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22. AT&T California - video svcs. ;, CITY OF CUPEIQ"INO City Hall 10300 Torre A\"enue Cupertino. CA 9501-1--3255 (-1-08) 777-3212 FAX: ("08) 777-3366 Public Communication SUMMARY Agenda Item 1...l.. Date: December 6, 2006 SUBJECT Agreement Regarding Provision ofIP Video Services By AT&T California. BACKGROUND AT&T plans to make a significant upgrade to its network infrastructure in the city (aka Project Lightspeed). As a result of the upgrade AT&T will be able to offer residents services that include: higher-speed internet access, IP telephony or Voice Over IP (VOIP) and a new choice for video service, Cupertino residents will have access to an improved, state-of-the-art digital infrastructure and City government will receive new revenues from franchise fees paid by AT&T. Potential Benefits: . Higher-Speed Internet Access Enables the ability to download more content faster Faster broadband speeds enhances efficiency for home and business . IPTV Expanded programming, including content and functionality Search functions for programming and movies Whole-home DVR capabilities Video on demand Enhanced interactivity with programming Multiple picture-in-picture technology . Voice Over IP (VOIP) Future plans include capabilities such as: Web-based call logs Conference call capabilities V oicemail to email capabilities Wireless to Wireline integration 2-.2- -I Service Availability: AT&T plans to make the upgraded services available as quickly as possible. The city will receive notice 10 days prior to the commencement of service, The expanded video service is anticipated to be available only to those residents who are currently within AT&T's DSL service coverage area, Service Pricing: While specific pricing is currently not available, AT&T has said its service will be competitively priced. AGREEMENT AT&T is pursuing an Agreement with the City as a means to expedite availability of these new services to residents. The Agreement specifies that services will be provided on the terms set forth in the Digital Infrastructure and Video competition Act of 2006 (AB 2937), That law was approved September 30, 2006 and authorizes video service providers to operate in California cities and elsewhere in the state pursuant to a franchise issued by the State Public Utilities Commission, Because of the time required to initiate the State franchise process, state franchises are not expected to be issued until the spring of2007. The Agreement would allow AT&T to begin offering video services immediately, in advance of receiving a state franchise. The Agreement requires AT&T to seek a state franchise as soon as reasonably practicable. If AT&T has not received a franchise within a year, the City has the option of terminating the Agreement. While operating pursuant to the Agreement, AT&T and the City would voluntarily comply with the requirements of the Act, as if AT&T had received a state franchise, The Act addresses issues such as the franchise fee payable to the City, support for Public, Educational, and Governmental channels, Emergency Alert System requirements, the construction and encroachment permit processes, and customer service and protection, In addition, in recognition of the City's costs in early implementation, AT&T has agreed to pay a lump-sum payment of $25,000. This payment is due regardless of the date on which AT&T receives a state franchise. If AT&T does not receive a state franchise within one year the City and AT&T are obligated to negotiate in good faith regarding the possible extension of the Agreement. The Act requires cities to enforce performance standards established by the state (cities are not allowed to adopt standards that differ from state Law). FISCAL IMPACTS The City will receive $25,000 upon approval of the Letter Agreement. The city will begin to receive franchise fees with the commencement of AT&T video services, RECOMMENDA nON Authorize the City Manager to enter into an Agreement regarding pro'\'ision ofIP video services b~. AT&T California in Cupertino. 22..-:L Submitted by: A ___ //~1- ~/ Rick Kitson I Public Communication Manager Approved for submission: \~wJ , ) David W. Knapp City Manager 22.-] ~ CITY OF CUPERJINO City Hall 10300 Torre Ayenue Cupertino. CA 9501-t-3255 H08) 777-3212 FAX: (408) 777-3366 OFFICE OF TIIE CITY MANAGER December 6, 2006 Re: Agreement Regarding Provision ofIP Video Services By AT&T California This letter memorializes the agreement between Pacific Bell Telephone Company, a California corporation doing business as "AT&T California" ("AT&T") and the City of Cupertino ("City") concerning the provision of Internet Protocol ("IP") enabled Video Service (IP Video Service) by AT&T to City residents over AT&T's communications network facilities in City's public rights of way, In light of the passage of Assembly Bill 2987 by the California Legislature on August 31,2006, the City and AT&T want to bring the benefits of AT&T IP Video Service product and video services competition to City residents as soon as possible, Accordingly, AT&T and the City agree that they will voluntarily comply with the following provisions of AB2987 (together with those portions of Sec. 3, ~ 5830 that define terms in the following provisions) until AT&T files and receives a state franchise under 2987 to serve the City (parenthetical descriptions are provided for reference only, and are not binding on either party) : . Sec. 3, ~5860 (concerning the franchise fee)~ . See, 3, ~5870 (concerning Public, Educational, and Governmental channels)~ . Sec, 3, ~5880 (concerning Emergency Alert System requirements)~ . Sec, 3, ~5885 (concerning construction and the encroachment permit process )~ . Sec, 3, ~5890 (concerning nondiscrimination) . Sec, 3, ~5900 (concerning customer service and protection), except subsection (k) (concerning renewal of state-issued franchise)~ . Sec, 4, ~107,7(a)-(e) (to be codified in the Revenue & Taxation Code). F or the purposes of interpretation of this Agreement, the provisions cited above are intended to apply in the same manner as they would apply if AT&T had already received a state franchise pursuant to the terms of AB2987, and any provisions cited above that apply on a statewide basis shall be interpreted under this agreement as applying on a statewide basis, City and AT&T California agree that the foregoing provisions shall govern the delivery of IP Video Services by AT&T California to City residents and City shall not impose any additional or different requirements. The term of this agreement shall be for three years from the date that this letter agreement is executed by both parties (the "Termination Date"). To the extent necessary, this document constitutes the authorization 2..2-- L{ for AT&T to provide video services in the City pursuant to AB2987, Sec. 3, ~~ 5840 and 5830(t). AT&T intends to apply for a state franchise pursuant to the terms of AB 2987 as soon as reasonably practicable, In the event that AT&T receives a state-issued franchise pursuant to the terms of AB2987, this authorization shall immediately terminate and the terms of the state-issued franchise shall govern the delivery of AT&T California's IP Video Services to City residents, In the event that AT&T has not received a state-issued franchise pursuant to the terms of AB2987 90 days prior to the Termination Date, AT&T and the City agree to meet and confer in good faith concerning the franchise requirement issue, and, to the extent reasonably necessary, to negotiate in good faith the terms and conditions of a local video franchise agreement. If AT&T has not been granted a required franchise to provide video services in the City as of the Termination Date, either from the City or any other authorizing entity, then these terms and conditions will continue until terminated by either party. The foregoing notwithstanding, AT&T California reserves the right to discontinue providing IP Video Service in City and terminate this Agreement upon 30 days prior written notice to City. In the event that any person files a claim against the City in state or federal court arising out of the fact that the City entered into this Agreement, challenging the lawfulness of this Agreement and/or seeking to modify its obligations under its existing cable franchise on the basis that the City entered into this Agreement, the Company shall cooperate with the City to provide information that may assist the City in responding to such claim, At the City's request, the Company will intervene in any such action and participate in the defense of any claim. In such event, the Company shall assume, at its expense, the sole defense of the claim through counsel selected by the Company and shall keep the City fully informed as to the progress of such defense. Upon reasonable request by the Company and at the Company's expense, the City shall cooperate with Company in the defense of the claim. At its option and expense, the City may retain or use separate counsel to represent it, including in-house counsel. However, the Company shall maintain control of the defense and resolution or settlement of the claim. except that if the settlement of a clainl would adversely affect the City, the Company may settle the claim as to the City only with its consent, which consent shall not be umeasonably withheld or delayed. The Company shall indemnify and hold the City harmless from any costs or attorneys fees awarded by any court against the City as a result of any litigation described above. Notwithstanding the above, this Agreement does not release the Company from any and all obligations required by the City as a condition to the issuance of an encroachment permit over and upon City streets. TIns constitutes the full and complete agreement between the City and AT&T concerning these matters, and supersedes all prior agreements, understandings, representations, or offers. 22-) CITY OF CUPERTINO By: Name: Title: Date: PACIFIC BELL TELEPHONE COMPANY d/b/a AT&T CALIFORNIA By: Name: Title: Date: 21- ~ EXHIBITS BEGIN HERE #;z~ December 6,2006 Mr. David Knapp City Manager City of Cupertino 10300 Torre Avenue Cupertino, CA 95014 Re: Agreement Regarding Provision of IP Video Services By AT&T California Dear Mr. Knapp: This letter memorializes the agreement between Pacific Bell Telephone Company, a California corporation doing business as "AT&T California" ("AT&T") and the City of Cupertino ("City") concerning the provision of Internet Protocol enabled Video Service ("IP Video Service") by AT&T to City residents over AT&T's communications network facilities in City's public rights of way (the "Agreement"). In light of the passage of Assembly Bill 2987 by the California Legislature on August 31,2006, the City and AT&T want to bring the benefits of AT&T IP Video Service product and video services competition to City residents as soon as possible. Accordingly, AT&T and the City agree that they will voluntarily comply with the following provisions of AB2987 (together with those portions of Sec. 3, S 5830 that define terms in the following provisions) until AT&T files and receives a state franchise under AB2987 to serve the City (parenthetical descriptions are provided for reference only, and are not binding on either party): . Sec. 3, S5860 (concerning the franchise fee); . Sec. 3, S5870 (concerning Public, Educational, and Governmental ("PEG") channels); . Sec. 3, S5880 (concerning Emergency Alert System requirements); . Sec. 3, S5885 (concerning construction and the encroachment permit process); . Sec. 3, S5890 (concerning nondiscrimination) . Sec. 3, S5900 (concerning customer service and protection), except subsection (k) (concerning renewal of state franchise); . Sec. 4, S107.7(a)-(e) (to be codified in the Revenue & Taxation Code). For the purposes of interpretation of this Agreement, the provisions cited above are intended to apply in the same manner as they would apply if AT&T had already received a state franchise pursuant to the terms of AB2987, and any provisions cited above that apply on a statewide basis shall be interpreted under this agreement as applying on a statewide basis. City and AT&T California agree that the foregoing provisions shall govern the delivery of IP Video Services by AT&T California to City residents and City shall not impose any additional or different requirements. To cover any additional costs City may incur as a result of early implementation of the provisions of AB 2987, AT&T will pay the City upon execution of this Agreement a one-time, lump-sum payment in the amount of twenty-five thousand dollars ($25,000.00). The City and AT&T agree that AT&T shall not be required to provision any PEG channels over AT&T's network before August 31,2007. This Agreement shall begin as of the date that it is executed by both parties ("Execution Date"), and shall expire as soon as AT&T received a state franchise under AB2987 to provide services to City residents; however, this Agreement will terminate in the event that AT&T has not received such a franchise as of three years from the Execution Date. To the extent necessary, this document constitutes the authorization for AT&T to provide video services in the City pursuant to AB2987, Sec. 3, SS 5840 and 5830(f). In the event that AT&T receives a franchise pursuant to the terms of AB2987 to provide video services to City residents, this authorization shall immediately terminate and the terms of the franchise shall govern the delivery of AT&T California's IP Video Services to City residents. AT&T intends to apply for a state franchise pursuant to the terms of AB 2987 as soon as reasonably practicable. In the event that AT&T has not received a franchise pursuant to the terms of AB2987 90 days prior to the date this Agreement would terminate, AT&T and the City agree to meet and confer in good faith concerning the franchise requirement issue, and, to the extent reasonably necessary, to negotiate in good faith the terms and conditions of a local video franchise agreement. If AT&T has not been granted a required franchise to , provide video services in the City as of the date this Agreement would terminate, either from the City or any other authorizing entity, then these terms and conditions will continue until terminated by either party. The foregoing notwithstanding, AT&T California reserves the right to discontinue providing IP Video Service in City and terminate this Agreement upon 30 days prior written notice to City. In the event that any person files a claim against the City in state or federal court arising out of the fact that the City entered into this Agreement, challenging the lawfulness of this Agreement and/or seeking to modify the obligations under an existing cable franchise on the basis that the City entered into this Agreement, the Company shall cooperate with the City to provide information that may assist the City in responding to such claim. At the City's request, the Company will intervene in any such action and participate in the defense of any claim. In such event, the Company shall assume, at its expense, the sole defense of the claim through counsel selected by the Company and shall keep the City fully informed as to the progress of such defense. Upon reasonable request by the Company and at the Company's expense, the City shall cooperate with Company in the defense of the claim. At its option and expense, the City may retain or use separate counsel to represent it, including in-house counsel. However, the Company shall maintain control of the defense and resolution or settlement of the claim, except that if the settlement of a claim would adversely affect the City, the Company may settle the claim as to the City only with its consent, which consent shall not be unreasonably withheld or delayed. Notwithstanding the above, this Agreement does not release the Company from any and all obligations required by the City as a condition to the issuance of an encroachment permit over and upon City streets. This constitutes the full and complete agreement between the City and AT&T concerning these matters, and supersedes all prior agreements, understandings, representations, or offers. CITY OF CUPERTINO By: Name: Title: Date: PACIFIC BELL TELEPHONE COMPANY d/b/a A T& T CALIFORNIA By: Name: Title: Date: