COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING AND PUBLIC MEETING BEFORE THE COMMITTEE ON STREETS AND SERVICES - - - Room 400 City Hall Philadelphia, Pennsylvania Tuesday, May 16, 2000 1:30 a.m. - - - BILL 000121 - (Held.) Granting permission to Cavalier Telephone to construct, maintain, and operate a telecommunications system. . . BILL 000166 - Regulating the location, size, operation, and maintenance of newsstands on the public sidewalk. . . BILL 000183 - Authorizing Gino DeJesse to construct and maintain various encroachments. . . BILL 000213 - Authorizing the revision of lines and grades on a portion of City Plan No. 187 by striking from the City Plan and vacating the legally open portions of Belgrade Street. . . BILL 000218 - (Held.) Granting permission to Columbia Transmission Communications to construct, maintain, and operate, replace and remove a telecommunications system. . . BILL 000220 - Held at request of sponsor. BILL 000259 - Granting permission to Chestnut Hill Academy to construct, use, and maintain one water distribution line. . . BILL 000262 - Authorizing Whole Foods Market Group, Inc. to construct and maintain various encroachments. . . BILL 000263 - Granting permission to Girish Sanghvi, owner of newsstand, to construct, use, and maintain electrical service. . . PRESENT: COUNCILMAN FRANK DICICCO, Chairman COUNCILMAN DAVID COHEN, Vice Chair COUNCILMAN DARRELL L. CLARKE COUNCILMAN W. WILSON GOODE, JR. COUNCILWOMAN DONNA REED MILLER COUNCILMAN ANGEL L. ORTIZ COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 I N D E X Page Bill 000183 * Nancy Sen, Engineering Supervisor, Streets Bill 000213 * Paul Lonie, Survey Bureau Manager, Streets Bill 000259 * Nancy Sen, Engineering Supervisor, Streets Margaret Conver, Business Manager. . . . . . . Chestnut Hill Academy Bill 000262 * Nancy Sen, Engineering Supervisor, Streets Bill 000263 * Nancy Sen, Engineering Supervisor, Streets 12 Bill 000166 John Rocco, Chairman, Newsstand Association. . 23 13 Steven Peterscheim, USA Today. . . . . . . . . 26 Earl Rogers, Newsstand Operator. . . . . . . . 45 Howard Berman, Board Member, Newsstand Assoc. 51 Bill 000218 * John Cunningham, Right-of-Way Mgr, Streets 53 Robert Rockwood, General Manager . . . . . . . 55 Columbia Transmission Communications Steven Hire, Telecommunications Consultant . . 58 Columbia Transcom Christopher Boyle, Counsel, CTC. . . . . . . . 80 Bill 000121 * John Cunningham Right-of-Way Mgr., Streets 90 * Martin Arias, Director of Bus. Development 92 Cavalier Telephone John Young, Director of Sales, Cavalier. . . . 94 Dave Heffline, Chief Engineer, Cavalier. . . . 101 Harry Foy, Electricians Union, Local 98. . . . 182 (*- Also submitted attached written testimony.) Written Testimony Only (Attached.) Edward Neilson, Treasurer, Local Union 98 IBEW 3 5/16/00 STREETS, SERVICES - BILL 000183 P R O C E E D I N G S
Good afternoon, everyone. Before I officially open up these hearings, I just want everyone in the room to know that we will go out of order on the bills in front of us today because we want to deal with -- there are two or three bills that will require, I believe, a little bit more testimony than the other bills, so we will take those bills that are Streets Department bills on some encroachment -- I think there's one that has to do with an encroachment, which is a Streets Department bill 15 also. I don't suspect there'll be that much testimony except from the Department itself, and that will make things move much more quickly because we have a lot of City employees in here who can't wait to get back to work. And before we begin, I do want to apologize to those folks who are representative of the Newsstand Association and all of the folks affiliated with them for the confusion as to whether or not this hearing was going to be held today or not. I had been holding out up until 4 5/16/00 STREETS, SERVICES - BILL 000183 later yesterday 'cause I thought I would have some new amendments to offer to the bill, both from the Managing Director's Office and from the advertising industry folks that may have been helpful for Council in this committee during its deliberations on newsstand legislation. So because of that, there was a miscommunication on my part. I take full responsibility for that and I apologize for any inconvenience to the folks in the association or affiliated with it and also to my colleagues. So I apologize and I take full responsibility for that. That being said, I'd like to open up the public hearings on the Committee of Streets and Services. In attendance with me today are, to my extreme left, Councilmember Rizzo, Councilmember Goode, Councilmember Cohen; and to my right somewhere was Councilmember Clarke -- here he comes now. We have a quorum of five that is necessary for this hearing to proceed. The clerk will read the title of the first bill.
Bill No. 183, an ordinance 25 authorizing Gino DeJesse, owner of the property 5 5/16/00 STREETS, SERVICES - BILL 000183 1824 East Passyunk Avenue, Philadelphia, Pennsylvania, 19147, to construct and maintain various encroachments onto and over the east footway of 13th Street and the north footway of Passyunk Avenue adjacent to the property 1824 East Passyunk Avenue, all under certain terms and conditions.
Good afternoon, Chairman and members of the committee. My name is Nancy Sen. I'm an engineering supervisor for the Streets Department, and I'm here to testify on Bill No. 13 000183 on behalf of the Department. This bill authorizes Gino DeJesse, owner of the property 1824 East Passyunk Avenue, to construct and maintain the following encroachments: on the footways adjacent to 1824 East Passyunk Avenue; a fenced-in area for a Dumpster encroaching approximately 4 feet onto the east footway of 13 Street, leaving approximately 8 feet of unobstructed footway on 13th Street; and an electrified vestibule encroaching approximately 4 feet onto the north footway of Passyunk Avenue, leaving approximately 8 feet of unobstructed footway on Passyunk Avenue. 6 5/16/00 STREETS, SERVICES - BILL 000213 The Streets Department has reviewed the plans for these encroachments and has no 4 objections to the passage of this bill.
Thank you. Are there any other questions for this witness from the committee? (No questions.)
Is there anyone else here who wishes to testify for or against this bill? (No response.)
Hearing none, the clerk will read the title of the next bill.
Bill No. 213, an ordinance 16 amending Section 2 of an ordinance (Bill No. 17 980547) approved December 15, 1998 authorizing the revision of lines and grades on a portion of City Plan No. 187 by striking from the City Plan and vacating the legally open portions of Belgrade Street from Butler Street to Castor Avenue, under certain terms and conditions, by extending the time for compliance with the conditions stated therein.
Good afternoon, 7 5/16/00 STREETS, SERVICES - BILL 000213 Mr. Chairman and members of the committee. My name is Paul Lonie, Survey Bureau Manager with the Department of Streets, and the Department of Streets would like to offer the following testimony on Bill No. 000213: This is not an administration ordinance 8 but an ordinance requested by Mr. Leo M. Garonski & Associates, P.C., of 2700 East Butler Street, Philadelphia. The purpose of this ordinance is to extend the time period to legally close Belgrade Street to facilitate commercial expansion in the area. This ordinance is supported by the Department of Streets and is recommended to your committee for favorable action.
Thank you. Are there any other questions for this witness from the committee? (No questions.)
Is there anyone else here who wishes to testify for or against this bill? (No response.)
Hearing none -- 8 5/16/00 STREETS, SERVICES - BILL 000220
Excuse me. Did you want to testify? UNIDENTIFIED PERSON: No. 7
Okay. The clerk will read the title of the next bill.
Bill No. 220, an ordinance 13 amending Section 12-2409 of the Philadelphia Code, entitled "Towing Zone Location and Hours," by adding as a towing zone location the north and south sides of Green Street between 11th Street and 12th Street, under certain terms and conditions.
And there's no one here to testify? Councilmember Clarke, Bill No. 220, there's no one here to testify. Do you have any comments? It's your bill.
Thank you, Mr. Chairman. I'd like to hold that bill at this 9 5/16/00 STREETS, SERVICES - BILL 000259 point.
So noted. The clerk will read the title of the next bill.
Bill No. 259, an ordinance 7 granting permission to Chestnut Hill Academy, 500 Willow Grove Avenue, Philadelphia, Pennsylvania, 19118, to construct, use, and maintain one water distribution line, one sleeve with two telecommunication conduits, and one spare sleeve under and across Willow Grove Avenue east of Cherokee Street, all under certain terms and conditions.
Committee, my name is Nancy Sen, and again, I'm here to testify on Bill No. 17 000259 on behalf of the Streets Department. This bill grants permission to Chestnut Hill Academy to construct, use, and maintain underground water, phone, and spare conduit lines under and across the entire Willow Grove Avenue right-of-way at a point located approximately 460 feet east of Cherokee Street for the purpose of serving their playing fields across from the school building. 10 5/16/00 STREETS, SERVICES - BILL 000259 The Streets Department has reviewed the construction plans for this project and has no 4 objection to the passage of the bill.
Good afternoon. Please identify yourself for the record.
Good afternoon, Committee. My name is Margaret Conver (ph), and I'm the Business Manager from Chestnut Hill Academy, and I'm here to speak in favor of our ability to be able to water across to be able to water our playing fields. The playing fields are used by many members, and at the present time, we don't have any efficient way of being able to water them.
Okay. Thank you. Are there any questions for these witnesses? Councilmember Cohen?
To the person from the Chestnut Hill Academy. What is the purpose of this bill?
The purpose of the bill is to be able to run a water line and electric and other conduit lines connecting the two sides of 11 5/16/00 STREETS, SERVICES - BILL 000259 our campus across -- underneath Willow Grove Avenue so that we can run water from the main water pit out to a water pit in the middle of the field to be able to water our two soccer fields.
So the whole purpose of the bill deals with the question of making water available where it's not now available?
Thank you. And, apparently, that's the requirement that Chestnut Hill Academy undertake that work?
Does the City pay for the work or does the Academy have to pay for the work?
Thank you. Are there any other questions for this witness from the committee? (No questions.)
Thank you. The 12 5/16/00 STREETS, SERVICES - BILL 000262 budget of the City of Philadelphia thanks you too. (Laughter.)
The clerk will read the title of the next bill. Thank you. Thank you for your testimony.
Bill No. 262, an ordinance 9 authorizing Whole Foods Market Group, Incorporated, tenant of the property located at 929 South Street, Philadelphia, Pennsylvania, 19147, to construct and maintain various encroachments in and on the north footway of South Street and the east footway of Tenth Street adjacent to the property 929 South Street, all under certain terms and conditions.
Once again, my name is Nancy Sen. I'm here to testify on behalf of the Streets Department for Bill No. 262. This bill authorizes Whole Foods market Group, Incorporated, tenants of the property located at 929 South Street, to construct and maintain the following encroachments on the public right-of-ways surrounding the Fresh Fields Supermarket now being developed: seven brick- 13 5/16/00 STREETS, SERVICES - BILL 000262 faced planters on the north footway of South Street, two brick-faced planters on the east footway of Tenth Street, three metal bike racks on the north footway of South Street, and a metal pipe bollard located in the east footway of Ninth Street near Rodman Street. The Streets Department has reviewed the construction plans for this project and has no 10 objection to the passage of this bill.
Thank you. Do you happen to know whether or not -- I don't know if Mr. Rocco can answer this, but is there have any intention on the part of the owners of this newsstand to. . . I'm sorry, this is Fresh Fields, I apologize. I jumped ahead, apologize. Are there any other questions for this witness from the committee? (No questions.)
Is there anyone else here who wishes to testify on this bill? (No response.)
Hearing none, the clerk will read the title of the next bill. 14 5/16/00 STREETS, SERVICES - BILL 000263
Bill No. 263, an ordinance 3 granting permission to Girish P. Sanghvi, the owner of the newsstand located on the northwest corner of Tenth and Market Streets, to construct, use, and maintain an electrical conduit and an electrical service line and a fiber optic conduit and telephone service line in and under the public rights-of-way Tenth Street and Market Street for the purpose of supplying electrical service and telephone service to his newsstand, under certain terms and conditions.
Again, my name's Nancy Sen and I'm here to testify for Bill No. 263 on behalf of the Streets Department. This bill grants permission to Girish Sanghvi, owner of the newsstand located on the northwest corner of Tenth and Market Streets to construct, use, and maintain an electrical conduit and electrical service line and a fiber optic conduit and telephone service line in and under the public rights-of-way of Tenth and Market Streets for the purpose of supplying electrical service and telephone service to his newsstand the. 15 5/16/00 STREETS, SERVICES - BILL 000263 The Streets Department has reviewed the construction plans for this project and has no 4 objection to the passage of the bill.
Thank you. Since I've been involved in newsstand legislation for the better part of a year and a half, I know one of the questions or concerns that was recently related to me had to do with some locations in the City where over the years we have allowed newsstands to be installed but within, I think it's feet or something, from the traffic 13 signals. There's some restrictions on that. Are 14 you familiar with that? 15
Traffic signals? I'm not 16 familiar with that, but I'm sure the Code 17 addresses that. I'm not exactly. . . 18
24 feet, okay. I 19 didn't know if you were more familiar with that. 20 I'll ask the question.
I'm not sure of the number, but I believe there is a number quoted in either the regulations or the Code.
And, obviously, this would comply with that. 16 5/16/00 STREETS, SERVICES - BILL 000263
All right. Because there are certain intersections where, obviously, they're out of compliance --
-- for one reason or another. I'm not sure how that happened, but it did.
Yeah. This particular site has been existence, and they were just looking to upgrade to get the service.
Okay. But, again, I know there's some existing newsstands that they may want to upgrade. But they may not necessarily be within compliance as to the distance from the traffic device and the intersection.
And before we do the conduit installation, sometimes we may have to move them, and I want to make sure that if we do it this time, it's done right, whether it means being moved one way or the other a few feet.
Oh, most definitely. And I believe the good work that you did with a lot of 17 5/16/00 STREETS, SERVICES - BILL 000263 departments in the City to try to, you know, get the new legislation for the newsstand pretty much handles everything, that all the street furniture that you'll find that surrounds the newsstand, and surely, if there's anything that isn't addressed, the regulations will surely address them.
In reference to a fiber optic conduit service telephone line, is that something new?
I believe it's actually to run the lottery machines because they have to connect with a server at Harrisburg, so anyone who has a lottery machine has to have a phone hookup to. . .
Yes. That's what they're putting this in, to have a lottery hookup. 18 5/16/00 STREETS, SERVICES - BILL 000263
Is it a given -- and maybe you can refresh my memory. Every newsstand isn't eligible, because I remember we did pedestrian studies. Is every newsstand able today to have a lottery machine if they chose to?
The Streets Department only deals with okaying or making sure that the connection is constructed properly and doesn't interfere with any other utilities. I believe if you are applying for a lottery machine, you probably have to go through the State to first get permission. We don't get involved with that -- just the connection.
I think maybe I can clear that up. We -- from time to time, Council, on this type of legislation, had to deal with electrification, and in those locations where Council, the District Councilperson, or the committee was of the opinion that a lottery would not be beneficial to that intersection, we have 19 5/16/00 STREETS, SERVICES - BILL 000263 the right to put a proviso in there saying electrification without lottery. I mean, we can approve the electrification of it but a proviso that would prohibit a lottery from being installed. And that's what we've done in and around Broad Street, on the Avenue of the Arts, where they don't want lottery sales -- or any new lottery sales.
So I guess for the record, anyone that gets electrification, that's a prerequisite to get a lottery machine? In other words, anyone today that has electrification can get a lottery machine even if it would impede the flow of traffic at a particular intersection?
I think if they're electrified, they probably -- they'd have to still obviously get approval from the Lottery Commission whether sales -- but you're -- what I'm dealing with -- what I'm suggesting is new electrification. If the stand is not electrified today and they come before us for electrification, 20 5/16/00 STREETS, SERVICES - BILL 000263 then we have to make the decision whether or not we want that stand to be able to sell lottery tickets or not.
Mr. Chairman, in my involvement with the lotteries and newsstands, there was also a certain criteria associated with Harrisburg on the location. It has to do with the level of pedestrian traffic, the ability to sell a certain number of lottery tickets. I think initially they give these -- I forget the exact -- what you call them, but prior to you actually getting the actual lottery, there's these ticket sales that you just, you know, immediate payment. And then if you get a number of those sold out of that location, you then can qualify for the actual lottery machine. So there's a -- that criteria is regulated by Harrisburg.
But I also recollect that even though it would be a good location for a 21 5/16/00 STREETS, SERVICES - BILL 000263 lottery machine, that it was too good a location for the space available and there were some concerns --
-- about pedestrian foot traffic. I mean, the lottery people weren't concerned about the lines and the blockage of the sidewalk. So I guess there's two issues.
One, yes, it qualifies for a lottery machine, but then does it create a situation that blocks the sidewalk? And I remember -- I think we struggled with that around Fifth and Walnut or Fifth and Chestnut, where there was a --
Fourth and Chestnut. And then there was also an issue that if a person got electrification, that they -- automatically that did not include telecommunications.
There are a lot more newsstands in the inventory that have just electrification but they need that phone hookup to get the lottery. And the process is that the person who wants -- because the previous Newsstand Code -- I'm sorry, the new Newsstand Code that is being acted on by Council now includes a proviso that no 10 electric or telephone hookups can happen without the permission of Council. So the procedure is that the newsstand owner comes to Streets to get their location okayed, and we need to see a letter of sponsorship from the Councilperson in that district, and that would pretty much cover if the Council felt that it wasn't a good location for that.
So the Streets Department will continue to provide technical support to advise Council if a person at a newsstand location, let's say, wanted it electrified but they're not equipped with telecommunications but wanted a lottery machine. And part of the responsibility of the Streets Department or L&I -- I'm not sure who it would be 23 5/16/00 STREETS, SERVICES - BILL 000263 -- would be to determine whether there would be anything impeding the flow of pedestrian traffic. So you're telling me that that -- who's responsibility would that be?
That would lie with Streets. We would make sure that there's enough passage. Our policy is to have at least six feet clear for passage around the -- past the newsstand. And we also look at the street furniture right beside the newsstand that might affect queueing up, you know, to buy the lottery.
I suggest that someone go to the southeast corner of Broad and Chestnut today and look at all of the honor boxes that are surrounding -- or to the left of the newsstand that are surrounding the trash can. It's incredible. You can't see the trash can, it's a mess out there. But I would appreciate someone -- I was going to call your office today to see if someone could go out and check that situation now. It's a very hazardous situation. Are there any other questions for this witness? 24 5/16/00 STREETS, SERVICES - BILL 000166 (No further questions.)
Is there anyone else here who wishes to testify? (No response.)
Hearing none, the clerk will read the title of the next bill.
Bill No. 166, which was continued previously, amending Chapter 9-200 of the Philadelphia Code, entitled "Commercial Activities on Streets," by adding a new section 12 regulating the location, size, operation, and maintenance of newsstands on the public sidewalk; and by making conforming amendments to other sections of the Chapter, all under certain terms and conditions. Witnesses come forward.)
Mr. Chairman, Mr. Vice Chairman, members of the committee, and members of the Newsstand Association and its supporters, when we initiated this project --
Yes. My name is John Rocco, the Chairperson of the Association. This 25 5/16/00 STREETS, SERVICES - BILL 000166 is Howard Berman, one of our Executive Council members, Steve Peterscheim (ph.) from USA Today, Mr. Rogers, one of our Executive Council members. And this is Aaron Sommers, who's one of our architects. When we initiated this project in February of '99, our goal was to build the most attractive and the most functional newsstands that the City ever seen. We believe on December 18th of '99, we proudly presented our two prototypes, and we feel as though we achieved our goal. We hope that this committee will look favorably on our request to improve the working conditions of the newsstand operator and to improve the streetscape throughout the City at no cost to the taxpayers. On behalf of the Newsstand Association, we wish to thank all the City agencies that worked with us on this project. We also would like to express our gratitude to Councilman DiCicco for all his efforts, and we wish to thank the committee for its time here today. Steven? Steven.
Yeah, Steve 5/16/00 STREETS, SERVICES - BILL 000166 Peterscheim with USA Today newspaper. We're just here 'cause we wanted to mention -- I wanted to mention that USA Today has been a partial sponsor of this project with the Newsstand Association, and in prior meetings, there has been a lot of discussion about commercial advertising.
Steve could you get a little closer to the microphone.
There's been a lot of discussion about commercial advertising. And what we are here to basically say is that it is possible to get this program started without commercial advertising. John Rocco has told us, and we have confidence -- he has a partial sponsorship from us as well as some other publishers, and then along with individual contributions from the actual newsstand owner, they have the ability to put out 20 newsstands in time for the Republican National Convention. And I just wanted to be here today to 27 5/16/00 STREETS, SERVICES - BILL 000166 say that -- to ask Council to take a look at this bill. If advertising is an issue, commercial advertising is an issue, if we can hold that back, keep discussing that, and working through the Managing Director's Office to put a plan together to solidify commercial advertising, but until that's done, we can still put out newsstands 9 and get 'em on the street and get the street 10 corners cleaned up. 11 So if we could possibly see to it to 12 consider this amendment without the -- or consider 13 the bill without the amendment for advertising, we 14 would highly recommend it at this point in time. 15
Could you just 16 describe the location, or locations, where the -- 17 where you are initially willing to install these 18 stands. 19
When we first began 20 talking about it, John had came to us at USA Today and he first asked us to pay for the newsstands. And we just -- as a company, we're not willing to pay the whole cost for the newsstands, so that is why he then began looking to other publishers, and eventually commercial advertising came in because 28 5/16/00 STREETS, SERVICES - BILL 000166 that was really the way to get the newsstand owner a free newsstand, was to use to commercial advertising; otherwise, he's going to have to pay a little bit. So initially, the publishers of USA Today in general -- I can't really speak for the other publishers involved, but we look at -- the locations that we want to sponsor are solely based on volume of sales, and where we sell the most newspapers is in Center City. So the initial locations we looked at were in Center City; those were the ones we wanted to sponsor. Those happened also to be the locations -- but, of course, it wasn't all the locations in Center City because, still, some of the newsstand owners in Center City could not afford their contribution. So we initially came up with a list. John Rocco, the Association, New York Times, and USA Today agreed on a list of 16 newsstands where we were willing to put up our sponsorship and the owner had the money to make his contribution. Those were in the Center City area; I don't know the locations off the top of my head and you'll have to excuse me 'cause I didn't bring the list 29 5/16/00 STREETS, SERVICES - BILL 000166 with me.
I'm a little bit confused. You said there were newsstand 10 operators that were prepared to pay all or a part 11 of -- 12
A part, a part of the 13 contribution. USA Today and the New York Times 14 was going to help subsidize the payment for the 15 newsstand; we were going to pay a portion of it. 16
And would that have made it unnecessary to consider commercial advertising?
At that point, yes. They -- the newsstand would have been on the street, so they wouldn't have needed commercial advertising. The commercial advertising was to come in, they were going to put the commercial on those stands, you know, get the first stands out on the street, with the hope that the Association 30 5/16/00 STREETS, SERVICES - BILL 000166 could get approval for commercial advertising. And the way that we understood that it was going to work was that the Association would collect the funds from the commercial advertising and distribute that equally among the members so that the guy at, you know, Fifth and Market would make the same money on advertising as the guy at, you know, Fifth and Spring Garden, or whatever. And that money was going to use -- the Association would keep a portion of that and that money would then be used to help subsidize people who could not afford the newsstands and who the publishers were not interested in subsidizing. So it was a way to bring in cash flow so that other newsstands could be built. That's really where commercial advertising came in. For USA Today New, the York Times in the beginning, we just wanted to put some newsstands in Center City, and we wanted to see 'em there for the Republican Convention.
Well, I'm one of the Councilmembers that are very much conflicted about this issue. I've been very supportive of the newsstands. I think the design is great, I think 31 5/16/00 STREETS, SERVICES - BILL 000166 the concept -- some form of uniformity is good, it clears up a lot of old stands. But I -- I have great difficulty in accepting the notion of commercial advertising and dealing with the question of content 'cause I think -- I think it ought to be done without having to advertise everything. You know, I think maybe businesses in general ought to pay more taxes so that they don't have to do the advertising to collect the funding. I know the Newsstand Association has done a great job on behalf of the members and on behalf of the City in what they've done, but'm hoping that this can be worked out in some way without being involved in advertising beyond the advertising of the publications that are for sale.
Mm-hmm, and that's what we would like to see as well. I mean, we are not necessarily -- though we're not in disfavor of commercial advertising, we're really not concerned with commercial advertising, USA Today. It would be better for us, I guess -- I mean, if there was no commercial advertising, that would be fine for us. 32 5/16/00 STREETS, SERVICES - BILL 000166 But the bottom line is if you want -- the issue was that these stands -- Councilman DiCicco's main concern in the very beginning was, are these going to be everywhere? You know, there's what, 200, 150 newsstands in this City, can we get them on every street corner? Well to ask me that question, USA Today is not going to sponsor a newsstand on every street corner; we're just not willing to do that.
Not profitable enough for us and we just weren't interested in going to that level. Like I said, it's based on volume, it's where we can really justify our ROI and all of that kind of good stuff. So in order to get them on every street corner, the best avenue that John could find was through commercial advertising, that was really the only way to get these to the people who couldn't afford them. And so that's where commercial advertising came into play. 33 5/16/00 STREETS, SERVICES - BILL 000166 So -- and this is why we're kind of here today. If commercial advertising is that much of an issue and it needs that much more discussion --
A question of affordability. Every business has to start with some capital. Very few businessmen in the beginning have enough capital to put money forward to, you know, to put in entirely the whole capital, so they arrange to borrow it to pay it over time. Why is this business situation different from all other business situations, which require -- you know, the amount is a substantial amount, but spread over 10 or 20 years, you know, it becomes, I think, manageable by a business, in the same fashion as any other business, and spare the City the spread of advertising. People have a right to see a nice city, without always having flaunted in front of them the sale of some item or other. And in 34 5/16/00 STREETS, SERVICES - BILL 000166 consideration of the whole city, I think advertising ought not to be forced upon people. And when you're walking and there's a sign there, it's forced upon you, just like a billboard is forced upon. You and I don't think the people of Philadelphia ought to have to, when they walk downtown, see all this advertising. I think they ought to enjoy the stores, they ought to enjoy whatever else exists. And that's basically the reason: from an environmental point of view, from an anesthetic point of view, I don't think it helps the City to have paid advertising all over. And I haven't understood why you say they can't afford it. I know almost nobody can afford the lump sum immediately, you know, to pay in full.
I asked that same question of John Rocco many times. Us as a business, we completely understand that, and, you know, these are business people. That is not a question that I can answer. Like I say, as far as commercial advertising goes, USA Today is not necessarily a 35 5/16/00 STREETS, SERVICES - BILL 000166 proponent of commercial advertising. We just want to see newsstands on the street; we'd like to see them there however possible. You know, we want to sell newspapers; that's really all we want to do. We can sell more newspapers at a nice, attractive location. Maybe John wants to talk a little bit about the financial situation.
Councilman, thanks for your kind words in the beginning there, we appreciate that. There are a lot of men and women who are in this business who simply cannot afford to put out the sum of money that will required for a metal stand. Wood, maybe, yes; metal, no. We have a member here, Mr. Rogers, who can attest to that, and we're trying to help Mr. Rogers and many of our members who are trying to move forward with their lives, who maybe are just starting out or have had a bad time of it. They go into the newsstand business as a beginning point, as a start-off point. Many of 'em don't have the ability to secure loans or many of 'em don't have acquire the resources 36 5/16/00 STREETS, SERVICES - BILL 000166 necessary. For this particular type of project, half of our membership cannot accrue the amount of money that is required. And I think Mr. Rogers can say a few words in reference to that. Earl?
Excuse me, before you begin, is there any additional compensation that the newsstand owner or operator benefits from the lottery sale, other than the volume of tickets or the percentage on the sale? As an example, Councilman Cohen speaks to advertising, and he and I obviously have a major difference here; with a lot of respect for each other, we do have a difference. When you see some of the stands that are out there today and you have a 4-by-8 Pennsylvania lottery sign on a newsstand, you're not -- correct me if I'm wrong, is there any fee or compensation for the advertising of the lottery to that newsstand operator?
So the only benefit they get is if you sell the lottery tickets, you get whatever percentage of your 37 5/16/00 STREETS, SERVICES - BILL 000166 sales.
So, in effect, you're advertising for the lottery but you're not getting compensation for it.
Well, Mr. Chairman, I'd say, respectfully, it's part of the contract of the lottery.
So that you are paying -- you know, there is compensation in the form of these commissions that the State Lottery Commission arranges for.
But I guess my point I'm trying to make is that if you didn't have some form of advertising for a lottery at that newsstand, most people would continue on their way until they saw some billboard or something that indicates lottery tickets are for sale at that particular location.
And I think what we're attempting to do here is to do it in a much more tasteful manner in which it is less offensive to the visual effect enhancements or the visual esthetics of the streetscape, while -- because advertising -- we can argue back and forth whether it's necessary. I mean, there are some times -- I think it has to be necessary because I don't think you would see companies and corporations paying so much money to advertise if it didn't mean that that would create more business for. So them what we're trying to say is, yeah, okay, if you want to advertise, fine, but we want some compensation for it.
And that's where the compensation goes directly to -- these are little business people in terms of what their investments are, and these are people who -- I mean, they have a lot of conditions they have to deal with, with the elements; some days the 39 5/16/00 STREETS, SERVICES - BILL 000166 weather's bad and people don't come out and buy a newspaper. So this helps them create a better working environment for themselves, and I think it lends to the streetscape, an improvement of the streetscape. At the same time, they're advertising on a stand that certain types of advertising is permitted anyway, but they really can't drive any financial benefit from it.
This debate is not sponsored by any agency. (Laughter.)
But let me just say very briefly that my position is that the finest kind of streetscape is the absence of advertising, that that's the greatest contribution advertising can make is by not being present. There's no way in the world that City Council can do anything about the lotteries; we have no power. If we had power, I would be opposed to the lottery advertising, but you don't help the situation by adding to it. And that's simply -- I'm just telling 40 5/16/00 STREETS, SERVICES - BILL 000166 you my concerns. I know you're working on plans. I want the newsstands to operate successfully, but there is a price that I feel ought not to be paid, and that's a price paid by everybody in Philadelphia and all of the visitors when they come into the City, they pay the price of being compelled to have this advertising forced upon them, and that's my concern. I don't think all the people that come downtown ought to pay the price of having to view the advertising. And so at that point, we leave it. Councilman DiCicco and I have been dealing with this and trying to see what could be worked out in some way. So far, we haven't succeeded in coming to a mutual agreement. I just wanted to express my concerns because I understand that -- despite earlier concerns of mine, I understand there's a proposal floating around to even increase the size of the advertising beyond what had been originally proposed.
And that's part of the discussion at the last meeting.
And that's the reason why for the first time I'm stating what my 41 5/16/00 STREETS, SERVICES - BILL 000166 views are. I was hoping that if it ever occurred, it would be confined to a smaller area. I also was disturbed by the concept of the kind of advertising that might go on, and I find that instead of dealing with that situation, there's an effort to make it bigger and to broaden the scope of the substance. So I'm just making public, 'cause I've been wrangling with it, I have not wanted in any way to get involved in any public dispute, because I do recognize the contribution the Newsstand Association has made under the leadership of John Rocco, and I was very active with him and was promoting the concept of the Newsstand Association 'cause I thought it was important that they get together. They were not being treated fairly, it seemed to me, before. And I think since their association, they're in the position to better, you know, get fair treatment, and they're beginning to get it, and I'm very glad for that. So I'm just making that statement for the record. I don't want anybody to be surprised at any given time, but I do hope that there can be a solution with a minimum -- if I had my way, a 42 5/16/00 STREETS, SERVICES - BILL 000166 total absence -- of advertising.
Maybe we can include it into one of my former bills where we had banned political posters from being placed throughout the City, we could ban all advertising. Councilmember Clarke?.
Thank you Mr. Chairman. Mr. Peterscheim, you had alluded to the fact earlier that your ability to participate in the initial was based on the volume of sales 13 for USA Today and was it Time Magazine also? 14
New York Times? 16 Can we measure what the volume of sales are for 17 other accessory contents of the newsstands? I 18 believe there's magazines that are sold in 19 different newsstand. In other words, has there 20 been an assessment of the other volume of --
I mean, I would have no idea. I mean, we -- USA Today would not go through that; the newsstand owner would have to do that. If the magazine company is interested in knowing, you know, what John sells at 20th and 43 5/16/00 STREETS, SERVICES - BILL 000166 Market, then they, of course, can find that information. It's out there; it's just a matter of going and getting it.
Has there been an effort to touch base with the other publications?
To get them to participate in the program so we can expand that beyond 20?
We have Philadelphia Magazine involved, and he has -- and David Lipson, the president and publisher, has committed to five newsstands, that he feels his magazines are selling in those particular locations. We also have Investors Business Daily that has a lot of interest in the project also. So we're trying to bring this project to a broader level, aside from using the commercial advertising.
I know in some neighborhoods, some publications sell more than others.
And I guess what 44 5/16/00 STREETS, SERVICES - BILL 000166 I'm trying t say or would I'd like to see -- and not having known how much you are in a proactive manner to go out and solicit those other advertisements to participate in this program so we can broaden the scope throughout the neighborhoods because I know that some people sell things other than USA Today and the New York Times and Philly Magazine in other neighborhoods, the volume of sale associated with those other things are a lot higher, so I'd like to see them to participate in the program so this gentleman here could possible participate. You're at 56th and --
Councilman Clarke, I just want to address one point. You bring up a very good point in that there might be a possibility for some other publications to come on board. I can't speak for them; I can only know what we do. It's hard for a smaller publication to make this kind of an investment to an abstract idea or a drawing, which is kind of why we came here today. And I wanted to address to Councilman Cohen we really didn't to want to discuss 45 5/16/00 STREETS, SERVICES - BILL 000166 advertising today; what wanted to discuss today was, you know, if we can get the legislation passed, we can put newsstands on the street. 5 Once those 20 newsstands are on the street, then 6 maybe the other publications will begin to see it, 7 then maybe the effects are seen, and maybe the 8 sales will increase for the publications. Then 9 maybe, you know, John can get interest from other 10 publications to expand the project elsewhere. 11 But if the legislation doesn't go 12 anywhere, then nothing happens, and you're left 13 with what is on the books now, which is, anybody 14 who is made of wood can be shut down tomorrow. 15
And there are guys 17 who in this business, you know, they don't make a 18 lot of money, and especially the way newspaper 19 sales go, you know sales are going down, so there 20 isn't a lot of profit there. And so when some of these guys say, you know, I can't afford to build a new stand, it's true.
My name is Earl Rogers. And when I joined this association, it was for that sole purpose; it was for me to obtain a 46 5/16/00 STREETS, SERVICES - BILL 000166 newspaper stand. And, you know, I'm just here to, like, advocate the fact that having that advertisement would be beneficial to the organization because what it does, actually, is going to help little businessmen who does not have this money to get into business and also have something that they can be actually proud of. And, you know, I'm just here just here to implore to this committee -- I mean, the Councilmen, you know, to think about that. You know, because what it's going to do is, it's going to take a lot of young people who wants to probably start and own a small little business like a newsstand, you know, and give them a really difficult way to go. And, you know, they're just not having enough money to come up. And, you know, to pay for something like that is, you know, it's beyond words.
Thank you, thank you. The way I look at this, you know, we're dealing with stadiums possibly and we're talking about naming rights and who gets the revenue. I 47 5/16/00 STREETS, SERVICES - BILL 000166 mean, this is kind of like getting naming rights for the little business guy, where the little businessperson gets some of the revenues for the naming rights on the newsstand. And I think we owe it to the small business folks in this town to make every opportunity for them to be compensated and to continue to thrive as a business. Are there any other questions? (No further questions.)
For the record, Councilmember Ortiz is now in session with us. So I guess, Mr. Peterscheim, that what you're asking to do, then, is pass Bill 166 as is, without the amendments.
And with the understanding that this committee will continue to work with all the associations and all the interested parties over the next couple of weeks to see if we can come up with some of the amendments that we were discussing at the last hearing two, three weeks or so ago.
And at that point, 48 5/16/00 STREETS, SERVICES - BILL 000166 if we come to a resolution, then we can adopt and/or do the amendments that may change what the prototypes will be going forward; am I correct in that?
Councilmember Clarke is going to propose a amendment at the appropriate time, and this really deals with the location of newsstands as it relates to intersections and certain types of buildings or institutions around Rittenhouse Square primarily. So rather than hold the bill up because of this amendment, he will offer this as a friendly amendment, and I think at that point, it seems to be the general consensus of the committee that we can vote this bill out today.
We'd like just to show you, Mr. Chairman, what we're advocating now and what we have on the street now. And we think that the compare and contrast speaks for itself, and we hope that you indeed vote this out of committee so that we can move forward and improve the streetscape. (Illustration of proposed new prototype 49 5/16/00 STREETS, SERVICES - BILL 000166 newsstand is displayed for committee members.)
Are there any other questions? (No further questions.)
Thank you, Mr. Chairman. Mr. Chairman, I'd like to read this into the record in the hearing, an amendment to Bill No. 000166. Add new sections 9-212(4)(d), (e) and (f) to read as follows: 9-212, Newsstands. Number 4, location of Newsstands. There shall be no newsstand within 30 feet of: 1. any property classified as residential or; 2. any church, chapel, convent, synagogue, mosque, monastery, rectory, or other place of worship and adjunct residential dwellings. (e) There should be no newsstand in the following locations: 1. both sides of 18th Street, between Walnut Street and Rittenhouse Square; 2. both sides of West Rittenhouse Square, between Walnut Street and Rittenhouse Square; and 3. both sides of Walnut Street, between 18th 50 5/16/00 STREETS, SERVICES - BILL 000166 Street and West Rittenhouse Square; 4. both sides of Rittenhouse Square, between 18th Street and West Rittenhouse Square. (f) Any newsstand licensed prior to May 16, 2000 shall be exempt from any provisions of Subsection 9-212(4)(d) and 9-212(4)(e).
Yes. There's a newsstand on the corner of 18th and Walnut. He is not affected --
Steve Peterscheim, USA Today. Provision (f), just so I understand it, it says, "Any newsstand licensed prior to May 16, 2000 shall be exempt from the provisions above." Now the licenses are renewed every year, right? Now, when his license comes up for renewal, he'll 51 5/16/00 STREETS, SERVICES - BILL 000166 still be eligible for that location?
Mr. Chairman, my name is Howard Berman (ph.), I'm on the board of the Newsstand Association. In regard to the advertising, the main reason why we are interested in advertising -- and I don't know whether everyone is aware of this, but newsstands vary in price enormously. It can be 2,000 to 100,000 or better. The advertising is our opportunity to level the playing field.
We -- I don't think we need to -- and I appreciate your being here today, but I don't think we need to discuss the advertising today. That is something we're going to continue to work on as a committee with the Association, and I'm really going to do everything I can to get some resolution to that between now and June 22nd. I think it would only complicate some of the things we're trying to do today.
I mean, I think -- and I appreciate what you were about to do, but I 52 5/16/00 STREETS, SERVICES - BILL 000166 don't think it's going to be important. I think, actually, it might take us a few steps back if we get into that again today. Thank you.
Any other questions for these witnesses? (No further questions.)
Thank you, thank you all for coming. And, again, I want to apologize one more time for the confusion. I truly am sorry about that.
Bill No. 218, an ordinance 19 granting permission to Columbia Transmission Communications Corp., a Delaware corporation, its successors and assigns, to construct, maintain, and operate, replace and remove a telecommuni- cations system along, over, in, and under the public rights-of-way on City street, and/or to place such telecommunications system within the 53 5/16/00 STREETS, SERVICES - BILL 000218 existing facilities and by Bell Atlantic-PA, PECO Energy Company, Southeastern Pennsylvania Transportation Authority, CSX Corporation, Norfolk Southern Corporation, Consolidated Rail Corporation Shared, or other entity holding a grant pursuant to other City ordinances, all under certain terms and conditions.
Good afternoon please identify yourself for the record.
Good afternoon, Mr. Chairman and members of the committee. My name's John Cunningham, and I'm the Right-of-Way Manager for the Department of Streets. And I'm here to testify on Bill No. 000218 on behalf of the Streets. This bill grants permission to Columbia Transmission Communications Corporation, a Delaware corporation, its successors and assigns to construct, maintain, and operate, replace and remove a telecommunications system along, over, in, and under the public right-of-way and City streets and/or to place such telecommunications system within the existing facilities owned by Bell Atlantic-PA, PECO Energy Company, 54 5/16/00 STREETS, SERVICES - BILL 000218 Southeastern Pennsylvania Transportation Authority, CSX Corporation, Norfolk Southern Corporation, Consolidated Rail Corporation Shared Assets, or other entity holding a grant pursuant to other City ordinances, all under certain terms and conditions. This is not an administrative ordinance 9 but an ordinance requested by Columbia Transmission Communications, a Delaware Corporation, 12801 Fairlakes Parkway, P.O. Box 10146, Fairfax, Virginia. The proposal is for a new conduit to be installed for a portion of the route in the SEPTA Route 3 right-of-way between Philadelphia city limits, near Cobbs Creek and 60th Street, to Woodland Avenue, near 48th Street, west of Woodland Bridge. For the remainder of the route, cable will be installed in existing SEPTA ducts, with the exception of the tie-in to the building at the end of the route, 401 North Broad, where a new conduit will be installed from 13th Street into the building. Consequently, there are no 24 anticipated railway excavations for this installation. 55 5/16/00 STREETS, SERVICES - BILL 000218 The Department of Streets Department has reviewed the preliminary plans and has no 4 objection to the passage of this ordinance.
Thank you. Good afternoon. Please identify yourself for the record.
Good afternoon, Mr. Chairman and members of the Council, my name is Robert Rockwood, and I am the General Manager of Columbia Transmission Communications. I appreciate very much the opportunity to appear before this afternoon and the opportunity to describe the fiber optic telecommunications system that Columbia Transcom is building and what its relationship, we hope, will be with the City of Philadelphia. Columbia Transcom will need to install, as has just been described, an operating system underneath certain City streets and public right-of-way, and for that purpose, we have applied to the City for the right to install the fiber optic cable underneath those same streets. Columbia Transcom's state-of-the-art fiber optic system would be used by our customers 56 5/16/00 STREETS, SERVICES - BILL 000218 to provide diverse and technologically advanced telecommunications to the Philadelphia community, and for that reason, we believe that Columbia Transcom and its business plan will be an asset to the City of Philadelphia. Let me first describe my company to you. Columbia Transcom is a wholly-owned subsidiary of Columbia Energy Group, which is one of the nation's leading energy companies, and Columbia Transmission Communications, again, the fiber optics company that is before you today, is the affiliate that's charged with the creation of a fiber optic system. As a member of the Columbia Energy Group family of companies, Columbia Transcom is keenly aware of its responsibilities to the communities through which its fiber optic system will go, especially into Philadelphia. We're committed to installing and operating the system in a manner which satisfies all of the City's safety and other requirements. In recognition of the importance of the quality of safety conditions invoked by the City, we're working closely and well with (unintelligible). Columbia Transcom will be providing 57 5/16/00 STREETS, SERVICES - BILL 000218 dark fiber strands; that is, telecommunications highways in its fiber optic system to many types of customers, including telecommunications carriers, Internet service-providers, government agencies, and private businesses. The Columbia Transcom fiber system is a sophisticated, high-capacity system that will offer its customers capability or providing highly reliable, economically efficient, and advanced telecommunication applications and services. Those customers will, in turn, supply the electronics necessary to provide full-service telecommunications directly to the public, to the City of Philadelphia. We recognize -- Transcom recognizes Philadelphia's place within the community of cities in the mid-Atlantic, and in fact, its premier stature amongst those cities, and we feel that access to this state-of-the-art telecommunications system can only enhance the City's ability to do business and its stature, again, with the communities in the mid-Atlantic. Thank you, and I'll be glad to answer any questions. I'm going to be followed by Steve 58 5/16/00 STREETS, SERVICES - BILL 000218 Hire (ph.), who will describe some of the physical characteristics of the system itself.
Thank you. Good afternoon, and please identify yourself for the record.
Mr. Chairman and members of the committee. My name is Steven Hire, and I am a telecommunications consultant to Columbia Transcom. I've been involved in telecommunications for some years and in 12 Philadelphia for the past 15 years. I was one of 13 the founders of Eastern Telelogic Corporation and 14 I actually sat here before Council some 14 years 15 ago in association with Bill 1191, which granted 16 us the authority to construct a network in 17 Philadelphia. 18 For the last year or so, I have been 19 consulting, and most recently now, supporting 20 Columbia's efforts in obtaining an ordinance here in Philadelphia. I've been asked to speak to the rights-of-way and the method of installation for Columbia. In general, the installation of the fiber optic line in the City will extend from 59 5/16/00 STREETS, SERVICES - BILL 000218 Cobbs Creek through Southwest Philadelphia and then up to the area of 401 North Broad Street. The route begins at Cobbs Creek, CTC proposes to run in the rights-of-way of the SEPTA R3line to Woodland Ave., where the route transitions under the City streets within SEPTA conduit systems already in place to the area at 401 North Broad. The proposed facilities will be installed under a licensed arrangement with SEPTA. Substantially all of CTC's installations will be in SEPTA-controlled property or within SEPTA's existing conduits under City streets. Two exceptions where we will need to access to City streets for conduit construction are at the connection of the SEPTA R3 line and the SEPTA conduit system under Woodland Avenue. There is about a 30-foot area of need to construct conduit. And in that -- near the vicinity of 401 North Broad, we would need to construct about construct about 200 line of conduit line along Noble Street. These physical disturbances -- and these are the only two areas where we anticipate physically disturbing the streets of Philadelphia. Installation methods are comprised of 60 5/16/00 STREETS, SERVICES - BILL 000218 conduit work, where we would actually trench and install four 1.5-inch conduits within the SEPTA right-of-way of the R3 between Cobbs Creek and Woodland Ave. This is comprised of the trenching of the trench of about the depth of approximately 36 inches, and then laying in four 1.5-inch conduits. Work beyond that within the streets along the SEPTA system is compromised of what we call an interduct, a plastic interduct of about the same diameter within existing SEPTA conduits. And these installations would occur between -- along Woodland Ave. and continue onto in and about the area of 401 Broad Street. Now, in terms of access windows, there's two scenarios that we're (unintelligible) to work. Along the SEPTA R3 line, the working would be done in accordance with approved SEPTA times, which would take into consideration train traffic and so forth, and within the streets, where we would need access to SEPTA manholes, and there would be minimum inconvenience to traffic flow and so forth. Those hours would be coordinated with the City Streets Department. 61 5/16/00 STREETS, SERVICES - BILL 000218 Thank you.
Are there any other witnesses to be heard? (No response.)
In the testimony of Mr. Arias, there is some discussion about bringing 200 high-tech jobs, construction jobs?
Yeah, disregard that question 'cause you're not the right guy.
I have a quick 62 5/16/00 STREETS, SERVICES - BILL 000218 question.
For Columbia, and this might be very elementary, but are you aware that there's a -- and maybe the Streets Department can elaborate. There's a group of utility companies that meet regularly -- Bell, PECO, steam, water to coordinate these activities to make sure that the Streets Department doesn't pave the street that you just described, and then a week later, you come and dig it up. So are you aware of that organization?
Is that what it's called? But I know PECO has a representative and the Water Department has a representative, and nothing frustrates me more than when the Streets Department does a good job, or PennDOT, and then another entity comes and digs everything up.
Yeah, we do appreciate that. 63 5/16/00 STREETS, SERVICES - BILL 000218 While I was at Eastern Telelogic, we supported that board's efforts for many, many years. So I understand that process very well.
Mr. Chairman? I'm somewhat confused by the flurry of activity by various companies seeking permits. And what confuses me is that in the electricity deregulation procedures, competitive companies are using the basic lines that exist in the City, that are owned by PECO. And I'm wondering, don't basic lines exist by Bell Atlantic, the existing telephone company? Why aren't -- in this area, why aren't those lines being used instead of, you know, duplicating fiber optic lines? I just don't understand the difference between, you know, this area and the electricity.
There's probably several answers, and I'd probably say that the most basic one and fundamental reason is that the need for telecommunications in terms of capacity and quantity has far outgrown needs for electricity; whereas there are capital concerns also as well in 64 5/16/00 STREETS, SERVICES - BILL 000218 terms of construction. But what we're seeing in the industry today is the need for telecommunications lines and different varieties of services is far outgrowing facilities installed by the original incumbent, Bell Atlantic, as well as new entrance over the years, so we're seeing a continual demand. And what it also benefits is, there's a continuing needs for new competition in the marketplace, and that flows down to benefit the City businesses as well in terms of their telecommunications costs. So, on one side, where we do have additional encumbrance of City rights-of-way, the upside is that there is added competition in the City, you have a higher quality of telecommunications infrastructure continually being renewed in the City as well.
Well, is your company covering the whole City in rendering of service?
The business plan for Columbia is more of a inter-city plan where Columbia meets the needs of companies that are building within Philadelphia and providing them 65 5/16/00 STREETS, SERVICES - BILL 000218 high-capacity access to the outside world or other cities. So Columbia's intentions are to build from a point outside the City, typically along the northeast quarter to connect those cities together where there are companies that have networks within Philadelphia.
Well, how are consumers ever going to work their way through the maze of different companies offering different amounts of service?
Well, fortunately, all of the companies have very large marketing forces that are more than happy to provide education and so forth as new services and products come on line.
You know, when electricity deregulation came along, which looks to me simpler than what we're getting involved with in the communication field, we were only successful in getting a small number of -- a small percentage of people. You know, consumers have busy lives and they can't really spend a great deal of time educating themselves on a subject which to them, you know, involves a service that 66 5/16/00 STREETS, SERVICES - BILL 000218 ought to be available easily. And I don't know what the answer is. It just -- these are difficult questions for consumers, for legislators to deal with. We don't want to have a whole hodgepodge of companies besieging people in Philadelphia with all kinds of services and creating a lot of confusion. How do we deal with that?
Councilman Cohen, that's a good question. Let me try to answer it this way. Columbia Transcom shares your concern about the number of providers of end-line telecommunications service. In our industry, it's called "dial tone," companies that can actually provide dial tone to your home. Our product are the pipes that carry voice data and video signals away from points of consolidation inside cities to distant cities. So our customers wouldn't be businesses and people of Philadelphia; they would be the companies that provide dial tone to the businesses and people of Philadelphia. And then on our system, those signals, literally those photons, can be carried anywhere that our system 67 5/16/00 STREETS, SERVICES - BILL 000218 goes or interconnects to.
Well, would your system involve the carrying of conversations?
So it's not just -- I didn't know what you meant when you said you're providing dial tones. If I hear a dial tone and nothing else, I get kind of annoyed. (Laughter.)
You know, if I pick up a phone and just get a dial tone, so I assume people have got to be able to talk, maybe you can also transmit data.
We would, after the dial tone's stopped because the call was completed, that voice signal, literally your voice talking to a friend in New York City, for example --
-- would travel through a full-service telecom provider like Bell Atlantic or any number of competitors of Bell Atlantic's. And then if they wanted to put it on our fiber, if they had contracted with us to carry that signal on Columbia Transcom fiber, then we would 68 5/16/00 STREETS, SERVICES - BILL 000218 transport it safely to New York City -- your voice, your data, your video, whatever product had left your home.
That's correct, that's correct. But we need to go to the center of the City to help collect and consolidate those signals to carry them out.
Mm-hmm. When we dealt with cable communications originally, it seemed kind of simple. Almost years ago, we 14 divided the City up into 4 areas, and ultimately, 15 after long hearings -- it took a long time for us 16 to understand what we were doing -- we finally 17 awarded 4 permits, but we didn't have anybody 18 competing in the same area. 19 But is it under the federal law that 20 competition has been opened up?
Before then, Bell 69 5/16/00 STREETS, SERVICES - BILL 000218 Atlantic Pennsylvania sort of had a monopoly on the local calls, and AT&T had a monopoly, if I recollect correctly, on the long-distance calls?
That's right. And by 1996, that had begun to change substantially. And in 1996, playing field was defined pretty clearly as to how that competition could take place. And Columbia Transcom is not going to market to customers, to the end-users of telecom systems; we'll market to the folks -- we'll fiber to the folks who do market to those customers, to the end-line solution. So the average telephone user isn't going to see Columbia Transcom; we provide that highway that other telephone companies will use to transport their signals.
Well, when you construct your own lines, you dig into the streets?
In this particular case, we're going to install the plastic pipe inside existing conduit, for the majority of the bill, 70 5/16/00 STREETS, SERVICES - BILL 000218 inside Philadelphia. I think the exception is how many feet, Steve? So there's 230 feet of digging in City streets. The balance of the six miles will either be digging in railroad right-of-way or inserting the fiber into existing conduit underneath the City streets.
'Cause there was an article, I think, within the last few weeks in one of the Philadelphia papers that told us of the horrendous traffic problems we're having as a result of all of the work being done on the streets, and I hesitate to see any more, you know, more traffic problems created.
And that's a valid concern of ours as well, and that's why the opportunity to put the majority of this system into existing conduit brings a tremendous capacity into Center City Philadelphia with only having to excavate 230 feet of City streets.
Councilmember Rizzo? 71 5/16/00 STREETS, SERVICES - BILL 000218
Thank you. I going to describe a condition that troubles me, and I've done a little bit of investigating, and I'd like to know what impact your company will have on this condition that I describe. At 6:30 in the evening, I pick up the telephone at home, I dial a phone number, and I get "beep-beep-beep-beep." I dial it again, can't get through. Call the phone company, Bell Atlantic, and say, "Can't use my phone." They tell me that the system is so overloaded that people with Internet and other communication devices, fax machines, beepers, cell phones, etc., have basically overloaded the Bell Atlantic system to the point where it's clogged and it just can't process any more calls, and I think they call the condition a reorder or a circuit-busy situation. It troubles me to think that on a clear day, on a day without any emergency situations going on in Philadelphia, that we could have sections of the City that are actually gridlocked and in the event of an emergency, we couldn't make a phone call, a panic situation with an alarm 72 5/16/00 STREETS, SERVICES - BILL 000218 system couldn't make a phone call. Will your company add or help with the situation that I've just described?
Yes, especially in transporting long-distance signals from Philadelphia to other cities.
But you will not -- your system will not alleviate that local call that I wanted to make ten miles from my home, if I wanted to call from my home -- or worse yet, a fire in a residence, let's say there was a fire or a holdup or a burglary, that's what really concerns me, that a person thinks their home is protected, and Bell Atlantic cannot process a call, and that call, obviously, would not go to emergency call center to dispatch police if there's no path for that call to be processed. So you won't have a negative or a positive impact? Or will you relieve some of the calls that would be long-distance calls away from those lines?
That's it. We would have a positive impact in that local circuits that would have been carrying long-distance signals can 73 5/16/00 STREETS, SERVICES - BILL 000218 now put the long-distance signals on our fiber, releasing those local circuits to carry local traffic.
Well, I'm glad to hear that because -- no disrespect to Bell Atlantic-Pennsylvania, but I've talked to -- again, I've done a little investigating to the point where the facilities become damaged, defective, and they go from one pair to another pair, and then they tell me they have no 12 additional pair to provide new telephone service in certain areas of Philadelphia. That troubles me to know that there's a person at home that's dependent on an outbound call that can't make it. So I'm pleased to hear that you're going to help with that problem, and I hope Bell Atlantic's listening also, that they need to shape up some of these facilities that apparently have deteriorated and are unable to be used as dial tone lines in Philadelphia. Good, I'm glad to hear that. Thanks.
Are there any plans to install any lines on existing utility poles that may be owned by Atlantic-PA or Bell 74 5/16/00 STREETS, SERVICES - BILL 000218 Telephone or anything like that?
How long do you think the phase of that project will be, in terms of time?
We'd like to complete it as soon as possible, and from the point where we have received the City the right to work, we think it will take about six months. The majority of that -- Steve actually has the details on how that work would be split up across the route. It's about 30 days completing the installation of conduit inside the City street; is that right Steve?
And about 60 days for the work on the rail outside of the City.
I'm new to this, so bear with me. When you do a conduit installation on a railroad facility, on a railroad property, as an example, obviously, you have to 75 5/16/00 STREETS, SERVICES - BILL 000218 get permission to do. Is there any financial compensation to the railroad or the entity that owns the land?
And the same would hold true for City streets? Do we get compensated for that other than the permits that are needed to be taken out for any openings of the streets if that's required?
Yes, there is compensation to the City. And currently contemplated is just a -- we would apportion a third of the capacity that we installed, the conduit that we installed would be the City's. So we would put conduit capacity in the streets for the City while we were putting our own in.
But I mean, is there any monetary compensation to the City for the right to use the right-of-way? Again, I'm -- this is all new to me.
That's a fair question. 76 5/16/00 STREETS, SERVICES - BILL 000218 Every city obviously operates a little bit differently, and the details of the license have yet to be addressed. This is the first step of the process, so we would begin those discussions in due course.
So if -- would you actually begin the construction phase, for lack of a better word, before those negotiations?
So it would be six months from the time those financial negotiations are completed.
Councilman, I'd like to respond to your question about fees. For the past year, there's been a combined effort between the Law Department, the Department of Public Property, the Managing Director's Office, and the Streets Department to prepare a master right-of-way ordinance to address a number of things on how to better manage the right-of-way, 77 5/16/00 STREETS, SERVICES - BILL 000218 one of which is including fees. We are in a position to present a draft of that to Council right after; we are waiting for direction from the Managing Director, and we should hopefully be presenting something to you before you adjourn for the summer.
Again -- that's kind of where I was going. I mean, I obviously am not one to stand in the way of progress, but would it not be putting cart before the horse, as an example, if this committee decided to vote this out and approve it without knowing what the negotiations are -- the what the final negotiation terms are because those terms may not be acceptable to Council.
I mean, I would obviously, yield to your expertise, but if you came back and said, "We believe that the fees should be 'X,Y and Z' for this type of operation," and Council maybe, for whatever reason, says, "No, we think it should something other than that," don't we have to go back to square one again?
Well, that's something 78 5/16/00 STREETS, SERVICES - BILL 000218 that we will have to deal with, but yet, at the same time, we cannot be a barrier to entry to any telecoms that are coming into Philadelphia. So while we're negotiating within ourselves what's the best mechanism to manage the right-of-way, we still have to facilitate those people who are coming in at the same time.
Even before negotiations have been agreed upon. I mean, I understand that you can't bar anybody from doing the installation, you're saying we're barring them from -- I'm looking for the right word here -- from the installation of these conduits, what have you. But if Council doesn't agree to the fee structure, I mean, you're kind of saying like, Well, we're going to talk and we're going to give you a fee structure and this is what we recommend and, you know, you can vote it up or down, but should you vote it down, we can't prevent them from going forward anyway; is that what you're saying, under the act?
That's right. I mean, right now, they pay $205, that's all. That's all the money, that's all the fees you get in terms of 79 5/16/00 STREETS, SERVICES - BILL 000218 right-of-way fees.
You get $200 for the ordinance and $5 for an application to the Streets Department. It's the best deal in town.
Fee or revenue that comes out of -- obviously, there's a business opportunity, it's a business proposition, and they're in a company and they're entitled to make a profit on whatever it is that they do, but we get nothing out of that?
No, except for what was already mentioned, which was an in-kind installation or conduit line for our use. But, no, we do not get any fees.
I'm not picking on you guys, by the way; I'm just trying to get education over here about -- you know, we're always looking to find ways in which we can increase our revenues in City without, you know, 80 5/16/00 STREETS, SERVICES - BILL 000218 preventing businesses from moving forward, although some people may take exception to that or disagree with that, but I'm just curious. You know, we put newsstands out on a corner, and we charge them so many fees and we're never looking to figure out a way of getting some of the revenue back that they will derive from advertising, so why wouldn't we look to get some revenue from the conduits and the fiber optics, or whatever it is, that they're placing in and above our roadways?
Well, we are going to do that, and we'll have something for you to review before you adjourn.
Councilman, my name is Christopher Boyle, I'm counsel for CTC, and I just wanted to speak a little bit to your question about the agreement. The process contemplated by the ordinance is that the agreement between the City and CTC has to be finalized before any construction work can begin. That agreement has already been provided by the City Law Department, 81 5/16/00 STREETS, SERVICES - BILL 000218 and I've been working with Gerald Clark and we will be work on negotiating that prior to the initiation of any construction, as required by the ordinance. My understanding of the process is that the ordinance would, once it becomes law, we would proceed with negotiating and finalizing that agreement. The agreement that was provided by the City, it is my understanding, it's substantially the same agreement that the City is required of companies doing similar work in the City streets up to this point.
Let me pose the same question to you, then. You enter into an agreement with the Streets Department on a fee structure. That recommendation comes back to Council. It doesn't come back to Council?
No, there's no fee structure between any entities and the right-of-way and the Department of Streets Department.
My understanding is that the ordinance compensates that the agreement is 82 5/16/00 STREETS, SERVICES - BILL 000218 entered between the City and CTC predominantly for the purpose of protecting the City from indemnifications and other requirements for bonding and things like that. And at this point, the Streets Department really has a function of reviewing the proposed route to assure that there's no conflicts with other construction with proposed renovations to the City streets and other conflicts that may arise in other permits.
I apologize if you've already covered this. The existing conduit that you're going to pull the fiber optic cable through, whose existing facilities are they?
SEPTA. Are you paying SEPTA for occupancy in those conduits?
And it's exclusive, all that is -- you've been able to do all of that through SEPTA's conduit?
Do we get the City 83 5/16/00 STREETS, SERVICES - BILL 000218 revenue that SEPTA gets for that?
I'm not saying that we don't, the Streets Department does not. I don't know that Council or anyone else sees what they're paying per linear foot.
I'll ask the question. How much are you paying SEPTA per linear foot to go into their conduit?
Yes, this is Steve Hire again. Maybe I can help you. There is a fee that CTC will pay to SEPTA. The way I understand is that it actually helps the City in terms of the City's -- the subsistence that the City pays to SEPTA. By reducing SEPTA cost, it reduces the City's obligation to SEPTA.
Is that a fair answer? 84 5/16/00 STREETS, SERVICES - BILL 000218
No. I've never heard SEPTA once say that because we've increased our revenue, that they're going to say, "Give us less." (Unintelligible, parties talking over each other.)
So you're telling me that you're going to pay SEPTA for how many miles of linear feet?
It's approximately six miles of right-of-way that comprises SEPTA.
-- nothing in return for the same six miles that are really City streets; am I correct in saying that?
Well, there are that are comprised of the SEPTA R3 railroad bed, which is SEPTA-controlled property. I'm not clear in terms of the underlying ownership on that, but --
But I just have a 85 5/16/00 STREETS, SERVICES - BILL 000218 little problem going forward with this until I know what negotiations --
There is language, I might add. In the ordinance itself, CTC is ingrained to paying any fees that the City may enact by law at some future time.
No, no, sir. This would comprise any law that the City may pass in the future, CTC would be obliged, and we except that that law would be on the basis of a level playing field with other carriers.
But hypothetically, if we were to pass something that you thought was not a good business decision to enter into and then we do it later, I mean, after you're in there, I mean, we can eat into our profits to a degree that you may say, "This is isn't even worth doing." I mean, wouldn't it make since to do it now rather than later?
In terms of our business interests, we would hope that and you would 86 5/16/00 STREETS, SERVICES - BILL 000218 support the needs of City business for telecommunication facilities of this type now and that your efforts to initiate a fee structure internally would not hold us up.
I'd be also interested in what you just said. I'm going to, obviously, need to speak with Jack Leary to find out about the amount of money that they're willing to return to the City as a result of the fees that they're going to be charging you for occupancy in their conduit. I've never heard that before, but that's really -- I'm pleased to hear that we're going to get something back from them and I'm going to find out what that is.
It was Gerald Clark that apprised me of that situation, that that was the good news from SEPTA.
Thank you, thank you, gentlemen, for your testimony. Any other questions for these 87 5/16/00 STREETS, SERVICES - BILL 000218 witnesses? (No further questions.)
Hearing none, the clerk will read the title of the next bill. Thank you, thank you.
Our offices are in Fairlakes, Virginia, which is near Washington, DC.
And where your office is, how are you going to be managing the whole project here in Philadelphia?
We'll have space at 401 North Broad, which is, in the industry, known as "a telecommunications hotel," or "a hub." And based on the volume of traffic and the amount of space we can negotiate with 401 North Broad, those negotiations are ongoing. That will either be a manned or an unmanned office.
A one-person office? 88 5/16/00 STREETS, SERVICES - BILL 000218
Depending on the volume of traffic that goes through there. In some cases, we can outfit a location just with equipment and would monitor it remotely from our location in Fairlakes, or we can put folks there.
The company has about fifty employees now, and we would have one to two in Philadelphia.
We're passing this and we're creating only two jobs out of this?
Two jobs and increasing the capacity, the telecommunications capacity inside the City 400 times.
You will have one 89 5/16/00 STREETS, SERVICES - BILL 000121 office that will be either manned or unmanned and you will have two jobs. I have to think about that, okay.
Hearing none, the clerk will read the title of the next bill. Thank you.
Bill No. 121, granting permission to Cavalier Telephone Mid-Atlantic, LLC, its successors and assigns, to construct, maintain, and operate, replace and remove a telecommunications system along, over, in, and under the public rights-of-way and City streets and/or to place such telecommunications system on or within the existing facilities owned by Bell Atlantic-PA, PECO Energy Company, Southeastern Pennsylvania Transportation Authority, CSX Corporation Norfolk Southern, Consolidated Rail Corporation Shared Assets, or other entity holding a grant pursuant to other City ordinances, all under certain terms and conditions.
Good afternoon. 90 5/16/00 STREETS, SERVICES - BILL 000121
Good afternoon, Mr. Chairman and members of the committee. My name is John Cunningham and I'm the Right-of-Way Manager for the Streets Department, and I'm here to testify on Bill No. 000121 on behalf of the Streets Commissioner. This bill is an ordinance granting permission to Cavalier Telephone Mid-Atlantic, LLC, its successors and assigns, to construct, maintain, and operate, replace and remove a telecommunications system along, over, in, and under public rights-of-way and City streets and/or to place such telecommunications system on or within the existing facilities owned by Bell Atlantic-PA, PECO Energy Company, Southeastern Pennsylvania Transportation Authority, CSX Corporation, Norfolk Southern, Consolidated Rail Corporation Shared Assets, or other entity holding a grant, pursuant to other City ordinances, all under certain terms and conditions. This is not an administration ordinance 23 but an ordinance requested by Mr. Martin Arias, Director of Business Development, Cavalier Telephone Mid-Atlantic, LLC, located at Two Bala 91 5/16/00 STREETS, SERVICES - BILL 000121 Plaza, Suite 300, Bala Cynwyd, PA, 19004. The purpose of this ordinance is to construct and maintain a fiber optic network and telecommunications system in and under the public rights-of-way at various locations along the route, as specified in the ordinance. The proposed route is approximately 68.5 miles in length. The aerial portion is approximately 59.6 miles and will be attached to PECO Energy poles. The underground portion will be installed in two sections, pulled through a new excavation. The pull-through portion is approximately 8 miles in length and will occupy Bell Atlantic's facilities. The remaining 0.25 miles will be new excavation. The Department of Streets has reviewed the preliminary plans and has no objection to the passage of this ordinance.
Thank you. Councilmember Miller is also available for these hearings. Good afternoon please identify yourself for the record.
Yes. Good afternoon, 92 5/16/00 STREETS, SERVICES - BILL 000121 Mr. Chairman and members of the Streets Committee. My name is Martin Arias, and I'm the Director of Business Development for Cavalier Telephone. To my left is John Young, the Director of Sales; and also David Heffline our Engineering Manager for our network construction. Cavalier Telephone is a new public utility here in Pennsylvania that will provide competitive local telephone service and high bandwidth digital subscriber loop service, also known as "DSL," throughout the City of Philadelphia and Eastern Pennsylvania. Philadelphia residents and small business telephone customers will finally have a competitive choice of local telephone and DSL service providers here in Pennsylvania. Unlike previous telecommunications services companies that have come before this committee for ordinances to build networks that exclusively serve large business customers in Center City, Cavalier will make a multi-million dollar investment to build an area-wide fiber network into all Philadelphia neighborhoods to help bridge the digital divide. Our network 93 5/16/00 STREETS, SERVICES - BILL 000121 build-out will be nondiscriminatory and will be citywide. We believe that all City residents are entitled to the benefits of the telecommunications revolution. For example, Cavalier will offer Philadelphians the benefits of competition and of high bandwidth, with rates up to percent less 9 than what Bell Atlantic currently provides for 10 similar services. 11 Cavalier is also aware of the damage 12 network trenching can sometimes do to city 13 streets. Accordingly, Cavalier has designed its 14 network to almost entirely eliminate any trenching 15 on City streets. Instead, most of Cavalier's 16 network will be aerial on PECO or on Bell Atlantic 17 poles. In Center City, Cavalier will lease the 18 existing Bell Atlantic or PECO underground 19 conduits. While this network design may be more 20 expensive, Cavalier seeks to minimize the City's 21 costs associated with resurfacing City streets due 22 to the damage caused by network trenching. 23 Finally, Cavalier will bring approximately 200 high-tech jobs and construction jobs to the Philadelphia region. 94 5/16/00 STREETS, SERVICES - BILL 000121 Again, Cavalier will build its network into all City neighborhoods and will not discriminate against low-income neighborhoods. We will not come in and just cherry-pick the large business customers in Center City and then leave. This network will help bridge the digital divide and will bring construction and permanent jobs to this reason. Therefore, I respectfully ask for your vote in support of Bill 000121. Thank you. I'll hand the mike over to John for a brief presentation.
I'd like to thank the Philadelphia City Council Streets Committee for giving us the opportunity to present our ordinance 17 for approval. My name is John Young, I'm the Director of Sales for Cavalier Telephone. As you've already heard from Martin to my right, Cavalier wants to provide a real choice to Philadelphia residents. We want to bring real competition to Philadelphia, which was the true goal of the 1996 Federal Communications Act. I'd like to draw your attention to a statement that William Canard (ph), Chairman of 95 5/16/00 STREETS, SERVICES - BILL 000121 the Federal Communication Commission, made to the graduates of Howard University just this week. The statement is over on the easel. "Blacks and Hispanics are only 40 percent as likely as whites to have Internet access at home. This gap between the information haves and have-nots is called 'the digital divide.'" Chairman Canard went on to say that "this digital divide is the civil rights challenge of the new millennium." I'd like to now draw your attention to a graphical representation of a report by the Pennsylvania Public Utility Commission that shows the competition of -- the state of telephone competition in Pennsylvania. Bell Atlantic, the primary telephone company in Philadelphia, serves over 99 percent of the residents' lines in the State. There is virtually no competition in local telephony for the residential home user-customer today. Cavalier looks to begin to bridge that digital divide and begin real competition in Philadelphia by offering high-technology telecommunications services to those residential 96 5/16/00 STREETS, SERVICES - BILL 000121 customers throughout the Philadelphia area. We will be offering an entire range of services, including basic telephony, prepaid local telephone service, long distance, and advanced telecommunications services, such as Internet caller I.D., talking caller I.D., and high-speed Internet access, using our advanced digital subscriber line technology. A key component in offering the wide range of services at reduced costs is our investment in the City of Philadelphia. We intend on leveraging our state-of-the-art network to provide a reliable information infrastructure. The network build is only the beginning. Cavalier will be providing hundreds of high-technology jobs in Philadelphia area in traditional telecommunications areas such as repair and dispatch, sales, billing, customer care, assignment, and translation. In addition, there will be, quote/unquote, new-economy jobs in the areas of Internet services, information systems, DSL services, and a host of other allied areas. In addition to the benefits of additional jobs, we will leverage our network 97 5/16/00 STREETS, SERVICES - BILL 000121 infrastructure to reduce telecom expenses for residents and small- to medium-sized business customers, a group that has traditionally been ignored by telecommunications companies providing services in Philadelphia. This will again provide 21st-century technology heretofore in neglected communities throughout Philadelphia by bridging the digital divide, and by bridging the digital divide, we are helping to make Philadelphia a better place to live and work. Our commitment to Philadelphia is twofold. We are balancing the benefits of the services I have discussed with the impacts of construction plans on the City of Philadelphia infrastructure. Our network build takes advantage of aerial and existing conduit runs for over 99 percent of our build, minimizing street closings and street trenching. We have worked closely with the Streets Department to ensure the efficacy of our network design. For the reasons I have presented, I ask for your approval of our Ordinance No. 121. Thanks for your time.
Thank you. 98 5/16/00 STREETS, SERVICES - BILL 000121 I just have a couple questions initially, and then I suspect some of the other Councilpeople may have questions. In your testimony, Martin, you indicate that most of Cavalier's network will be aerial, either on PECO or Bell Atlantic poles. Have you entered into negotiations with either of those entities, and what is the status of those negotiations?
Yes, I have concluded negotiations with PECO. We have an agreement to go on their poles. Our entire fiber run, I believe, in Philadelphia, except for a few poles, will be on PECO electric poles, and we have their permission to come aboard.
Have you had the authority yet, have you entered into an agreement 99 5/16/00 STREETS, SERVICES - BILL 000121 -- do you have the authority with the Federal Communications and/or the Public Utilities Commission yet to do this?
Yes. On a certificated public utility under Pennsylvania law, I have the permission to provide local telephone service, long-distance service, and all other regulated service under the Public Utility Commission of Pennsylvania.
How did you get to determine where the cables and the routes of the cables to be installed? How do you get to that?
Basically, you choose the path of least resistance in terms of where you build a network, meaning a lot of poles that you look at probably might have a lot of wires and have what's called a lot of "make-ready work." And, of course, if you see poles that are just too packed, you would move around and find other poles. But the way we decided to build our network here is to go to those areas in Pennsylvania that have been traditionally underserved markets, and we try to hit those 100 5/16/00 STREETS, SERVICES - BILL 000121 points in Philadelphia, all the neighborhoods we're going to, and basically try to find a path of least resistance in terms of network build-out. That's why we're going aerial, which is usually cheaper and faster than going underground and trenching and destroying City streets.
I assume you've entered into some agreements with companies that have existing underground ducts. Have you entered into agreements with them, and which are those companies?
Yes. Currently, we're considering use of Bell Atlantic ducts, especially in Center City. So we don't have to trench in Center City; we're using existing and we'll pull our fiber through those ducts.
But you haven't completed those negotiations? Do you have agreements with them yet?
You do have agreements? 101 5/16/00 STREETS, SERVICES - BILL 000121
Yes. And that's a tariff service. Bell Atlantic duct occupancy is something --
Now, Bell Atlantic will charge you, I assume, for the use of their conduit; am I correct? How does that work?
Again, this is all new to me so I'm trying to get an education here.
I think at this point, I would hand the mike over to our chief engineer. He's dealt directly with Bell Atlantic on the conduit issues.
Identify yourself for the record, please, and spell your name and speak closely to the -- we don't have a fiber optics system in here yet.
My name is Dave Heffline, H-E-F-F-L-I-N-E, and I'm the Engineering Manager for outside plant facilities in Philadelphia. And, yes, you are correct, Bell Telephone, or Bell Atlantic, will charge us a per-foot charge for the use of their conduits. 102 5/16/00 STREETS, SERVICES - BILL 000121
John, my question to you then is, do we charge Bell Atlantic for the conduit?
Why? Again, this is all an education for me, so I apologize, I need to ask questions.
Well, I guess, Councilman, the issue was that before the deregulation, you have one show in town, and they were providing all the services for the City. There were some charges for an aerial route, for example -- I think $6 a mile or something very inexpensive. But other than that, there is no 16 charge, and I can't really say as to why.
Yeah. The aerial services, you said, could be as much as $6 a 103 5/16/00 STREETS, SERVICES - BILL 000121 mile? Which is minimal, I understand, but there's a lot of mileage, I'm sure, of aerial service in the City, so it can be rather considerable. Cumulatively, if you look at the City, it's got to be a significant amount of money.
But these underground conduits, we're not charging, and other companies are coming along and utilizing that facility, charging the subcompanies, or whatever you refer to them as, for the use of that conduit, which we allow in the first place to be installed underneath our City streets.
All right. I have no further questions for the time being; I may come back for more. Councilmember Rizzo?
Thank you. Getting back to apparently your philosophy to go aerial. It seems that most communities, most new construction is normally more desirable underground for esthetic reasons. I'm wondering, when you reach areas that are, by 104 5/16/00 STREETS, SERVICES - BILL 000121 law, ten units or more required to be underground, I believe it is ten residential units or more, are you going to not provide service to those customers because they don't have aerial facilities? Are you going to not provide service to those people? If you get into the far Northeast, where you get into a development and there's no 10 aerial facilities to attach to and someone would want to be your customer, what would you tell them?
Councilman Rizzo, it's John Young again. Thank you for the question. We will be serving 100 percent of the residents of Philadelphia regardless of whether we are able to build directly into their location. In areas where we're not able to build directly into their location for various reasons, you know, there may not be -- there may be, for example, a moratorium, as there's going to be this summer, with the Republican Convention. We will still serve those customers by utilizing existing Bell Atlantic wiring from our collocated facility with Bell Atlantic into that site. 105 5/16/00 STREETS, SERVICES - BILL 000121
Now, Councilman DiCicco referred to the aerial fee of some nominal per-mile charge. I believe, if my memory serves me correctly, that there's an attachment fee for each pole that you attach your facilities to, so you pay PECO Energy, and PECO Energy, I believe -- I don't know what -- does PECO pay per pole?
Yes, there is a fee that we pay per attachment per pole that PECO charges us.
Could the Streets Department tell me -- I believe they have a blanket permit that they want to change, replace poles that L&I and whatever, but does the energy company or the telephone company pay any fee at all to the City per pole?
Councilman, it's John Cunningham again. Yes, they do pay. I think the total revenue is approximately somewhere around a quarter of a million a year for their pole.
All the poles that are the City of Philadelphia, a quarter of a million?
And, again, that 106 5/16/00 STREETS, SERVICES - BILL 000121 revenue that you pay per attachment will be revenue that PECO Energy gets but, again, nothing back to the City?
And that's not your problem, we understand that, but we're obviously looking for means of additional revenue because it's a business, it's a business that you're in, and as I said to the other folks from Columbia when they were up here, this is all becoming new to me, so it's a business, and businesses are taxed for whatever -- for a lot of reasons, obviously, but, you know, we tax businesses in a lot of different shapes and forms. And I'm just wondering if there's a possible revenue stream that we could generate for the City in addition to the revenue that the businesses want to generate for themselves, which you're entitled to, obviously, to make a profit. Did you have any more questions?
Yeah, just to follow up. So that I understand clearly, if a person is in an underground development and they would choose to be a customer of Cavalier, that to 107 5/16/00 STREETS, SERVICES - BILL 000121 compensate for the fact that you don't have underground facilities there, you would provide your service via Bell Atlantic equipment to them at the same price any other customer would pay?
Yes. Our network design primarily, we're building our network fiber optic backbone to Bell Atlantic central offices. Central offices are located strategically throughout the City, and from that central office, we collocate equipment that allows us to basically lease the last mile of Bell Atlantic copper into the home. Basically with the equipment we're going to put in those central offices, we'll be able to provide newer technology and newer services and higher bandwidth to the home. For example, with our DSL product, we'll be able -- currently under a normal plain old telephone service line going into your house, the bandwidth going into your house is about 56 Will kilobits per second. With our DSL product utilizing the existing copper wire of Bell Atlantic into that community with underground wires that we'll lease from Bell to get there, we'll be able to up that 108 5/16/00 STREETS, SERVICES - BILL 000121 bandwidth 100-fold. You're talking about megabytes per second. And that definitely will help bridge the digital divide, I believe, and that's what we're all about.
Did you hear the scenario that I described earlier of the circuit- busy situation? Will you contribute to making that a better situation? 'Cause it's hard for me to believe that our Bell Atlantic company has put themselves in a situation with growth and have not spent the money to upgrade their facilities to meet the demand. I mean, I again have personally been involved in four or five issues where they say they just don't have the facilities to deal with the fax machines and the Internet, that people tie up the phone lines. So will you help or will you --
Councilman Rizzo, I don't know if you noticed when I was sitting back there, but I almost chuckled when you asked that question because the network we're building is definitely 100 percent increasing the capacity of the ability for a residential customer in Philadelphia to make 109 5/16/00 STREETS, SERVICES - BILL 000121 and receive telephone calls and Internet telephony calls definitely. What we're doing is, we're installing a new switch -- the problem that Bell has is that they're out of capacity on their switches to the machine that actually routes a call from one user to the other. We're installing a new switch here in the area, and that switch is going to provide additional capacity to alleviate those concerns.
But I've been told -- in all fairness now, I've talked to some of the outside people, the cable people that tell me that the problem -- and, again, you need to clarify something because you're telling me if you're going to start utilizing some of the existing Bell Atlantic facilities that you're going to have a negative impact on an already bad situation, because I've been told by some of the retirees -- I'll put it that way -- that have retired from Bell Atlantic that Bell's got a cable, a 50-pair cable going down a street that every time they have a problem with a pair, they go from that pair to another pair, and now they're down to 36 pair. And at night, when you try to 110 5/16/00 STREETS, SERVICES - BILL 000121 make a phone call, that there's just no place for those calls to reach the central office or whatever. And I heard Councilwoman Miller say, "Is that why I get a fast busy signal?" Is that what you said? And I've been told it's not because of the central office switch; it's because the facilities on the street have deteriorated to the point where they just cannot accommodate all of the people with one, two, three, call-waiting, all those things that are so -- that we depend upon. So when I hear you telling me that you're going to use Bell Atlantic facilities, that says, Wow, now we'll load it up with even more calls. So correct me if I'm wrong but, again, I'd like to comment on the fact that maybe --
Cavalier has the capability to providing adequate transport from the end-user customer to our central office. At our central office, you can -- it's a virtual pipe from the end-user customer all the way over to our central office switch. There is no Bell Atlantic switch in the way to provide a fast busy signal. The dial tone would come from our central office 111 5/16/00 STREETS, SERVICES - BILL 000121 switch, and there would be -- the capacity there is from the Bell Atlantic residence customer all the way to our switch. There's no in-between. It's a virtual connection that starts at the residence customer, comes to the Bell Atlantic central office, never touches the Bell Atlantic switch, and is immediately put onto our network for transport back to our switch.
You bypass the switch but then you eventually go back to the Bell Atlantic facilities that I described that are already overwhelmed with calls.
It's my understanding and, you know, I'm not sure of the exact instance you're referring to, but it's my understanding that Bell Atlantic's primary problem right now is on the switch side because of the all the Internet hold times. The average call has gown gone three minutes -- you know, ten years ago, the average call, you pick up the phone and you talk to somebody for three minutes and you hang up -- to over an hour, when you pick up your phone through your modem line and dial the Internet and surf the 112 5/16/00 STREETS, SERVICES - BILL 000121 Web for over an hour. That's what I understand is the capacity issue.
Okay, and I'm going to move on because there's other people that want to speak, and it's taken a while now. But, again, I'm surprised that Bell Atlantic's not here, but I'm concerned, again, what I'm hearing is that the facilities are starting in our neighborhoods to deteriorate to the point where rather than fix or replace something, that they're just moving from this defective pair to the next good pair, and then when something else becomes defective, that cable that once could carry 50 telephone calls is now down to or 30. 17 And once you arrive on the scene, your 18 going to be taking or placing calls through those 19 same lines, so something's got to give. Either we 20 have to have Bell Atlantic put additional cables 21 to support what you're going to do or repair the 22 ones that they have. So this abandonment policy 23 that they have to go from bad to good and then 24 they're down to hardly anything is -- 25
We're building a new 113 5/16/00 STREETS, SERVICES - BILL 000121 network in Philadelphia and increasing the capacity of an existing telecommunications infrastructure today. Our business requires that Bell Atlantic provide us adequate capacity for access to the end-user customer that, as you can see by that chart over there, 99 percent is still on Bell. And when you don't have competition in place, Bell can say to you, "I'm sorry, there's just nothing we can do." When our business depends on it, we have the ability to go to the FCC, to go to the State Public Utility Commission, and really make a big issue of it.
Before I recognize Councilwoman Miller, and Councilmember Rizzo raised some very interesting questions as to systems that are in place today and many of these systems are very old and beginning to deteriorate. What are your experiences in constructing telecommunications systems in other cities?
Basically, Cavalier Telephone has about 250 miles of fiber already up and running and constructed in the Richmond area 114 5/16/00 STREETS, SERVICES - BILL 000121 and also going up to northern Virginia and also, I believe, the Virginia Beach area. Prior to that, the owner of Cavalier Telephone, Brad Evans, used to own Phone Michigan, and also Phone Michigan built a substantial network in the Michigan area. So we've done this several times and --
Have you had any issues in those municipalities? And if you had, how did you resolve them? Were there any construction issues out there that you know of?
Well, the installation of the facility -- of the conduits, or if you're coexisting with other companies, have ever there been any problems in these various municipalities, that you know of?
Okay, thank you, Mr. Chairman. I'd just like to get back to this whole 115 5/16/00 STREETS, SERVICES - BILL 000121 issue of the digital divide and the fact that -- I think your name is John Young?
John Young described it as the new civil rights struggle, and I'd like to hear more about that.
Councilwoman Miller, thank you for the question. Those are actually Chairman Canard's words, the FCC Chairman, who called the digital divide the civil rights issue of the 21st century. And by that, I think he meant that whereas, you know, there were different civil rights issues of this century, the information divide and digital divide between, like he said, the haves and have-nots has already created a gap between those inner-city urban populations and the populations that have had access to high bandwidth Internet services and advanced telephony services. What we're trying to do at Cavalier, where -- I don't know if you were present for the testimony of the group just before us when they 116 5/16/00 STREETS, SERVICES - BILL 000121 came in and talked about business services, but we are actually, I believe, the first facilities- based competitive local-exchange carrier to come into Philadelphia and offer an actual alternative to Bell Atlantic for regular telephony services and Internet services, a company that owns its own switch and that owns its own infrastructure in Philadelphia.
So basically what you're saying in English is -- I'm not technical.
People can opt to have telephone service through you; is that what you're saying?
Yes. What we hope to do also is really prod Bell Atlantic into offering a better quality of service here in Philadelphia. Obviously, the network we're building cannot handle 100 percent of the telephone lines in Philadelphia, but give us half and we'll be happy.
Okay. So then the digital divide is not just about economics; it's about access.
Okay, let me just ask you one more question. Because of the overloading -- and that's my term -- on Bell Telephone or Bell Atlantic's wiring, is that why we're kicked off the Internet, off AOL?
There's a number of reasons you'd be kicked off the Internet, and I'm not going to pretend to give you all of them. I have AOL also. Part of the problem is AOL's capacity on their own backbone network, but Bell Atlantic does have problems with overload on their network when people get on the phone and stay on for an hour versus the three-minute call I talked about before. That really chokes up the system, and what we're doing is bring additional capacity to that telecommunications infrastructure in Philadelphia.
When do you anticipate -- a twofold question. When do you anticipate that you will first be offering services to Philadelphia customers, and when would 118 5/16/00 STREETS, SERVICES - BILL 000121 you expect that those services would be available to all residents and businesses?
Councilman DiCicco, thank you for the question. As the Director of Sales for Cavalier Telephone here in Philadelphia, it is my job to push our operations folks to get this network turned up as soon as possible. My performance is based on the number of lines that we have installed. Currently, our plans call to begin installing our switch probably around July 1st. We anticipate that will take about six weeks to finish installing that switch, at which time, we will begin to offer services. Our current collocation plans call for turning up the Market Street and Locust Street central offices, I believe, if not as one and two, in the top ten of our COs. So I anticipate that by September 1st, we will be offering some services to the residences and the businesses of Philadelphia, completing our installations through the end of the year and into 2001. 119 5/16/00 STREETS, SERVICES - BILL 000121
What residential communities do we anticipate first? I would expect the business community, which is primarily Center City, so to me, that's a given. But do you have a plan? What communities do you expect to go in first? I'm sure you have a priority list of those communities.
Actually, we do have a list. The neighborhoods we would start with, I believe, from our network build-out would be coming first through the northern end of Philadelphia, I believe, coming down through Broad Street, hitting the central offices along that area.
What central offices do you mean? Can you give me the locations or -- do you mean Cheltenham Avenue, coming from north to south?
Yes, coming from north down to south. The reason we're starting that way is that we need to get to what is called "a tandem," which is the main interconnection point between my network and Bell Atlantic network. The tandem is located at Market Street, so I need to complete 120 5/16/00 STREETS, SERVICES - BILL 000121 that connection first. From there, we'll branch out, going to West Philadelphia and also going down to South Philadelphia, and then go to Northeast Philadelphia to complete various loops.
When you say "West Philadelphia," I assume you're speaking to the universities first, or would it be the residential? I'm really interested in what residential communities you anticipate will be able to have access to your services. And although I consider the University of Pennsylvania Drexel obviously our neighbors and friends, but there's a residential community beyond University City that I'm concerned about.
Exactly. And after our network is completed, if can you look at our network, we're hitting every Bell Atlantic central office that serves all residential communities in Philadelphia. So following the dots on our backbone, it's easy to see that from every dot there, we'll be able to serve a radius area of, like, one to two miles, and they will all overlap.
But, again, I'm 121 5/16/00 STREETS, SERVICES - BILL 000121 just curious in what order, if you have a plan. I assume there's got to be an order to that plan.
You used the word "underserved" in your testimony, that one of the purposes of Cavalier is to serve the underserved communities in Philadelphia. Could you define, and I think that's the answer the chairman is looking for, which of those communities that you believe are underserved in Philadelphia. And what do you mean by "underserved"?
Well, by "underserved," I mean areas in which no other company currently is offering local telephone service or high bandwidth DSL services.
Those neighborhoods would be South Philadelphia, West Philadelphia, North Philadelphia, Northeast, every -- basically every -- 122 5/16/00 STREETS, SERVICES - BILL 000121
You mean, this service is not being offered anywhere in Philadelphia?
And that's the wrong -- Bell Tel -- if you're telling me that there's no competition --
That's different from being underserved. Is there a service -- is this service being provided, let's say, to North Philadelphia, in the Barrio, in the Latino community? Does Bell Tel provide this service in that area?
Bell Telephone does not provide high bandwidth DSL services at every one of their COs in Philadelphia, and we certainly intend to provide DSL services for all the communities served by --
Again, answer my 123 5/16/00 STREETS, SERVICES - BILL 000121 question, though. I mean, is it serving -- does Bell Tel serve that community, does it offer these services to that community?
As to regular dial tone telephone service, yes. With respect to the newer technologies that we're bringing, not all.
I have a line, I get AOL, I got a Bell Telephone. Is Bell Telephone offering me all of the services that Cavalier is offering?
Do you have a choice of digital subscriber loop services right now from your house?
You're talking to -- 124 5/16/00 STREETS, SERVICES - BILL 000121 we're trying to get informed here.
Yes. Basically, you have a regular plain old telephone system line called "POTS," which its bandwidth is approximately 56 kilobits at this point, and you probably do not have in that area DSL services that I'm aware of at this point. DSL will allow you to dial up to the Internet at speeds of to 100 times faster. 10
Could you speak more directly into the microphone. I keep missing a word here and there.
Basically -- I apologize, I'll speak closer here. Basically, right now, you have regular telephone service to your home. The services we're talking about is not just only -- not only regular POTS telephone dial tone service where you call your neighbor, but I'm also talking about digital subscriber link services that would increase the bandwidth from your home when you dial up to the Internet by 10- to 100-fold.
Bandwidth. Bandwidth is 125 5/16/00 STREETS, SERVICES - BILL 000121 the amount of data through-put your lines can carry per second.
There's a lot of information that will be able to be put in through those wires, right?
So that's what I mean by "underserved," that -- first of all, you don't have a competitive choice of local service today.
So you increase the amount of information that you're able to store or send, right?
And you increase speed at which you gain access to the online and to the Internet?
And you increase the speed in which you are able to communicate through the Internet?
Okay. And Bell Tel does not currently offer that level of networking 126 5/16/00 STREETS, SERVICES - BILL 000121 that you're talking about?
I believe not to all neighborhood, not to all Philadelphia areas.
Do you know why they don't? Is it an economic decision, a business decision they've made?
Councilman DiCicco, John Young again. I can't testify to what Bell Atlantic thinks, but I have my own thoughts on it, which is that there has been no competition up until now and, therefore, Bell hasn't had to respond. I testified earlier that our aim here is to get Bell Atlantic not only to respond -- obviously, we want to win business from the residential consumer, but we also want to improve the lot for the people who don't want to leave Bell Atlantic. We want Bell Atlantic to start offering new and innovative services like Internet caller ID, which --
New and innovative Internet such as, for example, Internet caller ID, which 127 5/16/00 STREETS, SERVICES - BILL 000121 currently is not provided by Bell Atlantic anywhere in the State of Pennsylvania.
Internet caller ID is, if you were on the Internet, what's known as "surfing the Web," looking for information, and a call -- and that line at your home is being used for that, the line that you normally use to call your friends or family, and somebody calls you while you are online, you don't know that that call is being placed, and they either get a busy signal or are sent directly to your voice mail. With our service Internet caller ID, something will pop up on your screen with the telephone number and the name of the person calling you, and you will have the choice to disconnect your Internet service for the time being, pick up the phone call, speak to the person, hang up, and then continue surfing online. It's just a new, innovative service, it's just something that Bell doesn't offer today. And what we hope to do is to create the atmosphere in Philadelphia where Bell feels that 128 5/16/00 STREETS, SERVICES - BILL 000121 they have to offer these types of services to the community of Philadelphia.
Councilmember Rizzo, then I'll come back to my question.
Thank you. I'd like you to clarify something that you said earlier. Today copper wire is pretty much an antiquated communication mode.
Well, it's dependable but it's not fiber optic, it's not -- what's other --
Well, no, there's a new wire that's the buzz around the industry now, that people are installing in their homes. It's not copper.
I forget, but that's not my point. My point is that when you transition from this high-tech wire back down to 129 5/16/00 STREETS, SERVICES - BILL 000121 conventional copper wire, your system -- I'm trying to think of the name of it. It's cad five?
Well, cat five wiring is actually copper, it's copper wiring and it -- I'm not a technical person, either.
Well, here's where I'm going. If a home was equipped with this upscale wire, would your system provide more bandwidth than it would if it weren't attached to conventional copper wiring? In other words, are some of your customers that build new construction going to be able to install a different type of wiring? Will that give them more?
The network infrastructure that we're building takes advantage of, like we talked about before, the existing copper wiring that's in the ground today. However, the electronics that we -- I guess for lack of a better word -- strapped to either end of that copper wire will allow that copper wire to go from -- an analogy I can think of is a garden hose today to a water main. It's really that type of 130 5/16/00 STREETS, SERVICES - BILL 000121 difference. It's 100-fold increase in the speed or the bandwidth available on that line.
So you're going to utilize this existing copper wire, get more out of the existing copper wire, but if there were a different type of wire available to support your system, you could even do more.
I -- I think -- and let me clarify here. I think what we're talking about is wiring that gets us from the central office to the home, which would be the, quote/unquote, existing copper wire. Then if cat five is what you meant before, cat five would be a wiring for an internal local-area network that some homes even have now, and what that does is, it gives you the ability to run high bandwidth within the home, without having to strap on those electronics, which I talked about before.
Councilmember Ortiz? I'm sorry, excuse me. Councilmember Clarke.
Thank you, Mr. Chairman. I'll be brief. Mr. Arias, I had a question about in 131 5/16/00 STREETS, SERVICES - BILL 000121 your testimony where you speak of these 200 high-tech jobs and construction jobs in the Philadelphia region. Could you be a little bit more specific about the type of jobs and who those jobs will go to in both categories?
Yes. With respect to our jobs to run our network, we're going to have switch technicians, which we have. We're going to have engineers, internal engineers, outside plant engineers, customer service, sales, dispatch, installers, repairmen, and just a host of other -- information systems analysts, probably, let's see, billing, customer care, assignment and transactions, and just a host of many types of jobs in order to run a telecommunications company. Those are the types of jobs that we're expecting to --
With respect to construction, basically fiber construction is the type of jobs we'll be offering and we'll be subcontracting in the Philadelphia area.
Where will those 132 5/16/00 STREETS, SERVICES - BILL 000121 jobs be recruited from, those individuals to fill those jobs?
The reason I ask that is because Philadelphia region versus Philadelphia, there's been a discussion about that and the ability for us to get some revenue associated with the wage tax.
Yes. Basically, our new office we just purchased is in Warminster, Bucks County. It's conveniently located two or three blocks away from the R2 SEPTA line, which pulls directly from the City. So definitely, when we advertise for jobs, we advertise in the Philadelphia Inquirer and will be pulling from Philadelphia and from many regions.
For construction and/or just permanent network jobs, you know, for people to run our company.
Is there -- you know, 'cause we recently had a public hearing and 133 5/16/00 STREETS, SERVICES - BILL 000121 we talked about locating your type of facilities in the City of Philadelphia, and we were trying to come up with some strategies associated with the taxing structure and the way we do business. Could you briefly just give me a reason why the decision was made to locate there as opposed to the City of Philadelphia, given what you've said here today about the ability to create these new type of industries targeting the City of Philadelphia and why you wouldn't locate here in the City of Philadelphia with your headquarters?
Certainly. I'm glad you asked that question. We did work closely with the Mayor's Business Acton Team and also the Philadelphia Industrial Development Corporation, and I was looking at several Keystone Opportunity Zones in the Philadelphia area. The Navy base was one, I was looking at Building 11 specifically, which was one of the final buildings that we were seriously considering. However, we came across a building up in Bucks County, that the price was right. It was owned by a former communications-type company and 134 5/16/00 STREETS, SERVICES - BILL 000121 it was pretty much set up to go. And that's why we decided to go with that location.
Yes, but also the Keystone -- well, the tax -- well, the Building was 11 also close to the Delaware River and we were concerned, due to our electronics in the building, as to flooding issues, and that was one concern our engineers raised, which kind of made us decide maybe that's not the best place.
And there was nothing in any of those zones that was to your liking?
Well, in the other zones, a lot of the buildings were basically abandoned and in very bad shape for the Keystone Opportunity 135 5/16/00 STREETS, SERVICES - BILL 000121 Zones in Philadelphia. I toured just about every single building available in the Keystone Opportunity Zone, to tell you frankly. And also, I think there was going to be a new building built in West Philadelphia, a new technology center. However, that wasn't going to be ready for my timeline, and I spoke to the people doing that, and they couldn't accommodate my type of network and company. It was more built for start-ups and smaller company, not for a switch being put over there. So it didn't have the infrastructure for that. When you put a switch in a building, you have to have certain floor-weight specs that hold a lot of weight, you have battery backups, you have generators, you have that type of thing, and they weren't equipped for that. So that's another reason why we decided that that really wasn't good for our needs. The building we have in Bucks County does have the specifications we need to run our network.
Do you have a recruitment plan other than just advertising in 136 5/16/00 STREETS, SERVICES - BILL 000121 local newspapers?
Yeah, no 5 billboards, right. I'm just asking these questions because I'm concerned. We Councilpeople, we obviously would like for individuals to be located in the City of Philadelphia as it relates to their residency. We would prefer that work in the City of Philadelphia, given the nature of the tax structure on the wage tax, and wherever possible, we try and promote that. And you speak of providing a service to an underserved Philadelphia, and to make the decision not to locate here kind of troubles me.
But we did give it a -- with all due respect, we did give Philadelphia a very fair shake. We did look and I worked closely with the Mayor's Business Action Team for months, looking at various buildings, we toured them. And it just came down to costs, the dynamics of the building, and just the availability, and, you know, what was acceptable to our network needs.
And the Bell 137 5/16/00 STREETS, SERVICES - BILL 000121 Atlantics of the world that you would essentially be competing with, to your knowledge, are they located in the City of Philadelphia?
Well, Bell Atlantic's headquarters moved to New York, I believe, last time I checked. They still have a presence here but --
So you -- and would have no employees here, located here, working, and you're saying Bell potentially has a -- probably has a number of employees that we get City wage tax benefits from.
True. And we have employees right now from Philadelphia, and we're obviously going to pull a lot of our employees from Philadelphia. That definitely is something that we'd be interested in. 138 5/16/00 STREETS, SERVICES - BILL 000121
I couldn't understand what you said about the employees.
Yes. Currently we have Philadelphia employees, and we will be pulling more, I'm sure, from the labor pool here. That is definitely something we're interested in.
Would it be possible for you to provide the Chair and, therefore, members of the committee, with a recruitment strategy? 'Cause as we enter into this new technology, we would like to know what needs to happen, you know, both from our end of it and kind of give us a sense of what happened as you looked for location in the City of Philadelphia, just briefly summarizing the reason why you felt that, you know, you had to make the decision to locate outside of the City and how you will, on the backside of that decision, try to, wherever it's possible, to get employees to come from the City of Philadelphia and work at your facility, both from the construction side as it relates to the installation and also on the permanent side as it relates to your facility in the suburban county. 139 5/16/00 STREETS, SERVICES - BILL 000121
Councilman Clarke, it's John Young again. Thank you for the question. As the Director of Sales, one of my jobs is to heavily recruit people to staff my sales force and sales support staff. And what we have started to do in the last couple of weeks is advertise in the Philadelphia Inquirer. We'll probably be starting to continue that on a weekly basis from now on to pull not only sales and sales support staff from my side, but also to get additional support staff from the technical side. We -- like Martin had said, our location in Warminster is, I believe, two to three blocks from the R2 and SEPTA regional rail. Our plans -- you know, given the nature or the situation with the relatively low unemployment rates right now, we're going to need to pull people from everywhere we can get them and get them into these high-technology jobs. Where we have to, we will train people to come into these high-technology jobs. In Richmond, we have pulled extensively from the City of Richmond residents to come in and staff our positions anywhere from the sales side, 140 5/16/00 STREETS, SERVICES - BILL 000121 all the way to, you know, the customer support and then the technical support side. So we have a record of providing a lot of jobs. Martin testified that we'll be providing upwards of 200 jobs by the time we've completed our network build-out and are turned up and ready to go, and they'll range from, again, sales, customer support, all the way to the technical staff.
And how will you deal with the construction side of it?
With respect to the construction side, we'll be bidding out the work to subcontractors to build the network, and we would submit requests for proposals, I believe, and set our bid specs to a vast array of contractors. We've been meeting with several, as we speak -- some from Philadelphia, others who are not to do the construction. And with respect to construction work in Philadelphia, we would -- for subcontracting, we would definitely entertain prevailing wage to do so. That is not a problem for construction work subcontracting in Philadelphia, and we would welcome lists of potential contractors that could 141 5/16/00 STREETS, SERVICES - BILL 000121 this kind of work, we'll definitely welcome them.
Okay. So there are people before the general contractor, and then that general contractor will do the subcontracting with the various trades?
That is correct, that's how we would work it out. I mean, if I were provided a list of available contractors, we would definitely consider them in the bidding process.
So those 200 jobs will actually be located outside of the City of Philadelphia, right?
Yes, that's correct initially, yes. I don't know if all 200 would fit in that building; we may outgrow it eventually and have to look for another site.
And although you hope that some of them are from Philadelphia, it could be that a minority of them could be from Philadelphia.
That is also true. I can't predict exactly what percentage will or will not 142 5/16/00 STREETS, SERVICES - BILL 000121 be from Philadelphia.
I would have a question on the switch, and then I'll recognize Councilman Cohen and Rizzo. You mentioned something about a switch. Could you explain briefly, in layman's terms, what a switch system is.
Councilman DiCicco, John Young again. As a layman, I also hope to be able to explain this in such a way. A switch is a vehicle in which you connect one party to another party who may not be directly connected to your location. There are different types of connectivity -- it's a word we use in the industry -- to determine different ways of getting from one person to another. Point-to-point connectivity is done without a switch and involves the direct connection of either copper or fiber optics.
The switch, is that done manually? Is there somebody who does 143 5/16/00 STREETS, SERVICES - BILL 000121 something manually? 'Cause I have a little sense of this from a meeting with --
A switch is electronic. It sets up virtual circuits, and a circuit is just a connection between two sites to transit voice or data over that line to get from one point to the other. I think Martin's got a clarification on that.
Basically to put it in layman's terms, a switch is really the heart of your network, it's the brains of your operation, it is what controls the incoming and outgoing voice and data signals.
And does that require a manual or a human being to operate that? I mean, somebody has to make the switch, that's what a switch infers as far as --
That's correct, it needs constant updating and you have switch managers.
It's in Warminster, correct. 144 5/16/00 STREETS, SERVICES - BILL 000121
All right. I think Councilman Clarke may have asked the question earlier or it was in your testimony. When you were looking at some of the KOZ areas, you mentioned that none of the buildings that you had seen in KOZ areas -- and correct me if I'm wrong -- were adequate to support a switch; is that correct?
That is correct. Well, for the most part. I was generalizing there.
Does Bell Atlantic have switch or switches in buildings in Philadelphia?
Is there a way in which you could coexist with Bell Atlantic at those sites? And, again, I know nothing about --
Can I put a switch in their collocation site? I believe that was subject of litigation, and I believe right now, under the FCC rules, that we cannot put a switch at this point at a Bell central office. However, we can put other electronic equipment to facilitate switching 145 5/16/00 STREETS, SERVICES - BILL 000121 operations, but not necessarily the switch, that I'm aware of.
How many people does the switching operation require on a 7-day, 24-hour-aday, 7-day-aweek? You have 8-hour shifts where someone is there monitoring this or --
It's a 24-by-7 operation. When you're dealing with a network such as ours that deals with 911 also and emergency calls, you definitely have to have a full staff. I would say anywhere from 6 to 10, depending on --
To operate or monitor or observe, whatever the correct word is, the switch?
Outside of the KOZ zone, did you look at any other buildings that might be able to accommodate a switch in the Philadelphia County?
We were looking to purchase buildings. I looked at some, a few, actually, 146 5/16/00 STREETS, SERVICES - BILL 000121 yes.
What were the reasons for that decision? City wage taxes? What was it? It was a business decision, obviously.
Well, I guess price, taxes, issues such as that, yes, correct.
How many counties, including Philadelphia, would be affected by Cavalier?
And there are about 200 jobs that you would anticipate totally will be created at some point in time?
What percentage of Philadelphia County will account for -- what percentage of the business will Philadelphia County account for? Ballpark it.
Well, I would say, you know, 20 percent if there are 5 counties.
So 20 percent of 147 5/16/00 STREETS, SERVICES - BILL 000121 the --
Of the customers, I'm talking about of the customers. Twenty percent of your customer base would be Philadelphia?
What's that in natural numbers? "Twenty percent of," what does that mean? Does that mean 10,000 customers, 20,000 customers? What does that represent.
And what would the other four counties cumulatively account for in terms of customers?
An the additional 80 percent of our business, and we're just talking about, you know, our Year projections. 148 1 5/16/00 STREETS, SERVICES - BILL 000121
So, you know, roughly between -- I want to say 50 and 100,000 lines, with to 20,000 of those 50 to 100,000 lines 6 being Philadelphia County. 7
So conceivably, I 8 mean, 50 percent of your customer base could be 9 Philadelphia customers. 10
Well, we anticipate that if we did get 20,000 customers from Philadelphia, given the nature of the media and marketing campaign we would take on, that we would also get an additional amount of customers from the other areas. I guess the assumption I'm giving you now is if get 20,000 customers from Philadelphia, we would probably have on the order of 100,000 customers over the entire 5-county area. And I can't stress enough that these are very fluid numbers at this point.
I understand. I guess what I'm getting at is that we may provide the bulk of your business, but we get the minimum number of jobs in Philadelphia. And I know we're not supposed to depend 149 5/16/00 STREETS, SERVICES - BILL 000121 on legislation based on that, but we have a responsibility also, especially when you go back to some of my earlier questions, where conduits and services are being provided within the City of Philadelphia or under our streets, we -- and I appreciate the services that will be made available to customers, but they have to pay for that. See, customers aren't going to get this for free. So Philadelphia taxpayers will be paying for a service, we provide the right-of-way, the City of Philadelphia provides the rights-of-way, without any compensation. And in addition, we don't even get to get the employees, but the counties outside will employ the bulk of, if not all of, the employees. We get nothing in return. I just have a little problem with that. That's why I go back to original statement. I think we need to look at more closely at what can the City benefit by in terms of compensation for the use of our land, our ground, our air rights, what have you. And I'm not being argumentative. We 150 5/16/00 STREETS, SERVICES - BILL 000121 have a responsibility here: to create jobs, to keep revenue going. And if we keep losing our customers, which are our taxpayers, you will eventually will lose a customer base also. Now, Bucks County may pick them up, but I don't care about Bucks County because they, obviously, don't care about us, so we're only worried about Philadelphia residents. Councilmember Rizzo?
I'd like to talk a little bit more about the workforce that you plan to hire. I heard you say that the switch and other components would be installed by contractors that you would hire to do that. Do you have experience installing this equipment in other places, Richmond, Virginia?
Is the company that installed that equipment in Richmond, Virginia, going to be one of the people that bid on doing the work here?
Yes. Basically, the company installing our switch -- that will install our switch here is Lucent Technologies. We're 151 5/16/00 STREETS, SERVICES - BILL 000121 buying a Lucent switch in order to avoid the warranty of the switch, we have Lucent handle the installation of that switch at our sites.
So let's move beyond the actual installation of the switch by Lucent. What other -- those other contractors that you referred to that you'd be hiring to install those other components, could you describe the magnitude of that, that will occur in the City of Philadelphia and the selection process for those contractors? And obviously --
Yes. Basically, the selection process will be based on cost, on ability, on reputation, on company, on contractors that have done this type of work before with a track record, and we would seriously consider those. We're interested in a quality build-out, but at the same time, we don't want to spend too much on doing so.
Describe how big it is, how small it is because I can't get a feel for how much work this project is going to generate within the City of Philadelphia, whether it's one contractor working one day a week or 20 152 5/16/00 STREETS, SERVICES - BILL 000121 contractors working 24/7. Could you just kind of describe how big a deal this is for Philadelphia.
My name's Dave he Heffline. The construction phase will begin at our switching in Warminster. And as Martin said, it will work its way south into Philadelphia. Once we enter Philadelphia, we have approximately 70 miles of plant to build. We hope to build at a rate of 5 to 7 miles per week. That will involve various crews. Each crew can build approximately a mile and a half or maybe two miles a week. So we figure probably three aerial construction crews working the underground portions. The construction that we actually have to do the excavation will be minimized. We are working with Bell Atlantic to utilize all of their conduits where available. That work will be done by Bell Atlantic. They require -- or one of their approved contractors, they require someone to do that pulling through their conduit because it's into their manholes and to minimize damage in their facilities. That's something that they 153 5/16/00 STREETS, SERVICES - BILL 000121 require us to do.
How many jobs -- I mean, for three line crews, you're talking four men, women to a crew?
Three to five men per a crew, depending on the type of crew, yes. A fiber crew's around five, the support wire crew is usually three.
So they would be a aerial line construction crew? Would PECO Energy be one of those companies that would be considered for that construction?
So Exelon would be one of the companies and -- go ahead.
Yes. Actually, if I may, we are currently using Exelon to do the engineering part of our network and part of the make-ready cost apportioning of our pulls at this point, so we are using PECO.
So the only -- at this time, the only known company from outside the region is a company that's going to install the 154 5/16/00 STREETS, SERVICES - BILL 000121 switch?
That's correct. But I believe Lucent, that's installing the switch, will use CWA contractors to install that switch.
Do any of the companies named in the title as only the existing facilities, do they have a right to say no to you?
Well, under the Telecommunications Act, companies that own poles must make them available to companies such as mine, to telecom companies, for attachment. So Bell and PECO must make those available to me for attachment. I'm looking at the ordinance.
I believe the companies that -- telecommunications companies such as Bell that own the duct, yes, I believe they must make that available to me. PECO, I also believe that 155 5/16/00 STREETS, SERVICES - BILL 000121 they should also, although I have to check. But they make it them available anyway at this point. Railroads right-of-way, I don't think -- they're not affected by the FCC, so I don't think they have to make it available if they don't want to at this point.
Yes. Under the Telecommunications Act of 1996, local governments must make their rights-of-way available to us for occupancy. They cannot be a barrier to our entry, under Section 253-C of the Telecom Act and must provide access to the rights-of-way on a nondiscriminatory basis. Also, under State law, since I'm a public utility, I have the right to occupy the public rights-of-way, subject to, quote, reasonable regulations set forth by a local government.
Is that true of 156 5/16/00 STREETS, SERVICES - BILL 000121 every company that seeks to come into the City?
The Telecommunications Act, as a telecom company, yes; as a public utility company, I have additional rights that grant me to occupy the rights-of-way. So I have twofold right, subject to reasonable regulations of cities which are limited to administrative regulations, such as time and place of occupancy, I believe, requiring a company to place facilities underground, such as Center City, requiring a company to pay fees to recover administrative costs for the occupancy of rights-of-way, and also the requirement of the company to indemnify the City for any reasons whatsoever. As a matter of fact, a recent Federal District Court decision in the Eastern District of Pennsylvania, that case being PECO Energy Company versus the Township of Haverford, stated exactly those points. It basically struck down a Haverford ordinance because the township was acting under unlimited discretion as to company's ability to occupy the rights-of-way. And as I stated before, the Federal Court held that a company's discretion is limited 157 5/16/00 STREETS, SERVICES - BILL 000121 -- excuse me, the local government's discretion with respect to rights-of-way occupancy for telecommunications companies under Section 253, under the Telecom Act, are limited to the following, and I quote: Requiring a company to place its facilities underground rather than overhead, consistent with the requirements imposed on other utility companies. 2. Requiring a company to place its facilities underground rather than overhead, consistent with requirements imposed on other companies, regulating the time or location of excavation to preserve effective traffic flow, prevent hazardous road conditions, or minimize noise impacts, enforcing local zoning regulations, and requiring a company to indemnify the City against any claims of injury arising from the company's excavation. Any other requests or demands would tentatively fly in the face of Section 253-C of the Telecom Act.
Well, would we, for example, have the right to an investigation or an 158 5/16/00 STREETS, SERVICES - BILL 000121 examination of the finances of the company, or do we have to accept your conclusion that you are a solvent company?
With respect to solvency, that is regulated by the Public Utility Commission. When I applied for certification with the Public Utility Commission, I do undergo a financial analysis, and I do provide my financial records -- under seal, of course -- to the public utility, and they did look at that issue. Public utility companies, such as mine, are under the exclusive regulation and domain of the Public Utility Commission of Pennsylvania.
But public utilities, aren't they required to furnish their services to everybody?
Well, I live at 5635 North 16th Street, and I've been looking through your bill to see if that's covered. It does not 159 5/16/00 STREETS, SERVICES - BILL 000121 appear to be covered.
Where -- what I'm asking for here is for the layout of my backbone fiber network. What that does is, it connects me to all Bell Atlantic central offices in Philadelphia. From those central offices, I'll be able to reach your home, which is called, "the last mile." I will lease that from Bell Atlantic.
The last mile. Okay, I want to explain that to my wife tonight, what we're called. (Laughter.)
If you vote in favor of this ordinance, you will have a choice in communication services shortly from Cavalier, and you will not be just limited to Bell Atlantic at this point. And I'm sure your constituents would enjoy having a competitive choice in telecommunications services and also a --
Well, I'll tell you, I'm not sure. When I was a young man like 160 5/16/00 STREETS, SERVICES - BILL 000121 Councilman DiCicco, telephone service was much better than it is today. We used to laugh at reports we'd hear about service in Europe where there was difficulty making calls or connecting. Today in City Hall, it is almost impossible, if I am at home and a call comes in to the office and the office wants to connect that call to me at home or somewhere out in the field, we are as likely to be disconnected as we are to be connected. It never used to happen that way. And I think there's been a terrible state of deterioration in the furnishing of telephone services, just simple ordinary telephone services, and we spend much time just trying to correct each other and talk to each other. If I call the City Solicitor and the City Solicitor wants to get another attorney on the phone who's working on the case, we're probably going to have our phone disconnected. And so, I'm kind of cynical about these advanced services.
I'd be happy to be in the old days, when if I wanted to make a 161 5/16/00 STREETS, SERVICES - BILL 000121 connection, we could make the connection. I don't know what causes this.
Well, basically, if you allow competitive forces such as me to come into the City to compete against Bell Atlantic, service will improve on either side because we're fighting for the customers. Right now, the City of Philadelphia has a centrex system that's supplied by Bell Atlantic, I believe, and that's where you're talking about having problems with connecting one City department with the other.
Well, they all happen to be Bell Atlantic in the Philadelphia area now.
Well, if you allow a company like mine to come in with the competitive forces, it will not only force the incumbent to improve their service, but it will force me to provide better service 'cause then you'll just drop my service if you're not happy with it and go back to Bell or vice versa. So it gives you choice.
Mm-hmm. Let me ask 162 5/16/00 STREETS, SERVICES - BILL 000121 you about. . So you're saying everybody in Philadelphia will have your services available to them, that the list of addresses of various places merely indicates where work has to be done?
And that overwhelmingly, you seem to be utilizing other people's lines or ducts?
No, we will use -- I mean, our backbone, which will be the our main service platform for Philadelphia, that's what's described there. From that platform, we'll just lease the last mile in some circumstances; many in other circumstances, we'll build out to the customer. But in some circumstances, we'll lease the last mile from Bell Atlantic. And in that way, we'll be able to reach just about every potential customer in the City of Philadelphia. The way it's planned out, we'll be able to hit every neighborhood.
Tell me what this means on , the bottom paragraph, the first sentence. "The permission granted by this ordinance is conditioned upon the approval of the 163 5/16/00 STREETS, SERVICES - BILL 000121 Department of Streets as to the construction and the installation of Cavalier's facilities at any location along the specified route and is not a guarantee that Cavalier's facilities can be placed at any particular location along that route." Who wanted that language; did Cavalier want it or did the City want that language? And what does it mean?
The City Law Department wanted that language. Basically, these ordinances are a product of Jerry Clark, who's an attorney for the City that drafts these ordinances. It's standard language. It's conditioned upon the approval of the Department of Streets. As you know, the Department of Streets has approved, we have met with John several times, Mr. Cunningham, and he has approved our routes, we had engineers meet with him. And there's been a letter sent by Commissioner Moy, the Streets Commissioner, stating that he does approve of this ordinance and has no opposition to it.
So from a procedural perspective, Cavalier Telephone has satisfied 164 5/16/00 STREETS, SERVICES - BILL 000121 every regulatory requirement required right now by the City of Philadelphia pursuant to this ordinance and other enacted legislation that allows us to occupy the rights-of-way. And I believe John Cunningham here could testify to that effect.
Yeah, but what does that mean? Does that mean if you want to place something somewhere, the City has the right to say you have the right to place it somewhere along this route, but maybe not at this specific place you want to place it?
Councilman, this is John Cunningham again from the Streets Department.
You're absolutely correct. The ordinance basically gives you the conceptional route.
The word "conceptional," I have to tell you, in this City Council is not a good word to use, not these days, 'cause in so many cases when we ask for information as to what the new administration is doing, we're told they've arrived at a conceptual 165 5/16/00 STREETS, SERVICES - BILL 000121 agreement, and what that means is, there are no 3 terms to this agreement, we just have a general concept that we've agreed with.
It is a defined route. However, the safety net there in the language that you're referring to gives the City, through the Streets Department, the opportunity to review the proposal in a very detailed manner, so there may be physical encroachments that prevent the route, as so proposed. For example, there may be some other utilities that are in the way of that route, there may be -- that street may be under construction, that street may be under a pavement guarantee of some kind. So this is saying that you do not have a pure right to be in there no matter what, so we do have the final say to authorize that.
In reference to the question that Councilman Cohen just asked, the 166 5/16/00 STREETS, SERVICES - BILL 000121 majority of your system's going to be attached to PECO Energy existing facilities, and as you know, there are construction standards. You get to a particular pole that the spacing between the facilities doesn't exist, if you change that pole out, who pays? You. Now, my question. We have enough clutter -- and I don't suggest that your facilities are clutter, but we've got cable TV aerial services, we've got Bell Atlantic aerial services, we've got cable, Bell, electric, so we've got a lot of wires on the people's houses. I would then guess that you will not just be running wires on the PECO poles, that you'll have drops to -- no? You will have no wires going from the pole to the customer's home?
Well, in some circumstances, we may, but for the vast majority, we will lease the last mile from Bell Atlantic, using their existing --
I'm -- I'm sorry again. I lost all the word at the end.
In some circumstances, 167 5/16/00 STREETS, SERVICES - BILL 000121 we'll build out to the end-user, to their facility or their building. For the vast majority, we will lease the last mile of copper from Bell Atlantic, from the Bell Atlantic central office that will be collocated in.
So when we look down a residential City street, we will not see another wire either mid-span or from the pole to a customer's house?
So we will not see 50 new wires going up and down the street?
Yes. We're not going to add to that clutter. We're going to add our lines only to the specified route here, that's it. From there, we will lease the last mile to Bell, thus minimizing the clutter, if you will, to the end-user.
Councilman, maybe you could explain better to me than the speaker. Is there going to be more the clutter or not? And where will it be, if there is any? 168 5/16/00 STREETS, SERVICES - BILL 000121
It's going to be somewhere but not in the last mile. (Laughter.)
Let me add this. Basically, we're putting up 72 strands of fiber lines, which are about an inch thick, they're about this much around (indicating), which carry an extreme amount of capacity. Once we put these fibers up there, we will force the other competitors probably to upgrade their systems. They currently have those big copper wires for transport, and those copper wires can be replaced by the thin little wires like mine. So as technology evolves and as competition puts pressure on the incumbent, their wires are probably doing to diminish in size. Why? Because they'll replace their copper plant for transport with fiber. That's a potential 169 5/16/00 STREETS, SERVICES - BILL 000121 outcome of competitive pressure, so you'll see less clutter, arguably.
Well, one of the problems we now have with clutter is the fact that when PECO Energy or Bell Atlantic of Pennsylvania puts new facilities up, and I see Commissioner Joe James sitting back there, that I know sometimes for years and years and years, they just abandon a lot of the facilities in place because there's costs associated with removing, until someone figured that there was a lot of copper wire just hanging around in the air, and then they hired a contractor to go retrieve all of that. But there are miles and miles of clutter -- since we're calling it clutter, let's call it clutter -- out there that's never been retrieved, just deactivated and abandoned in place. And occasionally, I spot something since I have a little background in this stuff, and they'll take down miles of wire that's been just abandoned and not used. And, again, the City streets, you go into some of our neighborhoods, they're just absolutely overwhelmed with wires. And I'm glad to hear that at least the last mile 170 5/16/00 STREETS, SERVICES - BILL 000121 -- but, again, I think you have to answer Councilman Cohen's question. If not there, where?
Well, where we're going to put our network -- we don't intend on abandoning a fiber network. Other plants are just copper plants for transport for the main backbone used by the incumbent are obsolete, I would argue, but fiber will not be obsolete in the foreseeable future so --
What I responded to is that you said that you were going to drive the competition to upgrade to a possible thin conductor that would replace this humongous thing, and my rationale is, yeah, they might go to a small fiber cable, but you can bet they're going to leave that other thing up there because there's a lot of costs associated with removing it, unless it's got a salvage value.
Actually, pole space is at a premium, so the pole owners would probably want to make sure that in their contract there, the people not abandon their wires. If, for example, a company such as mine, let's say, were to abandon 171 5/16/00 STREETS, SERVICES - BILL 000121 their wires or something there, we still have to pay the pole owners, you know, money for the attachment. So it doesn't make sense. You'd want to get rid of them because you have an economic incentive to get rid of them. If not, you're still stuck paying a lease for years and years and years.
Sounds like the tear-down provision you and I worked very diligently on with the wireless communication. Do you know that Martin is a former City Solicitor, who was the gentleman who worked very hard with me on the wireless communication?
On that act? I did not know. To the Streets Department representative, how many of these applications are we getting from companies for fiber optic or. . .
Well, we have -- in 1996, we had one telecom company in Philadelphia. We have currently 12 at the moment. The number of miles has increased from approximately 50 miles to 80 miles per year. So we are being inundated.
We are being what? 172 5/16/00 STREETS, SERVICES - BILL 000121
Right. I'm going to try to avoid some of these more sensitive words.
There certainly has been a land rush on the public rights-of-way, and every city in the country is contending with this issue, and we're no different in that area.
And how many of them have not been granted, the right to use the rights-of-way as of now?
Well, not counting 173 5/16/00 STREETS, SERVICES - BILL 000121 Cavalier, these are -- they're in transition at the moment. I would say probably two or tree.
Mm-hmm, all right. I don't know -- I raised earlier the traffic problems. You know, you're kind of telling me that the City has no defense, that if 100 companies wanted to apply and they met the normal tests, that the City would be obligated to permit them all to compete in the City and have a war going on among them. It raises questions. Do the costs -- how do the costs -- I assume the Streets Department, say, in the case of Cavalier, the Streets Department must have spent a lot of time, you had to check out all these streets that are listed here?
You had to figure out whether or not they could use something?
Those costs are not passed on to anyone. 174 5/16/00 STREETS, SERVICES - BILL 000121
That's just a past practice, it's been a service that the City has provided.
It just seems to me totally unfair that small businesses, when they come in for all kind of permits, maybe for paving, for other things that they may need, pay the same fee. And we are entitled to charge fees equivalent to the cost of the service. We can't make a profit on it, as I understand the law. The City always has to be able to justify its fee basis on the basis of cost. Has the Streets Department ever been asked what the cost of the service is?
We have calculated the full cost -- that means the direct cost and the 175 5/16/00 STREETS, SERVICES - BILL 000121 indirect cost, including the City's overhead.
Our hardware and software acquisitions to manage it and any other systems that we will need to match the right-of-way. Councilman, the question that you're having and Councilman DiCicco's having right now is a bit mystifying at the moment, I grant you that. But it will be cleared up within the next couple of weeks when we come to you with our proposal that addresses the cost of operating the right-of-way.
Well, do we -- I don't know whether this is a legal question or not, as a lawyer.
But would those fee charges be applicable retroactively?
I don't believe they're going to be retroactive; it will be going forward.
Well, then wouldn't it be only a sense of caution to not enact any 176 5/16/00 STREETS, SERVICES - BILL 000121 further ordinances until we've had a chance to get consideration of those fee charges? They may be substantial. Now I understand better why the Chair was so concerned before, you know, on the question.
The license agreement that the City has between telecommunications companies, once an ordinance is passed, the telecom company must sign this license agreement with the City of Philadelphia. Specifically in that license agreement, it specifically reserves the City's right to charge any fees or rental fees that the City deems just, and that can be applied retroactively from the date of the signature. So I believe you're covered from that angle.
It can apply -- basically, if there's no fee today and you have a fee tomorrow, it can apply.
For how long, how 177 5/16/00 STREETS, SERVICES - BILL 000121 long after?
I think the language is pretty specific there. It says the City reserves the right to apply this fee or any fee that it may now or in the future apply. I think that's what the language says.
I would like to get an opinion from the City Solicitor.
Councilman, I just want to add to your line of thinking, that it would be most appropriate if you discussed this issue with our attorneys who have been working on this for about a year, and they can give you the best advice on how to go about this.
Are there specific attorneys in the City of Philadelphia?
Just for the record, I think there is one person to testify. And what I'm going to recommend after the testimony is taken, in light of the fact that there are a number of questions that have been 178 5/16/00 STREETS, SERVICES - BILL 000121 raised today, I'm not clear on, and I know some of the members on this committee aren't clear on them, and the fact that this type of business will affect the entire City, I will convene a seminar or a meeting of all of the Councilmembers and those City Solicitor folks who have been working on this legislation in the next week or two to answer any of the questions that Council may have as a result of today's hearing and any other questions. And by then, I would assume that the fee structure -- if that's the proper terminology -- would be coming from the Streets Department. And then, you know, we can wrap up before June 22nd, but I'm going to ask that we hold both of these bills until that time, until the call the Chair.
Could I just raise one question. I was silent when the Chair raised questions of the headquarters, but it seems to me that your figures have to be somewhat skewed when you indicate that you think Philadelphia will only provide 20 percent. You're saying that we as a county will only provide as much business as the 179 5/16/00 STREETS, SERVICES - BILL 000121 four Philadelphia suburban counties around us? That's awfully hard for me to think that that could be so.
Like we said, that was a very rough estimate. We don't know at this point what percentage it will be. I really couldn't tell you at this point. I was just stating 9 percent based on the 5-county area that will be 10 providing service, and 20 percent would be out 11 of 5. That's how we came down to that. 12
When Comcast came in 13 in the cable field, it was very important to us 14 that Comcast showed some real interest in 15 Philadelphia and agreed that they would -- we 16 couldn't compel it, but they agreed they would 17 place their main headquarters in Philadelphia. It 18 indicated a good-faith venture, it gave us some 19 solace in the feeling that probably there'd be 20 more Philadelphians hired. 21 It seems strange to me that you're 22 seeking, I think, to evade certain burdens that 23 businesses sometimes think they assume when they 24 come into Philadelphia, and you're asking us -- 25 maybe you have a right to ask us to go through all 180 1 5/16/00 STREETS, SERVICES - BILL 000121 kinds of inconvenience to give your business an opportunity to compete. It seems to me that a showing of good faith would relate to the question of a headquarters facility. I made a former employer of Councilman Rizzo very uncomfortable by protesting the merger of PECO and Unicom on a number of bases, and a very one important one was their initial refusal to guarantee the maintenance of their headquarters at Market Street for more than just a few years. They have since increased it by four to five years, they increased their guarantee on their retention of employees. And I just wonder why you treat Philadelphia as if you don't have to give any consideration to these questions that are so important to us, to all urban communities that are struggling to maintain vibrancy and vitality in the City. And do you have any comment? I would be pleased to hear it. It troubles me at great length.
Counselor, before you answer, Councilman Cohen made PECO Energy 181 5/16/00 STREETS, SERVICES - BILL 000121 uncomfortable long before this particular issue.
Yeah, yeah, I did, but on that opposition -- yeah I'm also opposed to do their concern because they are the major force the United States in promoting nuclear energy, yeah. But I don't understand why -- what your attitude is. Maybe it would be a little more costly, but your whole business venture wouldn't be possible if it weren't for the continued health and existence of the City of Philadelphia.
I understand your concerns, and we did give Philadelphia strong consideration. As I responded to Councilman Clarke's questions, I did state that we did look at various buildings within the City of Philadelphia, and we just happened to come across a great deal and a great buy for a building that was pretty much ready to go for a telecommunications standpoint in Bucks County, and that's where we decided to put our headquarters.
Thank you. 182 5/16/00 STREETS, SERVICES - BILL 000121 Any other questions for these witnesses? (No further questions.)
One quick request. After subsequent testimony here, may I be granted the request that I be able to respond to any other testimony that's raised today?
Thank you. Anyone else here who wishes to testify? Please approach the witness table. (Witnesses come forward.)
Thank you, Mr. Chairman and Councilmembers. I appreciate the time this afternoon. I'm the President of the Electricians Union, Local 98, in Philadelphia. I'm speaking for myself and John Dougherty and well over 3,000 members of the Electrician Technicians Local Union here in Philadelphia.
State your name 183 5/16/00 STREETS, SERVICES - BILL 000121 for the record, please.
My name is Harry Foy. We currently represent well in excess of 3,000 members, of which almost 1,000 of them are sound and communication and fiber installers throughout the Philadelphia area. We have been currently involved over the years in the digital divide, as it's been put down here; for the last ten years, in training City residents from the community in the teledata industry to generate wages, City wage tax, health and welfare, pensions, spend their money in the local supermarket, spend their money in the local hospitals, put their kids through the local schools. And we incur this kind of problem on an ongoing basis with entities that come in from out of state. And by the way, we've reached out up to ten times to Cavalier to respond to calls from Local 98 in regards to this work that's now being addressed here this afternoon, and we've received only one return phone call in regards to those calls. Now, we represent all walks of life in Philadelphia -- minorities, women. We currently 184 5/16/00 STREETS, SERVICES - BILL 000121 put well in excess of $1 million a year in training in fiber and telecommunications in the City of Philadelphia. ) Associates, who has pumped hundreds of thousands of tax dollars into this City of Philadelphia, as a local contractor both doing fiber and electrical installations throughout the City. Now, it becomes a problem for us, and we're all for e-business, but when an entity enters the area and they put their major, major facility in outside the City of Philadelphia and that's all lost tax base, all lost tax revenue by City wage tax -- and that's a big installation, let me say that to you right now. A central switch is a massive job, it's a large -- there's more work associated to the installation of that switch than the manning of a switch over the years. So that's a massive project. So we stand here this morning in opposition of this bill -- I'm sorry, this afternoon, we've been here a while. 185 5/16/00 STREETS, SERVICES - BILL 000121 If I can, what I will do is read you a brief statement here because I wasn't totally involved in this all along, but Ed Neilson was and he'd be here this afternoon to read this to you, but unfortunately, or fortunately, whatever way you want to look at it, his wife had a baby boy just the other day and everyone's just getting home. So if you would just bear with me, I'm going read this statement to you and I'm going to be very brief here this afternoon. But we would like to hold this bill up, 'cause I don't think it's good for the City of Philadelphia, I don't think it's good for taxpayers of City of Philadelphia, of which we represent 80 percent of those guys and girls and women and minorities that put money back into the City, where it belongs. "Today I sit in front of this committee to oppose this legislation on behalf of more than 3700 members of the IBEW Local 98 as well as the business manager, John Dougherty. Some people contend that the testimony that I am about do give is self-motivated and another tactic that unions in general use to secure work for 186 5/16/00 STREETS, SERVICES - BILL 000121 their members. I am here for not only work for my membership, however; it is about future jobs for our City residents and the long-term impact in Philadelphia. "Over the last five years, Local 98 has been taking a more active role in City Council to voice our concerns on the many issues and the challenges that come before City Council. As a lifelong resident of Philadelphia, I do not ask anyone in this building for something for myself that will result in personal gain. I do things to help others in my community and those individuals that I represent. "With the breakup of Ma Bells of the world over the last five years, we have had companies come in from City Council telling us how they are going to help our city grow. Through numerous studies, we have seen a declining population in Philadelphia because of the companies, such as Cavalier Communications.
The telecommunication technology in Philadelphia is growing to be a major issue in and around our region, as we read daily in our local newspapers. With 401 North Broad Street and the project at the 187 5/16/00 STREETS, SERVICES - BILL 000121 old SmithKline building on Spring Garden Street, I can see Philadelphia being a Silicon Valley East, just as many of the pros in the telecommunications market contend it to be, including our own our own Mayor Street. "We have heard many empty promises made to this Council and today we have heard another. The representatives tell us how the competition they are going to provide is great for the members of our community with the money we may save by utilizing their services, but let us look between the lines here, ladies and gentlemen. "Three years ago, a similar company came into town and made promises to this Council to uphold the area's prevailing wage and standards that were established by our forefathers. Let it be known that these standards are recognized by the State, Federal, and City agencies, while performing any and all work in the City of Philadelphia. Being the trustworthy people we were raised to be, we agreed and believed them, and this Council granted them permission to do some of the same things Cavalier is today asking to do. 188 5/16/00 STREETS, SERVICES - BILL 000121 "They talked about the neighborhood participation and local contractors. As they came up from the State of Virginia, like this one, they said that Philadelphia would have an opportunity to grow and its residents would have more choices and a cheaper rate with more competitive companies in the area. "What did we get? A few jobs to get them up and running, lower prices for a few month, and no-long term, good-paying jobs for native Philadelphians. These companies bring technicians and management teams from all across the country to run the operations and facilities as well as servicing and maintaining the equipment they allow us to install. They will hire a local secretary or someone to sweep the floors on off-hours for $6 hour, if they are lucky, but they bring people in from out of state to learn and to do the maintenance of the sophisticated equipment in this growing industry. "These companies that I am talking about bring employees in at a lower rate of pay and pay them through their main offices as if they were not even working in our city. This, in turn, 189 5/16/00 STREETS, SERVICES - BILL 000121 allows them to avoid City wage tax, a tax that we all must pay to keep the government and services operating. They dig up and block up our streets with trucks and equipment from companies from out of state. We see it every day throughout the City, with all the traffic jams. "I personally have met with representatives" -- and this is not me, this is Ed Neilson. "I have personally met with representatives from Cavalier. We went through their game plan together right up until they told me that they could save City residents money by moving their facilities outside the City of Philadelphia. I was told that their main office is going to be in Warminster, PA, by a train station so that people can the take train to work from Philadelphia. They told me they plan to hire City of Philadelphia residents only in a capacity of phone solicitation sales for this great service they want to provide us. "Martin Arias came to town as Cavalier Communications' main man to deliver a Philadelphia deal, after all the City of Philadelphia trained 190 5/16/00 STREETS, SERVICES - BILL 000121 him and taught him all about the legislation process of Philadelphia. Some of you here today may have worked with him on other projects. He wants us to think he is one of us, but he is not. Look at his record. "He abandoned our city a while back when he moved to Virginia. Then he came back to do this deal and set up shop in King of Prussia, once again to avoid city wage tax.
Recommended to his company to purchase a building to employ more than 150 employees in Warminster instead of here in the City of Philadelphia, once again to avoid taxes. Not coming forth to anyone in the City or in this room to ask for assistance or help in an effort to secure a facility. "Now they want the City to help, help Cavalier make money off the hard-working backs of City Council and the residents of our city, not theirs. Not that I think the City needs to get anything, but we continue to concessions to let companies prance through our city without helping our city grow, not even a gesture of any kind for our children or schools, like we see when a Comcast brings legislation before this Council. 191 5/16/00 STREETS, SERVICES - BILL 000121 Comcast wires our police stations and schools and provides a real service to our communities. They employ City residents at all levels Comcast supports our City residents, governments, and charities every opportunity they get. "Let's not make the same mistake again, and if companies want to be so detached from our city, let them detach and save the room for a company who will be a part of our community instead of someone else. " This was sincerely submitted by Ed J. Neilson, Treasurer and Political Director of the Local 98 IBW. And with that, I'll conclude my report, and I appreciate any consideration you will be giving this matter.
Thank you, Mr. Foy. While I agree with many of the statements that you've made and many of the 192 5/16/00 STREETS, SERVICES - BILL 000121 statements that Mr. Neilson submitted in his written testimony on a moral level as it relates to the City of Philadelphia. As you know, there are many things that we are not permitted to act on just because of our moral obligation to the residents of this city. You know, we're governed by laws and regulations, and under the Federal Act of 1996, I don't think we can just merely hold up a piece of legislation or not vote it out of committee favorably based on what we believe the moral obligation of companies doing business in this city have to its residents. I think you may have been in the room 15 earlier before testimony when I suggested that there are a number of issues that are of concern to this committee and others members of City Council, so we are electing to hold the two bills related to telecommunications today for further consideration from the call of the Chair. Is there anyone else here to who wish to testify? Mr. Martin.
I know you have a right to do that; I just hope that you'll be very 193 5/16/00 STREETS, SERVICES - BILL 000121 brief and refrain from getting into a courtroom debate here, because we do have a -- we will be having a seminar, as I said, with the members of this committee and other members of City Council to discuss some of the issues that are outstanding.
Because I think it will speed up the process. You have the testimony that was just -- could you write a written response to the committee on that report and send it to the Chair? I think a written response will be made a part of the record and I believe -- you know, so that we don't get into a -- I do believe that a thoughtful written response to the charges made by the IBW could be sufficient. Don't you think, Mr. Chairman?
We will provide 194 5/16/00 STREETS, SERVICES - PUBLIC MEETING you with a copy of the testimony. Thank you. Any other questions? (No further questions.)
This concludes the public hearing on the Committee of Streets and Services. - - -
We will now move into the meeting. The Chair recognizes Councilmember Ortiz.
Okay, I move that Bill No. 166 -- the amendment, actually, to Bill 15 166 be moved. (Duly seconded.)
It's been properly moved and seconded that the amendments to Bill 166 be approved as read into the record. All those in favor of the amendment signify by saying aye. Those opposed? The amendment to Bill 166 is approved. The Chair recognizes Councilmember Ortiz. 195 5/16/00 STREETS, SERVICES - PUBLIC MEETING
I move that Bill 3 166, as amended, be moved out of committee with a favorable recommendation and a recommendation that the rules of Council be suspended so as to permit first reading at the next session of City Council. (Duly seconded.)
Thank you. It's been properly moved and seconded that Bill No. 000166, as amended, be reported out of this committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next session of Council. All those in favor of the bill will signify by saying aye. Those opposed, nay? The bill is approved. The Chair recognizes Councilman Ortiz.
Mr. Chairman, I move that Bill No. 183 be moved out of committee with a favorable recommendation and a recommendation that the rules of Council be suspended.
It's been properly moved and seconded that Bill No. 000183 be 196 5/16/00 STREETS, SERVICES - PUBLIC MEETING reported out of this committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next session of Council. All those in favor of the bill will signify by saying aye. Those opposed? The bill is approved. The Chair recognizes Councilman Ortiz.
Mr. Chairman, I move that Bill No. 213 be moved out of committee with a favorable recommendation and a recommendation that the rules of Council be suspended so as to permit first reading at the next session City Council. (Duly seconded.)
It's been properly moved and seconded that Bill No. 000213 be reported out of this committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next session of Council. All those in favor of the bill will signify by saying aye. Those opposed? 197 5/16/00 STREETS, SERVICES - PUBLIC MEETING The bill is approved. The Chair recognizes Councilman Ortiz.
Mr. Chairman, I move that Bill No. 259 be recommended out of committee with a favorable recommendation and a recommendation that the rules of Council be suspended so as to permit first reading at the next session of City Council. (Duly seconded.)
It's been properly moved and seconded that Bill No. 000259 be reported out of this committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next session of Council. All those in favor of the bill will signify by saying aye. Those opposed? The bill is approved. Councilmember Ortiz?
Mr. Chairman, I move that Bill No. 262 be recommended out of committee with a favorable recommendation and a recommendation that the rules of Council be 198 5/16/00 STREETS, SERVICES - PUBLIC MEETING suspended so as to permit first reading at the next session of City Council. (Duly seconded.)
It's been properly moved and seconded that Bill No. 000262 be reported out of this committee with a favorable recommendation and that the rules of Council be suspended so as to permit first reading at our next session of Council. All those in favor of the bill will signify by saying aye. Those opposed? The bill is approved. The Chair recognizes Councilman Ortiz.
Mr. Chairman, I move that Bill No. 263 be moved out of committee with a favorable recommendation and a recommendation that the rules of Council be suspended so as to permit reading in the next session of City Council. (Duly seconded.)
It's been properly moved and seconded that Bill No. 000263 be reported out of this committee with a favorable recommendation and that the rules of Council be 199 5/16/00 STREETS, SERVICES - PUBLIC MEETING suspended so as to permit first reading at our next session of Council. All those in favor of the bill will signify by saying aye. Those opposed? The bill is approved. Bills 220, 121 and 218 are being held till the call of the Chair. This concludes public meeting and I thank all members for attending. (Adjourned at 4:50 p.m.) - - - 200 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, May 2000, were 8 reported fully and accurately by me, and that this 9 is a correct transcript of same. 10 11 12 13 RE: COUNCIL COMMITTEE ON STREETS AND SERVICES 14 BILL NO.'S 000121, 000166, 000183, 000213, 000218, 000220, 000259, 000262, 000263 15 16 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter