needs. Rice, Williams Associates staff have the statistical training, practical survey experience, and in-house computer capability to ensure reliability of results. Consumer Satisfaction Surveys Rice, Williams Associates is experienced in conducting consumer surveys to provide franchise authorities with insights on local satisfaction with cable TV service. Although we have often performed these surveys as part of franchise renewal processes, we are also called upon to undertake these during the course of a ten-year or fifteen-year franchise to determine consumer satisfaction levels with ongoing cable TV service. We design our satisfaction surveys to measure consumer attitudes on: ■ Installation ■ Sales ■ Repair work ■ Response time ■ Cable TV picture quality ■ Billing ■ Programming In franchise renewal assignments, we also test for consumer interest in and willingness to pay for expanded services, increased numbers of channels, and other special offerings. We take care that all surveys provide a valid representation of all residents, and use generally accepted statistical sampling and analysis methods to produce the highest quality report. Due to our database on consumer attitudes in a wide variety of cities, we are able to provide valuable insights regarding the degree to which local attitudes support or deviate from the norm. Community Needs Assessments Rice, Williams Associates is also very experienced in conducting needs assessment to determine the levels of utilization of proposed or existing access programming channels and institutional networks. 11 - 12 We are experienced in conducting seminars, where requested, to educate and inform noncommercial organizations and individuals on potential uses, financing alternatives, and management of these different types of community communications systems. We are experienced in conducting surveys of potential government, educational, and public access users to determine how these groups intend to begin or expand use of the cable channels allocated for these purposes. Rice, Williams Associates is experienced in analyzing these survey results and interpreting the levels of equipment, facilitate, channel capacity, and funding that will be required to support existing or future demand for access channel use. We also have an extensive background in planning utilization of institutional networks. We use a proven methodology to gather information from users and analyze how use of an institutional network could either reduce costs over current leased-line telecommunications service or provide new communications capabilities. Representative Consumer Survey and Needs Ascertainment Clients Rice, Williams Associates has conducted community needs assessments and consumer market surveys in many cities, including: Delaware Massachusetts North Carolina -- Wilmington Cambridge Charlotte Danvers Greensboro Florida Wakefield Greenville Clearwater Kinston Tallahassee Maryland Raleigh Titusville Baltimore Rocky Mount Georgia Michigan Ohio Albany Monroe Springfield Atlanta Washington Nebraska Oklahoma r„ Lincoln Ponca City Hawaii State of Hawaii New York Pennsylvania �. Ithaca Altoona Kentucky Upper Merion Township Owensboro Tennessee Jackson II - 13 - TELECOMMUNICATIONS NETWORK DESIGN: QUALIFICATIONS Since our firm began, Rice, Williams Associates has been active in encouraging clients to examine ways that local telecommunications systems might enhance the delivery of local programming, community information, and innovative services to consumers and businesses. We have conducted a wide range of consulting assignments that assist local governments, educational institutions, and non-profit organizations in the design and implementation of institutional networks to support video, data, and voice applications -- experience that demonstrates our qualification to conduct all technical analysis required for the City's cable TV franchise renewal. •.. Rice, Williams Associates has assisted many localities that want to: ■ Expand/improve utilization of an existing institutional network ■ Develop a network plan that can be incorporated as part of a cable system's rebuild ■ Determine a way to activate unconnected, existing facilities via cable, microwave, or broadcast links. We are highly qualified in the following areas: ■ Institutional system design. We have had significant experience designing I-nets that incorporate cable TV and other communications technologies, such as ITFS, low-power broadcast, and microwave. Typically we work with our client to agree .. upon a broad conceptual design for the system (e.g. connectivity locations, functionality) and then commence the detailed technical design (e.g. performance, interface standards). ■ Implementing, monitoring, and evaluating networks. We have worked with many clients to develop a full-scale implementation plans, including defining day- to-day operation/maintenance responsibilities for the network. _ ■ Management/utilization plans. We have performed many consulting assignments to improve the management and utilization of access channels and institutional networks. — 11 - 14 .. REPRESENTATIVE TELECOMMUNICATIONS SYSTEM DESIGN CLIENTS Rice, Williams Associates has performed technical design work for a variety of clients, •. including the following: Client. City of Baltimore, Maryland Project: To analyze the telecommunications needs of the City '— To develop plans for a fiber optic network To assist in negotiations with the cable operator. Tasks Performed.- Assessment erformed.Assessment of the video and data needs of the schools and major City departments Analysis of the overall telecommunications infrastructure in the City Analysis of the potential routing and technology for a fiber optic network Negotiation with the cable operator to provide the institutional network Client. Amherst College, Hampshire College, Mount Holyoke College, Smith College, and the University of Massachusetts. Project. To conduct a feasibility study for a telecommunications system to interconnect five area colleges Tasks Performed. Needs ascertainment including the academic and administrative divisions of each college Analysis of costs for each division of each college Recommendation on system technology and design Results Achieved for Consortium: Recommended system was designed for integration with the local area networks of these colleges 11 - 15 r Client: City of Longmeadow, Massachusetts Project: To conduct a technical evaluation of the local cable institutional network Tasks Performed: Implementation of technical tests and monitoring of the system Evaluation of existing user equipment Assessment of compliance with the local cable franchise Recommendations on the system and equipment Client: Southern Pennsylvania Public Broadcasting Council, Harrisburg, Pennsylvania Project: Ascertainment and design of a multi-technology institutional network to serve one-quarter of Pennsylvania, including five major population centers including Harrisburg and Hershey r Tasks: Ascertainment of telecommunication needs of local governments, educational �- institutions, hospitals, and social service agencies Network design Results Achieved: Network design in an interactive hub configuration Incorporated cable TV, ITFS, microwave, and low-power television facilities r r Client: Lakeshore Technical Institute, Cleveland, Wisconsin Project: To analyze the telecommunication needs To design a system to interconnect five towns near Green Bay Tasks Performed: Coordination of educational seminars Design and implementation of the ascertainment process Design of the technical configuration 11 - 16 r Results Achieved.- Operational chieved.Operational system utilizes cable television, two-way microwave for teleconferencing, and ITFS LOCAL CABLE/TELECOMMUNICATIONS REGULATORY SUPPORT: QUALIFICATIONS _ Many of our clients rely upon Rice, Williams Associates for ongoing support for their local cable TV and telecommunications regulation activities -- further demonstration of our qualification to provide the City with the most effective insights on drafting franchise ordinances and compliance provisions to support your long-term goals. We understand the types of regulatory and legal provisions that are necessary to: ■ Providing assurance that franchise fees are being remitted to franchising authorities properly ■ Evaluating ongoing cable operator performance ■ Ensuring compliance with current rate regulation guidelines. _ Rice, Williams Associates undertakes many types of special and ongoing assignments for its clients, including: ■ Franchise fee audits. We are experienced in reviewing cable operator franchise fee reports and financial statements for our clients. Our experience across the country in conducting detailed financial reviews of cable operations provides us with a working knowledge of revenue sources and typical financial ratios. In one instance, we were able to achieve a $1 million payment to our client in back franchise fees. ■ Five-year performance analyses. To ensure compliance with the franchise and cable ordinance, we are experienced in assisting clients in carrying out periodic compliance reviews during the course of the ten- or fifteen-year cable TV franchise. These independent assessments demonstrate the degree to which customer service requirements are being met by operators. ■ Rate increase analysis. We have assisted many franchising authorities in handling the rate increases requested by local cable operators. We have reviewed and analyzed FCC Forms 393, 1200, 1205, 1210, 1215, and 1220 for our clients. We have assisted clients to request additional information where warranted, and have provided input to final decision making on these requests. 11 - 17 Representative Rate Increase Analysis Clients Florida Kentucky Ohio Clearwater Owensboro Fairborn Pinellas County North Carolina Pennsylvania Iowa Cary Doylestown Iowa City Greensboro Northampton Township Rocky Mount REFERENCES Please feel free to call some of our former clients for reference on the quality of our work in cable television franchise renewals and other assignments. Ms. Claudette Harrell Ms. Doris Boris City Administrator Cable Communications Administrator City of Tallahassee City of Charlotte City Hall, 300 South Adams St. 600 East Fourth Street Tallahassee, FL 32301-1731 Charlotte, NC 28202-2855 (904) 599-8292 (704) 336-3064 Ms. Jeanne Treff The Honorable Jesse L. Warren City of Livonia City Attorney Department of Community Resource City of Greensboro 33000 Civic Center Drive P.O. Box 3136 Livonia, MI 48154 Greensboro, NC 27402-3136 (313) 421-2000 (919) 373-2320 Mr. Drew Shaffer Mr. Thomas Peeler Broadband Telecommunications Manager, COMPAS: Specialist City of Morganton Public Antenna City of Iowa City System 410 East Washington Street 203 West Meeting Street Iowa City, IA 52240-1826 Morganton, NC 28680-1029 (319) 356-5046 (704) 438-5397 11 - 18 III. PERSONNEL Rice, Williams Associates will assign the following project team to assist the City of Ithaca, :. New York in the tasks specified in Section I Scope of Services: ■ Jean Rice, Partner ■ Don Williams, Partner ■ Lee Afflerbach, Senior Engineer ■ Kenneth Jenkins, Engineer ■ John Weesner, Rate Analyst ■ Paul Langley, Certified Public Accountant ■ N. Frank Wiggins, Attorney ■ Robert A. Beizer, Attorney As demonstrated in the resumes that follow,these individuals provide a unique combination of experience in cable including,renewal,regulation,compliance analysis, survey research, transfer evaluation,technical review, financial analysis, and legal proceedings. JEAN RICE PARTNER Jean Rice, Partner, founded this Washington, D.C. based telecommunications consulting firm. The firm has assisted over 200 cities since its founding in 1981. Ms. Rice has been nationally recognized for her work in the cable communications field, providing advice on legal,regulatory, and community service aspects of this industry since 1972. She has served as the principal consultant for many projects undertaken by Rice, Williams Associates in cable franchising and renewals, telecommunications system design and utilization planning, performance evaluation, rate increase analysis, municipal ownership, overbuild feasibility studies, and access channel utilization. Ms. Rice has often played a key role in negotiating the final cable refranchising agreement, and emphasizes a close working relationship with her clients throughout the refranchising process. Among the cities with which Ms.Rice has consulted are Atlanta,Georgia;Altoona, Pennsylvania; Baltimore, Maryland; Bayonne, New Jersey; Charlotte, North Carolina; Department of Public Utility Control, State of Connecticut; Ithaca,New York; Morristown, New Jersey; Tallahassee, Florida; Titusville, Florida; Fairborn, Ohio; Worthington, Ohio; Greensboro, North Carolina; Owensboro, Kentucky; Iowa City, Iowa; and the State of Hawaii, Office of Cable Television. A recognized spokesperson within the industry,Ms. Rice has addressed conferences hosted by the National League of Cities, the International City Management Association, the American Public Power Association, the National Association of Telecommunications Officers and Advisors,the American Library Association,the National Federation of Local Cable Programmers, and state municipal leagues. She has made numerous presentations on .. the impacts of the 1984, 1992, and 1996 cable and telecommunications legislation at these conferences. ._ Ms. Rice has published many articles on the subject of municipalities and cable television, and was the editor of Cable Television Refranchising and Renewal, published by Communications Press. Ms. Rice has a long track record in assisting governments and non-profit organizations in telecommunications matters. Prior to founding Rice, Williams Associates, Ms. Rice served as Telecommunications Management Specialist for the National Telecommunications and Information Administration of the U.S. Department of Commerce. In this position, she assisted states, cities, educational institutions, and public broadcasting stations in the planning, development, and implementation of telecommunications systems. III - 2 Ms. Rice also served as Senior Municipal Consultant with the Division of Municipal Assistance and Policy Development at the New York State Commission on Cable Television. In this capacity,she worked with municipalities during franchise and renewal processes,rate hearings, and performance reviews. Ms. Rice received her M.A. in Communications from the University of Wisconsin at Madison. She received the Phi Beta Merit Award and the H.V. Kaltenborn Fellowship in Communications. She is also the recipient of the George Stoney Award in Humanistic Communications from the National Federation of Local Cable Programmers. — 111 - 3 DON WILLIAMS PARTNER Don Williams, Ph.D., Partner,has been the firm's principal consultant to clients in the areas of cable television franchise renewals, municipal ownership of cable, overbuild studies, institutional networks,and ongoing regulatory assistance. He is responsible for development of Rice, Williams Associate's extensive database, which enables comparative analysis of cable system performance among similarly-sized operations in many cities. Dr. Williams is responsible for design and coordination of the consumer market surveys, community needs ascertainments, telecommunications plans, and financial analysis undertaken by Rice, Williams Associates. Dr. Williams' research for the firm has also included completion of a comprehensive study on municipal and cooperative cable system ownership for the Benton Foundation and a study on post-divestiture telecommunications taxation for the City of New Orleans. Dr.Williams has designed and managed surveys to measure consumer satisfaction with cable TV services for many of our clients,including Atlanta, Georgia; Charlotte,North Carolina; Clearwater, Florida; the State of Hawaii; Ithaca, New York; Iowa City, Iowa; Wellesley, Massachusetts; Raleigh,North Carolina; Sarasota,Florida; and Wilmington,Delaware. He has also designed and conducted market and financial studies for commercial, government, and other institutional network users in cities such as Greensboro,North Carolina; Albany, Georgia;Lincoln Nebraska;Tallahassee,Florida;Jackson,Tennessee;and Washington,D.C. Dr. Williams has conducted municipal ownership feasibility studies for Tallahassee Florida, Ponca City,Oklahoma;Jackson,Tennessee;Belmont,Massachusetts; Springfield,Missouri; Traverse City, Michigan; Phillipe, West Virginia; and Morganton,North Carolina; among others. He is a nationally recognized expert on cable and has made presentations at numerous conferences including the New Jersey State League of Municipalities, the American Public Power Association, the Florida Innovations Group, the South Carolina Association of Municipal and County Attorneys, the South Carolina Associations of Municipal Power Systems,the Iowa Association of Public Power,ICMA, and North Carolina Electric Cities. Dr. Williams holds a Ph.D. in Political Economy from the University of Massachusetts at Amherst and an M.A. degree with honors from the University of Wisconsin at Madison. 111 - 4 r, LEE AFFLERBACH SENIOR ENGINEER Mr. Afflerbach, an Associate of Rice, Williams Associates, is a communications system engineer with 25 years professional experience in the design of cable, broadcast, and land -- mobile radio systems. He has designed and evaluated cable television networks and conducted feasibility studies for many of our clients. On client assignments for Rice, Williams Associates, Mr. Afflerbach develops technical standards, carries out the cable system tests required, and performs the technical analysis required for franchise renewals and municipal ownership studies. He has worked for many of our clients, including Altoona,Pennsylvania;Ithaca,New York; Los Angeles, California; Charlotte,North Carolina; and Tallahassee, Florida. Prior to his work for Rice, Williams Associates, Mr. Afflerbach served on the staff of the MITRE Corporation,where he was responsible for evaluating the broadband system design. At MITRE, he worked on establishing procedures for cable television franchising and the interactive TICCIT two-way demonstration in Reston,Virginia. Mr. Afflerbach is very familiar with implementation of public-sector applications on many types of telecommunications networks. Under funding provided by the Law Enforcement Assistance Administration (LEAA), Mr. Afflerbach performed and managed communications design studies for federal, state, and local law enforcement agencies including the Federal Bureau of Investigation(FBI), the Drug Enforcement Administration (DEA), the New York State Police, and the Georgia State Police. His role on these assignments included performing user requirements analysis, system design, and specification preparation for land-mobile radio, computer-assisted dispatching, and 911 emergency telephone systems. He also served as an on-site technical advisor to the West German Federal Aviation Administration in Frankfurt, West Germany for five years in support of a major engineering project. Mr. Afflerbach participated in the feasibility studies, requirements analysis, and specification program phases of the ZKSD program, which developed a new high-speed flight data processing system for the Federal Republic. Mr.Afflerbach has professional affiliations with many telecommunications and engineering organizations, including the Institute of Electrical and Electronic Engineers(IEEE); IEEE-- Broadcast Society, IEEE -- Computer Society;National Society of Professional Engineers (NSPE); Maryland Society of Professional Engineers (MSPE); Licensed Professional Engineer - Maryland and District of Columbia; and National Association of Telecommunications Officers and Advisors(NATOA). 111 - 5 KENNETH E. JENKINS ENGINEER Mr. Jenkins,an Associate of Rice, Williams Associates, has over 14 years of technical and engineering experience with cable television systems and local area network (LAN) broadband communications. His experience includes component- and system-level specification development, system design, construction, quality control, and other operational functions. In his work for Rice,Williams Associates,Mr. Jenkins conducts technical field surveys and audits of cable television networks and evaluates the need for upgrades and rebuilds of existing cable systems. He draws upon his extensive computer-modeling experience to evaluate system performance and to perform feasibility studies on a wide range of telecommunications systems, including fiber optic networks. Mr. Jenkins has extensive experience in recommending system components. His past work includes developing networks and products to provide telemetry and control functions and video services for traffic-flow monitoring and control systems in Rochester,New York, and at various airports throughout the United States. Mr. Jenkins has been involved with and served on IEEE broadband network standards- making committees. In addition,he has professional affiliations with the Society of Cable Television Engineers and with the National Cable Television Association, serving on the Engineering Committee and various subcommittees. Mr. Jenkins received his civil engineering degree from Pennsylvania State University, and he has authored papers and conducted seminars on the key aspects of broadband networks, .. system design, and performance criteria. III - 6 — JOHN WEESNER RATE ANALYST Mr. Weesner,an associate of Rice,Williams Associates,has a broad range of experience and capabilities in the areas of utility facility design, operations and rate and tariff regulation. He has conducted rate analysis for industrial companies,municipal, state and federal entities and independent power developers. Projects included load forecasting, billing analysis, contract negotiations, alternate energy project feasibility analysis, site selection and development, rate and tariff design/analysis, expert witness testimony and utility facility inspection and valuation. Previously,he was executive engineer with national consulting engineering firms (ENR top 100) serving municipal and cooperative utilities and industrial clients. He managed projects involving retail and wholesale utility ratemaking and policy development; conducted negotiations with senior management of private utility suppliers regarding costs of service, rate/tariff design, terms and conditions and other tariff matters; prepared reports for clients seeking compliance with federal and state laws including activities required by PURPA, PIFUA,and the FLA Energy Efficiency and Conservation Act; and participated/testified in proceedings before the FERC,the DOE and state public service commissions and municipal authorities. Mr. Weesner also served as a senior utility analyst for Washington, DC-based public utility consulting firm. Client work involved analysis and contestation of utility rate changes at the state and federal level;preparation of testimony for regulatory proceedings; design of retail _ rates, preparation of short and long range load and energy forecasts, operating system evaluations and power supply procurement studies. For the East Florida Municipal Power User Group, he provided cost of service and rate design analyses and negotiated with wholesale electric power supplier as to rate level and contract terms and conditions in proceedings conducted before the Federal Energy Regulatory Commission. Millions of dollars in power costs were saved as a result of these activities in FERC Dockets ER78-19,ER81-588,ER82-793 (re:Florida Power&Light Co.). He has worked with numerous cities, including the following projects. In the City of Bushnell,he performed Triennial Electric and Water System Survey in accordance with the applicable covenants of the City's Bond Resolution and provided a cost of service study and electric rate design report. For the City of Starke, he redesigned rates as part of an interim rate study to meet new rate design criteria mandated by the Florida Public Service Commission. 111 - 7 For the City of New Smyrna Beach - Utilities Commission, Mr. Weesner assisted the Commission with compliance with the Power Plant and Industrial Fuel Use Act of 1978 in the following areas: ■ Prepared a comprehensive report detailing the requirements of the Act as it applied to the Commission. ■ Developed and prepared for filing with the DOE the Conservation Plan required by the Act. Developed and prepared for filing with the DOE the exemption requests provided by the Act. For each municipal electric system for the Cities of High Point, Wilson, Rocky Mount and the Greenville Utilities Commission, over a two-year period, Mr. Weesner provided the following assistance in these areas related to Title I and II of the Public Utility Regulatory Policies Act of 1978: ■ Developed "Staff Position" for each of the ratemaking and rate administration standards and served as the expert witness in evidentiary hearings conducted by each system. ■ Provided an analysis of the "lifeline rate" standard and rendered an opinion with .. respect to whether or not each system's rate structure was in conformance. ■ Prepared comprehensive report that detailed the cost of service reporting requirements(accounting costs, marginal costs and load research data)of the Act. ■ Provided suggestions as to individual/joint load research programs and conforming modifications to accounting procedures. ■ Prepared initial ERA Form 166 report on progress of activities required by the Act. ■ Prepared exemption requests for Section 133 cost of service filing requirements. For ElectriCities, he provided cost of service and rate design analyses and negotiated with wholesale electric power supplier for rate level and contract terms and conditions in ._ proceedings before the Federal Energy Regulatory Commission. Millions of dollars of power costs were saved by these activities in Dockets ER81-550 and ER83-765 (re: Carolina P&L Co.); Dockets ER81-388,ER82423 and ER83430(re: Virginia Electric Power Co.). He also provided for ElectriCities an analysis of federal requirements regarding the relationships between the member municipal systems and small power producers and 111 - 8 _ cogenerators and designed form letter for related responses to regulatory agencies. Also for ElectriCities, Mr. Weesner prepared testimony for filing before the North Carolina Utilities Commission in Docket E-100, Sub 41 concerning the rates to be paid by electric utilities for .. purchases from small power producers and cogenerators. Mr. Weesner has a Bachelor of Science from the University of Virginia and a Master of Engineering Administration(Management/Finance)from George Washington University. Following is a list of Mr. Weesner's federal rate regulatory experience. FEDERAL ENERGY REGULATORY COMMISSION: Expert Testimony: Docket ER 77-347: Wisconsin P&L Co. (Rate& Tariff Docket ER 78-583: Mississippi P&L Co. Issues) Docket ER 78-584: Mississippi P&L co. Docket ER 84-355: Virginia E&P Co. Expert Testimony: Docket RM 87-012: Generic re: cogeneration and small power facilities Protests and Docket ER 78-19 : Florida P&L Co. Interventions: Docket ER 81-588: Florida P&L Co. Docket ER 82-793: Florida P&L Co. Docket ER 82-701: Florida Power Corp. Docket ER 81-550: Duke Power Co. Docket ER 82-732: Duke Power Co. Docket ER 82-743: Carolina P&L Co. Docket ER 83-765: Carolina P&L Co. —' Docket ER 81-388: Virginia E&P Co. Docket ER 82-423: Virginia E&P Co. Docket ER 83-430: Virginia E&P Co. Docket ER 90-540: Virginia E&P Co. 111 - 9 _ PAUL D. LANGLEY CERTIFIED PUBLIC ACCOUNTANT Education: B.S. in Business Administration, George Mason University 1979 J.D. George Mason University School of Law 1994 Licenses: _ C.P.A. Commonwealth of Virginia 1981 Virginia Bar Association 1994 _ Mr. Langley entered the field of Public Accounting in 1979, in the Northern Virginia area. Mr. Langley performs reviews of Cable Television franchise fees for Rice, Williams Associates and has performed numerous reviews for a variety of MSO's. Other major areas of concentration include taxation and business planning. Major clients included real estate developers, publishers, professional corporation, and government contractors. Representation before the Internal Revenue Service led to development of many forensic accounting techniques. III - 10 N. FRANK WIGGINS ATTORNEY Frank Wiggins concentrates in litigation and administrative law. He practices primarily in the Federal courts and before the Federal Communications Commission, the Federal Trade .. Commission, and the Postal Rate Commission as well as the U.S. Postal Service. Mr. Wiggins' FCC-related practice spans virtually all elements of the Commission's jurisdiction. He has done broadcast-related work, both transactional and regulatory, regulatory, operations, and transactional work in the cable area for cable systems, cable networks,and network programmers,telecommunications litigation,both administrative and in courts and both litigation and transactional work involving satellite communications. Mr. Wiggins received his B.S. from Iowa State University in 1969, and earned his J.D., magna cum laude, from University of Michigan in 1972, where he was a member of Order of the Coif and served as Associate Editor for the MICHIGAN LAW REVIEW. III - 11 _ ROBERT A. BEIZER ATTORNEY Robert A. Beizer has practiced in communications law, representing broadcasters, cable operators,and common carriers before the Federal Communications Commission, for over .. 25 years. Long active in bar association activities, Mr. Beizer served as President of the 2000-member Federal Communications Bar Association in 1992-3, and remains a frequent lecturer before bar and industry groups. In 1964-65, Mr. Beizer clerked for Judge Robert P. Anderson, United States Court of Appeals for the Second Circuit. From 1968-84,he taught a communications law seminar at the University of Virginia Law School. In 1994, he was appointed the first Distinguished Practitioner in Residence at the Institute for Communications Law Studies of Columbus School of Law, The Catholic University of America. Mr. Beizer received his B.A., magna cum laude, from Harvard University in 1961, and earned his LL.B. from Yale Law School in 1964. 111 - 12 IV. FEES Rice, Williams Associates offers a flexible fee schedule to enable the City to select the scale _ and scope of service that the City feels is most appropriate. All Rice, Williams Associates fees are based on our costs and are levied on a service-by-service basis. Our hourly rates are as follows: ■ $130.00 per hour for Consultants. Following are the fees for the tasks described in this proposal: Project 1 -Cable Television Franchise Renewal Task I: Initial Consultation $1,560 Task II: Community Needs Assessment $7,500-10,500* and Consumer Market Survey $11,500 Task III: Technical Evaluation of the Existing Cable System $9,500-13,000* _ (Per headend/per system) Technical Evaluation of Existing I-Net $6,500 Task IV: Review of Cable Operator Compliance with the Cable TV Ordinance/Franchise $3,200-6,200* Task V: Updating Relevant Ordinances $5,200 Task VI: Preparation of a Request for Proposal $3,850 Task VII: Evaluation of Renewal Proposal $5,500 Task VIII: Drafting Franchise Agreement $4,600 Task IX: Assistance with Public Hearings $1,560 (Per hearing) Project 2 -Municipal Ownership Studv Task I: Initial Consultation $1,560 Task II: Consumer Market Survey (on municipal ownership) $11,500 Task III: Institutional Needs Assessment (Not needed if done for the cable renewal process) $5,500-10,500* Task IV: Preliminary Technical Analysis and Cost Assessment $15,000 Task V: Financial Analysis $12,500 Travel and Expenses At Cost *Dependent upon scope and work already accomplished by the City and Cable Commission.. Note: Costs for services listed under 10ther Services"will be provided upon request. IV - 1