MINUTES OF THE CITY COUNCIL STUDY SESSION
November 8, 2000
Council Chambers, 1175 East Main Street
CALL TO ORDER
Mayor Shaw called the meeting to order at 12:05 p.m.
Councilors Laws, Hauck, Wheeldon and Fine were present, Councilors Reid arrived late. Staff present included City Administrator Greg Scoles, Director Electric & Telecommunications Pete Lovrovich, Finance Director Lee Tuneberg, and Accounting Supervisor Karen Huckins.
PRESENTATION AND UPDATE ON THE STATUS OF THE ASHLAND FIBER NETWORK (Complete Report attached to original minutes in City Recorder’s Office.)
Director of Electric and Telecommunications presented a progress report for the Ashland Fiber Network. He stated that the May 1999 launch date consisted of the Southern Oregon University and Ashland School District Contracts, and the equivalent of 38 direct fiber clients. An update/progress report chart was displayed indicating a higher projected number than originally estimated within the initial Business Plan.
Lovrovich explained that February 2000 was the launch date for cable television, which currently consists of 1,020 subscribers. AFN has been offered to 75% of Ashland citizens and 25% are currently subscribers. The plan projects 36%, and if hook-ups continue at the current rate, subscriptions will reach 44% by the end of the year. Cable modem internet access for business and residential subscribers is currently 820 with 9 ISP Partners. Lovrovich noted that AFN is the only provider for business subscriptions, whereas both AFN and Charter Communications are providing for residential services. The Business Plan does not indicate revenue streams from multiple dwelling units (MDUs), such as the college dorms, family housing, the hospital, etc.
Construction of the overhead plant is complete, and the underground plant is currently under construction. Combined, the plants consist of 130 miles. Underground construction has been handled with the best interest of the property owner with the goal of minimizing the disruption of private property landscaping. In best case scenarios, cable is laid behind the curb so that no asphalt is cut.
Lovrovich explained that the electric department put up the fiber and their wages were paid out of the AFN budget. There has been no cross subsidizing—all personnel used from other departments are paid from the AFN budget. A contracted construction crew has been used during the construction period. City staff has not been increased in order to build the AFN infrastructure. Construction crews are putting in 900 to 1,000 feet of cable per day. This rate may slow down depending on road conflicts (traffic, gas lines, etc). Completion is expected in six to seven months. Lovrovich clarified conduits for future underground power needs have been laid at the same time. Lovrovich explained that overtime has not affected the overall budget, as it was expected. He identified challenges and obstacles as labor costs, supplies, training, and keeping up with cutting edge technology. Unexpected expenses have been related to outside labor costs, as the contractor was unaware that there is requirement of paying prevailing wages to workers when contracting with a governmental agency. Obtaining supplies has proven difficult. AFN purchased most of the fiber needed at the beginning of the project, but securing digital boxes has been more challenging. Training has taken time, as cutting-edge technology has required additional training even for those with prior knowledge.
Citizens enjoy the lowest rates in the region. Open access to private partnerships, as well as community-owned and operated service, provides customers with the best service. Some citizens have refused AFN because certain channels are not available. Another concern is unclear reception for local stations. AFN is working on these situations. Disadvantages include responding to offers and programming challenges.
Lovrovich gave a brief update on the progress of the Medford Build. The projection for the high-speed fiber business plan revenue will exceed earlier indications, as Medford was not considered in the customer base. There is also a potential for a multi-state network, which is based on cooperation with Bonneville Power.
Lovrovich stated that citizen response has been enthusiastic. Installation is in for all nodes, and installs are being booked 12 to 15 days out. Rob Warfel was introduced, and he voiced his appreciation for the services offered and his pleasure in connection with the community. He explained the one-year contract for Charter customers. If a Charter customer chooses to switch to AFN before the end of their contract they are charged $5 for each month remaining within the twelve months. He has not heard of any instances where Charter enforced this policy.
Council engaged in a general discussion of TV listing availability. Lovrovich explained that local advertising becomes more fruitful after 1,000 viewers have been added. There is some discussion as to who will be approached for advertising. All the networks offer local breaks, averaging four 30-second breaks per hour. AFN can sell these breaks to local businesses. AFN does not have the staff or equipment to produce commercials. A business would need to provide its own commercial for insertion.
Lovrovich noted a letter from Ryan Mallory, the president of Internet Ventures, and how private business views AFN. Mallory was initially reluctant for AFN to begin, but is now pleased with the outcome.
In summary, Lovrovich explained that, due to launch delays, revenue projects were affected. There has been nine months of consistent operation, and AFN has been tracking the Business Plan. Tracking is done on a daily and weekly basis. The finance director is currently responding to US Banks' inquiries in regard to the AFN Business Plan.
Lovrovich responded to council's questions regarding wind power, and stated BPA has done some testing, which was not promising. However, solar power energy is a possibility.
The meeting was adjourned at 1:20 p.m.
Submitted by Barbara Christensen, City Recorder/Treasurer