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Agenda Item 7
• CITY OF PETAL[1NiA, CALIFORNIA AGEN DA. ,BI'LL a Agenda Title: ,Meeting Date: V. Recommendation for;Matching,Funds for Petaluma Lawn Bowling March 5,2001 Fund Raising Efforts. rl- Department: Director Co' aaet Person:. • Phone Number: Parks and Recreation Jim Carr t' ,Yun^Carr (707) 778-4380 Cost of Proposal: Up To $50,000 '(Recommended) for Account.Number: 209 construction. Maintenance costs, tonCe the facility' is completed, will. require:financial and/or maintenance assistance from Lawn Name of Fund:`Park Develop- Bowling Club Members due to the specialized nature of the Ment Funds- ' playing surface. - Amount Budgeted: -0- Attachments to Agenda Packet Item:. a. Staff Report b. Site''Plan c. Project Cost Estimate d. 5-Year Capital Improvement Program List of Projects. • Summary Statement: During the'December 11, 2000 City Council meeting, proponents of Lawn Bowling-in Petalumasmade a brief presentation,,regarding their efforts to;establish a lawn bowls facility. The Council referred the item to the Recreation, Music and Parks"Commission.in order to determine if funding could be made available NIF to act as a match for the long=terinfund-raising campaign. The Recreation, .Music and Parks Commission discussed the Lawn Bowling fund raising effort at their January 17, 2001. meeting, and is making a recommendation that the City provide up to $50,000 re- allocated from existing projects, to be used as a.match for the Lawn Bowling'fundraising effort. Council Priority: THIS AGENDA ITEM IS CONSIDERED TO BE4PART.OF,OR NECESSARY TO, ONE OR MORE OF THE 1999-2000 PRIORITIES ESTABLISHED BY THE CITY COUNCIL ON JANUARY 30, 1999 AND MARCH 18, 2000. Priority(s): N/A • Recommended Commissiotr Action/Suggested Motion: Redirect up to $50,000, from existing.Capital Improvement Projects, to the Lawn Bowling fund-raising effort, to act as a challenge match to other funding entities, in the fund raising campaign Additionally, , consider the Lawn Bowling project for future Proposition 12 funding once the competitive grant criteria is made available'bythe State this spring. Reviewed by Finance Director: Revie siju kmi •—; e Approved by City Manager: cj..b �t in 7 Da*e: .� . ®� � Date: IA 'o l ■ odav s Date: Revision *and' I a 'e.' evised File Coder # zy CITY OF`PETALUMA, CALIFORNIA 3 March 5, 2001 4 AGENDA REPORT' 5 FOR ' 6 Recommended Funding For>Lawn Bowling. 7 . 8 1. EXECUTIVE SUMMARY: 9 . • 10 During the City Council meeting of December,11, 2000,Jriembers,of the Petaluma Lawn 1.1 Bowls Club made a brief presentation to the City Council requesting assistance towards 12 their fund raising campaign. The City Council referred the item•to`the Recreation, Music 13 and,Parks Commission,toasee if some matching funds?could bePappropriated'to act as a 14 match matcMfor other finding entities in the'..community: ' 15 The Recreation, Music and:Parks;Commission discussed the item,and is recommending 16 that up,to $50,000 be re-allocated from'existing projects to be used towards,a match in 17 the Lawn Bowling fund raising'effort: . 18 2. BACKGROUND: . 19 20 For the last,three yearstthere.has.been an effort to establish lawn bowling in Petaluma. 21 Initially started by Eugenia:Shribbs, the effort originally,focused on placing,a lawn bowls �2 green in the proposed Gatti Park,site: In December of 1998, Mz.'Shribbs presented the 3 Parks and Recreation`Department with two petitionsisigned by 240 citizens, requesting a 24 lawn bowls facility in Petaluma. Staff made a recommendation that Mz. Shribbs consider 25 the Kenilworth Park site, between the Petaluma Library and Payran Street. With the teen 26 center near by, the lawn,bowls facility would have access to=restrooms, storage and 27 parking. Additionally, the suggested turf area,is an‘underutilized expanse of lawn that 28 would lend itself for a lawn bowls site: Mz. Shribbs:evaluated,the site'and met with the 29 East "D" Street-Neighborhood;Association, who endorsed the•project. In the meantime, 30 .staff had spoken to the Library staff,whichialso"endorsed'the`project. 31 . . ' 32 . At their April.16, 1999;meeting, the Recreation„Music;and Parks Commission formally 33 recommended to the City,Council, that they designate the Kenilworth Park site as the site ' 34 for,a'lawn bowls facility: During Commission:discussion, staff and Commissioners made 35 it clear that the City would provide-the site and accessLLto the Teen Center, but the 36 Petaluma Lawn Bowls Club would;be responsible for raising the funds for development 37 and maintenance of the;proposed.facility. 38 The City Council, at their meeting of February 22, 2000, designated Kenilworth Park as 39 the location for a lawn bowls facility. . 40 Mz. Shribbs had been working with Mr. Steve Caulkins of Haley/'Caulkins, Master 41 Lawn Bowling,Green,Contractors. Mr. Caulkins provided a cost estimate for 42 development grid maintenance of a lawn bowls facility(included;with thisreport): The 43 cost,estimate;provided for project development, required maintenance equipment and ' 44 three-years of Maintenance; at a total cost of$300,000. • 1 During 1999,.Mz: Shribbs and'h'et committee started-their campaign to promote lawn 2 bowls in-Petaluma. Theyhave obtained their non-profit,status frottt theiState of • 3 California. 4 The fund raisingieffort has been slowi and a suggestion-made by the City Council 5 proposed thatif'the City could provide some"funding,towards the project this:couldact 6 as a challenge match to other funding,entities in Petaluma, 7 The Recreation,Music;and:Parks Commission discussed-the item,at their January 17, 8 2001 meeting„and voted unanimouslyto redirect funding from existing,park.projects to 9 be used as a%match by the Petaluma-Lawn'Bowls Club. The only question,was howto . 10 allocate:funding. Of the five Commissioners present, two wanted tWprovide $50,000 11 immediately, in order-to allow the;fund raising effort`to point.to the fulPsupporteofthe 12 City. The majority of the Commissioners approved:a motionto recommend,to,the City, 13 Council' that they'authorizeta re-allocationfrom two ezistingprojects. $20000:from 14 Wiseman Park (project-9679) andi$30,000.fr'om Gatti Park,(project 9959),;with the funds 15 ' to be made,available as follows. $25,000 to be allocated to Petaluma:Lawn Bowls,Club, 16 with the LawnrBOwlsCl"ub to match'--the $25,000'within a two,year periodcfrom.thedate 17 the City Connell'approves the proposal If the match is achieved,'a second isito 18 be allocated, for a..total of$ 50,000, provided however,,that the balance:of the funds, 19 needed for the project be raised within four years 6fthe:initial City Councilapproval, or 20 all funds revert,back to'the City. 21 In addition,the Commission suggested that when,the state makes the competitive-grant . 22 . criteria available°in the spring of 2001, Proposition 12'•funding couldbe"another financial 23 source. 24 • 25 . 26 3. ALTERNATIVES: 27 ' 28 a. Make.lawn bowling a City priorityforinclusioW in State Proposition 12 competitive 29 grant program effort once the State of California's•criteria,is known (Spring of 30 2001). .- 31 b. Re-prioritize projects inthe.five- year capital improvement budget in;order to provide 32 a level of funding for',the'lawn'.bowls,facility. 33 c. Use•fund_ingfrom re-prioritized projects.in conjunction with possible Proposition, " 34 12 competitiveagrant funds, once the State criteria,are known{Spring of 2001)_ _ 35 ' d. Require the Petaluma:Lawn.Bowls Clubto::generate fundingato be used-as•a.Match 36 against;some,level of City'contribution 37 Je. Not provide funding at.this:time. 38 , 39 40 4. FINANCIAL IMPACTS: 41 . 42 The estimated cost of the project is'$300,000,,which includes project development, 43 required.maintenance equipment and three years of maintenance. Staff believes`that the 44 maintenance cost.of$35,000.for three years is,low. The,lawn bowling'facility is a , 45 specialized,playing'surface, requiring-a highlevel.of maintenance._Apparently in some 46 Iurisdictions, acommittee"of.volunfeers can handle this task; but regardless,of who does • 1 1. it, it mist be maintained correctiy,'due to,the:critical tolerances required for the play ing 2, surface. 3- It is recommended that:the,development,plan include a comprehensive maintenance 4' program•so that there are:noh surprises once the facility'is.,up;and running. Existing staff 1115' already provides normal irrigation repair and turf management for Kenilworth Park. 6' Specialized equipment'and'maintenance of the•unique playing surface will require 7 assistance from:outside sources including:Lawn Bowling Club Members. 8 ,9 . 10 5. CONCLUSION: 11 12 The Petaluma Lawn Bowls,Club has'.a park site designated for a:future'facility, they have 13 arranged for-their non-profit status through the.State, and they are actively recruiting 14 members: The proposed project is.estimated-to cost $3001000. Fund raising efforts are 15 going slowly,;not meeting with the club's°timetable of starting construction_:in the 16 stunner of 2001.:With,the infusion of funding from,the4City;to act as a match for other 17 possible'funding entities, the,chance:of.the effort sueceedirig improves dramatically. 18 19 OUTCOMES OR PERFORMANCE:MEASUREMENTS THAT WILL IDENTIFY SUCCESSOR 20 COMPLETION: 21 Once full funding is,secured;engineering and site design can commence, with 22 construction tor;follow; Due.to the nature,of the proposed facility, the project would be 23 contracted to a,film who:specializes In this type ofcomplek. 24 • 25 • 26 7. RECOMMENDATION: . 7 Re-prioritizer,existing projects and provide $501000:from Capital Improvement Project 8 funding be used'for the°Lawn Bowling Fund-Raismg;effort, with the possibility of 29 Proposition'12 funding also being used, once the competitive grant criteria is-pdbhshedin 30 the Spring,of 2001. a . 31 'Through the.use of reprioritizedfiinding, allocate $25,000 to Petaluma Lawn 32 Bowls Club, with the;proviso that the Club matches the $25,000 within two years of City 33 Council approval of this recommendation: If the Petaluma Lawn Bowls•Club should 34 match the1City's contribution within the required two years, an additional:$25,000 will be 35 raisedt�dt t owardsthe project In either case;;the balance;of allxequired fun8ing�is to be 36 within four years of the•initial'approval.of this=recommendation or all funds revert 37 back to the:City. 38 39 49 ./Forms/2000 Agenda Bill revised 042100 • 41 ' 42 44 45 • 46 47 48 49 50 51 • t • r { }? � • rr t, -b. t t • � z * ? 1.4":-... >i ° Y 1 • • ' I, "_:it 4 Kt ': :iii 4 't _ k p," '��i ."f� „5 ,ems i i x�uY.,r��s 'vT';" * It: - {ps iii s1~ ; d a, a :ate _ t 'a+ „y,e fit. f E b: 3 4;VN -SSL >�'" 0.+. f, a'S� "4 i .!�- /s n j' 1� Z "Or '`rie ... . ,...,.. ..,„:„..-. . L... ......-...7.. !: i ,, , , , i ., .., r> y _......,..... _ r ' 9A � 1 gn..bu {rvx rte � �/Y �tt�Y� J ti • 3rd }5: z° - s ` "'w `I s' r 4i !t. S f-- r'tY a 3 nr 4 ._ x _ i r .i ;x{; `� }`.yam t- F' ,* di ' kn .. f ��44 f.a?�' i a "-L � d ?� Lrl y; ." ay • .f .. w A s �4y s x 1 3' .+ lr It I tig7� {> k=44,44'. M + 61 1�,�' Y l e• .. a ... of . ).max g� rx _A',Zit.fi Y ` ■ FAi1 / l Ly & 1ti • xy r d , '�..Ir� ry srEvf cA-ucriNs HALEY / CAULKINS - DR EDGAR R. HALEY cischN ALBA 44orao4•03/4•/ice Mambo, MASTER LAWN BOWL ( N,G GREEN CONSTRUCTORS September 14, 1999 Page 1 of 3 Bruce Hagen Recreation, Music and Parks Commissioner Petaluma Comriumity Center Petaltutla, CA Ph. (707) 974-4855 Fax (707)794-7777 • SUBJECT: General Budget Consideration for Site Develop-meat and IConstruction . • of the Petaluma Lawn Bowling Green,Located at Kenilworth Park,In the City of Petaluma,California. Dear Mr. Hagen: Pursuant to your request,we have prepared,Me.following General Budget Consideration (GBC), for the design and construction of the subjeculawnbowljng green This GBC is pruvidcd to help develop a Scope of Projet and is not interxredas a Construction Proposal. The costs provide are hasesion similar lawn bowling green i design I build projects completed by/faky/Cairtthtt Master Lawn Howling Green Constructors within the last five(5)yeafs, in the State of California, U.S.A. • PR, (714) 492-9003 s F AX (714 ) 401. 1gig 128 W. Ave. Santioao • SC1" _ - STEVE CAULKINS HALEY / CAULKINS De. EEEGAR Et. HALEY , Goo.",>woe ALIA 70;saw)!Omar I LAD UlarrAll taA'STER LAWN flOWL1•NG GREVN CONSiTIIU,CTO Page of 3. CONSTRUCTION . S.180;000.00 : Otie•Flubdred'Eighly Thousandtollin 1.) Site:preparation, survey, staging, fencing. .. 2.) Excavaton, export,hauling 3) Gradient establishinents 4.) Mainlines', drainage, water service, electrical 5) Rough pit, baCkboards,:structuracconcrete 6)-Green proper donstructibninc. Plinth 7) Subdrainage Construction • 8.) Inigation„electrical,eonstruction , . 2) Sand import yi/compaction. leveling 10) Concrete flatwoticifencing, benches, Misc., .. 11-) Tdol4hed construction 12.)-Volleyball cowl reconstruction, •13.) BovilingGreen Stolen pia-Cements . _ SPECIALTY EQUIPMENT: $45,000.00—Forty-rnie Thousand DOILIrs 1.) Haley Greensplanertesign/Manufacture, Ix/delivery 2) 30"Scott Bonnar Queen Lavin 13oviding Green Mower. 3.) Qkdraw tensiometer 4) WaterManorneter 6)- Misc. hand tools - 3 YEAR MAINTENANCE'COST: S 35;000:00-Thirty Five ThousanciDolitin ._.._ TOTA'L CRC:1 300'000:00-THREE=HUNDHED THOUSAND DOLLARS Should you have further questions please contact ouroffice at your convenience. Yours truly, :IllSteve,CaulkinS, President PH (714) 492-9603 • PAX ('71,4) 498• 18-19 • a•v,. n 'a .D n io. A. ;g, .d c al',.a o to i Ii ■2' „ 2i -° m V 3, u O $' m A A � •/.,.a 8 'a �) m. <. ,°b ° n 3 j3{ 1 :.CB i a 373 o. v°. a m n 8 E 5 'a 3 3, m E A 1 g .3 m ix, '$ m nl' y .m. , Ni. e, ?.a., y t T d -, `to 1 m;a g $ a 3 1p } iijqI > ' 111th•- 3 °1 g. m 8 a .0,a v ,3 " u c rats m w .S a e a m. g C, v ..m s u 1 _ 's 3' T m ? : u a 3� .m 3 Q si 1c c a Ca j ?Tr_'ng a, a g a in •a m g. '^ m i'r• a `O a1 , a o n O ° r- ° k�' .•Y. m _. — r a m a 2. a m :o o a 8 • c m a a+ a _ 0"3 , 4 •a S iaa. o $ m a ' • 3 c a = u Ri Rill 4 o m a c 0. 1 o, a a ja 0 o `c 1 2 $ a 3. a 4 '3'. m 30 3 a,Sn la g_ t a, n 3 g. ,o 3 g 2 m 1 a J #-'`,3 - n. o is �. E u m 3 'm g S g m m rn m' g x 4 a s a .a• t ■ 1. 04 % 8 w m- �� S X '�_ 3 .�s O � 3 m s s ii' r a a 'o 3 1 a`am as a m'' . I > $ o g a s 3 g .m a q. m w •F, 8 a 'c3' o; o _.. 9 -0 g a b 3 s' 8- a = .2 � a 7 e. a S. g •7 •o a `a 3, m ... a g a. m F. $ '@_ 3 m m .742 Fn n. a 3,° 3• 3 a 3 P § a ; :p' c `e oaf; s 5 o- °� Q o y . � -ssm b 8 :c m m a is 3 : o i° I. i 3 as a . c. = � � �e p 5 �. 3•� S ;IA E v 7 7 $ �' $ 7 s in g °: .1 - g 3 CI give. ' ` E P.- 55" '513 33 .m m u. 8 3 2�' :� a3 a O' Q E e a iii a $ a 8 t - 5 be 0 m e• m v m • d a m o a a a $s a m ! g ° 8 al, . : a 33 _ a . 3S '.q _ i . `o a � . 3 r 'n 4 = ! I ! t ! i ! i 8 3.• ° $ ns1Q' 3 m °31 $ v m', g sr _ v 3 c a a o S , i� 3 4 - a m 'c 3 .•Z 3. g. v a N. eg 4 A� - a b : c 0 ° 8 as 7,- oo > g3 � ma � $ . r; 3' o 'a: YES; I'WANT TO CONTRIBUTE. • Name Address • City State Zip • Phone Contribution I wish`to join the Petaluma Lawn Bowls Club. Enclosed is'my/our membership for 2000-2001 • (Charter'Membrship;(s a bargain $25 singie/S40'couple). 9 g !t ;.; ; ; i g g � � • 5. ! p8f, �p —4 s ? . 8n ypyQ; r N • OM' yNN r O b Pg O O F O P V, i"; ktrafi T fn y i ig m iI. -5t raj -aa. -' i' w ! .1Lc ). 7e bSmn -I (j:/;i -.�; a5 n w • kei ._ yy - J y� qy�r y y yy O7 Y b,b O�N N.'Y C °R �J M' :0.0 4 r- L'' O r+.'- 0 —..P i - ' O'1 1 g- � ! �� t tit, tit R,t , o 5 : • b y • J J N;N W § '; 8 8 8 -§f it t t § t i t t i t I ,1. K • 8 $ $ 8O }88 N'. NJ' iC O -§ - -.0 Q O N v $ tr ¢; N Or 8 O N� 8 X4. 0`M • m p`. nM a . o 1, 2• 04 5 6 7 A RESOLUTION OF THE .CITY•COUNCIL 8 AUTHORIZING THERE;ALLOCATION OF PARK • 9 • DEVELOPMENT FUNDS,FROM EXISTING PROJECTS TO 10 BE USED AS'.A MATCH FOR THE LAWN BOWLS FUND 11 RAISING EFFORT. 12 13 14 15 16 WHEREAS, the City Council has'designated Kenilworth'Park•as the future site for a lawn bowls 17 facility; and 18 19 WHEREAS, the Petaluma Lawn Bowls Club has become a non profit organization and is 20 actively pursuing funding in order to develop the lawn bowls facility; and 21 22 WHEREAS, in order to assist the Petaluma,Lawn Bowls Club,,,the Recreation, Music and Parks 23 Commission recommends re-allocating,$20,000 from project 9679 (Wiseman Park) and $30,000 alp from project 9959 Gatti Park; and 5 • 26 WHEREAS, the Recreation, Music and Parks Commission'recommends that the reallocated 27 City finds be used as a match to,encourager other Petaluma funding entities to come forward to 28 match the City's contribution. • 29 30 NOW, THEREFORE, BE IT RESOLVED,that the City Council of the City of Petaluma does 31 hereby authorize the re-allocation of park-funding from project 9679 (Wiseman Park) $20,000 32 and from project 9959(Gatti Park) $ 30,000, with the resulting funding,to`be used to assist the 33 Petaluma Lawn Bowls Club in their fundraising efforts. Upon approval ofthis resolution, 34 $25,000,will be allocated to the Petaluma Lawn Bowls project, If the Petaluma Lawn Bowls 35 Club can match the initial'City=allocation within two years of this City Council action, a second 36 $25,000 will be allocated to the project for a total of$50,000. All funds for the project must be 37 raised within four;years'of this City Council or all City funds revert back to the City. • J ` City of Petaluma, California • Memorandum City Manager's OJrce„1I.:English Street, Petaluma, CA.94952 (707) 778-4345 Fax(707) 778-4419 E-mail:.ci/ymgr(a cirpeta/uma.ca.us DATE: March 2,2001. TO Mayor and Members of the City Counc'� • FROM: Frederick C. Stouder, City'Manage£ • SUBJECT: AT&T.Audit.Report—Agenda Item #9'' March 5,2001 Council Meeting Attached is a revised report from the consultant John Risk. The changes to this report areas follows: 1. The report submitted in.the,agenda packet had page nuinbers::cut off from view.: As the consultant will be referring to thesepage numbersiduring his presentation to Council, •' these-are now added. . 2. The original report submitted to the City required:three updates to the financial figures to reflect the latest,information that was being provided by AT&T following the original report date. The packetadistributed"last week included an:earlier version of the report. The updates are: • a. The figure at thebottom of page 2 ofthe Executive Summary and on page 4 of the full report shouldbread$1'5;856;.09'mstead'of$17 067`33. this change was also made to the chart on;page 13. b. On page 3 of,the°Executive'Summary, on page:5 of the full report, and on the chart on.page 1,3;the amount owed and the amount of revenues omitted related to late fees should'be changed`to read $842.33 and,$16,486.50 respectively instead of=$7.17.83:and $14,355..00. If you have any questions;please contact me. • d:/manager/stouder/fs0301/ke • •••1 • 7' :4""' -" ii atw COMMUNICATIONS SUPPORT GROUP:,. ;IIVC'. . :. 1499 WESTGATE LANE-PENNGROVE, CA 94951 • VOICE: (707) 795-8995 FAx:r(7o7) 795-6258 • EMAIL:.frisk a concentric.net EXECUTIVE:'SUMMARY September 15, 2000 • 1. PURPOSE: .. • The City of Petaluma retained-the firm ;Communications Support Group, Inc. (CSG) to • provide a variety of consulting services related to the fourth,year review of AT&T's Petaluma cable franch ise: Section 27.1 of:the City's Franchise Agreement (Ordinance 1981 NCS -- adopted June 19, 1995) calls for these four-yeaF'performance reviews On May 15, 2000, the City engaged Communications Support Group, Inc. (CSG) for the purpose of conducting audits related to Section 27.1. Specifically, Section_27.1 reads: • Four-year Review A. Curing the years, which commence on the fourth, eighth, and twelfth anniversaries of the effective date of the Franchise°the City may commence a review of the Grantee's performance under Me Franchise As,partof this review, the City may consider. (1)whether the Grantee:has complied with its obligations under Franchise and applicable law; (2) whether customer service standards„technical standards ,or bond orsecurity/fund requirements are adequate or excessive; and (3) other issues as may be raised,by the Grantee; the City or the public. B. The City may conduct publibhearings to provide the Grantee and the public the opportunity to comment on the Grantee's performance and other issues considered as part of the four-year review. This report provides a summaryoffindings from the various audits performed by CSG and presented in a report to the City on September 1 , 2000: Findings are summarized . t :in the following four areas: : • - _ 1) Franchise Fee-Audit Findings.(including reconciliation of fees paid for the period July1, 1998 through December'31, 1999) 2) Franchise Compliance Audit Findings 3) Additional items requested by City Council members at the May 15, 2000 Council meeting. . 4) Technical Compliance Audit,Findings. Detailed information can be found in CSG'S comprehensive report. Additionally, separate.support documentation is also contained in°four exhibit binders accompanying the comprehensive report;. • • Executive Summary:doc Communications Support Group, Inc. ©2000 Page 1 of 6 -AT&T PETALUMA,FRANCHISE FOURTH.YEAR PERFORMANCE REVIEW EXECUTIVE+SUMMARY ' Sepf`emberl5, 2000 . 2.. METHODOLOGY: As part of this.:review, our ascertainment takes k into account provisions of"the City?s, municipal code, franchise agreement,. the federal Cable Act, Federal 'Communications, Commission (FCC) rules, applicable California State law and Standard practices of the cable industry: During the period between June and September 2000, CSG performed the following • services: ✓ Conducted intervieWs'with City management staff pertaining to issues of performance and non- compliance. • Reviewed City documents regarding AT&T's:franchise performance..and.-franchise fee payments. • • Reviewed current certificates of insurance, bonds and letters of credit;as specified in'fran"chise agreement. ✓ Validated-Auditors report from 1998.Transfer. • Conducted interviewslwith AT&T representatives;on issues pertaining to franchise fee payments and franchise compliance: • Compiled compliance checklist of municipal;code and franchise fee paymentsand`franchise agreement req uirements. ✓ Provided questionnaire to AT&T regarding compliance with specific requirements of.municipal111, code:and franchise agreement. ✓ Performed audits'in the followingareas: o Franchise fee payment.accuracy • o Franchise compliance performance o Technical compliance performance o Councihmemoers'issuesraised ., _ ✓ Drafted reports addressing each'area of reiew. 3: 'FINDINGS: 3:1 FRANCHISE FEE;AUDIT Section 1 1 of the report comprises the franchise fee ,audit. During -the franehlse fee ;audit CSG audited financial records of AT&T 'to determine compliance to franchise:fee• payment terms as set out in the franchise 'agreement , A.list of exceptional findings follows: ' In total, CSG found $15,856.09 in unpaid franchise, fees.for the period July 1 19-98 through. December 31, 1'999'related to the following; • Executive Summary:doc Communications:Support Group, Inc. ©20001 • Page 2'of 6 AT&T PETALUMA FRANCHISE'FOURTH YEAR PERFORMANCE REVIEW EXECUTIVE'SUMMARY • September 15;4000 1111, 1)' Found AT&Thad misallocated 20 City subscriber.addresses to the County. , d y 2), Found an additional 50 addresses not 1n AT&T's database, which may represent past, current,r3or future franchise fee revenues to the City. ,3) Found that AT&T omitted late fees in 1998 in the amount-of $16,846 50',resulting in a $842:33 franchise fee liability: 4) Found4hattin;November of 1998 AT&T failed to pay:franchise fees on.$1;326.05 in trip charges resulting in a $66.30•franchise fee liability.; 5) Found AT&T underreported $283;142.901 ofadvertising,revenue;,due to deductions for agency commissions and national representative fees, resulting in $14,157.15 of franchise fees owed,. 6) Found it necessary to recalculate 'advertising, home shopping, and program guide revenues due to the omission,of 20 subscribers;discussed above. 7) Determined that beginning in April 2000 AT&T purchased a satellite master antenna television system (SMATVx) serving 383 subscribers` in the "Lakeville Apartments" complex on south,Ely`Rd. AT&T should be.remitting franchise fees payable to the City for these;subscribers. During ourreviewlofrecords we:found that AT&T did not include revenues for April; and May of 2000 in its June 30 2000 quarterly franchise fee payment: Found'AT&T's payments,related interactive services (@Home cable modem service) consistent with transfer agreement: ut execed'in 1999. 8) Found AT&T's digital revenue is included in the basic service revenue consistent with transfer agreementexecuted in 1999. 9) AT&T has properly complied with Fifth Circuit Court of Appeals decision in City of Dallas.v. FCC, 118 F3d 393 (1997)and the"transfer agreement regarding fees paid on franchise fees. 3.2 FRANCHISE COMPLIANCE AUDIT CSG audited performance. 146 items. CSG found AT&T to be in compliance or substantial compliance (depending on nature of performance criteria)•with 134 items. Major items found in compliance included requirements for insurance certificates, bonds, and letter of credit (see exhibits C, D and E of compliance audit binder). • CSG found AT&T to be in non compliance, potential non-compliance, or conditional compliance, to 12 items. Section 2.4 of the compliance audit report;offers suggestions and recommendations for corrective measures., Many of these items are directly related to AT&T's failure to provide documentation supporting ;compliance. Below are listed the twelve items of potential non-compliance or•conditional compliance: , ITEM 1: Section 24 BOOKS AND RECORDS -- REPORTS` AND RESPONSES TO QUESTIONS subsection 24.1. - ITEM 2: Section 7.4 MAINTENANCE AND COMPLAINTS, subsection 7.4 (B). ITEM 3: Section 7.5 Non-discrimination and Equal Employment subsection (A) Statistical reporting of'FCC noticeslto Grantee. • 'This figure is,based on actual figures for commissions and,rep.,fees as provided.by AT&T's P&L's'submitted'.by AT&T Media Services corporate office in Denver,beginning in February 1S99 Executive Summary.doc Communications,Support Group, Inc. ©2000 Page 3 of 3 • • ,AT&T PETALUMAFRANCHISE FOURTH YEAR PERFORMANCE REVIEW EXECUTIVE:SUMMARY September 15,'2000 - ITEM 4: Section -8 SYSTEM FACILITIES', 'EQUIPMENT AND DESIGN (81)(C)(2). Institutional Network Design. ITEM 5 Section 8 SYSTEM FACILITIES, EQUIPMENT AND DESIGN subsection 8.10 System Extension. Part A. ITEM 6: Section 8,,SYSTEM.FACILITIES, EQUIPMENT AND DESIGN.subsection 8.14 Ascertainment of Programming ppart,A. ITEM 7.` `Section 24 BOOKS AND RECORDS --: REPORTS AND RESPONSES TO QUESTIONS•subsections:-24:i, (B); 24:1C; 24.2 (A). ITEM 8: Section 27 Performance,Monitorinq subsection 27:2 Grantee Cooperation:.. ITEM 9; Exhibit A Customer'Service,•of the franchises'ordinance: Section 2, subsection 2:2.3.0perati nq Hours. ITEM 10: Exhibit,A, section 2 Local Operations, subsection 2:2•Telephone Service Part :2:2.4 and FCC Customer,servicetiRules Title 47 SUBPART .H - GENERAL OPERATING tREQUIREMENTSSECTION 76.309'Customerservice obligations: Can-Sumer Service;Standards Telephone Answer Time (C)(ii)': • ITEM 11: FCC Custoiner'Service;Rules'Title 47 SUBPART H - 'GENERAL OPERATING REQUIREMENTS ,SECTION 76!309 Customer service obligations. Consumer Service'Standards Telephone AnswerTime (C)(iv). . ITEM 12. FCC Customer Service Rules Title 47 SUBPART H —GENERAL OPERATING REQUIREMENTS SECTION 76.309 Customer, service obligations. (C)(2) Consum_ er Service Standards Installations, outages'and service calls.. CSG determines AT&T to be In non:compliance to one Issue, pertaining to provision of • quarterlyreports in a form agreed upon by the City and the Grantee: .ITEM;. Pursuant to Section 24 BOOKS AND RECORDS -- REPORTS AND RESPONSES TO QUESTIONS'subsection 24.1. 33 COUNCIL MEMBERS ISSUES r During-the May 15; 2000'council meeting, the City Council raised specfic>'issues'that'^=•" — they were interested in having CS,G investigate during the review. These issues included: • • ✓ Rate+regulation: . ✓ PetalumaLCommunity Access ✓ Utility.Undergroundi'ng • ✓ Pedestals Rate fRegulation: . . . . _ Data, detailed in the comprehensive report, suggests that rate regulation may lead to lower charges foi Petaluma's basic-only, subscribers; and, may lead to lower equipment rates to the entire subscriber'population. But, as the data clearly shows, regulated cities experience higher expanded basic rates. Since approximately 92% of Petaluma subscribers take a combination ef basic and expanded basic, these Mk higher expanded basic rates may offset the benefits of rate regulation for the majority of•'Petaluma'ssubscribers Nonetheless, as-a policy matter, the City could Executive Summary.doc Communications.Support Group, Inc. ©2000 Page•4 of 6 • AT&T PETALUMA,FRANCHISE FOURTH YEAR PERFORMANCEREVIEW EXECUTIVE:SUMM'ARY ,September 15, 2000 consider rate regulation;an important"and'useful°measure in protecting'the interests of the approximately 1,401 Basic-onlysubscribers, someof whom are of low or fixed incomes. Petalun;ia,Community,Access - Is AT&T Properly Accounting For Petaluma.Access Funds? CSG found that AT&T's billing-system tracks-both the number of subscribers and the amount :collected from ;subscribers related. to the $2"00' per month access fee , contribution. The audit ,determined.that AT&T provides;an" option each month for a subscriber to .check whether or not they would like to be charged the access fee. Once subscriber selects,the option not to be charged, the subscriber is entitled-to deduct $2"00 from the amount. he or she owes far that month" Going forward, according to AT&T's local customer service staff, AT&T 'automatically deducts the amount from..future billings ifa''subscriber fails.,:to make:a choice, the subscriber is ' charged the fee by default. CSG did not audit the accuracy of access fee payments. `CSG recommends the Petaluma Access Corporation audit the accuracy of past and future access fee payments to ensure accuracy going forward. • Utility Undergroundmg Does AT&T Participate With Utility Undergrounding Coordination? AT&T regularly sends a representative to meetings related to underground construction coordination with the other ,utility companies" AT&T also participates with USA (Underground Service Alert) and dispatches a representative whenever necessary to protect 'its underground, assets. AT&T has no issues with the City regarding the underground districts (Rule 20) and supports the efforts of the City related to underground standards. CSG .interviewed the City's construction manager, .Rick Skladzien who also indicated that there are no issues specific to AT&T's compliance or participation in undergroundingteables - Pedestals: , • AT&T has;a total; of 28 ;fiber,nodes in 'Petaluma. Roughly'55%of these nodes are located`•on telephone .poles and 45% of these are in ground=mounted pedestals. Additionally, in order to provide standby powering equipment for its telephony customers, AT&T Cable has installed(large cabinets containing up to six 12-volt , (automotive type) batteries for backup power for-their`system Although none. are currently, in use in Petaluma, some cable companies,. including AT&T (in other communities)'are placing in the rights of way propane gas powered generators for stand-by power. • As apreventive policy; CSG recommends!that the=City periodically inspect the-safety condition Of these cabinets and generators. Executive Suminary'doc Communications Support#"Group;;lnc. ©:2000 Page-5 of 6 AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW EXECUTIVE'SUMMARY September 15, 2000 - . 3.4 TECHNICAL COMPLIANCE AUDIT ' • AT&T's technical performance was evaluated during the technical compliance audit. - 'conducted on -August 1St and 2"d of 2000" As is discussed in greater detail in. the comprehensive 'report, AT&T designed, constructed', and operates a 750 MHz Hybrid Fiber Coax (HFC'design system in, Petaluma" This design'uses;fiber optics"totransport signals to multiple' neighborhood locations; ('nodes") where the •optical signals are ;received and re-modulated as"standard Radio Frequency, (RF)" There,aref28 nodes in . Petaluma:serving approximately 627subscribers each. CSG selected three.•location , perform field;tests These locations included•City Hall, Lucchesi Community Center, and the PCAs Media Center at Casa Grande' High School" As noted in the full report, Carrier to :Noise and signal levels at the Access. Center Community Center' met or surpassed ,FCC standards Additionally, certain findings from tests performed atthe;Media Center suggest the need„for PCA.to upgrade its internal '.RF Wiring within the Media Center. However, signal levels at City Hall 'did not meet requirements,of FCC 76'605 !(a) (3): The aural`centerfrequency-of the aural carrier must be 4.5.MHz -15 kHz above the;frequency of the visual carrier at the output of the modulating or processing, equipment of a cable: television system, and atthe subscriber terminal.' This failurehas likely contributed tothe City Hall • test also.,missing'the FCC/requirement (76.605"(a) (7)).fbr Carrier to,Noise ratio'(C/N). Section 27 of the franchise ,agreement requires AT&T to submit, a 'state of cable technology' report. As stated in the Section 2"0' subsection 2 3,;of the Compliance. report, AT&T has repeatedly been requested°to submit a report (and letter attached at Exhibit'C'hereto). ,As of the date 4atei of this report, this important'state of:cable technology' report has.riot'been-submitted: .._- 4: 4 CONCLUSION: . In spite of the repeated reassurances from AT&T that compliance, is on going, it is troubling that AT&T has been unable to confirmgcompliance by failing,tdprovide specific documentation as 'requested". Ultimately the company.must provide' to the City franchise required documentation to confirm compliance to ,areas of the franchise indicated in our'report. As, it pertains'to franchise fee; deficiencies, CSG recommends the City noticeAT&T of " the deficiencies and pursue necessary corrective actions by AT&T to 'the; areas 'indicated in the full report. Finally,; a"s it pertains to,RCA's technical needs, CSG :recommends the City assist PCA in securing the assistance of AT&T to st'udythematters.outlined.in our full report; ,. Executive Summary.doc - Communications,Support"Group, Inc. ©2000 Page 6 of 6 • COMMUNICATIONS SUPPORT GROUP,, INC. 1499'WESTGATE'LANE`PENNGROVE, CA 94951 VOICE: (707) 795-8995 FAX: (707) 795-6258 110: EMAIL: jrisk@concentric.net Franchise Compliance Audit Report Of AT&T Cable Services, City of Petaluma * *.* Pertaining to Fourth Year Performance September 1, 2000 PLEASE REGARD SUPPORT DOCUMENTS WITH CONFIDENTIALITY 1.0 NATURE OF STUDY • Section,27.1 of the City's Franchise.Agreement {Ordinance 1981 NCS -- adopted June 19, 1995) calls for reviews every fourth-year during the franchise. On May 15, 2000, the City engaged Communications Support Group, Inca (CSG)for the purpose of conducting audits related to Section 271. Specifically, Section 27.1 reads: Four-year Review A. During the years, ,which: commence on the fourth, eighth, and twelfth anniversaries of the effectivesdate of the, Franchise, the'City may commence:a review of the Grantees performance under the Franchise!.As part of this review; the City maytconsider: (1) whether the Grantee has complied with its obligations under Franchise and applicable;law; (2) whether customer service standards; technical standards, or bond or security fund,requirements are adequate or excessive; ' and.(3)'other issues as may be raised by the Grantee, the City; or the public. B. The City may conduct public hearings to provide the Grantee and the public the opportunity to comment on the Grantee's performance and, other issues considered as part of the four-year This report details findings .from 'the various audits performed by CSG. Our report pr esents,findings in the following order: 1), Franchise Fee;Audif,Findings ('including reconciliation'of`fees paid for the period July 1'„ 1998 through December 31,.1'999) 2) Franchise Compliance Audit Findings 3) Additional-items.regquested by City Council 'members at the May 15, 2000 Council.meofing'. 4) Technical Compliance Audit.Findings • An executive summary is also provided at the rear of the report. RPT00012.001:FINAL.doc Communications Support Group, Inc.•-©2000 Page.1 of 34 • • AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 1.1 -..FRANCHISE FEE.AUDIT SEPTEMBER 1,2000 • Section 1'.1 FINANCIAL PROCEDURES AUDIT OF AT&T BROADBAND & INTERNET SERVICES.;RELATED TO FRANCHISE:FEE PAYMENTS TO THE CITY OF PETALUMA FOR THE.PERIOD JULY 1, 1998"THROUGH, DECEMBER 31', 1999 Section 11:1 of the-Franchise Agreement,(Ordinance 1981) states:. The Grantee shall ;pay, to the City an amount equal •to five (5) percent of the Gross Revenues derived.'from the operation of its Cable• System in the City. Section 1 t2 of the Franchise Agreement. requires 'Payments due to the City under this provision shall be computed at the end of each calendar quarter and shallbe:due within 45 days after the end of'the preceding "quarter. Each payment shall be accompanied by a statement of revenue received' for the quarter in connection with the operation of the Grantee's Cable System in the City and a brief report showing the basis for computation of fees. The reports shall:list a line item;for every source of revenue received by'.the Grantee (as specified within the definition of "Gross Revenues" in Section 2.2) from the operation of its Cable System. "Gross Revenues" arerdefined in Section 2.2 of,Ordinance #1981 as: "Gross Revenues' shall mean all cash,,credits, or other consid• rationtof any kind or nature received directly or indirectly-by the Grantee„ its Affiliates;or any other . Person .which constitutes ft cable operator under the•Cable Act from any source .whatsoever, arising from attributable to, or in•any way derived fromcthe^-Grantee's Cable System within :the City. Gross, Revenues include, •but are not limited to, fees charged Subscribers for Basic Service; fees charged Subscribers; for any optional, premium, per-channel, or per-program service; Monthly fees 'charged Subscribers for any Tier of service other than Basic ,Service installation, .disconnection, re=connection; and change-in-service fees; .leased channel fees, fees, payments, or other consideratiion received from^Programmers'for'carriage of Programming on the Cable System; converter rentals or sales to customers;' personnel (services fees (over and above Grantee costs)'; local advertising revenues; 'regional or national advertising-revenue allocable to this 'system, . revenues from home shopping channels; sales of Programming+guidesunique to. • the Grantee or its affiliates; and such'other revenue,,sources'a's may now exist or hereafter develop: The,definition shall be interpreted in a manner which permits the City to collect the maximum 'Franchise fee permitted by law: Gross • Revenues, however, shall not :include any taxes imposed 'directly Upon' any Subscriber or user bythe state, City,,or other governmental unit and collected by the' Grantee on behalf of said governmental unit. The amount, paid as a Franchise fee cannot be deducted from Gross Revenues unless prohibited by Federal law:- • .. • RPT00012;001.FINAL:doc Cornmunications'Suppo tGroup, Inc. ©'2000 .Page 2 of 34 _ . . . AT&TPETALUMA FRANCHISEFOURTH YEARPERFORMANCE REVIEW SECTION 1.1 - FRANCHISE FEE AUDIT • SEPTEMBER 1, 2000 1.2 FINANCIAL AUDITCONSIDERATIONS • Six principal questions were conSidered during the course of our audit. 1 ) Are AT&T's accounting.- procedures sufficient to assure proper franthise fee payments to the City? 2) Is AT&T's reporting,- of :revenue supported 'by/ our review of various • financial records kepti-by the company? 3) •Were franchise,fee,payments submitted to trie,iCity during the Period July• 1, 1998, through Deeember 31, 1999 and consistent with • .franchise requirements? 4) Are franchise lee• calculations compliant with the Fifth Circuit Court of ' Appeals decision in City of-Dallas v 'FCC, 118 F.3d 393 (1997) and the transfer agreement? • 5)" Is AT&T properly reporting advertiSing and hbrne shopping revenues? 6) Does AT&T have,an accurate accounting' of Petaluma subscribers? 1.3 METHODOLOGY On June 16, 2000, CS G's acco,unting staff inSpected accoiig records and cbnducted interviews with AT&T representatives at AT&T COmmUnitation's San Ramon, CA corporate"office's. • • AT&T representatives included: - - ti •• v -Stacie KellY;7Director ofReaulation • Karin Perkins, DivisionAbooOnting Manager .Sharon Jorgensen, ACcotintarit • CSG,performed what is known as an "agreed-to procedures" audit What this means is that revenue detail was not exhaustively reviewed. Instead, priority was given to inspecting major- categories of revenue (subscriber revenue, equipment rental, advertising, .and shopping) using test months, .to sample procedures and accuracy. Audit depth was increased, based on discrepancies and compliance. issues. This method, saved time and allowed i us to concentrate,•dn areas-where discrepancies and compliance issues were found The start date of the audit peribd, July 1 , 1998,i was mutually_selected by AT&T and CSG because it aligned with the audit cut-off of the previo,us•audit performed by The City: • • • Rp3-00,012:905.rmAL.doc ,CommunicationsSupportGrouP,,Inc. ©2000', ,Page 3 of 34 ' , . • AT&T PETAI,UMATRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 1.1 -.FRANCHISE FEE,AUDIT SEPTEMDERI;2000 • CSG reviewed the following,documents: 1) Remittance statements and check attached: to franchise fee payments from AT&T to the City for fiscal years ending,•_#1998, (Exhibit A), • 1999 (Exhibit S), 'andist quarter:2000 (Exhibit C); 2) Annual.audited trial balancevand general ledgers for fiscal years ending 1998.; 1999 pertaining to,City of Petaluma cable..sistenri; 3) Cable Services Group, (a billing system) reports which are used to • calculate revenue anciderive subscriber numbers for,the period: 4) Remittance ataternenta shOWing amounts paid end: tcalculation of prorations for each of the following: a) Home shopping channels' by 'source in test rimonths during fiscal year endihg 1998, 1999; b) Advertising sales revenue receipts from AT&T and T.CI Media Services for test months during'fiscerStear ending 1998 1999: 5) Bank, deposit statements showing'walk-in receipts for',test months during fisbal year ending ¶998,J999; 6) Subscriber address lists asaignedto.the City of Petaluma; 7) Monthly accounting worksheets showing revenue data used in the 1111 franchise fee calcuiastron forthedCity; 8) Community acceas,fee :records for select months, during the audit period (EXhibitK). 9) Unaudited finansial statenlentS.s.ubmitted to the Cify.of:Petaluma; 10). Special worksheets provided by AT&T related to •adveniaing revenues including PetaluMa•aystern general ledgers.for 1998iand 1999; 11.) ' Home shopping receipts for's-elected months. 12) General ledger fig-urea-from AT&T'storporate office in Denver, CO-related . adyertiaing agency commissions and -national rep firm:feea. • 1.4 Surnmarytiof Exceptiona1Findings: In total, CSG'todnd $15;856.209 in unpaid franchise fees' for the period July 1,, 1998 through becember31 , 1999, related to the:folloWing ' 1.) Found •AT&T misallocated a total of 20 City subscriber:addresses to the 1CoOrity-, The exact amount of franchise :fee liability is not •knoWn. For further diacUsaioni. 0-lease:see section 1.5.2. • 2) Found an additional 50 addresses not in AT&T's •database, which may represent pas( current, or future'franchise fee revenues to the City: This • matter requires further study to determine exact franchise fee :liability, if any: RPT00012:001.FINAL.dbc Communieations,SupportGOup, Inc. ©2000 Pale 4-6f 34 AT&T PETALUMA FRANCHISE•FOURTH YEAR PERFORMANCE MANCE REVIEW_ SECTION 1.1 FRANCHISE FEEAUDIT SEPTEMBER 1; 2000 3) Found that AT&T omitted late.fees in 1,998 in the amount of $16,846.50 resulting in a $842.33 franchise flee liability: 4) Found that in November of 1'898 AT&T?failed to pay franchise fees on $1 326.05 in trip charges resulting in a $66.$0 franchise fee liability. 5) Found AT&T underreported: $283,142.901 of advertising revenue, due to deductions for agency commissions and national'. representative fees resulting in $1,-4,157115--of franchise,fees owed. • 6) Found it. necessary to recalculate advertising, home shopping and program guide revenues due to the omission of 20 subscribers discussed ' • above. AT&T Was found to have underpaid a total of $70.31 related to these,three prorated.categories of revenue. 7) Determined that beginning: in: April 2000 ,AT&T purchased a satellite master antenna :system serving 383 subscribers in the "Lakeville Apartments" complex on south Ely Rd: AT&T calls this franchise Agent ' 30: The subscribers of this franchise area automatically become part of the City of Petaluma'franchi'se area Therefore, AT&T should be remitting franchise fees payable to the City for these subscribers. During our • review of records we found that AT&T. did not-include revenues for April and May of 20001-in its June 30, 2000, quarterly franchise fee payment. AT&T's accounting staff stated that this matter would be corrected in AT&T's September 30; 2000 payment.. In that this finding concerns franchise fees eligible:to the City, which'extend outside of our audit period (ending December 31, 1999) we did not audit the accuracy of AT&T's , reporting of revenue;, but would be willing to do 'so as add-on work. CSG • recommends,`the City evaluate this matter-following receipt of AT&T's third quarter 2000 ;payment°.Records indicate'that-franchise;fees;payable•for this franchise area total approximately $550'll00 per month. 8) Found AT&T's interactive services related payments: (@Home cable Modem service) consistent with:transfer agreement executed in 1999. 9) Found AT&T's digital revenue is included in the basic service revenue consistent with transfer agreement executedin 1'999. 10). AT&T has properly complied With Fifth Circuit Court of Appeals decision in City of Dallas v FCC, 118 F.3d; 393 (19.97) and the transfer agreement regarding fees paid,on franchise fees. • ' Based on recalculating,gross revenuesiusing.actual figures for agency commissions and national rep firm fees provided to CSG by AT&T Media Services Corporate office in Denver, CO, See Section 1.5.2. of the report for additional details RPT00012:001.FINAL.doc Communications Support Grotto:Inc. ©2000 Page 5 of 34 AT&T PETALUMA,FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 1.1 - FRANCHISE°FEE:AUDIT SEPTEMBER`1, 2000 • 1.5 DETAILED FINDINGS:, 1.5.1. Accounting Procedures •And;Revenue,Recognition Each quarter, during •the-audit period, AT&T:Cable remits a checkwith,a cover letterfor the payment of" the'5% franchise fee Included with the check is a worksheet that summarizes,revenue by category'showing calculation of the fee (Exhibits A, B, and C). However, detailed ,calculations related to franchise fee payments are only included in the financial 'records; a document prepared- and maintained, at AT&T Cable headquarters in San Ramon. For the period of review, AT&T, subscriber revenue records; are generated using software provided by Cable, Services Group Which generates reports for subscriber counts; 'subscriber revenue, cash receipts, and bad' debt. AT&T uses the following categories,to report and/or adjustrevenue eligible for franchise fees paid to the City: • Categories of Revenues- AT&T'.Communications Subscnber Income (Basic Expanded Basic„Pay N iPPV • • 'Equipment Rentland Installation) ,; Advertising Sales '; ' Home Shopping Channel Commissions. 7.:11 447 r Guide 9 :Other.lneorne. , Late Charges Bad Debt ` Home Modern Service • "Additionally, franchise -fees- are calculated on revenues collected by' affiliates such as ICI Media Services for advertising and QVC for home shopping commissions These revenues are prorated to Petaluma based on subscriber counts tied to billing system reports: • AT&T's Petaluma Corporation is General Ledger system .1030.16. _During the audit period the Petaluma Corporation was made Up of two sub-systems;,or agents: 1) Agent 16, which represents the main •portions. of Petaluma and corresponds to,General Ledger system`F7791;; 2) Agent 20, which represents' the unincorporated portion of Sonoma County and corresponds to General Ledger system F7792. RPT00012.001.FINAL-.doc Communications Support Group.lnc.,;©2000 Pagei6 of34 • • AT&T PETALUMA FRANCHISE FOURTH YEAR;PERFORMANCE'..REVIEW SECTION 1.1 - FRANCHISE FEE.AUDIT SEPTEMBER 1, 2000. During the audit period, the City of Petaluma contributed approximately 87%o,of this total system's subscribers. Additionally, as is discussedin greater detail below, beginning in April, 2000 AT&T added a thiit agent, Agent'30, which is comprised of subscribers residing in Lakeville Apartments on South Ely Road. 1.5.2 Audit;Details And Conclusions'By Category Subscribe •lncorrie and Accounting • Billing system reports for several test months were examined for accuracy concerning revenues from Basic, Expanded Basic, Pay TV "PPV, ,Equipment Rental, Installation, Guide and Late Charges ;CSG noted.discrepancies regarding Late Charges and Trip Charges, which are discussed ingreater'detail later in'thissection. • Additionally, on a test basis, CSG compared known addresses in Petaluma with billing system reports. to ensure proper reporting of revenues: -CSG compiled two sets of , • addresses (See Exhibits D, E). The first list was;created'to confirm whether addresses at the perimeter of Petaluma were included.in franchise;fee;calculations (See Exhibit D). The,second list was created to,confirm-addresses surrounding the''I' Street extension in ' response to concernsexpressed by'Council,member Keller (See Exhibit E). Using these two lists CSG and AT&T local customer service staff checked the billing , system and concluded theta total of 20 addresses?were' incorrectly accounted'to Agent 20 (the County)rather than Agent-10 (City of Petaluma). A(complete listing of these 20 addresses:can be seen in Exhibit E The exact amount of franchise, fee liability related to these addresses is not known. • Logically, franchise fee liability is,based on the number of months each resident has subscribed to cable dating_ back to the date the area, was annex ed by the City. . Assuming for the purpose of discussion that each resident subscribed for,.the duration of the period in question and assuming that the last annexation by the City was,ten years ago, then franchise fees in the •amount of $4,800,00 were paid by AT&T to th'e County . rather than"the City (based on the;for,mula:20 subscribers x:,$40 per-month x 12 months x 10 years x 5%). In this case, the County would owe Petaluma the amount -due plus interest. Usually, in such cases, AT&T would ask the City and County to agree to a reasonable amount, then.AT&T would correct the amounts agreed:owed when making the next quarterly payments to'the County and the City. - AT&T prorates 'revenues for advertising and home shopping between the Petaluma Agents based on Equivalent Basic Units (EBU's) .CSG"revi ewed AT&T'sjigures,related to EBU's for the each year (See Exhibit: H). AT&T used the following prorations in . making franchise the payments in the'years 1998'and 1999 as shown on the next page. • • RPT00012.001.F1NAL.doc • Communications Support?Group;,1nc..©%2000 Page 7 of 34 • AT&T'PETALUMA::FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 1.1 =FRANCHISE FEE AUDIT SEPTEMBER 1,2000 • ,Proration ForitUla '1998; 1999 Agent 1'0 , Agene20 12:56/0 _ „ . ° .. _ -- . "'1.2.1:0% " By adjusting these percentages forthe'20 subscribers mis"allocated4t6 Agent_20 (,County. Of Sonoma) •the following percentages were.applied to our audit conclusions: • • Adjusted Proration Formula • 1998 1999 Agent,l_p ".Agent'.26 12.46% " ai1'2 00%'c Additionally, a total of 50 addresses from;,both lists could not 'be located in AT&T's' database(See Exhibit G). AT&T's staff•indicated that the reason these 50 addresses are not part of AT&T's 'idatabase is that (service has never been provided Because these addresses represent potential;,future;subscriberrevenue,rwe recommend that the City encourage AT&T to further study the market`potential of:these addresses and to assure Agent 10n, en su scribers come on line at these addresses'that they are'properl'y coded • Petaluma. Lastly, during our-audit:period, we determined that begihning in. April 2000, AT&T expanded the cable system in Petaluma to include,383 ,subscribers in the 'Lakeville Apartments" complex on South Ely. Rd (previously a private satellite master antenna •system). AT&T createda new franchise area withln;the Petaluma^system called Agent' 30. Under the terms of the City's'franchise agreementtwith,•A_T&T , the subscribers of this franchise area should automatically beecdme-part ophe=City`of°Petaluma.franchise . ,area. Therefore AT&T should be remitting franchise fees payable to.the'City for these: subscribers. It was found during •our review of records that AT&T did not include • revenues for April and May of 2000 in its June 30, 2000 quarterly franchise fee payment. AT&T's accounting staff:stated that this matter would be'corrected in_AT&T's September 30, 2000 payment In that this finding concerns franchise fees eligible to •the;City; which extend outside of our audit period•(ending December 31 , 1'999), Wel did, not perform any additional audit to "investigate these subscriber counts and subscriber revenues'or their impact on franchise feesland access contributions. However,•we'are willing.-to do so. as add-on work'. CSG recommends the :City: evaluate this. matter - 'following receipt of AT&T's third quarter 2000 payment. Our brief review of records 'indicatesthattfranchise'fees payable for this franchise area total approximately'$550:00 per month.. Late Fees Consistent;with state law, AT&T charges;delinquent accounts a late.fee of $4:75 per month. Late fees are itemized on subscriber bills and tracked by''the billing;system' as any other category of subscriber revenues. It was found during a review of billing, • system records•that AT&T omitted-late fees in the amount of $14,356.00 in 1;998. RPT00012:001,FINA'L.doc: :Communications Support Group, Inc. ©1000 Page 8 of • AT&T PETALUMA FRANCHISEJFOU•RTH YEAR PERFORMANCE REVIEW SECTION 1:1 - FRANCHISE FEE,AUDIT • SEPTEMBER 1, 2000 That omission' results in a $842.33!franchisefee liability:, Beginning in 1999, late fees were reclassified into the "other" category and we found'nb errors.thereafter: CPSM'-`318■ Finanical(:Summary Report LateFees Income,not reported in Franchise Fee calculation Petaluma=0010 . Jul-98 Aug'-98 Sep-98 Oct-98 Nov-98 Dec-98 $2,490.00 $ 1,275.00 $1,763;75 1' 3;944.00 ,$ 3,718.75 $ 3,655.00 Fees owed $ 124.50 $, 63/5 $ 88.19 $. `197.20 $ 185.94 $ 182.75 Trip Charges Similarly, AT&T charges subscribers for trips to subscribers' homes for services not categorized by any other code. .CSG found that .in November of 1998;; AT&T failed to pay franchise fees on $1,326.05 in trip charges This resulted in a.$66.30 franchise fee liability. • • Advertising.Revenue • • • Local and National advertising appears on AT&T cable. systems in the Bay Area. ' Advertising is sold through, a wholly owned AT&T affiliate known as AT&T Media Services. In prior years AT&T Media Services was named ICI Media Services and Bay Cable Advertising. AT&T Media,Services sells and tracks advertising sales on a "spot" • basis or fee per run. Total.advertising revenues in the Bay Area are pooled among all AT&T Cable systems in the Bay Area In 1998, AT&T's total Bay ,Area subscribers numbered 1,322,444 and in 1999, 1 ,366,642. Therefore, Petaluma System (Agents 10 and 20) represent 1.44%, and ' 1.45% the regional total for years 1998 and 1999 respectively.(Exhibit H). During our audit of advertising revenues, we discovered that AT&T was calculating franchise fees. based on :Net,-revenues -A.T.&T Media Services pays commissions in,,, two principal manners: 1 ) Agency commissions . . • 2) National.Rep. 'Firm fees Agency commissions are typically 1;5% of gross and National Rep Firms are 20% of net (e.g gross; less Agency commissions), To justify their position on netting of revenues, AT&T presented CSG with an opinion by PriceWaterhouseCoopers (Exhibit L).. AT&T;pays agency commissions to advertising agencies who bring their clients to AT&T Media Services. For example J. Walter Thompson might,bring Ford Motor Company to AT&T Media Services :A Ford ad might appear on all AT&T cable systems and AT&T invoices J. Walter Thompson on Fords behalf. For purposes; of example let us set an ad value of $100;00, J Walter Thompson would be billed.$100"00, less an agency fee of 15% or $15.00. The net revenue to AT&T Media Services posted from this ad is $85.00. • RPT00012001.F.INAL;d0c Communications Support Group; Inc..©-2000 Page 9 of 34 AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 1.1 - FRANCHISE FEE AUDIT SEPTEMBER 1, 2000 • National Rep.•Firm fees are slightly different AT&T uses a single, Boston firm called NCC to represent national advertising sales'. In this example; NCC :attracts Mazda to run an :ad 'on AT&T:Media services. Mazda is represented by the agency•Young and Rubicam. In this case, the $100 'is broken down as follows '115% to Young and Rubicam, leaving a net of $85.00, to be divided between NCC and AT&T. Of the $85.00,AT&T paysINCC'$ 17.00 (20%) leaving net revenues to AT&T Media Services of $68:00. Throughout the audit period, AT&T deducted Agency commissions and ,National Rep Firm fees from the Gross Revenues ofAT&T Media Services. Agency commissions are. found under general ledger Account 3511 and National Rep,Firm Feesare found,under account 3513. In 1,998, the'media division', then TCI Media Services,'included account. 3511 and 3543 on their monthly P&L' "in addition to a gross revenue figure from which accounts 3511, 3513 and out-bound•!contra:.accounts were backed out (See Exhibit I) Out-bound contra accounts involve,revenues applicable to cable systems outside of the TCI/AT&T'•network and therefore represent legitimate exceptions to "gross-revenues." Moreover, beginning in February 1999 AT&T completely omitted these codes'from(the P&L and began reporting only "net" revenues going forward. CSG requested actual. figures-tor-commissions (GL 3511) and Rep fees. (GL 3513) but`they. have not been provided as of this date: Consequently, AT&T based franchise fees paid to the City of Petaluma on net numbers and not-gross: • CSG concludes that "netting" of agency commissions and Rep Firm fees contradicts the definition of Gross Revenues:defined in the Franchise Agreement. To correct for this, CSG created a spreadsheet adding back agency commissions and' National Rep fees. Therefore, we have projected Gross Revenues,based on historic averages (See-Exhibit J). This analysis concludes that AT&T underreported. $283 142:90 of advertising revenue due to deductions for agency commissions and National Rep. fees resulting in a$14,157.15 franchise fee liability3: As'a means ofdetermining`the reasonableness of this audit conclusion;--CSG contacted the Cities"of Alameda Oakland, Berkeley and Contra Costa County All of these cities have recently conducted franchise; fee audits:, CSG confirmed that franchising authorities in Oakland and Contra: Costa County made similar findings related 'to: advertising revenues. In interviewing the actual audit staff; Roland Smith; Internal Auditor, with the City of Oakland and Bill Morgan, CPA and auditor'for Berkeley and Contra Costa County, the decision to ,allow or disallow Agency co`mmission-s and National Rep. Firm fees was contingent on the respective" cities' definition` of gross revenue.. Oakland, having the largest. advertising; revenues of the group (most: subscribers) has concluded 'that AT&T should pay'franchise fees in,Oaklandbased.on gross revenues (not<net).- Oakland„reviewedtheir findings with the City''Atforney'and'Will 2 Thisifigure islbased on-actual figures;for,commissions and rep. fees as provided_by Kristine Kinne, • AT&T`Media Services, Den'er, CO. s Our audit conclusion: further adjust advertising revenues.by factoring the additional 20 subscribers' found omitted(from the[proration,formula used by'AT&T'in calculating advertising revenues: RPT00012:001:FINA'L.doc Communications Si pport'Group, Inc. ©`2000 Page 10:oPJ4- - AT&T PETALUMATRANCHISE FOUR, H YEARPERFORMANCE REVIEW . . SECTION"1:1 ,FRANCHISE FEE AUDIT SEPTEMBER-I -2000 be releasing their report to the City Councirshortly. Contra Costa County is also in the draft stages' but4as"clear that certairtrietting-of revenues;should not be allowed. . • CSG recommends that the City consider joining Oakland'in presenting a'unified position and responding to any Challenges which might be made by AT&T related to this issue. • Additionally, further liabilities related to advertising revenues exist for the first two • quarters of 2000. As this goes beyond the term of this particular audit, CSG recommends the City complete-a reVieW'of'advertising freVenues for this period. • HomaShoppinci Channel-Commissions AT&T carried only one home shopping channel QVC, ,during the audit period. Upon a comparison of franchise fee worksheets to:general ledger'entries, AT&T was found to have 'properly accounted 'for home shopping revenues. However; AT&T used a proration formula that did not take into account the-20 .subscribers omitted from our address reVieW.--CSG-addit tbnclusiorfs correct-fof-rthiS ornision. • Program Guide Upon a comparison of franchise fea,vvorksheets:taigeneral ledger entries, AT&T was found to have properly accounted for program guide revenues. 'However, AT&T used a proration formula that did not account the 20 subscribers mentioned above:. CSG audit •Ask . conclusions correct for thisbrnision. • Other tricot-fie • Beginning in 1999, AT&T includes late charges in this category. All entries were tied to the general ledger. No, additional audit-work is necessary. Bad Debt ". AT&T remits franchise, fees to the City based on revenues billed (less bad debt). Consistent with our findings from audits in other'cities, AT&T in Petaluma avoids the potential issue of estimating bad debts expense by not:including-a bad debts reserve.in,.. its franchise fee calculation Instead.; AT&T reduces its revenue by the actual amount of accounts written. off each month.' Corporate policy is to Write off all ,abcounts ihat'are unpaid after 60 days, at which time service to the nonpaying subscriber is canceled. The recovery is automatically generated 'following application of a payment or credit adjustment to an account with a written-off balance CSG noted AT&T actually records all recoveries to the billing system to generate the actual gross recovery amount This • figure is added back to gross annual receipts-as collections and is included in the franchise fee calculation. The collection agency fee is then deducted from the revenue • in the bad :debt 'allocation account: CSG verified the gross collection amount and net payment to AT&T where- possible for the period July 1 , 1998, through December 31 , 1999. No additional audit work is necessary in'thisarea. • ( Horhe Revenue Beginning in Debbi:fiber, 1997 AT&T (then Tel) began, offering high speed internet access services via cable modems under the product name @Home. All @Home subScription.abtivityfis-tracked using a billing system similar to that used by AT&T for its cable television 'subscribers, however the two systems are independent. Additionally, billing, and customer services, such as installation and technical,support, are handled RPT00012•001.FINAL.doc -CommunicationfSupport Gioup, Inc. @,2000 Page 11 of 34 AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW • SECTION 1.1. -FRANCHISE'FEE AUDIT SEPTEMBER 1, 2000 • - v • ia a separate division of AT&T from that ;of the cable television,division, Therefore, ,separate financial documents were obtained'and reyiewed'related,fo @Home revenues, Upon a review of @Home revenues, we found no ;accounting discrepancies.worthy additional auditing (See table below). • Petaluma,'California • @Home, Revenue:Analysis:Report Date ;Financial Summary,Report Franchise Fee Revenue Report _ Difference • (Net,Revenue). December-1998 $86;998:56 $$6;99$.:56, $0:00 March-1999 _ $63;506:56 , , $63,507106 June-1999 $64200.45 $64',200:46 • 40:01 September-1999 • . ,$70;715.55 r r $70,715'55 $0.00 December-1999 '.$80;228.99 . $80,228199. , ,$0.'00 There'',was,a revenue reallocation of $36;59,1.68 in December from Sonoma to Petaluma. However,;.. given. the fact that 20 subscribers were identified to have been .incorrectly allocated to the County"'s Agent 20, vs'. Petaluma's Agent 10; CSG recommends further audit work.be performed by the Citylin determining whether any of'these 20 subscribers review;to @Home since December, 1997. Depending on the results of this; .40 additional additional franchise fees may be owed the City from.the County. • Clearly; _s shown in :t1,7,ie chart below, @Horne revenues. are ;growing and should continue&to be audited ih subsequent yea'ret •Home Revenue Analysis Comparison May and,June•1999_to-May and,June 2000 'May 99 Jun-99. May-00 Jun00 -%tchange @Home•Revenues $6,2747,1:$1 $64';200,14641.04;33.04.$.09, 62.66.: 170.66% Review Of Auditors Report From 1998 Transfer — Digital .Services and Franchise Fee Revenues:. CSG reviewed and .analyzed,general financial findings reported by, the City's previous consultant, C2 Consulting (a. subcontractor'to the Buske Group), performed in 1998 as part of the City's°transfer.. CSG reviewed letters.andidorrespondence between the City, . , • TCI, AT&T` and the Citys consultant related to the Aransfer: Based;on our :re-View; of documentsaupplied'by the City the;outstandiing issues during the transfer weref a) 'Underpayments of franchise fees due to itemization of franchise,fees (e.g. 5th - Circuit Court-decision in :Dallas vs. FCC regarding franchise;fees on :franchise • ,fees). •b) ,Potential underpayment ot.:revenues from new •services such as digital Iinteractive,services (@Home). • RPT00012.001-F,INAL:doc £ommunicationsSupport Group, Inc. ©2000P .Page 12 of'34- • • AT&T PETALUMA.F,RANCHISE{FOURTH YEAR PERFORMANCE REVIEW . SECTION 1.1 =_:FRANCHISE''.FEE'AUDIT SEPTEMBER'1, 2000 It appears from the transfer agreement (and its various cash settlements) that reconciled underpayments related to frandhise`fees on franchise fees and other findings made by the;auditor. The transfer agreement also required AT&T to pay franchise fees on @Home revenues in its:4th quarter 1998:payment to the City. CSG perused AT&T's financial_ documents toy confirm and validate compliance to the transfer agreement. In _ our review, we found that AT&T,. consistent with the transfer agreement, made an adjustment for @Home revenues- in the 4th 'quarter 1998• which properly included revenues from digital services and going forward paid franchise fees on franchise fees consistent with the Fifth'Circuit Court of Appeals debision in City of Dallas v. FCC, 118 F.3d 393 (1997); . 1.6 INTEREST CALCULATION Interest on unpaid `liabilities should 'be paid to the CO., Given the complexity of the various items, and given• that some items predate the audit. period (subscriber,. omissions) we have not included a ;detailed interest table'. However, we recommend ' that the Finance Director and City Treasurer determine exact interest.amounts based on months.. The City ishoLild 'examine, the terms of its franchise or consult with the City Treasurecand City•Attorney regarding interest terms and final :amounts owed the City. 1.7 CONCLUSION . The following table summarizes the findings of ou r a_ udit and totals franchise fee liabilities by category Franchise Fees OwedAJuly, 1„-1998'to December 31; 1999 . �w,'���.��m sir`•. r:.k., � ��Fi<�.`„��'4.'a�.” .� ..?�.snx;~���`�;:,�.'�1998w, :. <<.�= `.1989,�^?�.�. TOTAL Franchise Fees From Omitted Subscriber'Revenue $240:00' $480;00 OMITTED SUBSCRIBER TOTAL:' :$240 00 $480:00 $720,00 Franchise Fë'es3From Late Fees 2. $842'33 $0.00 LATE FEES TOTAL?! I : $842 33' • `: 1 . $0:00 . $842:33 Franchise FeesFrom Trip Charges $66 30 $0.00 . . TRIP;:CHARGES TOTAL';'a ,' $66 30, $0:00 $66.30 Franchise.FeesiFrom.Advertising $2;,1':52:22% $12,004.93 ADVERTISING TOTAL: "4.4:$2,152.22i) +''$12,004;93 $14,157.15 Adj. Proration For Revenues from Advertising, Home Shopping,;Program Guide $20.90 $49.41 Prorauon°Adlustinent?,!. $20 90: _,c. ,,, ;$49:41 TOTAL. FRANCHISE FEES DUE $3;321.75 $12,534.34 $15,856.09 We are ofthe-opinion that additional revenues have also been underreported during the period January 1 , 2000 to present related to subscriber count omissions, advertising and home shopping; We also recommend an audit be performed to determine whether any of the 20 subscribers subscribedtto @Home. Finally, as stated late in section 4.0 of this report, CSG recommends the .City or Petaluma Community Access Corporation (PCA) perform a detailed audit of payments.made by AT&T to PCA for the three year period beginning July 1 1997 to dune 30 2000. END SECTION 1.0 RPT00012:001:FINAL.doc Communications Support Inc: ©.2000 Page 13 of 34 ., i AT&T PETALUMA FRANCHISE FOURTH YEAR,PERFORMANCE REVIEW SECTION 2.0 - FRANCHISE:COMPLIANCE AUDIT SEPTEMBER 1, 2000 • 2.0 OVERVIEW= FRANCHISE COMPLIANCE AUDIT CSGs compliance auditfound AT&T insubstantial compliance withmost:franchise requirements. However, certain compliance issues were:identified. This-report:focuses on'items that either.require additional clarification in order todetermine compliance, or items'which we conclude as of the,date of this,report in,potential non-compliance to the. terms and:conditionsof Petaluma''s"franchise agreement_ 'For a;complete listing of all findings, please refer to;Exhibit B of the compliance audit binder — Franchise Compliance Chart. • 2.1' METHODOLOGY During the months of.June and July 2060, CSG performed the;fdllowing:. • 1: Conducted•,interviews with City management staff pertaining to issues of ,performance and non-compliance; • 2. Reviewed City°documents regarding AT&T performance; Conducted interviews with ShirleyGulbransen, Area Director,; and David Kerr;, Government Affairs, On issues pertaining to customer serviee • 4. Performed an on-site inspection of AT&T's customer service'call ;center; 5. Co Upileed.a compliance checklist of, municipal code and franchise agreement e q ents (see Exhibit B of the compliance audit binder); including- amendmentsregarding customer service; 6. Performed audits, sought additional information, including FCC research,•and • compiled findings. • 2:2 FINDINGS • _M.. ' ,ran-all; CSG reviewed 146 items of compliance pursuahVtothelerms-end conditions of the franchise agreement. CSG found AT&T to 'be in: compliance, or isubstantia compliance (depending on nature of performance criteria).with 134 items. Major items found,in compliance included requirements for:insurancecertificates, bonds„ and letter ofcredit (see exhibifs C, D and Eof the compliance audit binder), CSG found AT&T to be in non-compliance, potential non-compliance or conditional compliance, to 12 ,items. Section '2,4 of this :report offers' suggestions; and recommendations for correctiverneasures, CSG determines AT&T to be in:non-compliance to one issue,.pertaining to provision of quarterlyreports in a'form agreed upoh,by`the City and the 'Grantee:- • • RPT00012:0011FINAL.doc CommunicationsSupport Group, Inc. ©2000 Page`14 of34- AT&T PETALUMA'FRANCHISE FOURTH`YEAR PERFORMANCE:REVIEW' SECTION 2 p iFRANCHISE cOMPLIANCE,AUDIT . SEPTEMBER 1,'2000 2'}3 COMPLIANCE ISSUES. ' - 'ITEM 1': Pursuant to Sedtion 24 BOOKS' AND• RECORDS -- REPORTS AND • RESPONSES TO QUESTIONSsubsection:24.1;; The Grantee shall provide; the following .reports quarterly,, in a form agreed upon between the City and 'Grantee,: at the time it is scheduled to make its Franchise fee payment . Finding: N'on-compliance To the best of our knowledge, these reports;are not being provided in the form consistent with the franchise :agreement. :A report was requested, but not • provided. ITEM 2':• Pursuant to Section 7:4 MAINTEN'ANCE':AND COMPLAINTS, subsection 7,4 , • (B): • Written;complain.ts concerning'billing, employee courtesy (respecting employee/employerconfiden'tiality)„programming, safety Grantee's operational policies, outages, signal quality and service disruptions, snail be recorded The Grantee will maintain Record's of complaints for three (3) years: Copies•of the complaint Records shall'beprovided to the City on request .Finding: Conditional Compliance, Potential Non-compliance: CSG inspected outage.records customer complaint files, but our request for a • written description of AT&T's compliance log methodology has not been provided: ITEM 3• Pursuant to Section 7.5 •Non-discrimination and Equal Employment subsection (A)'Statistical reporting'&FCC notices"to'Grantee: Throughout. the term of this Franchise, the Grantee; shall fully comply with the equal employment opportunity rquiements of federal, state, and local law and, in particular, FCC rules and regulations relating thereto. Uponrequest by the City, the Grantee shall furnish the City a copy ofthe Grantee's annual'-statisticall report filed with the FCC, along • -with proof of the Grantee's annual' certification of ;compliance The Grantee shall- i immediately notify the City in the,event the Grantee is at any time determined by the FCC not to be in compliance:with FCC rules,;or regulations Finding: Pending showing of compliance: • CSG inspected AT&T's FCC files but found the current-year's report not available for inspection. CSG'�requested'report, but it was not provided ITEM-4: Pursuant to Sectfon 8 SYSTEM FACILITIES. ;EQUIPMENT AND.. DESIGN (8,1)(C)(2) Institutional Network:Design: Under Phase II, which shall be•implemented between the third(3rd) and fifth(5th) years ' after the effective date of the Franchise,. Grantee shall install,and activate•the software and equipment required to integrate telephony/data transmission and interactive capability into its system so that the subscriber network may accommodate future PEG and Institutional Network uses in the City of Petaluma, through dynamic spectrum , management technologies or its equivalent. The technological capability described • above shall be provided to all public schools and City occupied locations, that are passed by` the cable doinmunicatien system. If such dynamic spectrum management RPT00012.001.FINAL,doc CommuriicationsSupport..Grouq'Inc.,:©,2000 Page 15 of 34 . . • AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 24- FRANCHISE COMPLIANCE AUDIT SEPTEMBER 1, 2000 • technologies are not commercially available:and, are hot jipancially,feasible, Grantee may petition the City;ofPetaluma for: (a) relief from implementing, such feChnologies, or (b) a 'deferral of the implementation of such ttechnologies If scab-El relief from implementatiOn or :deferral bccurS, the Grantee shall be obligated to provide the capabilitias and Headend equipment described above in Sedtions8..1C, and 8 1 b,1 to all public schobIlanekCity;occupied locations,within thePranchrse area Finding: Conditional Compliance: Gene Beatty and Dave DeorseyindiCatect,that the City elected to pursue other telecommunications options rather than contract with AT&T for deployment and maintenance of a fibehtietviOrk: According to AT&T techniCargaffiand,Confirrhed by City staff, active AT&T's fibers connect Lucchesi CommUnityCenter, City Hall, the Access Center, and the 'School bistnct,office. The City Hall'fiber run includes = ,fibers,. 'but only two are presently lit. An additional City building, Water and • Power, was installed with 2 fibers, but these were never lit hour fibers feed the Access Center. The School District hired AT&T to install'2 fibers'to the„Distnet'S Main adioniSticatiOnpuildinp and four additiOnal school sites Since,the City is,in its 5th year of the franchise'term, CSG suggests the City hein•a.diSedssion. with AT&T pursuant to this section. 6f:the frahchise to inter-pit-et the meaningYOf the requirement '!Grantee shall install and .activate the software, anck.equipment required].to integrate 'telephony/data transmission and interactive capability into . its system so that the subscriber network may accommodate future !PEG. and Institutional Network uses in the Qity. of Petaluma through dynamic spectrum • managethent, technologies or its equivalent " This is unique and ,Lincleat language: We consider the ianguage potentially advantageous to the City and the Access Corporation, but Without a'historical perSpettive, we fihd:it'difficult to determine,compliance. ITEM 5• Pursuant to Section 8, SYSTEM FACILITIES, EQUIPMENT AND DESIGN subsedtion13.1`0 System' ExteriSibn. Pan A: - The,,Grantee shall build its :C:able System so that it is able to provide service'to all areas lOcateciwithin the City limits as they a*Isteddn the effective date of this Franchise The Grantee must build the Cable ;System so that 'it can extend service to residents, including'residents located in areas.Whieh.may• be annexed in the feitOrb in accordance with Section £31n3.213: Line,Extension Requirements. Finding: Potential Compliance: During the audit, three issues regarding extension of service.develdped, Central Downtown, the City Airport, and'Corp. :card'at Hopper Street CSG recommends . the City conduct further study of these issues to determine whetherAt&T should extend *Service pifsilantlosectiOn&lQ,System Ektension. • a RPT00012:001.FINALdoc CommunicatioosSuppoit'Groupioc. ©200O Page 16 otlfl , ' • AT&T PETALUMA FRANCHISE FOURTH YEAR'PERFORMANCE REVIEW SECTION 2.0 - FRANCHISE COMPLIANCE AUDIT SEPTEMBER 1, 2000 • ITEM'6: Pursuant to Section 8, SYSTEM FACILITIES EQUIPMENT AND DESIGN subsection 8.14 Ascertainment of Programming part A:- I At minimum during years'four (4),-eight ,(8), and twelve (12) of the Franchise, the Grantee,shall conduct,a systematic customer survey of;the needs, interests, ,and preferences ofi.the subscribers within its Franchise Area The Grantee shall'report to the City the resultsof the Grantee's,survey and any actions taken, or to be taken;'by the Grantee pursuant thereto. Finding: Compliance; Pending: CSGconfirmed that a.survey was performed, The-survey summary report was requested, however AT&T-has not provided this.document to validate the surveys results: ITEM'7: Pursuant to Section 24 BOOKS AND 'RECORDS -- REPORTS AND RESPONSES TO QUESTIONS' subsections: 24.1, (B)` 24.10; 24:2 (A); Within ninety days after.the close of the'Grantee's fiscal year, the Grantee shall submit a writterrannual report, including, but not limited to, the following information: 24.1(B). a 'financial, statement of the Petaluma system, including a • • statement of income, balance sheet; and a statement of sources and applications of funds'which the chief-financial officer of the Grantee states is true and accurate; and 24.1(C). the annual report, if any of the Grantee; or each Affiliate, which controls, owns, Or manages the Grantee'and issues anannual report. 24.2(A) a summary of the previous year's:activities in,the development of its cable system in the City, including, -but...not limited to, additions, deletions, or improvements begun oridiscontinues during the reporting year services initiated,or discontinued, number of Subscribers (including . gains and losses), homes passed, and Miles,of cable distribution plant in service (the'summary Shall also includeua comparison of any construction, including cable system upgrades, during the year with any protections previously provided'to the City, as well as rate and charge increases . and/or decrea Ses"forthe Previous fiscal year); .- Finding: Pending Compliance: David Kerr attested Mai these reports have 'been faithfully submitted, but CSG's request for a sample showing has not been provided. ITEM 8: Pursuant to Section 27 Performance Monitoring' subsection 27 2 Grantee Cooperation: Grantee,Cooperation: The Grantee shall cooperate:in the fourth, eighth, and twelfth year reviews, including by submitting reports on the state oPcabletechnology. Finding: Potential Non-Compliance: • CSGr has made repeated requests for this information but it has not been ' provided (See Exhibit S of the compliance,audit binder, letters to David Kerr and David Dyke). While it is understandable that personnel changes at AT&T, e.g. RPT00012.00LFINAL;doc Communications Support Group,,tne. ©2000 Page 17 of 34 AT&TPETALUMA FRANCHISE FOURTH'YEAR PERFORMANCE REVIEW SECTION 2,0 -LFRANCHISE COMPLIANCE AUDIT S w EPTEMBER 1:2000: David Kerr<'s departure, would have some. impact on AT&T's ability.provide the • requested documentation, it':is difficult to understand why the request itself was completely overlooked: • • ITEM`9: •Pursuant to Exhibit A Customer Service, of the franchises ordinance:' Section 2,:subsection 2.2.3 Operating Hours: Under normal operating conditions, ninety=seven percent (97%) of cols to the:Grantee, as measured on an annual basis, will not encounter a busy signal or delay, in;.reaching,a customer ,service representative or, any automated answering egaipmeht.. The term "normal operating conditions" means those service':conditions,that are-within the control of the Grantee. These conditions that are not within The control.of"the Grantee include, but are not limited to, natural disasters, civil 'disturbances, power 'outages, 'telephone network outages;.''and severe or unusualt Weather conditions: Those conditions, which are ordinarily within the control of the Grantee include but are not limited to special promotions, pay-per-view events rate increases'„ regular peak or seasonal demand periods andImainteTance or Upgrade of the:cable system. Finding: Potential,Non-compliance or Compliance Pending:: CSG performed numerous random calls into the.Petaluma cus tomerservice•line, • and found general compliance by AT&T 'to this standard. 'Additiona. CSG . requested- telephone system, statistics to support AT&T actual Compliance. to these•telephone standards;.but:these were not provided. Finding: Potential Non-Compliance: ' This :line has, proven intermittently:busy when tone phone ,not.used, indicating that people with rotary phones might not be able to get through. Additionally; CSG requested telephone system statistics to support,AT&T actual compliance to these telephonestandards, 'b'utthese werehot provided: ITEM iloi. Pursuant to Exhibit A section 2 Locat Operations, subsection 2 2 Telephone Service Part72'2:4 and-FCC Customer Service •SUBPART H GENERAL OPERATING' REQUIREMENTS -SECTION 76:309 Customer service obligations. Consumer Service Standards Telephone Answer "Trite (C)(ii): Under normal operating conditions, 'the telephone answer time by a customer service representative, inCluding wait tier e_ and time required to transfer the ccalt, shall not exceed thirty'seconds when the connection is made: These standards.shall be met no less than,ninety percent of the time, under normal 'operating conditions; measured.on•a . quarterly basis. Finding: .Potential N'on;compliance orCompliancerPending:,. CSG performed numerous random'calls into the Petaluma customer service line, and found general, compliance to this standard. However, CSG requested telephone system statistics, to support AT&T actual compliance- to these • -telephone standards, but these were not provided. • RPT00012.001.FINAL.doc Communications.Support Giouq•Inc. ©2000 Page,48'of.34 • AT&T'PETALUMA FRANCHISE F,OURTH YEAR PERFORMANCE'REVIEW' SECTION 20- FRANCHISE COMPLIANCErAUDIT ' SEPTEMBER 1, 2000 • Finding: .Potential.Non-Compliance: This-line 'has proven intermittently busy when tone phone not used, indicating , that people with rotary phones might not be able to get through. Additionally, CSG, requested:telephone system statistics to support AT&T actual compliance to these:telephone standards, 'but these were hot ITEM 11: Pursuant to FCC, Customer Service Rules,Title s47'SUBPARTH - GENERAL OPERATING` REQUIREMENTS' SECTION '76,309. Customer service obligations, Consumer Service Standards Telephone Answer Time (C)(iv): Under.normal operating,conditions, ;the;customer will receive a busy signal less than three (3) percent of the time. Finding: Compliance Pending;, • TCl/A.TT should submit telephone Statistics from its quarterly reports to determine compliance with the requirement that no more than 3% of callers receive busy signals. measured on a quarterly basis during the past quarter. , CSG recommends. a review of these statistics Statistics requested, but not . provided. ITEM 12: Pursuant to FCC Customer Service Rules' Title 47 SUBPART H - GENERAL ' OPERATING REQUIREMENTS 'SECTION 76:309 Customer service obligations (C)(2) Consumer Service Standards Installations, outages and service calls: Under normal operating conditions, each of the-following four standards will be met no less than ninety five (95) percent of the time measured oma quarterly basis: (1) Standard installations will be performed within seven (7) business days after an order has been placed'.. "Standard" installations are those that are. located up 6:1125 feet from the existing-distribution system. (2) Excluding: c it o s—b o d ontrol- of the �operator;_the cable operator begin Working "sere nterruptions" promptly and in no event later than-24 hours;-after' the interruption becomes known, The cable operator must begin actions to correct other service problems the next business day afterTotification of the service problem':. (3) The "appointment window'` alternatives for,installations, 'service calls, and other installation activities will be either a:specific time or at maximum, a - four-hour time block during normal business hours (The operator may ' schedule service:calls and other installation activities outsides of normal business hours for the express convenience of the customer.) (4) An, operator may not cancel` an appointment with a customer after the close of busiriess,on,,the;6usiness dby prior to the scheduled appointment. •• Finding: ,CompliandePending: TCt/A TT should provide the.City with service call statistics for the past quarter to Y p q determine compliance with FCC standards. • RPT00012.001:FINAL,doc• CommunicationsSupport.Group, Inc.'©2000 Page 19 of 34 • AT&T PETALUMA FRANCHISE FOURTH YEAR,PERFORMANCE REVIEW SECTION 2:0 - FRANCHISE COMPLIANCE AUDIT SEPTEMBER 1, 2000 • Partof the reason AT&T has been.unable, to,substantiate compliance to these items is staffing turnover at the company -.For years, the City's contactfor governmental affairs has been Mr, David Kerr: Mr. Kerr departed the company without any, noticeto City staff or CSG'on July 3 .2000. ,AT&T representatives from other offices are:temporarilyfilling Mr- Kerr s position and delays have been caused as the ,Cityand CSG determine who is ultimately'resporsible for answering remaining.audit questions. For example, CSG requested.certain from AT&T in a,meeting with David Kerr. on June 1'9 22000, In a letterto Susan.Ritchie, dated July 12, 2000 and in a letter to',Sue Levitin dated'August 22; 2000 (See Exhibit of the compliance audit hinder). Asof'this writing CSG has not yet receiveditne requested;records.. For a complete listing of compliance 'issues please see the 'attached Petaluma Franchise Compliance Issues Chart, ExhibitA ofthe compliance audit binder. 2.4 COMPLIANCE RECOMMENDATIONS 1) CSG suggests that AT&T correct',anyissue of non-compliance determined bythis audit. • 2) CSG recommends that the ,City find AT&T to be in default of the franchise.for failing to provide required:4franchise-mandated docum_ entation- 'to substantiate compliance. Once this documentation ,is submitted, the City can determine . whether AT&rhas.complied with all franchise:provisions. 3) CSG recommends the City review the terms of the :Performance Bond and determine whether the current amount is sufficient or. should-be increased: to meet the 10%o requirement stated in Section 13 of the'franchise 'agreement(see exFiibit D of the compliance audit binder. _4)_ �CSGrecommends the City conduct further study. of Central:Downtown and,Cor yard at,Hopper Street. to determine level of connectivity. prov.idedlin those areas. 5) Scrutiny of AT&T's, Petaluma franchise has yielded suggestions and recommendations. At the forefront, the City should recognize that since it ' possesses the first cable system of its kind in the area, Petaluma is in a leadership position in terms;of telecommunications implementation. This allows the City of Petaluma the opportunity for some: experimentation with these, new technologies Break new ground so to speak. 'Therefore, GS:G„recommends'the -. City of Petaluma make a• strong effort to utilize the technology provided for advanced.functions such'asi ' - i) Teleconferencing and distance leaning u) eographic G lnformation.Systems(,GIS)` Ili) Live broadcast of City council meetings Via.the Internet iv) Archival: and streaming of live and recorded'Government meetings via the Governmenttweb�page. • • END SECTION TWO RPT00012.001.FINAL.doc Communicationst,Support,Group, Inc. 0 2000 Page 20 of:34-. AT&T PETALUMA-FRANCHISE FOURTH,YEAR PERFORMANCE:REVIEW SECTION 4:0 -,000NCIL'MEMBER.ISSUES SEPTEMBER 1 2000 3.0 OVERVIEW-- COUNCIL MEMBERS'ISSUES 3.1 'RATE REGULATION The City Council' requested that CSC comment in our report regarding the issue of whether the City could 'regulate'basic_cable rates. :Mr. Beatty, the City's Assistant City • Manager, confirmed during our audit that the City completed the necessary paper work and was certified by the Federal Communications Commission to regulate rates back in 1993 or 1994'. 3.1.1 Process And Decision Factors: Under FCC rules, in order for the City to implement rate regulation, the City Council must first. adopt, an ordinance or resolution stipulating the City's authority and procedures to do so and provide the cable company;notice of its adoption of the rate regulation authority ordinance. Unless the City adopts the necessary resolution or ordinance and provides the necessary notice of-certificati'on to the cable operator, the operator has no obligation to submit the necessary rate forms. We have assisted several cities with this ordinance or resolution process and will be happy to draft the language of this ordinance for this purpose as;add-on work,, if requested. 3.1.2 Rate Regulation Considerations: There are a number of factors (some practicat, some policy related) to consider in determining whether to,,become,a rate regulatory authority.. A few of these issues are . discussed below in-question and answer format. 1) What does rate regulation allow the City to do? The FCC first codified rate regulation policies in 1993 following the adoption of the Cable Television Consumer .Protection and Competition Act of 1992 at ;Section 623 [47 USG Section 543] - Regulation of Rates. In general, the City can regulate rates charge.Vor basic cable subscriptions rates charged for equipment _ used to receive cable signals(converters and remotes),. and rates charged for • ' • 'installation 'services. FCC .rules' require cable companies, subject to basic rate regulations, to submit to franchising authorities an application to adjust rates. Rates can be adjusted quarterly or annually depending on the form used The FCC provides structured forms for completing;applications known as Form 1205, • 1210, 1220 and '1240. Most companies, including AT&T, opt 'to: adjust rates annually using Form 1205 and Form 1240., 2) Whatare rate regulation time requirements? If a cable company; plans to, raise rates in a regulated community, the company must notify the City ninety days in advance of a proposed adjustment. This .establishes an administrative.advantage over non=regulated communities where the notice requirement isi only 30 days. Once the forms are submitted, a franchising authority accepts a fiduciary responsibility to review the accuracy of the forms submitted by the cable company. The City has two time windows. The first, is a ninety-day period to determine the reasonableness of the company's rates prior -to the rates taking effect; second. is a twelve-month statute of RPT00012.001.FINAL.doc Communications Support Group; Inc. ©2000 Page 21!of 34 AT&T PETALUMAFRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 4.0 - COUNCIL MEMBER ISSUES . SEPTEMBER 1,1000 • lithitations from receipt of the formSlo determine,reasonablenessKof the rates and •orderrate adjustments and,rafunds.as needed. Most cities 'find the initial ninety-day period 'too short to review the forms and determine 'reasonableness, and usually take up to :a year to make a final determination of reasonableness. 3) What is•the administrative burden related to rate regulation? On average? it takes up, to 60 hours of either a trained staff member Or a professional Consultant to perfcirrn, a cursory review of the both the Form 1205 (equipment and installation rateS).andAlie•ForM 1240 (besidrate'S)oand"torender are opinion regarding reaSonableriessi, ,Additional, hours are needed to request additional information frorrrthe,cable company, challenge the company's figures, and adopt a, resolution ;determining, unreasonableness or to. order refunds (as. necessary). We estimate, from our:knowledge of California clients and cities, that a city the Size of Petaluma could likely;Spend between $5::000, and $7,500 per year in consultant costs related to routine enforcement of the FCC';'S rate rUles. The number jumps to the range of $20;000:10 $30,000, when a,'City performs detailed audits and adopts a rate order having the effect of the ' proposed rate to a prescribed1evel and determining whether-refundsereMeeded. 4) What happens if the City receives the relevant forms from an operator but fails to 'take-action within the subsequent'twelve months? If a city takes receipt of a company's rates forms and fails to take .aCtion within twelve months from receipt, the company's proposed rates are approved by defaUlt. 5) Are rate,filinq'S'the same betWeen Cities? NO: Only.when tbrfimunities are served from the same Headend and with similar channel line-ups, similar aged systems , and :similar franchise terms, will a company scibrriit filings with Siitilar;'data Trie'figrii-is Zifrifairi information specific to each cable system such as programming expenses franchise mandated costs, costs of upgrading the system, etc. Therefore, the filings AT&T produces . for Petaluma will be:different:froth the filings produced for Santa Rosa or Rohnert • Park. This explains why FietaluMa: with its advanced system (offering more channels, and services; such as cable !modems, community access 'center, and telephony,) will have higher rates than surrounding communities. 6) How many neighboring-cities areftate-regulating aUthbrities? Calistoga, Cotatl, Rohnert Park:, Santa Rosa,,,Sonoma; St Helena and allycitietf -- Mann County, except' Novato, conduct some form of annual rate regulation • activity. • • • RPT00012:001:EINAL.doc CornmuniCaiions Support Group,-Inc. ©20O0 Page122'of 34 AT&T'PETALUMA FRANCHISE'FOI.RTH'YEARPERFORMANGE,REVIEW SECTION 4`.0 - COUNCIL MEMBER'ISSUES . SEPTEMBER 1, 2000. ' • 7) Is there a benefit in working togetherwith tither cities? Yes, When communities are served''from the same Headend, or when'the rates ,set:for these communities are common and determined by the company using • the 'same Form 1240 and Form 1205, there are practical benefits of working together. In the case of cities;in Mariin and the group of Sonoma 'County cities listed above (except Santa Ro"sa), regulatory expenses are shared based on subscriber populations This:leadssto cost,savings for any single entity, with the smallest cities benefiting the.'most. Petaluma should consider participating with adjoining cities in this regard but keeping in mind that its costs may ' be proportionately higher given Petaluma's,. size and Petaluma's separate FCC Forms due to:its distinct Headend' 8) Are rates likely to be higher Or ;lower between regulated and non-regulated communities? Years ado, the answer to'this 'question was a,cesounding yes. However, during the past three years (culminating with the :FCC's withdrawal from regulation of ' the expanded basic`tiers in March of 1999) the answer is not so clear. On June 15, '2000 the FCC,released a comprehensive report on cable industry prices. In this report the FCC looks at ,issues of competition and regulation on rates and compares changes in prices charged,by companies; between 1998 and 1999. • They sampled rates for basic cable, combined basic, expanded basic, and converters between systems, Controls were used to separate data for systems ' facing,competition from other multi-channel video programming providers and for . systems that were<eitherodrtified to regulate'rates'or not. 3.1.3 FCC Cable Rate Rata The following tables illustrate;some ofihe FCC findings: Table 7. Averages; Unregulated, Noncompetitive Group Monthly 7/1198 `7/1/99 I.' 1Change % Change r BasicService Tier ( T) $12.59 -.$12:51', C $0.22? ' 1'..7% Cable Programming Service Tier (CPST) _ $14.1'-1 $15143 , $1:32,,--, .". ,9 4%* Programming Services (BST;& CPST) $26:70 ; $28 2‘.., . $1.54 5.8J° Equipment(Converter & Remote) $2:55 ' $:2.7.1 .,:" $0:16,`' 6.3%* Total: Program'&Equipment Charge ___._ '.'$29.25 :$30-1951;•.:' $1:70" '.;5:8010*-'. - Number`of.Channels; 7/1198 ::7/1/99 $ Change l -;%'change: Channels`. (Broadcast-&Satellite) _ .46 5 ' 49:4 ;NA _ ' ;6'2%*. Charge per Channel , $0 66 ,, $0 66 $0:00- 0:0% ' Channels: (Satellite Only) 32'9 35 5 NA 7,9%* Charge pet-Satellite Channel, .$0.97 -$0.95 .=$0:02 -2.1% I I . RPT00012:001.FINAL doc Communications Support%Group Inca©-2000 Page 23,of 34 . • AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 4.0 - COUNCIL MEMBER'ISSUES SEPTEMBER 1, 2000 Table 8. Averages; Regulated, Noncompetitive Group - Monthly Charge' 77/1/90" . •. 7/1/99 % Change Basic Service Tier(BST) • . .$121.18; : r:$0:15:1:3 11 Cable PrOdriffirriiii07Seriiibe;Tiel(CP,ST) 0:9%!,HLH ProgramtiniMOSeNleds'(BST,'& CPST) Lr:$V88if; 1,6:8%tE Equipment (Converter, Remote)_ Total:,Prograrn & Equipment Charge ;, Number of Channels 7/1/98Y;;r:E '...:1:Charige,122,,;')/(1Change:„: 'Channels: (Broadcast & Satellite) 51.11;;11^:!f: Charge per Channel — :lir-c$0!6$:AQ Hi3/.2% (ChanTrel . (Satellite Only) • - ` 135'.4-: • 36.6 -• ':NA ' '3:4% Chairge per Satellice":,Ctrahnelk $0:03 ;3:2%.• Table9. Chargesitor Ottidi Regulated Services, Item ' Competitive rN,GroiP I • NoncoMpetitiVecGjoup-. i7/1198F' • •:7/1/98- ,VoChgly Installation `;'? :1_742W :$34:94'r Disconnection :.Y1017%7, iRecdmietticili :6%44 $21;89 :;:1111:0P/6:;;;,' Tier Change ,;..4$8(42; r ' ...$855, • • Additidnal 01:itlef is$92i.. 'Anbasterisklderotee a'::statiSticalljisigOifioarWorialijeLdverjiine. See Attachment B16,for StaildardrerthrS, for the repe-rted,averaOes. 1111 • These cherls;reveal that, in general, ,rate regulated communities enjOy, lower rates for .basic ,service ter; but correspondingly' those communities pay higher rates for e*Patideditia.SitYSerVide tier. • 3:1.4 Comparison Petaluma Vs: National;Averages Petaluma'S.rates:illuStrate'this trend in the reverse. The following two charts compare, petaiarna-rateS WitIttha'hatibrial4averaOes determined by the FCC. - " - - - - L• Chart- Petalurna:ratefl Natio-n-al,Oera4es, Uniegiilated;,NencompetitiVe Group Pet: Nat !pet. Nat.. Pet. Nat., Pet. Nat. Mohly nt • 'Avg. Avg. . $ $ % ft°. :$. 7/1/98 7/1/99 7/1/99 7/1/99 Change Change change change Difference Difference. BasicBST)rService • ' ' • $121.,59 :$15:00:$12.81, 1$1.27-i $0.22 i9{91%. 1.72% Tier:( (CPST) ,;$13901,$1.4.11 '$15.43 $1.32 4/.28* 8.55% 'ti!($0.4) i (BST &: $?7.63, $26.70 !..$29.56':,$28.24: .rt193.: $1.54 ;6'.83%: 545% :` ".138% 'CPST) Equipment (converter ,:$355. $155 ;$2.71 r$0:30: $0.16 1107% '5.90% $0.:14 &..Remote) ' ; •• Total: $31.18, $29125' l$33:4;1:$30 95 $2'.23: $120 ;'7.21%; 549% 53 ' 1-1:71 /o' .].. RPT00012.001.PINAL.dot 'ComrhunicationsSupport-Group, Inc. ©2000, Page:24 cit:34 - . . AT&T PETALUMA FRANCHISE FOURTH'YEAR PERFORMANCE,REVIEW SECTION 4.0- COUNCIL MEMBER ISSUES SEPTEMBER 1, 2000, Chart- Petaluma ee Channel rates 80National'Aveiages' Pet Nat Pet. Nat. Pet. Nat. Difference Pet: Nat,. , Difference Avg' Avg' ChengeChang ° , / /°e . 7/98 7/98! 7/99 7/99 Change Change channels Channels Channels: ,i (Broadcast y56'' 46.5 60' 49.4 $ ,4 2.9 6.67% 5.87% Satellite) z _ Charge per $0 56 $0.66 $0.56*$0 66 $0 0(/ $0.00 .0.00% 0,00% ,} -0 10 0 00%• Channel _ . G= Channels: fi ' (Satellite 28' 32.9 32', 35.5 4 00) 2 6 12 50% 7.9% 1 40 H4.60%:, Only) Charge per -1. Satellite $1 11 $0.97 $1.04! $0.95 ($0 07)($0.02) :6:66% ,-2,10% -0.05 '4.56% Channel , 7 _ . 3.1.5 Comparison Analysis From these'comparison charts, basic rates in Petaluma are'significantly higher than the national average (as discussed above, due to Petaluma being 'a recently upgraded and • more advanced system and in part to being an unregulated community with its own • access corporation). Petaluma enjoys a lower than average expanded basic (CPST, which the FCC calls Cable Programming Services Tier): When the two tiers are ' combined, we see that Petaluma `rates for 1999' are lenly 3% higher than the national average. However, equipment-rates in ;Petaluma are.significantly higher than'national averages ($3:85 vs. $2:71). regulation might result in lowering equipment charges. Overall, in 1999, Petaluma's combined rates for service and equipment were $1.70 'higher than the national average when comparing to the FCC's average figures for non-competitve cable systems (combining regulated' and non-regulated in one group). In terms of cost per channel, for two years-,in a row, the second chart above shows that the average price per channel' in 1999 was lower than,.the national average ($0.56 vs. $0.66 respectively). Additionally, per channel costs for satellite programming in 1999 actually went below 1998.. levels and remain lower than national averages. Satellite programming is defined heraasc;cable'services other than off-air broadcast channels. Finally the two-charts ;above track the percentage of increases in rates between 1998 and 1999. .Here we see further distinction between-Petaluma and national. averages. The data shows that Petaluma's total percentages ,exceeded National averages by 1.7%, for percentages in other unregulated,. non-competitive communities •(see chart below). .Please! note however, that the percentage channe in basic only rates in Petaluma outpaced national averages by 8.2%. Equipment`'percentages also outpaced • national averages by 5.17 0 RPT00012.001.FINAL.doc- Communications Support'GrougJnc. ©1000 Page 25 of 34 AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 4.0 - COUNCIL MEMBER ISSUES SEPTEMBER 1, 2000 Comparison Of Changes In Rates Between 1998 And 1999 • " Between Petaluma And National Averages Inn Unregulated, Non-Conipetitive (As A'Percentage Of Change) • • 12:00%- • ter: 10.00% ���` 8.00% I 'y • 6.00% ' �� >, g —€ as d� '' Lk l o br.}. �gi, � rY ki r t x i 4.00%- �' S� � , �e � k � r�r""k`R ri. 2.00 � 0.00% ' ° 'Nat. % Change 5 ea kc o a` Petaluma % Ch ange� G plN e QJ� ; • 3.1.6 'Conclusion: Rafe Regulation Data suggests that rate regulation,may lead to lower charges for Petaluma's basic-only subscribers and may lead to lower equipment rates to the:entirersubscriber population. But as the.+data clearly shows, regulatedcities experience higher expanded.basic rates. Since approximately 92% of Petaluma subscribers take a combination of .basic and • expanded basic, these higher expanded basic rates •may ;offset the :benefits of rate regulation for the.majority of Petaluma's subscribers. Nonetheless, as+a policy matter? the City could ,consider rate, regulation an important,_and useful measure in_protecting -the interests of the approximately 1,401 Basic only -subscribers some .of'whoin are of - low or fixed incomes. • 3'.2 PETALUMA COMMUNITY-ACCESS' is,AT&T Properly.Accounting For Retaluma,Access Funds? CSG found that ,AT&T'-s billing,:sy,stem tracks both the ,number ofrsubscribers,and the amount collected from subscribers related to the $2.00 per month: 'access, fee contribution. It was determined during the audit that AT&T`provides an option each month o bier to checkwhetf er,or not•they would like:to be charged:the access .fee. Once as ubscriber selects the option not'to be;charged, the subscriber is entitled to deduct $2'.00 from the :aiticianti he or she owes for that month. • "Going forward, according, 'to AT&T's• local customer ser"vice staff, AT&T automatically deducts the amount:from future billings: If a subscriber .fails to make a choice, ;the subscriber is . . _'j charged'fhe'fee by default. Since,AT&Tjustbegan the practice in May and June 'there • - RPT00012.001.F,INAL.doc- Coin nunications SupportGroup, Inc..©2000 Page 26 of 34 • AT&T PETALUMA:F,,,RANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 4,0 - COUNCIL MEMBER ISSUES ; SEPTEMBER41,2000 111, was limited information to audit. We only audited the methods and amounts being charged, not the accuracy of AT&Ts payments tb PCA. We reviewed.billing system=records for 1999' (See Exhibit K)and made comparisons to second quarter 2000 infornation,provided by-AT&T (See chart below). Community:Access Revenue Analysis': Years 1999 and 2000_ _ May1999. June•1999 May 2000 June.2000 % Change Access Revenue. ;$;A561-.'.49„ '.$;:.8,370:424 .,$2-9;450:0_0".Y; .$26,670:90-318:62% . As'of June 16, 2000, according tb'records provided by AT&T, 6,768 subscribers opted not to pay the access fee. Given the amount`of publicity this,issue has experienced, it could be expected that the,number of subscribers electing the no answer will change • over time John Bertucci, PCA Executive Director, nofed that a subscriber had contacted him regarding th •fact.that-the,subscriber had checked no, but,was still being charge the amount ofthe fee. The City should further study this problem. We are of the opinion'that the default "yes" is of great advantage to the City. Under the current billing method, subscribers are given an opportunity to•adjust opinion each month. As it currently stands, a subscriber can request no:once;and never-be charged again, unless he/she affirmatively selects the yes box in subsequent months. This is also true for those who check,yes Further study should,begivenato determine the manner in which • AT&T'handles those cases where•a subscriber checks no at time but later selects the yes box in a subsequent month, (and vice versa) fiow`will the billing accounts be adjusted going forward? We recommend that the City and PCA continue routine checking of the billing practices of AT&T related to the access fee. Since we .are not aware of any previous audits,:it would be prudent for RCA to perform an audit AT&T's access contribution payments:forthe'past three years: • 3.3. UTILITY UNPERGRO_UNDING - Does AT&T Participate With•Utility Undergrounding Coordination'? During our technical inspection, CSG inquired,of Mr., Dan Rurnrill, AT&T Area Network Manager, how AT&T participates in the utility coordination of undergrounding,, Mr. Runirill indicated=that AT&T regularly, sends a representative to meetings related to underground construction cpordmation.'with the other utility companies. AT&T also • participates with USA (Underground Service Alert) and dispatches a representative whenever necessary to protect its"underground assets. AT&T has no issues with the City regarding the underground, districts (Rule 20), and supports the efforts of the City • related to underground •standards. CSG interviewed the City's construction manager, Rick Skladzien, who also indicated that there are no issues specific to AT&T's compliance or participation in undergrounding cables. , However; Mr. Skladzien indicated that the•:City has general concerns for all utilities'performing work in the right of way; that proper construction practices,`resurfacing,,.and traffic control be followed. • RPT00012`001.FINAL.doc, Communications Support Group, Inc: ©,2000 Page 27 of 34 AT&T PETALUMA FRANCHISE FOURTH'YEAR PERFORMANCE REVIEW SECTION 4.0 - COUNCIL MEMBER'ISSUES SEPTEMBER 1, 2000 • 3.4 PEDESTALS A secondary issue exists related to'construction practices of AT&T related to:pedestals. AT&T has a total of 28 'fiber nodes in:!Petalbma. •:Roughly 55% of these InOdes are located on telephone ,poles and 45% of these are in ground:mounted: pedestals. Additionally, in order to provide standby powering equipment for its 'telephony. customers, AT&T Cable has installed Large cabinets containing up to six `12=volt (automotive type) batteries for backup power for their system Although ,none are currently in use in Petaluma, some cable companies, including AT&T (in roiher communities) are 'placing in the rights,of;way 'propane gas powered generators, for Stand-by power. As a preventive 'policy, CSG recommends' that the City'periodically'inspect the safety -condition of these.cabinets.;and;generators ;(;when put;in use)for'the'following reasons_ 1;) Public;safety related to"the storage of'flammable:fuel in the vicinity of-possible vehicle collisions. 2) Public safety related to the size and location of the structures and susceptibility to traffic/pedestrian collisions. , 3) Aesthetic concerns-about the size/location/screening ofthe:sfructures. 4) Noise pollution related toi3he',decibel level of the generators. •' • • END SECTION'3.0 • • • • RPT00012:0o1.FINAL.doc CominunicationsSupport Group;Inc. ©2000' Page 28 of 34 • AT&T PETALUMA FRANCHISE?FOURTH`YEAR PERFORMANCE REVIEW SECTION 4.0 - COUNCIL MEMBER ISSUES; IP- SEPTEMBER 1, 2000 4.0 OVERVIEW= TECHNICAL COMPLIANCE AUDIT • • CSG's-Technical review of AT&T revealed that AT&T met all FCC proof of performance technical requirements. However, the audit:further revealed certain areas of technical deficiency as noted in this report. The technical review was?conducted by the following individuals: / John Risk, President, Communications Support Group, Inc. ✓ W F Kohutanycz, CSG Consulting Engineer ✓ Dan Rumrill, AT&T Area Network Manager ✓ Tom Comyns, AT&T Maintenance Technician 4.1. Purpose And Methodology: CSG provided consulting time for the purpose of evaluating the company's technical performance under Section 8" of the franchise agreement. CSG performed the following: 1) Drafted parameters and.sent correspondence requesting Review of AT&T's Winter 1999 Proof'of Performance Teat'(ExhibitA) 2) Inspected:AT&T Winter Proof of Performance Test Results.(Exhibit B) and AT&T's 1'999 Cumulative,Leakage Report(CLI) to Signal Quality i) Signal leakage ii), Power supply construction and safety iii) Any other iteme.deemed pertinent to reliable system operation 3) Observed Signaf,Quaiity.at::Selected City Tap Locations: ✓ City`'Hall _ -- ✓ Lucchesi Community Center ✓ Petaluma Community Access 4) Reviewed deployment:of advanced services (suchas digital channels, Video On Demand (VOD), High Definition Television (HDTV)),assessed compliance to the industry's "open cable standard s, and other issues of technical readiness given today's-state of1he.art. ' 4.2 Findings' • - As is discussed in 'greater. detail below, AT&T designed, constructed, and operates a 750 MHz Hybrid Fiber Coax (HFC!')i design system in !Petaluma. This design uses fiber optics to transport signals to multiple neighborhood locations ("nodes' ) where the optical signals are received and re-modulated as standard Radio' Frequency; (RF). There are g' 28 nodes in Petaluma serving approximately 627 subscribers each Section 27 of the franchise agreement requires AT&T to 'submit a 'state of cable technology' report. As stated in the Section 2::0 subsection 2.3 of the Compliance report, AT&T has repeatedly • RPT00012.`001.FINAL.doc Cornmuriications SupporfGroup, Inc. ©2000. Page 29`of 34 AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 4.0 COUNCIL MEMBER ISSUES SEPTEMBER 1, 2000' • been requested to submit a report ,(see letter attached at Exhibit C' hereto): As of the date of "this report„ this important 'state of cable technology report has not been s `ubmittedi • 4.3 FCC.`Winter 1999 WinterProof'OUPerformance'Testing; CSG reviewed AT&T's, winter 1999 FCC. Proof of Performance Report;, The Federal Communications Commission (FCC) requires that all cable companies perform a "Proof of Performance" .test twice per year. These tests are required to g y .. be:conducted in the enerall hottestand<coldest months,of the year.. Typically this would be winter and summer." AT&T performed its Winter 2000 test between February,and April 2000. Review of winter proof includes following:areas, of concentration: FCC _ Section Nature of Test•Require ment _ FCC 76:605 (a)_(2) Aural'Carrier. Frequency' F0036 605 (alp) Minimum Vi'sual`Signal;?Levels FCC76.505,(a) (4) Visual'Signal°L'evelChanges ;'FCC 76.605•(a) (4) (i) Visual Signal ' .Adjacent` Channel ;Relationship PT • FCC;7;6.605 (g(5) Aural:Carrier;Levels _ • FCC 76.605 (a) (6) :In Band,Response FCC 76.60 J (7) Carrier to Noise - FCC 76.605 (a) (8) Composite ,Triple Beat/27° , Order/Cross:' [Modulation FCC 76.605 (a)](1:0) Hum::: e;•,' .. Our review of AT&T's year 2000.formal FCC test reports suggest the following " AT&T:met:all FCC.Proof_of Perforriiance:requiremenfe' 4.3.1 'Signal Quality CSG selected three locatiionsto perform field tests. These;locations;included':City Hall, Lucchesi Community Center, and the PCA''s Media Center at Casa ,Grande' High School. As noted below, field :tests duplicated portions;of the FCC requirements. Carrier to Noise and signal levels, at the Access Center Community Center met or surpassed, FCC 76.605 (a) (7): 'The amplitude:characteristic.shall be: within a range of ±2 decibels from 0.75 :MHz to 5.0.MHz.above the lower boundary^frequency of',the cable television channel, referenced to the average of the highest and lowest amplitude s vvithinkhese'frequency boundaries.' • However, signal levels at City. Hall did not:meet requirements of FCC 76.605 (e) (3): 'The aural,center frequency of the aural carrier mustbe 4.5 MHz .L5 kHz above thefrequency of the visual carrier •at the output:of the modulating or processing equipment 6f a cable ;television' system, and at•4he'subscriberterminal.' • RPT000,12;001 FINALdoc Communications:Support Group, Inc. ©2000 Page30"of34' • AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION CO - COUNCIL MEMBER ISSUES SEPTEMBER 1, 2000. This failure has likely contributed to the City Hall test also missing the FCC requirement (76.606 (a) (7)) for Carrier to Wise-ratio (C/N). . 4.3.2. Signal Leakage: CSG also reviewed AT&T's latest cumulative leakage index report The FCC requires that all cable companies perform a, comprehensive Signal leakage test on an annual • ' basis. This test is designed to assess the amount of.stray Radio Frequency(RF) signal leaking from the cable system (if briy): This is'done to that the cable system is maintained* an electronically closed system and signals do not interfere with licensed off air Userstif the same frequencies.. _ Review of AT&T's FCC Form 320 filing, ' Basic Signal Leakage 'Performance Report," pursuant to FCC 7611605 (a) (12), showed,that the fly-over-method as opposed to the ' ground-based-method was being employed for the formal filing This method is on of two methodologies allowed under-Form:320 and provides-Jan accurate and timely review • of signal leakage. Ground based methods are ndrrhally, used as a follow up for identified problem areas. The current CLI (Cumulative Leakage Index) fly over testing indicates that/the system is within all pertinent FCC standards. No major leakage was found and minor leaks have been repaired. • 4.3.3 Power Supplytonstruction & Safety:: Visual•spot check of pbWensupplies in the City reflected "good engineering practices in • installation and operation. There are a number of areas, in the City where there are facilities for the current system on the same pole jas_an earlier over-built system The City may wish to investigate if both facilities are currently being used or if the older one may be 'removed fromjihe poles. 4.3.4 Observation at City Tap Locations: . In order to ascertain compliance with this'Issue"tesis and 'observations were made on overall signal levels andt,arrierJto NoiSe ratios (C/N) on the three PEG channels, Channels 26, 27 and 28. 'ThesedbserVations and tests were conducted at the Access 1";" •• Center— Casa Grande High;School, City Hall and Community Center l; These tests allowed both Observation' of the total signal being originated and their overall performance-iafter relay to the Headend, reprocessing and insertion on the down stream subscriber network. ThetiN,figures are,a measure of the actual and perceived quality of the Signal;Ythe-signal level figures representithaiarnount of signal that AT&T is currently delivering to'each location.• • • RPT00012.001.FINAL.doc Communications SupportGroup,, ©2000 Page 31 of 34 • AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW SECTION 40 - COUNCIL MEMBER,ISS-OES' SEPTEMBER .200 Measurements From City Tap Locations: (Control. City Hall City Hall Lucchesi Access Access Room) _ (Control • (Council Community Center w/o two-way Room) (Chambers)* Center splitter FCC-114 ini rn: : t - - 0db-nv • atSubscriber Terminal 2:5 Cli 2f Si gnal Level_ ,fc702CdErriVirc:4':. 41\‘.0j dB MN 11 t.j? ,•:71711,15'dernYr:•:;. Ch:71:0Sig-nal'Level ,a-f;lj,tdBrtiktg; 43 d b Channel,265,Q/N Channel 2TC/N Channel 28i.C/N: •;43!5,dli • • •• .112.1n1Ch61/4W. 1 Bold numbers:denote failures. . DBrny=:unit of measurement: decibel ratio of Volts to one mill volt. * Low signal levels did-nor allow an abeurate.:Ca'rlier to Noise5(C/N) measure-in-ant. As shown in the chart; levels at City Hall do not meet the FCC ife4Uirecrents for minimum signal level at the subscriber terminal, 0 dbmV.. While.the.rponifor in Council Chambers displayed this',signal level, AT&T should do additional testing to[determine if signal levels at the tap serving City Hall meet the t3 dBmV FCC standard for the end of a 1007.4cOtidrop. If tills( IS not the tese, the tap values need to beiadiustec . tf, tap levels • are sufficiently high then !adjustment/modification/repair of the Internal distribution system[in City'Hall'rriay'be required 4:53.5 Public, Educational and Governmental (PEG) Access Channels:, In addition to the,C/N'tests:•performed at the three City locations, City Hall, Lucchesi' Community Center and Petaluma Community Access (P0A) 'performance,of channelsWas-Aalstre,ylevved at the system kepi:lend, RF measurements were made at twO OoiritS inithesightel - • • • (1,) On the inbound side of the fiber interconnect wittrthe,AbceSsICenter; after , the fiber receiver conversion to RE... • •(-2) On the outbound side of the subscriber network after up-conversion to channels 26E27 and 28, • • Results,shOw'that the ikber-iriteraohnect and RF processing provide •a high;qualjtY link for the PEG'Channels The following chart on the following Oage,"etritaint',the'results,of these:measurementS. . • • . RPT00012.00tFINALi.doc Communicationa Support droup,inc. ©2000 page 32..of,34 AT&T PETALUMA FRANCHISE FOURTH YEAR PERFORMANCE REVIEW , ,SECTION 4.0 - COUNCIL.MEMBER ISSUES 'SEPTEMBER 1, 2000 Chart-PEG RF measurements In-Bound Out-Bound C/N Channel' -Channel . 3 2,y A y •52.6 d b . 6 rt i :;; y 60 0I d b 9 ;f ,, ' a 0x# 56.8 db '26 48.6 db aka ;Cra 27 49:,7 db r a1z ,t 28 44.1 db However, we noted .significant signal loss'' due to inferior ;splitters and cable. AT&T replaced the problem splitter and indicated willingness to consult Petaluma Community Access (PCA) for further corrective actions. We recommend PCA contact AT&T for the purpose of troubleshooting and building distribution.issues; Additionally, PCA General manager Mr. John Bertucci indicated that audio inputs at Lucchesi are not balanced 3:-conductor XLR type' but are instead an uncommon unbalanced 'banana plug' type, 'Since we have been told' that_Vi'acom performed the original install at the community center, CSG recommends ;AT&T be asked to assist •, RCA in replacing these jacks with 3-conductor XLR'type connectors. 4.3.6 Advanced services deployment: CSG also examined the system for AT&T's deployment of advanced services (such as digital channels, video on demand, high definition''television), assessing compliance with industry's "open cable' standards,, and other issues• of 'technical readiness given today's state of the art. • We found that AT&T is generally offering services comparable with the most advanced contemporary systems (in California)'. These 1riclude digital television (cable), DOCSIS cable modem Internet access near video on demand,, and cable based telephony Its 750 MHz HFC (Hylind•Fiber.Coax)'distribution system appears,to be well designed and constructed. Technology has,'advanced from its initial,construction and new equipment is now available with an 860: MHz upper frequency limit, but many systems continue to • program to 750 MHz or below based upon perceived subscriber interest in available programming (Cox.Cable Orange County, and AT&T'Fremont). Spectrum usage is vitally important.to cable operators as more advanced,services are offered on platforms of -limited capacity. Advanced services (such as High Definition Television, true Video on 'Demand)`and increased demand (new subscribers) for these , have the potential for creating capacity/throughput bottlenecks. As a result, we have requested AT&T provide-a reviewtf frequency spectrum usageas part of its technology , report — see Exhibit C. As mentioned above, AT&T operates 'a cable system with electronics capable of passing. 750 MHz'of bandwidth. Signals for the cable system originate via fiber optic RPT00012001.FINAL;doc Communications Support Group;Inc: ©2000 Page 33 of 34 AT&T PETALUMA FRANCHISE FOURTH'YEAR PERFORMANCE REVIEW SECTION 4.0,.-COUNCIL MEMBER ISSUES SEPTEMBER 1, 2000 Cable AT&T's Petaluma Headend, Certain signals,(related to;digital channels, pay services,.and digital music are generated from other AT&T facilities. The 'City`s three PEG access channels originate at,the•Access Center facility;and are connected via fiber into the table system at:the Petaluma Headend. The Headend site also serves as a processing local on'for data signals for AT&T's high-speed Internet and'voieetelephony, mbined'siignals travel over"fiber optic cable to approximately,28'nodes in neighborhoods'throughout'the city. ' Each node serves•approximately 627 potential customers. At each node the light signals are converted into electrical signals and delivered to the customer via coaxial cable. • The spectrum between 54 MHz and 550 MHz+,is currently used for analog video signals. A portion, of the spectrum :between 550 MHz and 750 MHz is being used for digital video, audio, and data signals. Telephony services ;use:8,MHz of capacity CSG has requesteda detailed description'of'AT&T'scable system frequency usage but^as of this date, no information,has been submitted,(see Exhibit C) 4.4 TECHNICAL RECOMMENDATIONS:' 1) :CSG recommends that the Cityrequest AT&T investigate signal'quality situation • 'at City Hall-and provide`corrective actions.. . •2) CSG•also observed'thatthe•recording format being used is inferior given 'today's . levels of technology used for PEG'production., We therefore recommend'that•the • City and Petaluma Community ;Access Center meet to confer about a replacethentschedule•for this equipment: 3) •AT&T and PCA should meet' to discuss rewiring the' routing and ,distribution cables in the Media 'Center''to •improve.picture quality and transmission back to AT&T's headend. 4) AT& 'should be asked to assist PCA in replacing the• audio connectors at:the Community.Centec: • END SECTION 4.0 EXECUTIVESUMMARY"TO FOLLOW • • • • . 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