[ Council Communication ]  [ List of Improvements ]  [ 2nd Quarterly Report ]

Council Communication

Title:	AFN Quarterly Report
Dept:	Electric and Telecommunications
Date:	January 15, 2002
Submitted By:	Dick Wanderscheid
Reviewed By:	Greg Scoles

Synopsis:	This is the second AFN Quarterly report. It covers the period of October through December, 2001
Recommendation:	This report is for informational purposes only and no council action is required.
Fiscal Impact:	There is no fiscal impact.
Background:	As part of the work done by the AFN Advisory Committee last year a Quarterly report format was developed. The first quarterly report was completed in November and this report covers the period from October through December 2001. The report demonstrates that we are continuing to build new underground plant, hook up new customers and that we are exceeding the bench marks as defined by the revised business plan that was developed in conjunction with the Advisory committee. The Final AFN Report developed in November and presented to the Council in conjunction with the First Quarterly Report also included a list of items for consideration for implementation by AFN. We have included that list with the status of each item for your information.

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As part of the Advisory Committee’s final report submitted in October, there was a list of recommendations for improvements to consider for AFN. The staff has analyzed this list and summarized the recommendations as follows:

IDEAS FOR ENHANCING OR IMPROVING EXISTING AFN SERVICES

• Accelerate the build out of the system.

When the initial quarterly report on AFN was submitted to the council in October, it was made clear the build-out of AFN should be completed as quickly as possible. Staff agrees with this and to that end, our contracted construction has preceded at the fastest possible pace and therefore this year’s budget for AFN construction has nearly been expended. The revised business plan developed in conjunction with the AFN advisory committee recognized a need to expedite the build-out and therefore it increased funding for construction this year to accomplish this goal. This revised budget amount will allow us to accelerate beyond our current pace by augmenting our efforts throughout the remainder of the budget year. It is also important to note that while spending will increase for construction this year, next budget year’s expenditures should decline proportionally.

• Refine and enhance the TV products and tiers to provide a competitive advantage.

AFN continues to improve our CATV channel lineup. Since launching in February 2000 we have added 10 channels to our Expanded Basic and Digital Plus tiers without raising the retail price to our subscribers.

In December we added 7 more Pay Per View (PPV) channels to increase our PPV offerings which will also provide incremental revenue growth along with a competitive advantage in the PPV category.

In addition AFN added 6 Cable Radio Stations to our audio services, which includes 45 channels of Music Choice for a total of 51 audio channels. Expanded Basic service now includes 120 channels for $26.11 a month, approximately 30% below the national average for far less channels.

We are currently in the process of adding unique channels such as “Free Speech TV”, “Worldlink”, “Classic Arts Showcase”, and the “NASA channel” to our lineup as exclusively unique channels to AFN. In addition we’ve added the “ESD” channel for residents interested in distant learning via televised curriculum.

AFN’s Channel Lineup is selected by a Citizens Programming Selection Committee which recently sent our Community Survey to all homes in Ashland. Respondents requested “NASA”, “Classic Arts Showcase”, and “FOX Family” as new networks they’d like to see on AFN. ABC recently acquired FOX Family and the Programming Committee is waiting to see what the final format of this channel will be before considering adding this network to AFN.

• Improve marketing efforts by increasing the marketing budget, increasing direct sales efforts, increasing the installation staff, and improving customer data analysis to help marketing efforts.

The current marketing budget is $123,400. The marketing budget is managed extremely diligently, and because AFN now handles the majority of all marketing duties in-house, AFN is maximizing this budget and receives the most bang for it’s buck. Along with underwriting traditional advertising efforts, this budget also underwrites the commissions of the three AFN Sales People, and also subsidizes any “one month free” promotional offers. That is, the marketing budget is an all inclusive cost center that pays for all marketing related services and benefits, including coop advertising payments to the nine ISP’s at $13,500 which essentially leaves $109,900 for all other marketing efforts.

Increasing sales efforts:

The Sales staff has been increased to three and directly targets AFN serviceable homes only as identified by the Utility Billing data software. Two weeks ago, we were able to run a new “non-subscriber / AFN serviceable” address list and the Sales people are now working those addresses. Since neither sales nor direct marketing targets non-serviceable addresses, it is of utmost critical importance that the customer data in the Utility Billing software is accurate and updated as AFN continues to build-out our cable plant.

Increasing the installation staff:

This has proved to be impractical on a temporary basis, instead AFN ramped up the Installer’s workday and workweek with overtime to handle the increased volume of connections.

AFN is booked out three weeks in advance for installations. Our competitive advantage is requiring new electric accounts to visit Utility Billing in person, we are not able to leverage this advantage to include CATV when someone is moving in to a new home, as we doubt anyone would wait three weeks for cable TV as they might for High Speed Internet services. We have identified a competitive disadvantage of not being able to do “instant installs” and as the solution AFN now has the third Installer booked exclusively for instant installs.

Improving customer data analysis to help marketing effort:

This is the singular most important critical factor in connecting up people to AFN as both Marketing, Sales, and the Utility Billing Staff use this data to ascertain if an address is serviceable. In recent months the database has improved tremendously. However we still have challenges with the remaining build-out in the underground sections of the City. We have worked out a process where someone in AFN Operations actually walks out a newly completed street and then enters the required data (conduit needed or not needed) into the UB database.

• Implement a ‘Direct Sales’ team approach for marketing AFN Data within the city.

One of our sales people is now also AFN’s Data Connection point of contact. He will target prospective Data Customers in Ashland and work in tandem with Richard Holbo in securing new business customers. To date nearly all of those incoming calls for AFN Data Connection really only wanted a Cable Modem connection, so customer education is critical to grow this product base.

• Promote high-speed data product to potential new businesses that are considering locating to Ashland.

For economic growth AFN Data is promoted in the Ashland and Medford’s Chamber of Commerce directories which are mailed out to 20,000 plus out-of-city addresses each year. In addition the Web site is currently being updated to increase the promotion of AFN Data service to residents and non-residents visiting the site. All incoming calls will be directed to sales to handle and to walk Data customers through the whole process of getting service.

• Educate Ashland businesses as to how best to utilize AFN Business Cable Modem service to enhance their business opportunities.

We’re coordinating with the ISP’s to work in partnership with AFN to host various community meetings to educate businesses on Cable Modem service. We have done a handful of these events in the past with the Rotary and Greeters to name a few, but with limited resources, we had to focus on construction and operating our system in recent months.As this is becoming more a routine for AFN and our ISP’s staff, we can focus more concentrated efforts on this critical need.

• Revise pricing structure, product offerings, and acceptable use policy for data services and business cable

This was accomplished in December, 2001 when high speed data and business cable modem rates were revised by the Council.

• Improve ISP Partnerships by: setting requirements and high standards for operation and service by ISPs, charging for AFN Support of ISPs, and helping the ISPs become better/more active marketing partners with AFN.

We have revised our AFN ISP contract and these new contracts will be required to be signed in June when existing contracts expire. These changes will implement these recommendations.

• Develop targeted marketing to existing customers to ensure that they are taking advantage of the highest tier CATV product possible.

With the addition of ad insertion equipment we will be able to promote this to our existing customers. We also hope to develop some inventive programs to encourage people to upgrade through service.

• Require ISPs to provide better branding of AFN Internet of their web site and in their promotions.

This will also be addressed by the new contracts.

• Leverage and market the ‘locally owned by the citizens of Ashland’ concept.

We will continue to stress this concept in many of our advertising messages.

• Promote and leverage the bundling of CATV and Cable modem products together.

We provide free installation to customers who request both services and we will explore a bundled rate for both services after the build out is completed.

• Market the significant benefits of public ownership of AFN.

This concept is stressed in many of our advertising campaigns and marketing effects.

NEW PRODUCT AND SERVICES FOR AFN

• Work with the Ashland School District to utilize AFN to link their phone systems together thus saving them money and providing an additional revenue source for AFN.

We have had preliminary discussions with the school district but this project is quite complex and while it has a lot of merit for both entities, it will take awhile to implement.

• Provide managed network services to other government agencies in Jackson County.

This would require the City to increase staffing and is something that needs the costs and benefits analyzed fully after build-out before this is undertaken.

• Strengthen and develop partnerships to sell wholesale services outside of Ashland.

Hunter construction and their subsidiary company, Core Digital, have secured telecommunication franchises in some Jackson County cities to resell AFN wholesale products. We have entered into a contractual agreement with them and this partnership should begin bringing revenue to AFN in the next quarter.

• Utilize AFN in partnership with the private sector to provide choice for local telephone services.

AFN was designed to be able to provide telephone services and we hope to eventually develop a partnership for this service. We have submitted an application to QWEST for our fiber to be installed in the point of presence in Medford. Once this is approved and installed we can pursue this new service.

• Utilize AFN to enhance city utility operations (Electric, Water and Wastewater).

We have now provided fiber to the WWTP and hope to get it up to the Water Plant and Reeder Reservoir during the next budget year. After the build-out is completed we will focus efforts to implement this item.

• Develop and implement true cost of service fees for city departments, which utilize AFN.

Currently city departments are charged a fee that is paid by computer services for use of AFN. We hope to evaluate these fees during the budget process so we can make sure they are capturing the true costs of service.

• Work on ways to implement a real ‘Video on Demand’ pay per view product for AFN.

This project will be evaluated along with private sector partnerships to deliver it upon completion of the build-out.

• Develop a business analysis and cost benefit test for any new products or services launched on AFN.

This test will be developed and implemented when a new product or service is proposed for AFN.

• Purchase ad insertion equipment for cross promotion of AFN and local commercial advertising.

We currently are comparing the options of purchasing equipment out right, or working with a third party vendor with a revenue sharing opportunity partnership.

Cross channel promotions will prove to be an exceptional tool to up sell our current subscriber base to a higher tier level of service and to promote PPV and special events. AFN also has met the benchmark of a minimum of 2000 TV subscribers to make commercial ad insertion viable to our advertisers.

• Consider creating an AFN local TV channel, possibly in partnership with the Ashland coalition that could air events of local interest.

This will be explored after completion of the build-out and staff time is available to devote to this project.

• Work with the ISPs to provide an easier interface between AFN Internet customers that want to continue to use AOL.

We hope to place simple instructions on the AFN Web site on how to do this in the next quarter.

• Ask the programming committee to consider adding channels that would pay AFN to carry them (e.g. Home shopping Network, Horse Racing channel etc.).

This was discussed briefly at the last program committee meeting and it will be discussed again at this next January meeting.

Provide more education to Ashland businesses on how AFN Data or Business Cable Modem products can benefit and/or expand their business operations. This could be done via seminars or a direct sales approach.

After the build-out is completed we should be able to allocate staff to work on this project.

• Position AFN as a provider to telecommunication advice for Ashland Businesses.

Here again after the build-out is completed we can allocate staff to provide this service.

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