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City Council Minutes 03-22-2007 Joint -Fiber Optics Special Council Meeting Minutes: 3/22/07 MINUTES SPECIAL COUNCIL MEETING -MONTICELLO BROADBAND WORKSHOP March 22, 2007- 5 p.m. Members Present: Mayor Clint Herbst, Councilmembers Brian Stumpf, Wayne Mayer, Tom Perrault and Susie Wojchouski. Members Absent: None The Broadband Workshop was opened by City Administrator Jeff O'Neill at 5 pm. He introduced Milda Hedblom of Dain International, consultant to the City for the Fiber to the Premise project. Milda Hedblom outlined the purpose of the workshop which was to update the City Council on the progress of the project and steps to proceed. She noted the guidelines for the workshop which will include a presentation by representatives from Bristol Virginia Utilities (BVU), followed by a question and answer period limited to council members, and, lastly, updates from the Task Force. Milda Hedblom introduced Doug Dawson from CCO, Inc who performed the feasibility study and is providing some additional consulting services. Doug Dawson explained his role in the project and introduced the representatives from Bristol VA. Council members introduced themselves. Wes Rosenbalm, President and CEO of BVU led the presentation from his group with a powerpoint show. He explained the history ofBVU and OptiNet, which is the telecommunications service division ofBVU. Some of the major reasons that BVU undertook their fiber to the premise project were to provide local service for telecommunications, to provide service in those areas that did not have access to triple play services and economic development in their community and area of the state. Wes Rosenbalm noted some important considerations in undertaking a project of this type: . Run it like a business (take the politics out) . Qualified employees (be willing to pay what it takes) . All in - no partial commitment . Be prepared for incumbents to take action against you (lawsuits in their case) Bristol's efforts eventually include outreach to other communities, which helped them to thrive. Be ready to expand beyond your city limits. Bristol was recognized with the 2004 Scattergood A ward; this was national recognition from the Power industry for telecommunications success. (This award normally recognizes successes in power utilities, so this was indeed an honor.) Wes Rosenbalm explained slides which showed levels of service for internet, phone and cable TV as well as statistics for single, double and triple play customers. Within 4 years, they attracted 50% of the available customer base in Bristol. To date, they have signed 65% of the customer base. Wes Rosenbalm talked about some of the key factors that drove their success: . "Branding" - name recognition of your business (BVU OptiN et) . Dynamic marketing (using local faces) . Consistent pricing I Special Council Meeting Minutes: 3/22/07 . LOCAL service - this has continued to drive their success Milda Hedblom then asked each of the representatives from Bristol to offer some brief comments. Jim Rector, Chairman of the Board for BVU and Bristol council member, noted that he favored the fiber to the premise project for economic development purposes, expanded services for citizens, and educational opportunity in their local schools. He noted that dealing with the incumbents was a struggle. Mayor Farnham Jarrard looked at the fiber to the premise project as a way to bring life back to southwest Virginia and help them compete economically in the State. Stacey Bright, Executive Vice President and CFO, talked about the financial success of OptiNet, the telecommunications division. The revenue from their telecommunications services pays for the bonds, the operating costs and provides extra revenue that the City can designate for other uses. They also maintain a fund that will help with future maintenance and replacement costs. Jeff O'Neill asked for comments on similarities and differences between Bristol VA and Monticello. Doug Dawson commented on the initial survey done as part of the feasibility study and noted the extremely satisfactory response rate in that survey and follow-up calls that were made later in 2006. Doug Dawson also noted that Monticello is a "richer" community than Bristol; people earn more and have more to spend. Monticello has a higher phone rate - in fact one of the highest in the nation. Monticello has growth; Bristol was stagnant and land-locked. Monticello has more commuters. Brian Stumpf asked Bristol to comment on what we (Monticello) need to be aware of to make this project work. 1) Think out of the box; be creative 2) Hire experience because you need good people to operate the system 3) Branding - really need to ramp this up to make it work 4) Be aware of incumbents (door-to-door, courts, marketing) 5) Large national companies that want to stall the project will hire lobbyists, go to your state capitol, do whatever it takes to keep it from going forward 6) SERVICE is the most important thing that affects your bottom line 7) Look at how you set up your enterprise - keep it independent from politics Bristol reps emphasized the importance of service many times. They have a local sales office staffed with local people. They maintain 2 separate call in lines: one for sales and one for service. Their service line averages about I 12 minute wait time, which is very short time for the industry. They talked about turnover, also referred to as "churn" rate. Since the inception of telecommunications service, approximately 20 people have dropped. Some of this was caused by shut off for non-payment. Otherwise their drop rate is about 1 %, which is extremely low. They do have financial criteria that must be met, otherwise customers are charged a deposit to start up service. 2 Special Council Meeting Minutes: 3/22/07 They also discussed programming for cable TV. They recommended thinking ahead about the standards you want in your community. Don't compromise those standards. Be sure you offer at least what the competition does. Listen to your customers. By offering a special channel, desired by the local citizens but not offered by the competition, they won over some customers. Susie W ojchouski asked why the chose fiber to the premise? They didn't want to wait for the incumbents, encourage economic development, and wanted to get ahead of the curve. Mayor Jarrard said he had confidence in the people leading the City and the evidence in the feasibility study. He recommended doing your homework, then make a decision and stick with it. Jim Rector noted that it may be worth soliciting federal and state legislators and keeping them in the know about your project. They can be a great support when the going gets tough. Wes Rosenbalm explained that their project started in February of 200 1 with market surveys and a feasibility study before making an educated "leap of faith." Stacey Bright commented that you give choice to your citizens by offering local options. Following the presentation by Bristol VA representatives, members of Monticello Fiber Optic Task Force, city staff and consultants provided updates on the status ofthe Monticello Fiber to the Premise project. Lynne Dahl-Fleming provided an update on communications. Brenda Krueger from Springsted spoke on financing plans and upcoming actions to take place. Doug Dawson from CCG summarized the findings on the draft pre-engineering study. Milda Hedblom of Dain International spoke on voice and video options, legal issues and establishing an enterprise for the business of telecommunications services. Do...>..v"" ~'--^=>s~"'- Recording Secretary 1 3