Item 11ACity of Southlake, Texas
MEMORANDUM
August 31, 2004
TO: Billy Campbell, City Manager
FROM: John Eaglen, Assistant to the City Manager
SUBJECT: Cable Franchise Agreement negotiations with Verizon
Action Requested: City Council discussion on the status of negotiations with Verizon in order
to provide a Cable Franchise Agreement.
Background
Information: In July of this year, the City joined with surrounding cities (Grapevine,
Colleyville, Westlake, Keller) to jointly participate in negotiating a cable
franchise agreement with Verizon. Clarence A. West of Austin, Texas,
was hired by the consortium cities to negotiate the base agreement.
Verizon representatives on a couple of occasions reviewed with staff the
proposed Southlake service area, which is comprised of the current
telephone service area, and the limits of where they are providing Fiber to
the Premise (FTTP) technology. The proposed service area covers
roughly 89% of the City. The location of the remaining 11% is generally
the neighborhoods north of Dove Road.
After reviewing the initial Verizon proposal, staff and the City Attorney
identified seven priority issues to consider in the negotiations, with service
area being the number one priority. The service area issue was identified
as a priority among a majority of coalition cities.
At the initial meeting with the coalition, the Verizon representative stated
that extending their proposed service area in any of the cities, now or in
the future, was a non - negotiable item. Mr. West submitted a proviso to
this position on behalf of the coalition cities that stated that if Verizon
provides cable service in any other city in the United States outside its
current telephone service area, Verizon will also do so in each of the
coalition cities. Verizon rejected the proposal given its "nationwide
implications."
As a follow -up item from the meeting, Mr. West proceeded to submit
comments on the Verizon proposal that addressed each City's concerns.
Language was submitted to Verizon that exists in our current franchise
agreements regarding service area.
Billy Campbell, City Manager
August 31, 2004
Page 2 of 3
On August 10, Mr. West briefed City Manager Billy Campbell and Debra
Drayovich of the City Attorney's Office to discuss the service area issue.
At that time, Mr. West was instructed to notify Verizon that without the
extension of the service area to address the remaining 11 %, or some type
of extension plan that identifies how to address this area at some point in
the future, there was no need to proceed with negotiations with the City of
Southlake.
The other cities have had to make a similar determination regarding the
service area issue, with Grapevine electing not to proceed with
negotiations, and Keller and Westlake agreeing to accept Verizon's
position and to proceed. Colleyville has not made a determination at this
time.
On August 26, Verizon submitted comments to Mr. West's proposal for
all five cities to review. Verizon's position on the City's priority issues to
date is the following:
• Verizon has rejected the City's proposal on the following issues:
• Service Area;
• Definition of Gross Revenues / Value of Bundled Services;
• Definition of Force Majeure;
• Definition of Normal Operating Conditions;
• Term and Renewal of Agreement.
• Detailed discussions on Customer Service Standards and
Institutional Network (I -Net) provisions have not occurred to date
and are pending. These are significant issues that have not been
further discussed due to the time spent on the service area issue.
The purpose of this agenda item is to discuss with the City Council the
position taken to date and to get City Council input regarding how to
proceed.
Financial
Considerations: Proceeding with the negotiations has a minimal financial impact, due to
cost sharing arrangements. The letter of engagement with Mr. West is for
an amount not to exceed $5,000 without further City approval.
Financial Impact: While a cable franchise agreement provides revenue to the City,
enforcement of the agreement has potential financial impact, due to the
legal processes required by Federal Law. A City's position is strongest in
Billy Campbell, City Manager
August 31, 2004
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negotiating the award of a cable franchise agreement versus the renewal of
an existing franchise agreement.
Citizen Input /
Board Review: Not Applicable.
Legal Review: While Mr. West has been hired to handle the negotiations for the coalition,
the City Attorney's Office has been involved in this process.
Alternatives: Input towards the discussion as desired.
Supporting
Documents: There are no supporting documents included with this agenda item.
Staff
Recommendation: Place as an item on the September 7, 2004 City Council agenda to discuss
the status of negotiations with Verizon for a Cable Franchise Agreement
and receive City Council direction.