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Council Agenda - City of BurbankTuesday, March 23, 2004Agenda Item - 6 |
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PURPOSE This item seeks authority to enter into five Fiber Optic Cable Service Agreements with the following companies: TVN Entertainment, Inc., Modern Videofilm, Foto-Kem Industries, Inc., Plus 8 Digital and OnFiber Communications, Inc. All but OnFiber are local Burbank companies. Each agreement will lease unused fiber optic strands (dark fiber) that are part of the Burbank Fiber Optic Network. The four local company agreements are for a period of one (1) year and thereafter extended annually for successive one-year terms. The agreement with OnFiber, a telecommunications company based in Texas, is for a period of five (5) years and thereafter extended annually for successive one-year terms.
BACKGROUND TVN Entertainment, Inc., a local company, first requested information and a cost estimate for fiber optic services from BWP in January of 2003. A request to formally proceed with the project was received in a letter dated March 20, 2003, to connect two facilities located at 2901 W. Alameda Avenue and 4111 W. Alameda Avenue.
Modern Videofilm, a local company, first requested information and a cost estimate for fiber optic services from BWP in November of 2002. A request to formally proceed with the project was received in a letter dated January 20, 2003, to connect two facilities located at 4411 W. Olive Avenue and 1733 Flower Street in Glendale.
Foto-Kem Industries, Inc., a local company, first requested information and a cost estimate for fiber optic services from BWP in August of 2003. A request to formally proceed with the project was received in a letter dated September 16, 2003, to connect two facilities located at 2801 W Alameda Avenue and 4111 W. Alameda Avenue.
Plus 8 Digital, a local company, first requested information and a cost estimate for fiber optic services from BWP in September of 2003. A request to formally proceed with the project was received in a letter dated October 9, 2003, to connect two facilities located at 300 S. Flower Street and 111 W. Verdugo Avenue.
Since May of 2003, the BWP and OnFiber Communications have been developing a fiber optic service agreement. The Agreement before the Council today is the result of those discussions and developments. OnFiber Communications is a telecommunications company based in Texas. OnFiber Communications provides telecommunications services much like Pacific Bell and GTE. They represent the competition that has developed over the years following the deregulation of the telephone industry. OnFiber Communications uses the most modern equipment and can support a broad range of communication related services at attractive prices. The presence of such competitive suppliers encourages the development of additional telecom services and lower prices. Such services and prices are important to many Burbank businesses. The term of this Agreement is five (5) years, during which OnFiber Communications will connect an unspecified number of buildings to the Burbank Fiber Network at OnFiber Communications expense so that OnFiber Communications can provide communication services to those buildings. This is not an exclusive agreement; the City may offer similar agreements to competitors of OnFiber Communications. It will help us extend our fiber backbone and enter additional buildings at no additional cost to the City. It will also encourage competitive services and pricing for communications in the City.
Since the initial inception of the Burbank Fiber Optic infrastructure, BWP has maintained a policy that excess fiber would be made available to interested parties such as entertainment companies and competitive access providers. The revenue streams from leasing excess fiber would be used to help finance the network, thus avoiding the need for funding by electric and water utility customers.
ANALYSIS The four Agreements with local Burbank companies do not contain provisions to provide communication services. However, they do allow TVN Entertainment, Inc., Modern Videofilm, Foto-Kem Industries, Inc. and Plus 8 Digital to lease dark fiber and provide the links so necessary to connect their buildings and related communications equipment together for their own business purposes. BWP's rate for the use of fiber is fixed at $175/fiber/mile/month with no adjustment for communication traffic volume or capacity. TVN Entertainment, Inc. will pay $8,400 a year for four (4) fiber strands (1-mile), Modern Videofilm $10,500 a year for one (1) fiber strand (5-miles), Foto-Kem $9,456 a year for three (3) fiber strands (1.5-miles) and Plus 8 Digital will pay $2,400 a year for two (2) fiber strands (distance less than 1-mile). This project and the work required under this Agreement utilize existing facilities. No new facilities are needed at this time.
The OnFiber Communications Inc. Agreement allows OnFiber to lease dark fiber, which they can then use to provide communication services using their own equipment and system. Our rate for the use of our fiber is fixed with no adjustment for communication traffic volume or capacity.
This Agreement does provide the fiber optic links so necessary to connect the various buildings and relational communication equipment together. Using BWP's already installed Fiber Optic Network, speeds OnFiber Communications deployment in the City and makes it possible for OnFiber Communications to focus their efforts on their communication services rather than having to tear up our streets and sidewalks to install their own fiber. Under this Agreement OnFiber Communications would request a connection to an address near our fiber optic cable. Our engineering staff would determine how a connection could be most efficiently made and produce an estimate and time schedule for the construction of the connection. If OnFiber Communications accepts such estimate, they would pay the estimated cost. The City would then construct the connection. The City would refund OnFiber Communications any amount that OnFiber Communications may have overpaid for the connection should the actual cost be less than estimated. If the actual cost is higher than estimated OnFiber Communications would only pay the first ten percent (10%) of such overruns. This arrangement assures that OnFiber Communications will pay the cost of making the connection in a fair manner and that the City will provide cost estimates that are accurate. The connection would not only provide OnFiber Communications access into the building but the access into the building for the City as well. The City is not restricted on how it might use this fiber. The City would maintain ownership of the entrance but OnFiber Communications would share in its maintenance based on their percentage of use.
The above arrangements will be used for connections within a thousand feet (1000�) of our Fiber Optic Network. However, OnFiber Communications may have a need to serve a customer located more than a thousand feet (1000�) from our fiber optic cable. In such cases, there are three options:
The City would maintain the primary Burbank Fiber Optic Network at its sole expense. However, maintenance on any extension into buildings or extensions using City facilities that are constructed in conjunction with OnFiber Communications shall be prorated by fiber strand usage. This way OnFiber Communications would pay its share of any maintenance required for facilities for which it paid to construct.
In the event that there may be a problem with the Fiber Optic Network, OnFiber Communications may call the City at any time to request repair service. The City will respond by phone within two (2) hours and begin to diagnose the problem within four (4) hours of notice with our on-call electrical service personnel who are trained to make fiber optic repairs. These trained employees will work closely with OnFiber Communications to restore service as required. Should the call-out be found unnecessary, OnFiber Communications will pay the costs of calling the employee to work. This reimbursement possibility will reduce false call-outs, thus reducing impact on our operations. Should the fiber cable be inoperable, or so badly damaged that it is beyond feasible repair, OnFiber Communications can terminate the Agreement. Similarly, if the cable should become obsolete, OnFiber Communications may also terminate the Agreement. However, the City�s methods of construction and use of technology are more reliable and contemporary than those deployed by cable TV companies and many telephone companies. These extensive networks would most likely have failed or become obsolete before the City�s system would be so damaged or outdated.
The City will be responsible for any relocation of the fiber optic cable. Very little of the Fiber Optic Network is subject to relocation and that part that is subject to relocation underground would be relocated in conjunction with our electric transmission lines. The City has already considered how it would relocate the fiber in such event and can do so with little or no additional cost. OnFiber Communications will pay $54,600 a year for two (2) fiber strands (13 miles) for the use of this network.
This project and the work required under this Agreement utilize existing facilities. No new facilities are needed at this time. This Agreement is exempt under the California Environmental Quality Act.
FISCAL IMPACT The City in the past has approved agreements with Warner Bros., Disney, ICG, Media Net, Black Entertainment Television Inc., Qwest and Matchframe Video. The TVN Entertainment, Inc., Modern Videofilm, Foto-Kem Industries, Inc., Plus 8 Digital and OnFiber Communications, Inc. agreements will generate $85,355 per year for the City. BWP estimates the operations and maintenance expense of the entire fiber optic network at approximately $90,000 per year. With these agreements, the total fiber optic revenue will be $951,264 annually.
RECOMMENDATION Staff recommends that the City Council approve the resolutions authorizing the General Manager of BWP to execute Optical Fiber Cable Service Agreements with TVN Entertainment Inc., Modern Videofilm, Foto-Kem Industries, Inc., Plus 8 Digital and OnFiber Communications, Inc.
RED:JJC:jjc Fiber agreements � staff rpt 3-23-04 rev 2.doc
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