This report recommends that Council direct staff to proceed with a Periodic Review of AT&T Cable Services (formerly TCI Cablevision of California, Inc.) as outlined in the current Franchise Agreement. Staff also recommends that Council award a contract to the consulting firm of Municipal Services Associates, Inc. (MSA) for an amount not to exceed $38,750 plus a maximum of $6,000 in expenses to conduct the Periodic Review (Budget Modification #19).

As outlined in the current nonexclusive Franchise Agreement between the City of Sunnyvale and AT&T Cable Services (AT&T), the City has the right to conduct formal, periodic reviews of the system and the performance of the company. Staff recommends such a Periodic Review be conducted for the calendar years 1996-1998.

Cable Franchise Agreement (12/14/90-12/13/2005)

City Charter Article VI Sections 1600-1608

Federal Communications Commission Rules and Regulations

In 1990, the City entered into a nonexclusive Franchise Agreement with TCI Cablevision of California, Inc. (12/14/90 – 12/13/2005). Section XVII of the Franchise Agreement outlines the City’s right to conduct formal periodic reviews of the system and the performance of the cable company.

Topics to be included in a Periodic Review may include, but are not limited to, franchise fees, applications of new technologies, system performance, compliance with the terms of the Franchise Agreement, services provided, the mix, quality and level of programs offered, local access channels, leased access channels, access facilities, PEG origination, customer complaints, privacy, judicial or FCC rulings and any other topics the City and AT&T believe relate to the quality of service provided in Sunnyvale.

Given the complexity of cable operations, the Departments of Finance and Information Technology determined that the services of independent, professional consultants were needed to assure accuracy and objectivity of the evaluations. The City met with AT&T to discuss the scope of a Periodic Review and both parties agreed to a Summary of Periodic Review Elements (Attachment A). To begin the process, the City requested that AT&T submit a report stating the company’s compliance with the terms and conditions of the Franchise Agreement (Attachment B).

The Franchise Agreement states that the costs of the Periodic Review shall be paid by AT&T unless the City reserves its right to employ and direct the work of the consultants rather than allowing AT&T to direct the work of the consultants. If the City exercises its right, the cost of the consultant work shall be shared equally by the City and AT&T.

AT&T agreed with the City’s position to exercise its right to employ and direct the work of the consultants and did not indicate they wanted to actively participate in the selection process. The City prepared a Request for Proposal and distributed it to an extensive consultant list provided by Public Technology, Inc. (PTI) and the National Association of Telecommunications Officers and Advisors (NATOA).

An evaluation team composed of staff representing the Department of Finance and the Information Technology Department developed a consistent set of criteria for evaluating the proposals and selected five proposals for further consideration. Following extensive reference checking, staff selected the proposal submitted by Municipal Services Associates, Inc. (Attachment C). The team of consultants identified in the proposal collectively have approximately twenty years of telecommunications-related experience working with a variety of counties and municipalities across the country. They have completed similar work in the states of California, Illinois, Virginia, Wisconsin, Ohio and Minnesota.

The lead consultants are:

References for each of the individuals were positive and complimentary. A number of individuals described Mr. Chapman, Mr. Karrison and Mr. Kramer as "some of the very best".

City staff met with AT&T and reviewed the proposal evaluation process and the staff recommendation. AT&T did not object to the selection of Municipal Services Associates, Inc., and confirmed their obligation to cover 50% of the costs associated with the Periodic Review.

To pursue a Periodic Review of Cable Services, consultant costs will be $38,750 plus a maximum of $6,000 in expenses for a total of $44,750. As outlined in the Franchise Agreement, AT&T will cover 50% of the costs. The current Franchise Agreement expires in 2005, and an additional Periodic Review will be necessary as part of the franchise renewal process. Future costs for an additional Periodic Review will be included in the Fiscal Year 2000-2001 budget process.

Publication and posting of the City Council Agenda. Copies of this Report to Council were forwarded to AT&T Cable Services. This report is also available in the Sunnyvale Library and on the City’s Internet Home Page.

1. Council directs staff to pursue a Periodic Review of AT&T Cable Services, awards a contract to Municipal Services Associates, Inc. not to exceed $44,750.00, and approves Budget Modification #19 in the amount of $49,225.00 (includes 10% contingency).
2. Council directs staff not to pursue a Periodic Review of AT&T.

Staff recommends Alternative #1.

Prepared by:

Katherine Bradshaw Chappelear
Executive Assistant to the Director

Reviewed by:

Mary Bradley
Director, Department of Finance

Reviewed by:

Encarnacion Hernandez
Director, Information Technology Department

Approved by:

Robert S. LaSala
City Manager