Analysis of City-AT&T Franchise Agreement



-- City obtains dedicated ATM capacity from AT&T. Community sites, schools and libraries each independently obtain services from AT&T. City's capacity is funded by cable subscribers. Services for community groups are paid by cable subscribers and community group sources. Services for schools and libraries are paid by schools and libraries.

-- No dedicated fiber to provision own services; no need for collaboration; no economies of scale; potentially unaffordable prices for all except City.


-- Gets defined, dedicated ATM capacity at no charge to City; City can provision its own services on the ATM fabric

-- Cable subscribers pay costs

Community Access Sites:

-- Eligible to purchase undefined services at undefined prices

-- Community sites and/or cable subscribers pay costs of fiber and installation and full price for services

-- Council members determine sites

-- Community sites develop plans to distribute services to the public, including financing and management plans

-- Neighborhoods and Council members may opt for AT&T cable modem service

Schools and Libraries:

-- Eligible to purchase undefined services at undefined prices

-- Schools and libraries pay costs of fiber and installation, including costs of connections from nodes to buildings




1. What does the City get?

-- ATM network capacity/services, including all electronic equipment (i.e., ATM switches, user interface modules); City is able to provision its own services, such as virtual conferencing, Internet access, etc.

-- Supporting data rates of OC1, OC3, and OC12

-- Fiber connections/capacity for 22 City sites (including City-County Building, Public Safety Building, John Robin Building, Public Works Building, Municipal Courts Building, 17 police and EMS stations, Emergency Operations Center

-- Fiber connection/capacity for Pittsburgh Supercomputing Center

-- 80 free cable modems and Internet access for City senior and recreation centers

2. Who pays?

-- City pays no fees

-- Installation costs (fiber and installation) are borne initially by AT&T but may be passed through in rates to cable subscribers. Costs are limited to "direct incremental costs" which are defined to include "costs directly and actually incurred by Franchisee in meeting a requirement under this Franchise which Franchisee would otherwise not have been required to incur as part of its operation of its cable service network, or in order to meet another obligation of this Franchise." Unless the sites also have fiber cable tv drops (which is unlikely), the incremental costs will likely include the full materials and installation costs of the fiber connection.


Community Sites:

1. What do Community Sites get?

-- Undefined services

- Access to "certain of [AT&T's] Internet-based products for the purpose of ensuring access to underserved communities that are not otherwise provided for via other publicly-funded institutions" (Sec. 5.1).

-- Undefined prices

- Agreement does not define prices, although it does state (i) that community sites and/or cable subscribers will pay costs of materials and installation and (ii) that community sites will pay AT&T-determined prices for services

-- AT&T installs and maintains facilities on outside of Demarcation Point (defined as "output or connection point to the interface modules" (Sec. 5.2(A)(5)); Community site installs and maintains customer premise equipment, such as switches, servers, routers or other active components beyond Demarcation Point

2. Who pays?

-- AT&T initially pays cost of fiber from nodes to adjacent utility poles but may pass the costs to cable subscribers and/or community sites; costs include material (fiber) and installation costs

-- Community sites pay costs of fiber connections from utility poles to buildings; costs include material (fiber) and installation costs

-- Community sites pay for services (prices will cover maintenance costs and any premium desired by AT&T)

-- Reimbursable costs defined as "direct incremental costs", as discussed in City section above. Unless sites also have cable drops, the incremental costs will likely include the full materials and installation costs of the fiber connection.


3. Other special terms:

-- AT&T makes a fiber connection available from one node in each City neighborhood (up to 88 sites)

-- Members of Council serving each neighborhood designate one Community Access Site for each neighborhood, one alternate site and a Site Coordinator for the site

-- Site Coordinators prepare Community Access Plans for each site to include:

- Plan for providing access to underserved members of the neighborhood

- Information regarding accessibility (e.g., child-friendly, handicapped accessibility, convenient hours)

- Detailed management plan for ongoing operation

- Detailed identification of funding sources for equipment and materials and ongoing operational costs

-- Council member and AT&T consult to assess Community Network requirements for hardware and signal transport capacity to determine minim and maximum capacity requirements for each site

-- Neighborhoods may elect a coaxial cable connection and AT&T cable modem service by so advising their Member of Council

Schools and Libraries:

1. What do schools and libraries get?

-- Fiber connections and services as defined in Managed Services agreements

- Franchise agreement doesn't define services

- Franchise agreement doesn't define prices

2. Who pays?

-- Payment will be defined in Managed Services agreements, but franchise agreement states the following parameters:

-- Schools and libraries pay full costs of fiber connections (materials and installation)

-- Schools and libraries pay full price of services

-- Reimbursable costs defined as "direct incremental costs", as discussed in City section above. Unless sites also have cable drops, the incremental costs will likely include the full materials and installation costs of the fiber connection.



What the Agreement Doesn't Do:

-- Doesn't provide what we asked for:

- No free cable modem services for community sites

- No dedicated fiber

- No economies of scale to promote affordability

-- Doesn't provide for community groups, schools and libraries what the City obtained for itself

-- No consultation with I-Net Working Group as City negotiated a fundamentally different I-Net system than the proposal from the Working Group

-- Doesn't make Pittsburgh a leader in providing access to advanced telecommunications services for schools, libraries and community groups

- Doesn't follow trend of cities, such as Austin, Texas; Boston, Massachusetts; Denver, Colorado; Tucson, Arizona; King County, Washington; and Montgomery County, Maryland for dedicated fiber

- Doesn't include protective terms obtained in other cities, such as Portland, Oregon, for dedicated capacity/network agreements

- No definition of services for community sites, schools and libraries; no assurance that needed services will be offered

-- No ability to purchase Internet access through anyone other than AT&T/@Home/Excite. Internet access will likely be one of the services offered by AT&T. The agreement does not address how or whether users will be able to reach other ISPs.

-- No clear assurance that capacity will be adequate for Institutional user needs; section 5.6(A) requirement that "[f]ranchisee is responsible for maintaining each Institutional Network so that it is reliable and usable for critical, high-speed applications, as well as for the transmission of video and voice" is not clear. It is not clear whether it is a maintenance responsibility to ensure the quality of the capacity or whether it is a continuing responsibility to upgrade its services to satisfy Institutional users' needs. It appears to be a maintenance responsibility.

-- No provisions to ensure that services are affordable

- No definition of prices for community sites, schools and libraries;

- agreement provides for community sites and/or cable subscribers to pay full costs of facilities and services for community sites

- agreement provides for schools and libraries to pay full costs of facilities and services for schools and libraries

- Portland, Oregon agreement also provides for capacity, but it also defines maximum prices for Institutional users. Maximum prices are based upon TCI operation and maintenance costs plus 10 percent. They may also not exceed the lowest prices charged to commercial users.

- no economies of scale

-- No provision for community group, schools and libraries "capacity" independent from "services". City essentially gets ATM capacity not individual services. City can provision its own services over the ATM fabric. We should ask for the same thing. [Portland agreement also was for "capacity" but allowed TCI to submit an alternate plan prior to construction to provide a "Fiber-based managed network." This means that we could potentially ask for the "capacity" and the ATM switches or provision the switches to provide services for ourselves.]

-- No requirement that schools and libraries provide connections for community sites; all are independent.

-- No specification of annual rate at which City and community site costs may be passed through to cable subscribers

-- No prevention of double collection of costs for community sites through cable subscribers and community sites (i.e., pass-through of costs to cable subscribers in rates and in prices charged to community sites for services); no specification of proportions to be borne by subscribers and community groups

Other Problems:

-- Unclear definition of "demarcation point". "Demarcation point" is defined in section 5.2(A)(5) as the "output or connection point to the interface modules". The definition makes sense for the City network, where AT&T provides the ATM switches in which the interface modules will be placed. But the definition does not work for community sites, schools and libraries, where AT&T will not provide the devices that contain the interface modules.

-- City's approach does not clearly state that cable subscribers pay for costs of City services; cable subscriber pass-throughs are made clear for community sites


-- What are estimated AT&T costs for Institutional network commitments for City, community groups, school district and libraries?

- Impact on cable subscriber rates

- Compare AT&T costs of dedicated fiber vs. dedicated capacity vs. managed network

-- How will community site costs be allocated between cable subscribers and community site sources? Each are responsible but AT&T retains discretion to charge either or both in proportions to be determined by AT&T

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This page last updated on 26 June, 2000