Thank you. I guess my question will be to Wireless Philadelphia. It is about communications. I'm a little bit confused. I think some of my colleagues received the agreement that was delivered to the office, and there is just a recommendation if this is going to be smooth business. I received an e-mail to my legislative aid saying if I was interested in these documents you can 102 print them. I don't think that's the way we should be doing business, especially if this is as important to you, because this was a document that I just got it this morning. We had to print it out ourselves, not that that's a big deal, but last minute, obviously a lot of paper here, and not a very good communication with me at least.
I agree. I actually thought that these had been distributed earlier, so you are telling me now. I wasn't aware of that. Understand that Wireless Philadelphia is primarily a volunteer organization right now and we're doing everything that we can on a daily basis. Your point is very well taken. There was no intention of not --
I would never think you would do anything like that, to give us anything at the last minute.
I would love you to read all these agreements. As soon as they were available, I wanted everyone at City Council to read the agreements. And I love the question and answer because literally we sat down for three months as a team to try to get the best deal we could for Philadelphia. I encourage the questions and answers for this document.
Councilman, could I follow up please? Two quick points. The first point is that we were asked at the City Law Department, in order to facilitate the Council's staff's review of these documents, to provide it in electronic format so that it could be searchable.
I understand it was from Mr. Auerbach. Secondly, the network agreement, which I believe was the last agreement that was distributed and maybe the one that you had made reference to, previously had a confidentiality provision in it. Because we knew that this was something of interest to Council members, you would want to see the entire transaction and all the documents associated with it, we worked a side letter agreement with EarthLink to make sure that we were consistent with the agreement, making it available and essentially removing the confidentiality restriction, and for that there was some -- there was a requirement for some additional time. So the delay in distribution I think is associated with those two issues, plus the electronic search facility.
And the 105 delay in distribution could be a delay in your project. The other observation to EarthLink, we have a very competent street lighting department, and I think I brought to your attention the fact that you are going to use some devices that will replace photocells that we currently use so you can energize your equipment. Obviously, our maintenance people are going to have to have those devices in the event there is a failure of the photocell that supports the operation of the streetlight. My suggestion is that you give our own street-lighting department an opportunity to be your installer of this equipment. They understand the work. They have the equipment. They are very, very competent, and I would appreciate our own streetlight department having an opportunity to do this work for you, and a lot of the problems that you are possibly going to have to deal with will 106 go away.
We'll address that with the managing director. You know, the streetlight department will be doing the inspection, mounting of the devices, along with the team.
That's not what we heard just a minute ago. We heard that a vendor would be hired with a bucket truck to install them.
To do the installation, but the City streetlight department will do the inspection of those mountings.
My point being is that we are going to assume the responsibility for the maintenance of the streetlight. The first time one of the photocells that is utilized to energize 107 the equipment isn't available to the maintenance person, that's one device that will go down because it will -- it will plug in a regular, standard old photocell and the light will work again, but your device won't. You know what I'm talking about.
So our radio is plugged in and getting 24-hour, 7-day-a-week power, and so if the photocell broke, only the light wouldn't work, and then they would replace the photocell on top of the plug.
But you will give an opportunity for the install to our own City employees?
I think we could certainly take a look at that. We are not opposed to looking at that as an 108 opportunity. I'm not sure if there would be any legal obligations with hiring the City workers from a private contractor standpoint.
No; you are attaching something that we already own. I mean you are attaching your device to something we already own. Again, I don't want to resolve it here. I just want to give our people the opportunity to get the work. This is a project where they could work -- not a big project. This is something they could do on Saturdays on overtime or whatever. It is an opportunity for them.
Councilman, if I could respond, and of course we will provide a response from the managing director's office and the streets department directly responsive, but I would like to make these three quick points: One, as I had indicated in earlier responses to Councilman O'Neill, we have been very clear in structuring 109 this deal to eliminate liability for the City. It seems to me having Streets Department employees doing the installation eliminates whatever protections we have developed in the transaction. Secondly, the agreements provide for $300,000 to allow the City Streets Department to recover the inspection costs. I believe there are three installation teams with three inspectors that will be covered by that preagreed payment. And, thirdly, just to clarify, hopefully I didn't misunderstand, but just to clarify, that the City's Streets Department will not have responsibility for maintaining the antenna and the components being installed at EarthLink's request.
Thank you, Councilman. Real briefly, this will be covered under the Telecommunications Act, this system?
Because of the nature of the activity, Federal Telecommunications Act requirements apply, and in connection with the fees that have been developed and negotiated, we want to make sure that both those fees would be used on a nondiscriminatory basis for a similar use in the future by EarthLink competitors and we also wanted to make sure that whatever arrangements we were making for access to the network was itself on a nondiscriminatory basis, which is why I think Mr. Pew indicated earlier that the anticipation is that we would have at least four Internet service providers on the network as a minimum in order to achieve those nondiscriminatory goals anticipated under federal law. 111
In the event that there is some change within the company structure of EarthLink sale, restructuring, whatever, and it is a requirement of some discussion as it relates to the contractual relationships to the City, to what degree can we be involved? I'll tell you why I'm asking this question. Recently we had hearings on the cable franchise agreements and it was extremely frustrating trying to get information from those operators, from -- I don't know if it was from Time Warner or who was the most frustrating or the other entity, and consistently they talked about the Telecommunications Act prohibited us from getting certain information. Could the possibility that something like that can happen in the event -- and I'm not suggesting that it will, but things happen. There's some change in ownership with EarthLink or 112 where there is the need to sell off EarthLink or whatever, that we would have a similar situation?
There are two points I would make in response to that question, Councilman. The first is that we have been very clear in these agreements explicitly that under no 10 circumstances is the authorization provided in the agreements to be applicable to a cable or -- I forget the technical term, but it is related to visual technology; that in those instances franchises would be required to be separately authorized. With respect to these series of agreements, assignment rights have to be approved by the City. There will be an opportunity for us to assure that any potential transfer of rights and obligations under the agreements are reviewed by the City.
And that agreement supersedes any 113 Telecommunications Act?
I wouldn't say that it supersedes, but it would be consistent with, we believe, our authority under federal telecommunications law.
Suppose the company believes that that's not the case down the line? I know we have a very cordial relationship right now with EarthLink and we had this similar type of cordial relationship early on with some of the cable franchises, but it got a bit nasty when we wanted to get information during the course of that transaction. And my concern is -- and you are saying that you believe, but you are not saying it in a very definitive term, that we will not find ourselves in a similar position. I'm concerned that we are going down this road and if something like that were to happen, we would find ourselves here four or five years from now trying to get information and be simply told that we don't have the 114 jurisdiction because of the Telecommunications Act to get that information and they don't have to share information pertinent to their individual -- their personal transaction between companies.
I will confirm for the record our understanding in that regard with local counsel for EarthLink, but I can assure you that there has been exceedingly intricate due diligence exercised by EarthLink's attorneys, and in every instance where we have looked at the issues related to federal telecommunications law and the use of PAID and state law with regard to the use of municipal resources for wireless network and all of those major review instances, the EarthLink counsel have agreed with the City's legal opinions. But I will confirm for the record this particular point that you now raise.
Fine. Thank you. 115 Getting back to the number of accounts that will be designated for the City -- and I know there was some earlier questioning. I didn't hear all of the responses. In terms of the distribution of those accounts, how is this going to work? When you say 1250 free WiFi accounts for the City, 1750 deeply discounted used at the City's option, how does all of this work?
It is purely the City's determination whether they choose to use the accounts or not. This will be coordinated through the managing director's office and the Mayor's office of information services.
And I think Romy is probably advising you to talk about counsel's involvement, right?
Excuse me, Councilman. I was just going to suggest that Public Property will be making that decision on behalf of the managing 116 director's office in consultation with MOIS.
So what involvement does City Council have in this distribution of these accounts? Who will we be distributing these accounts to?
Again, the contract specifies the managing director's office that will manage these accounts on behalf of the City.
If I may come at it, first of all, the intention is to focus on areas within the responsibility of the managing director that we believe have this particular need; for example, the mobile licensing and inspections department personnel. We also believe that to the extent that there is a use that would 117 require the expenditure of funds even beyond the initial free accounts, that would clearly be a part of the budget review process on an annual basis that Council would have an opportunity to review. I can't imagine that at the deployment of any of these free accounts or the reduced cost accounts that Council would not have an opportunity to be apprised of that deployment approach and in some instances actually have an ability to approve them where there is a budget implication.
Okay, okay. Thank you. That's enough for me. I have heard quite a bit of information from you. I know we do have a timing issue. I know a lot of people have been waiting here since 10 o'clock, so I'm not going to continue to discuss this at this point from my perspective because I do know that you will be back at some point in time. 118
A couple of questions. We are expecting the current corporate minority program will be provided to the Chair, as raised in earlier questions. Provide for us, if you will, what the projected new jobs are, how will the vendors here in Philadelphia get the opportunity to bid on those opportunities, which goes back to an earlier question on a plan that speaks to how you seek to ensure MBE/WBE participation. Then moving to the families, the process or plan for signing up those families, how will they qualify, which is Councilwoman Marian Tasco's question as well?
There will be from our network perspective approximately 11 full-time people ongoing after implementation. Almost all of the 119 expense in this implementation goes to subcontractors that we will hire to build the network.
We wanted to complete the second part of the question on the families.
Derek had mentioned earlier that we plan to use the federal guidelines for lifeline in that selection, and it has a two-component part as 130 percent of poverty and qualifications for a number of federal programs.
Okay. Let me just put this on the record. There is a new entity called Benefit Bank, which, in fact, my office will be calling for a briefing for Council members and members of the administration, that will be a one-stop shop for families who are designated low income where they can come and hear and have access to the range of 120 services, tax credits, and programs available to low-income families. So this may be another opportunity to add to that list of services for low-income families, the opportunity with WiFi Philadelphia.
Great. We would love to hear more about it and we will get in touch with you.
Thank you. Miss Neff, I believe one of your goals is to reduce costs for our government.
When Elliot Shelkrot was here before Council, I asked him a question. They just spent lots of money over there to wire their network. It doesn't seem to me other than the few examples that you use for some wireless technology for L & I and others -- an example -- and I will ask 121 EarthLink also. We spent a significant amount of money with a vendor each month to support our data terminals that are in our police vehicles. Could your technology support that application?
A couple of responses: The wireless network is not intended to replace the 800 megahertz system.
Not police radio. I'm talking about the Verizon contract that we have for data.
Yes. That is at the City's option. That contract I believe is through July of 2007, and at that point the City will have the option to take advantage of free licenses for data with the mobile data access in the vehicles. That is one of the options. And the City will do their analysis and determine if they want to take advantage. That is definitely a way of reducing our costs. Today we pay a mixed price depending on if you are public safety or 122 nonpublic safety for a cellular wireless access. We also spend quite a bit of dollars in connecting our remote facilities. We lease lines called T-1s. As a part of the program that EarthLink is offering, they are offering the City up to 700 T-1s at a reduced cost, which is approximately 40 to 50 percent of what we are paying today. The City will need to go through that evaluation and determine if they want to make the shift to that. That is another potential cost savings for the City.
Could you provide to the Chair a list of opportunities that the City government would have to reduce costs by utilizing EarthLink's network --
-- like the deal for the data terminals? The library said that they would only go over to wireless if they were forced to because 123 the technology is slower -- that was a quote -- than a hard-wired computer. Is that yes or no?
I would have to meet with him to understand those comments. The T-1 is a T-1. If they are getting T-1 access into their facility today, they are paying a leased rate for that. This will be the same access except it will be wireless, same speed. It's a point to multipoint.
I think there are many of us that think we know what we are talking about when it comes to the technology, but we don't.
And I don't pretend to know, but I do know there are probably many opportunities for the system to support because I believe the 124 tab for the police department is significant --
-- for the data terminals, and if we could reduce that cost, but not give up the quality, I'm okay with that.
So I would like to know what opportunities we have to -- and I think that that should put a smile on your face to have more opportunities to serve the government because you are not going to give us this. We are going to have to pay for it, but if it's there, I'm sure that it will be a better opportunity than we may currently have.
It does put a smile on my face. I think the opportunities -- we have seen applications in cities all over the country where they have moved to some of this mobile technology and it has 125 actually increased speed, increased mobility, kept the City worker force out in the districts more rather than coming back in, and it is replacing older, slower networks. So the capability of the network, which will be a network provider, is very, very high quality, very fast, and then it is just the applications that you chose to run over it.
Thank you, Councilman. Under its bylaws the Wireless Philadelphia board of directors consists of four directors appointed by the Mayor, the City's chief information officer, and four other directors elected by the board. The eight appointed or elected directors serve staggered terms of four years each. The bylaws provide that 126 directors may be removed for cause upon the vote of two-thirds of the directors. Is that the sole method of removal?
That kind of answers the next question. Will the Mayor be unable to replace a director before the expiration of his or her term of office? Obviously there is one, but that's just been mentioned. How about of the others. Is that pretty clear that they will serve their term other than cause of removal?
The City 127 PAID, PAID agreement, includes a provision requiring PAID to abide by the new no-bid contract rules contained in Section 17-1400 of the code. Why are there no similar provisions in the City/Wireless Philadelphia agreement? Section 17-1400 applies to contracts with the City-related agency such as a quasi public corporation which has entered into a continuing contractual or cooperative relationship with the City. Isn't Wireless Philadelphia such a quasi public corporation and, if so, shouldn't it be subject to this new no-bid contract rule under its contract with the City?
It's my recollection, Councilman, that Chapter 19 17-1400 by its terms does not apply to nonprofit organizations such as Wireless Philadelphia, but regardless of that exemption the competitive RFP process that was initiated before the February effective date of 17-1400 has already been complied with. 128
We have the competitive response, which is what led to EarthLink's selection prior to the February 1 effective date of 17-1400.
Is the City/Wireless Philadelphia agreement going to apply -- we can argue whether it's a quasi government agency or not. I know it's a nonprofit. But I think at least there is an argument that it's a quasi government agency. Aside from the technicalities of terminology, will there be in the City/Wireless Philadelphia agreement provisions abiding by the new no-bid contract rules? And, if not, why? I guess that's the obvious followup.
My recollection, subject to check, and I will provide you with a written response for the record, is that in all the agreements that I looked at last night, but I will confirm 129 with regard to the management and service agreement between the City and Wireless Philadelphia, there is a provision related to compliance with 17-1400. As a matter of policy we wanted to ensure that in all of these transactional documents that we were inserting standard City conditions, especially as to the most important ones that we have talked about today, only one example of which was the MBEC-related requirements.
Okay. The Wireless Philadelphia/EarthLink agreement provides for a proof of concept period during which a portion of the system will be built and tested, and that has been referred to. But what criteria will be used to determine whether the proof of concept has been successful?
The way this will work -- and I'm trying to make it as nonlegalese as possible -- is there are two exhibits that have detailed 130 specifications and requirements for the network that actually came out of the RFP process -- that's the starting point -- and from those design control documents need to be created by EarthLink for the build-out of the square mile test. 8 Those design control documents 9 not only include the design of the 10 network, but it will also include the 11 manner of testing the design of the 12 network to assure that the service level 13 agreements contained in our primary 14 agreement are satisfied. 15 If we make it through the 15 square mile test, a part of what Wireless Philadelphia is doing and through our technological advisory board also will be looking at the results of those prespecified metrics that we have to agree to before they even build the 15 square miles and determine to what extent they were able to achieve or not achieve the specifications and goals in the agreement. 131 Is that adequate?
Yes. Basically we are proving to Wireless Philadelphia that what we designed and promised in the RFP can be delivered, so it's scope of coverage areas, the signal speed, issues like that will be addressed during that proof of concept.
So you have already agreed on the metrics that have been tested?
What we have agreed to are the baseline metrics that are in the RFP that we are going to use to create the design control documents, but the problem is that they have to go out for the first time in this City and actually build the network and prove it against the specifications, requirements that we have. And if we have to look at what -- if we have to look at modifications of those specifications and requirements, that will be part of the 15 132 square mile test process, but initially we have I think pretty clearly laid out specifications and requirements in the agreement. I can even tell you the exhibits. I think it's Exhibit F and G. Those are the two exhibits in the agreement.
So the final test will be a work in progress during the trial period? As your platform you have what you have agreed on, but you also will be actually kicking the tires once you are out there?
Got you. EarthLink has agreed to keep the system updated with industry standard equipment. What remedies are there if EarthLink does not follow through on that commitment?
EarthLink is generally required to maintain the network at industry standard throughout 133 the course of the agreement. Industry standard is obviously something that we are readdressing all throughout the term of the agreement. Also, if there is some reason why we find -- two things: If we find that the network just generally isn't doing what we thought it was supposed to do, there is a process in the contract where we tell them they need to remedy it, and if they fail to remedy it, we actually go to a third-party consultant. And the third-party consultant actually comes in and looks at the network and decides what might be wrong, and to the extent -- I don't remember the exact legalese, but to the extent it is technologically and in good business -- whatever the legalese was around that, they would have to implement. They have to implement those recommendations. There is also an ombudsman program, so to the extent that the community groups are having some issue 134 with the network, they can come to the joint effort between Wireless Philadelphia and EarthLink where to the extent that there are resolutions to those community problems, technical, and also the legalese around businessly feasible -- that's not a word, businessly, but you know what I'm saying, a feasible solution, that we can -- that they actually have to make those technical modifications. So that's what's in the contract.
We have also agreed on a technical advisory council between EarthLink and Wireless Philadelphia to continually monitor not only the performance of the network but the technology as it gets introduced. Something unique to this technology is new standards get introduced and then they go through a process to be commercialized and then get introduced into the network. For instance, we are going to 135 be kicking this off with 80211-B and 80211-G, which are the industry standard WiFi technologies today. There are a list of other standards that are being approved and worked on today that at some point will have to be introduced to the network.
PAID -- PIDC, its financing arm, PAID, that agreement with the City, and then that organization being the conduit is mentioned throughout this whole proceeding. Why didn't the City just deal directly and is PAID necessary, or what does PAID add to the equation? I just don't want the record to be absent on PAID; that's all, PAID/PIDC.
Thank you, Councilman, for the opportunity to clarify the record. As I understood it in discussions with counsel for EarthLink, the two issues that they were particularly concerned about, given the 136 new model going away from the Wireless Philadelphia financed network through bonds and then going to a totally private financed operation, the concern expressed by counsel to EarthLink to me was that, A, they wanted to have assurance of the ability to amortize the expenses associated with the network build-out. The years, which includes the initial 11 term of ten years and the two five-year 12 option terms, gives them that 13 opportunity. There is potentially an 14 argument that could be made that because 15 there are certain obligations of the City 16 this implicates the four-year-out 17 provision when we don't use an authority 18 such as PAID for purposes of this 19 agreement. And it was the desire for a 20 clear-cut opportunity to have 20 years potentially to amortize their expenses that they raise this issue. The second issue that came to my attention was a concern related to the way in which the structure of the 137 nonprofit had been accomplished. We thought that it provided sufficient protection for the City in connection with any liabilities, but on further discussions with local counsel for EarthLink we thought there was a potential benefit for the City as well. We had the protection of an independent nonprofit, so I constantly remind people there is the City, there is PAID, there is Wireless Philadelphia, an independent nonprofit organization, and EarthLink in this transaction. The City and EarthLink -- I'm sorry. The City and Wireless Philadelphia are not synonymous in terms of their purposes and their entities and their protections, but the PAID conduit provides an extra layer of protection for the City in terms of the liabilities that we talked about earlier that are independent of any protections we would have had through the use of a nonprofit organization. 138
Thank you very much. I had a thought while you were talking but you were so engrossing that I lost it. It had something to do with PAID, but it can wait. The one area that I see missing here -- and maybe it's just that I don't see it, but it's something that I spent a lot of time at the National League of Cities dealing with the -- which was just talking about it. We are actually doing something here with the digital divide question, and that's where the real congratulations above and beyond comes in here, but I find a digital divide to be income, social and age, age at the early end, but age particularly at the latter end. Now, I don't see anything about seniors, and to me you can accomplish more keeping senior citizens engaged, helping them to become engaged if they are not, whether it's with their family, 139 the community around them. People may not be technically disabled, but they may in fact be disabled when it comes to being able to really lead a full life and be out in the world, the ability to access the Internet, the ability to have this kind of service that we are talking about. I don't know if anything is being worked on, but I would hope that it does get worked on sort of as an equal leg in the stool dealing with those segments of our society only having government involvement and will make a difference for. Could you comment on that?
Absolutely. The seniors are an important component of our program. We like to say from cradle to grave that we would be bringing digital learning to our community. We have already partnered in a number of areas in holding training sessions with seniors. I think the 140 Lutheran and Family -- Children and Family Services in Olney is a great example, that in the first class that they graduated of the students were 6 seniors. And they came in to learn, to 7 get access to computers, to know how to 8 use wireless, to stay connected, and so 9 they are a very important element of our 10 community. We focus a lot on children because we want to make sure the future and children have the opportunity to be digitally -- in a digital learning society. But seniors are important. We have done outreach with those as well as people with disabilities or mobility, that are homebound, that can definitely use this. So we are trying to reach out to all elements of our community. I don't know, Derek, if you have anything to add.
That is probably the most important things I heard said today, is the fact that that's a group that's really left behind. You think about some of the things that our seniors can't get too. I think there are grocery stores now where it's great, where you can put your order in, but what good is it if the person can't access it. So my question: A computer is very expensive. Are there stepdown devices that we could have that -- I mean my mom wouldn't need to go and check the Dow Jones. Maybe to send an e-mail to someone someplace in another part of the world. Are there possibilities of stepdown devices that could give minimum access that isn't a laptop that you travel around? You know where I'm heading here. Is there something that is really cheap and fast and easy where a person could do e-mail and also maybe do the Acme order to get some food brought 142 into the property?
There are a number of opportunities. We can all speak to that because we all have been looking at how we can get devices, whether they are a desktop, a laptop, a handheld device low cost. There are many speakers that are here today that are involved in this program that can talk to that. One example is we have been talking to Microsoft. They have a Web-type access device that isn't a full-blown computer.
We have been in discussions with MIT about their hundred dollar device which is a limited P.C., but it doesn't have all of the bells and whistles that the expensive ones have.
That's 143 wonderful. That will be the one I need. Thank you, Mr. Chairman.
On of your testimony you make reference to the streetlight use agreement between the City and PAID and the management and services agreement between the City and Wireless Philadelphia. These two agreements along with two other agreements to which the City is not a party comprise the full transaction. I did receive this morning -- I actually borrowed from Councilwoman Miller the bill and what appear to be the agreements between the City and PAID and I guess PAID and EarthLink, and then Councilwoman Reynolds Brown's staff person gave me a copy of the agreement 144 between Wireless Philadelphia and EarthLink. What is the other agreement that the City is not a party to?
The City is not a party to the PAID/EarthLink streetlight agreement, which is an exhibit to the City/PAID streetlight agreement.
The four agreements in this transaction, Councilman, are the City streetlight agreement as between it and PAID. That is before Council for approval. An exhibit to that agreement is the PAID to EarthLink streetlight agreement. We are not technically a party to that provision, although we have third-party rights under it. The third agreement is the management and service agreement, which is Exhibit B to the bill, and that is between the City and Wireless Philadelphia. And the fourth agreement is the network agreement 145 between EarthLink and Wireless Philadelphia.
Okay. All right. So there are four agreements and within one of the agreements is an exhibit which is the PAID/EarthLink agreement on streetlights?
Solicitor, just for the record, who do you represent in this transaction?
We have one here. That's Stuart Rudoler. I think there was a reference earlier to Tom Speranza with Kleinbard, Bell & Brecker, our local counsel to Wireless Philadelphia, the nonprofit. And then EarthLink has both local and Atlanta counsel in this matter.
Local counsel is Marilyn Kutler at Schnader Harrison here in Philadelphia.
Can you provide to us through the Chair, I guess for lack of better terms, a bit of an organizational chart showing who is connected to who and who represents who in this particular or whom in this particular transaction?
I would be pleased to do that. We actually have, I think, previously provided to Council -- and I just want to understand the request. There is sort of a depiction of the transaction that shows the relationships through the various agreements and what the rights and privileges are under each, and then we will provide you with a list 147 of counsel representing each of the parties to the agreement. And I'm reminded that I neglected to mention Denise Smyler is also local counsel to Wireless Philadelphia, the nonprofit.
You mentioned that you had provided a transaction agreement?
I will make sure that we provide that along with a list of counsel representing each of the parties.
Can you also provide to us -- I know you know it by now. I mean I would be pleased to read all of these agreements and make my own notes, but could you provide now as our counsel a facts sheet and analysis of the four contracts.
Thank you. Let me go back to one technical point, a note that I took down. Mr. Pew, there was a question raised earlier, I think by the Chair, with regard to budget approval, I think involving Wireless Philadelphia. I made a note that part of your response made reference to general City oversight and that there was some -- it was kind of an internal political issue with regard to what City Council's role may or may not be. Do you recall making that statement?
This is not a lecture series, but I would only mention to you that I think that it's a little higher than an internal political issue. It's probably more of a separation of powers issue. We are the City Council. We approve budgets. That's what we do.
I appreciate that, Councilman Nutter. All I was suggesting 149 -- the question I think had to do with reporting, and all I was saying is that we have agreed under the management agreement to report back to the City, and the distribution of those reports within the City is not part of Wireless Philadelphia. Wireless Philadelphia is a separate entity, so we were distributing. That was the whole point of my comment.
I understand. And which management agreement are you referring to?
Is it called the management and services agreement? The management and services between the City of Philadelphia and Wireless Philadelphia.
Now, is that agreement one of the four agreements that we discussed earlier?
And what's the current agreement between the City and Wireless Philadelphia? What are you 150 required to do presently?
Actually, if I can look at my notes, I will tell you. It's a very long list. I have just been reminded that there is no current agreement until City Council actually approves it, but, if approved, the agreement that is currently in place -- that would come into place between Wireless Philadelphia and the City directs Wireless Philadelphia to manage a relationship with EarthLink under the network agreement, dedicate ourselves to the visual inclusion program, spur economic development in the city, enhance community neighborhoods, reduce the cost of government, maintain a series of insurances. We also have a series of reporting requirements back to the City. We have an annual plan that needs to be provided back to the City on March of every year that sets forth all of our programs that we have put in place to 151 address our goals, a budget setting worth the funding for each of those programs, the key personnel that we have that are going to be responsible for each of those programs, and the goals and metrics for measuring the success of all of those programs. We have a requirement to deliver to the City monthly reports.
I appreciate that. Are you reading from something in the broadband network agreement?
No; this is actually something I put together last night to make sure I could answer that question.
The information that you were just reading into the record, is it somewhere in this agreement?
If Romy puts together the facts sheets for you, it will 152 probably sound very similar to what I just read. It's out of the agreement.
It's within the entirety of the agreement. I was trying to outline it so it would be simple to understand.
So do I understand presently there is no 12 operating agreement between Wireless Philadelphia and the City of Philadelphia?
So how do you do what you do? I mean under what authority or jurisdiction?
Let me clarify, if I may, Councilman, one point. The management and service agreement between the City of Philadelphia is before Council for 153 approval for, among other reasons, the approval of the transfer of the $2 million that is anticipated to be received by the City from EarthLink to Wireless Philadelphia. And the second point I would make is that although the Mayor was the incorporator of Wireless Philadelphia in March and bylaws were established and a mission for the organization was created, the management and service agreement would in fact provide the contractual basis between the City and Wireless Philadelphia for all of the purposes that Derek and others have summarized.
Well, I understand that. When was Wireless Philadelphia created?
And since that time and based on my recollection of the last time Miss Neff was at the table, I think you indicated that you have spent 154 $750,000 on Wireless Philadelphia; is that correct?
We have received $750,000 and just recently received another $700,000.
Okay. Which relates to the 1.4 million that you mention in your testimony, right?
I guess I'm trying to understand. If there is no 13 operating agreement between Wireless Philadelphia and the City of Philadelphia, what is the basis upon which you would have either the first $750,000 or a subsequent $700,000 and you have been operating now for a year?
Wireless Philadelphia was incorporated. We have articles and bylaws. We also have a note with PIDC for the funding that states our purposes from both our bylaws and our articles of incorporation and the use of those funds and repayment schedule of 155 those funds.
I have all that. What I'm trying to understand is how do we give a million and a half dollars to someone that has no operating agreement with us?
No one gave anything to Wireless Philadelphia. I think what the chief information officer is trying to describe, Councilman, is a series of loans that have been made by PIDC to Wireless Philadelphia with a repayment schedule over four years that would compensate PIDC for the economic stimulus loans that have been granted and two tranches.
I understand that as well. What I'm trying to understand is in a normal financial transaction -- Wireless Philadelphia has no money and has no access to any money.
Wireless Philadelphia has $1.45 million through loan proceeds, Councilman. 156
It has no 3 money to pay it back because they have no 4 guaranty of funding at the moment until a contract is signed, correct?
So they received a loan with no basis to pay it back because they have no money of their own to make the repayment until we sign this agreement or approve this agreement, correct?
I think I would characterize it as a reasonable expectation that based upon the value of this initiative to the City and its residents that there will be approval, we hope, of City Council for these transactions that would then provide the funds to repay the two loans received from PIDC.
Well, okay. I mean I guess I wish it was that easy to do a transaction with a regular financial institution based on my best interest or 157 my best intentions that I'm a relatively decent person and I think I might be able to pay you back at some point in time. I mean generally they usually like to see a pay stub or something or know that I work somewhere that I have the basis to pay them back, but that has nothing to do with the good quality of what it is we are trying to get done. I was just trying to understand how we make loans to people who have no ability at the moment we give them the loan to pay the money back, anticipating, for all the best of intentions, that this Council will approve something to allow you to pay the money back, and that's what happened here, right?
I think the loans were clearly made in anticipation that there would be ability to repay. And if it would be helpful, we would be happy to supply for the record the loan document to essentially provide the documentary evidence that this is a loan. 158
That would be helpful. I think there have been some stimulus funds provided as loans in the past to certain organizations that were subsequently converted to grants, correct.
I have heard of such, but I do not have personal knowledge of such.
That's a good City solicitor answer. Miss Neff, just a couple questions about the items at hand. Who is the average customer here? Who is purchasing these services?
The goal is to reach out to those citizens and businesses that do not have access to the Internet today and dial-up customers and then obviously anybody else that is interested in subscribing to the network.
I understand. 159 Based on the business model, what's the profile of the average customer?
I can tell you in our models what we think the average profile of the customer will be. First, they will be those customers who subscribe to dial-up today who either don't have access to broadband or broadband is to expensive.
What's the socioeconomic or demographic profile of the average customer that you think is going to sign up for this service?
We believe there will be two. There will be those customers who subscribe who are on the 160 lower income bracket because they can't afford higher cost broadband services, and then there will be those customers who like the access and mobility of the network who have services either at home or here on business and they probably will be in the middle to upper income bracket.
And what device is this average customer utilizing to access the service?
Or a personal digital assistant as well if it has a wireless connection.
Low-end laptops are under $500 today. The refurbished desktop and computers are under $150. 161