First of all, we wouldn't have submitted an EOP plan because we'd have no requirement to.
No, I'm not saying 64 12/11/08 - PUBLIC PROPERTY - BILL 080879 that. What I'm saying is, we would not have submitted an EOP plan. Absent any submission to the City, 47 percent of the workforce is minority. Absent a cable franchise, we've spent $114 million in your city. With the cable franchise, we're saying we'll increase that by $34 million.
So it is my right to ask you the question. Minus the cable franchise, how would your participation in minority and women businesses increase after a five-year period, after a ten-year period, after a 15-year period? Because your Economic Opportunity Plan says that after five years, it would go from 14 percent to 19 percent. After another five years, it 20 would go to 25 percent, and after that, another five years, it would go to 30 percent. My question is -- the numbers would be lower in terms of dollar amount without a cable franchise. My question 65 12/11/08 - PUBLIC PROPERTY - BILL 080879 is, would you be doing more business with minority and women-owned businesses minus the cable franchise and what would those numbers be? You're starting with your baseline standard of 2007 being 114 million and percent. I'm asking how 9 was that going to increase minus the 10 cable franchise? And that's a fair 11 question to ask. 12
Without question, 13 but the premise is based on this: If we 14 don't get approval of a cable franchise, we will not --
I'm asking minus the cable franchise. I'm not talking about the cable franchise now.
There won't be any investment in the City of Philadelphia at all without a cable franchise. 66 12/11/08 - PUBLIC PROPERTY - BILL 080879
But you will spend money in Philadelphia and you will spend money as you did in the baseline year of 2007 where you spent 114 million with disadvantaged businesses, which amounted to percent. I'm asking, how 8 would that increase anyway minus the 9 cable franchise? And it is going to be 10 the same question. 11
Obviously the 12 number would increase above the 114 13 million, but it would increase at a much 14 greater rate if we're investing a billion dollars in your community.
But my question is, how would it increase minus the cable franchise? I'm going to ask the same question over and over again. If you say you don't know, you don't know, which means you don't envision how you'd be doing more business with disadvantaged businesses minus a cable franchise. I'm asking you, did you envision it? Did you have an Economic 67 12/11/08 - PUBLIC PROPERTY - BILL 080879 Opportunity Plan internally before you decided to do a cable franchise, and how would that change in terms of these numbers? The dollar amount might go down without a cable franchise, but would the percentages be the same?
Your point is 100 percent right. If there's no cable franchise, there's no EOP. You're 100 percent right.
There's no 13 EOP that's submitted to the government, but what's your internal Economic Opportunity Plan in terms of how you would be doing business with disadvantaged businesses, how that might increase over five years, over ten years, over 15 years as you have here?
If I may step in for just a moment, Councilman. One of the things I think it's important to point to is Verizon's commitment to minority business enterprises, minority, women, disabled and veteran-owned 68 12/11/08 - PUBLIC PROPERTY - BILL 080879 business enterprises, and that commitment has been longstanding and certainly is the case even before we got to the place of discussing the cable franchise. What happens at Verizon is, because we're a national company, we do business in over states, that we have 9 more of a national focus in terms of how 10 we do business with minority, women, 11 disabled and veterans. 12 I guess if I can use the word 13 "minority business" to cover all those 14 categories without insulting anybody, I'd 15 like to do that, just to kind of make my 16 conversation a little easier. 17 For minority firms, we have -- 18 Verizon is a member of the Billion Dollar 19 Roundtable, which, again, those select 20 group of organizations that spend over a billion dollars with minority business across the country. So the commitment is there. What happened through this franchise is that it created the opportunity for a 69 12/11/08 - PUBLIC PROPERTY - BILL 080879 different kind of discussion where we could get -- we have an Office of Supplier Diversity that runs -- that's chiefly responsible for kind of making sure and tracking and monitoring, but making sure that we are looking at ways of doing business with minority organizations. So long way/short one, we are at a place now where we could create the dialogue between the Office of Supplier Diversity and the City in that regard. So we expect that we'll be able to work in that area.
Actually, my question is, what would your internal goals be for economic inclusion minus the cable franchise?
Are you 70 12/11/08 - PUBLIC PROPERTY - BILL 080879 saying there would be no goals?
Every year Verizon increases the amount of business it does with minority vendors in the City of Philadelphia. That's what our goal is. We have over 2,000 employees, of which 47 percent are women, 44 percent are minority and --
That's what I'm referring to. And we spent $114 million here last year.
In 2007, that's your baseline standard, 2007. Then you have a standard after five years, after ten years, after 15 years with a cable franchise. I'm asking minus the cable franchise, what would your goals be for five years, ten years and 15 71 12/11/08 - PUBLIC PROPERTY - BILL 080879 years? Would they not be --
Obviously it would be reduced, because we wouldn't be investing in the City. That's my point.
The dollar amount would be reduced. Would the percentages be reduced?
I'm not going to speculate on whether the percentages are going down. Obviously more investment --
I'm not asking you to speculate. I'm asking whether you know.
You just said, I do not know what our economic inclusion goals would be minus a franchise.
No. What I'm saying is, it's commonsense to believe that the more you invest, the more 72 12/11/08 - PUBLIC PROPERTY - BILL 080879 opportunity and the more jobs it creates. That's our point.
My question -- and I will actually look to the flip side of that and say, so if you do not have a cable franchise, then you will still increase to percent after 9 five years, 25 percent after ten years 10 and 30 percent to 15 years? 11
We're not 14 talking contractual obligation. We're 15 asking what your goals are. 16
No. We are talking 17 about a contractual obligation. That's 18 what a franchise is. 19
Mr. Bishop, when a business or a residential 73 12/11/08 - PUBLIC PROPERTY - BILL 080879 telephone user calls a Verizon business office from Philadelphia, where are those call centers presently?
There's approximately ten call centers across the country that handle a variety of calls that come in now.
Don't we have one that just serves this region for our --
Each one of them is set up based on the amount of calls they're getting to be able to transfer calls from one call center to another.
I understand overflow. I'm talking normal business day. I from home call. I want to add a feature. I want to talk about my bill. Where are those call centers presently? Tell me where the ones that are servicing first Philadelphia.
Councilman, I don't know if I can use the term "first" in quotes that way, but there is an 74 12/11/08 - PUBLIC PROPERTY - BILL 080879 operation actually that moved -- when I spoke about 400 jobs that moved from the ring counties of the City, some of those jobs moved in from the suburbs into the City over at our facility at 900 Race Street.
They do receive phone calls there. It's not an FSC, but it is a --
If I want to talk about my phone bill or I want to add Direct TV -- you're a reseller for Direct TV, correct? If I call and I want television service presently through Verizon, who am I talking to? Where am I talking? (Witness talking without microphone.)
Mr. Reid, if you have an answer, you have to come up to the mike, or if you're just going to relay it, that's fine. Identify yourself for the record, please.
So wouldn't it be safe to say that if you're already a reseller for Direct TV, the satellite television service, that those customers eventually would be handled by the same call centers that you already have established?
As you may know, there are less than 6,000 Direct TV 76 12/11/08 - PUBLIC PROPERTY - BILL 080879 customers in the City of Philadelphia.
Those would be resell customers of Verizon. So there are very few of those among the 1.5 million people in the City. But that agreement with Direct TV is an agreement between Verizon and Direct TV. There's a special number that people call to handle that. They're not called out of the location here in Philadelphia.
Well, I called to talk about my phone call, not to digress, but the person that I talked to about my phone bill tried to sell me Direct TV.
Well, it happened. But my point is, wouldn't the grand plan of Verizon be to incorporate the television aspect of business into 77 12/11/08 - PUBLIC PROPERTY - BILL 080879 the same call centers that handle dial tone?
The idea is to create centers that can handle any of the services that Verizon would provide.
So you're suggesting that there's going to be need for a new call center, then why not in Philadelphia?
I'm not suggesting that. What I've said to you and to the Committee is that the idea of a call center tied to a cable franchise is beyond the scope of the law. That's what I've said. What I'm suggesting is that the company will continue the work with the union on the location and the need for call centers. What drives a call center is new customers.
I have a question, Mr. Chairman, for the Administration in reference to this. Could I talk to the City lawyer for a moment? 78 12/11/08 - PUBLIC PROPERTY - BILL 080879
Yes. Councilman, actually, what we were thinking about doing, because we have a lot of people here who came down here for purposes of being a part of the Council session, and a lot of them are looking at us wondering why are they down here. They did not come here for cable or anything else, other than being a part of the traditional Council session. So what we were thinking about is recessing this hearing and allowing the individuals -- I think we have three presentations -- and get those on, so these folks can go on about their business. Then we can come back and continue the discussion. Is that okay?
So we're going to -- if I had known I was going to get applause, I'd have done this earlier. 79 12/11/08 - PUBLIC PROPERTY - BILL 080879 Folks, we're going to recess the public hearing on Public Property and Public Works, and the Council President is going to come up and start the session, have presentations, then we'll go back into the hearing. (Committee on Public Property and Public Works recessed from 11:50 a.m. to 12:45 p.m.)
We're now going to reconvene the Committee on Public Property and Public Works. We ask the Verizon representatives to please come back to the witness table. (Witnesses approached witness table.)
Thank you. Mr. Chairman, if you recollect before we started the Council session, I asked for the City attorney.
He's coming now. 80 12/11/08 - PUBLIC PROPERTY - BILL 080879 (Witness approached witness table.)
Mr. Chairman, I'd like to yield for a moment to Councilman O'Neill. He has a question. And he'll be able to leave after he asks his question. Is that okay with you?
Point of clarity. I'm not concerned with the -- what I'm seeing here is Phase under the original plan and Phase under the original plan and then Phase 1 and Phase 2 under the revised plan. I'm not sure I have the latest information here, but for clarity's sake, the original plan was only a week ago. The new plan is roughly seven days, eight days later. Phase went from three years a week ago and now 81 12/11/08 - PUBLIC PROPERTY - BILL 080879 it's four years out of the seven-year build-out. And I've never played the shell game, but I've watched it a lot, and slight of hand is really fun to watch, but not to be a victim of. That's not so much fun. And I want to make sure that that isn't happening. If there's going to be an improvement by more build-out in the first three years in my district, which I've asked for -- and the Chair has been very helpful and other members of the Committee and Council, members of the Administration I know trying to work on that -- I want to be able to say that there will be X number percentage more build-out in my district in the first three years. I don't care what you call the phase. I mean, you could say this is a seven-year build-out. I think we should know what first year, second year, third year right down the line is, because that's really the only way you can tell. 82 12/11/08 - PUBLIC PROPERTY - BILL 080879 But in the new four-year build-out, I want to know whether the area in my district, which is the Knights Road office, is going to be built out in the first three years, which wasn't the case a week ago, or whether it's in the fourth year, that new year that's been added to Phase 1, which would mean that it's not changed. It's just we changed the length of Phase 1.
Sure. We reached an agreement with the City on the original build plan a couple of months ago, and obviously following that, submitted to the Council. Since the last hearing, we've proposed to amend the map to include, as you've indicated, more of your district in the build, and what that means is that all those areas indicated in Phase will be started in Phase simultaneously and they'll be built out over that time 83 12/11/08 - PUBLIC PROPERTY - BILL 080879 period to include the four years and the 45 percent of the City benchmark.
I haven't seen anything yet that shows the Knights Road office, which is in my district, in the new Phase 1.
I have some arrows here, but they don't mean anything to me. And -- I'll wait for the Chair. (Pause.)
Okay. What I don't have here -- and I don't think we're going to have it today -- is what the original percentages were per district. I mean, I can eyeball them pretty clearly, but that's all it is. The company has the information. And as 84 12/11/08 - PUBLIC PROPERTY - BILL 080879 I said to the Verizon representatives when we met two weeks ago, I don't want you -- and I know you've tried not to cherry pick. That was a problem in the past and it's a problem in different parts of the country. That's difficulties in this area. But I want you to be fair. I don't need a big percentage of this, but I don't need to be embarrassed either when I go to a whole lot of Verizon phone customers and tell them that they've been shut out. And that was exactly what was on the map that had been worked out with the City over six months. There was several areas. And I'll use the Northeast since I'm most familiar with that. And this doesn't take any fault away from six months of negotiating on the City's side, because what happened as a result of those six months of private negotiations was that we wound up with a map that if we were New York City would have excluded, virtually excluded -- ten to 15 85 12/11/08 - PUBLIC PROPERTY - BILL 080879 percent build-out is not anything but virtually excluding something, an area -- Staten Island and Queens. And I can assure you that New York City did not start their first map without Staten Island and Queens having a fair piece of what was being done over the five boroughs. And I'm not sure what the percentage is in this with the change to Phase 4, with the simultaneous build-out, and also what -- and this is what happens when you actually have discussions -- and we'll have the opportunity hopefully over the next couple months -- is, I've got a colleague to my left who is the first at-large I think to ever live in my district in history. And he's not in the Knights Road office, and that's not a problem for me. I just don't know why. I'm going to have to listen to Councilman Kelly and his neighbors, and they rightly could ask, How come Knights Road got it and Orchard didn't get it, one side of the Boulevard, the other. And, again, my 86 12/11/08 - PUBLIC PROPERTY - BILL 080879 whole district would have to get built out in Phase 1 for all that to happen. I'm not looking for that. But I would like the courtesy, because other than telling Verizon a little over a week ago that I felt that I had been deceived, because I sat there and said, Is this a fair map, and that fair map had about ten to percent build-out in my district, 11 and, Oh, the map is fair, don't worry 12 about it. Well, I relied on that. I 13 don't want to rely on anything until I 14 get full information. I don't think 15 we're having it here today. There are other issues, the call center. I think they're very legitimate. I think the liquidated damages is very legitimate. I've worked on the performance bond side. I've worked on the liquidated damages side. If I wanted to penalize somebody or have them agree to a penalty, it wouldn't be a performance bond. No knock on surety companies and insurance companies. It 87 12/11/08 - PUBLIC PROPERTY - BILL 080879 would be liquidated damages. That's what ensures commitments. No one ever wants to do liquidated damages that they've agreed to. But I would just ask the Chair, if it's possible, if that amendment on the map -- and this is a lot of progress, just what I've heard here -- could be held until we come back to the continued meeting, because I think more will get done in that atmosphere, or maybe nothing will have to be done, but we won't have to get back to what we're doing today, walking in and hearing something at the last minute. Even what was on my desk wasn't accurate. It still had the -- it was an amendment, but it still had the same information as last week, and obviously that's changed this morning, and I thank you for that.
Thank you, Councilman. Councilman, with respect to the actual amendment, it's my understanding 88 12/11/08 - PUBLIC PROPERTY - BILL 080879 that all of the changes are in one document. So I'd ask the Administration what the process would be as it relates to portions of that amendment, and hopefully before we conclude today, we'll have an understanding as to what, if anything, can be deleted or altered or changed --
And putting on the Administration's hat, beat them up, because I really think they screwed up a fairness issue in a major way on this map, but it's being corrected. And to the extent that the amendments today are showing progress in a fairly short period of time -- and I thank the whole Committee for the work, especially the Chairman -- this map might as well stay in, because it is reflective of the improvement that's occurred over just a little over a week, and hopefully 89 12/11/08 - PUBLIC PROPERTY - BILL 080879 in almost two months later there'll be that much more significant improvement in the entire picture here. I only mentioned the three areas that I'm most aware of as a member not on the Committee, and hopefully it will all be resolved by the time we get this bill out. Thank you.
Thank you very much, Mr. Chairman. I would just like to point out that when things happen in private, without consultation with the key stakeholders, mistakes are made that have to be corrected in a very public process rather than involving key stakeholders up front, and this has applied throughout 90 12/11/08 - PUBLIC PROPERTY - BILL 080879 the last three months, and hopefully this hearing, Councilman O'Neill's expressed frustration and other members of Council who feel the same way, hopefully we can have a different process as we look to future cuts that have to be made and we look to improve this agreement. Thank you.
Michael Athay, Chief Deputy City Solicitor in the Law Department.
Thank you, Counselor. Counselor, Councilman O'Neill touched on this, but I would like for the record you to explain the difference between liquidated damages versus the performance bond and why we have not, according to my colleague, done the best 91 12/11/08 - PUBLIC PROPERTY - BILL 080879 to protect our interests.
The surety bond is a kind of insurance policy. The surety bond is a kind of insurance policy if the principal on the bond defaults on obligations under a contract, then the obligee on the bond, in this case the City, has the right to require the surety to perform the contract to cure the breach, in effect. If the bond amount is sufficient, as we believe it now is, to cover the breach, it is a very industry standard form of protection. Our contracts typically require surety bonds, contracts generally, technology contracts in particular. The liquidated damages are a monetary equivalent of the damages that the parties believe a particular breach can represent. Not really a fine, but 92 12/11/08 - PUBLIC PROPERTY - BILL 080879 it's a way of covering damages, of liquidating damages, so that the amount of the damages -- they're already quantified. Liquidated damages are a terrific remedy. Technology contractors, including cable companies, including technology contractors, generally are very resistant to liquidated damages. It's a tough penalty. The question is whether you have to have liquidated damages in order to be protected against a breach, and my judgment is that a surety bond is good and sufficient protection.
Excuse me, Counselor. Councilman O'Neill has a point of information.
Just some perspective. I was told several years ago when Verizon was getting into the FiOS business -- and Comcast was obviously interested in them not succeeding. And they're competitors. That's what happens with competitors. 93 12/11/08 - PUBLIC PROPERTY - BILL 080879 The National League of Cities, we heard Comcast, we heard good arguments, it sounded good that you won't get the -- the local governments will not get financially what they're getting from the cable companies. Verizon primarily, but anybody going into the phone company side of going into cable, said, No, we'll pay everything they're paying right up front, no negotiations, you just tell us what they're paying, that's what we're paying, you can't have a better, fairer deal than that, and I agreed with that. I am told -- and we'll have several weeks at least to verify this -- that it's standard operating procedure in the cable business -- I'm not talking about the technology business, which is much broader than that -- that liquidated damages is in the cable contracts. That may be bad information, but right now that's all I've got to go on. We have plenty of time to check it. It is something that any one of 94 12/11/08 - PUBLIC PROPERTY - BILL 080879 us would resist if we didn't have to do it, and we would be so happy to have a surety bond. Surety bonds are insurance. They're better than nothing, but nobody wants to decide ahead of time that big question of damages. It's like on a real estate contract -- and that's where many people know -- it's done. You did it or you didn't do it. You already decided in advance. You can't complain about the amount of the damages because you already agreed to them. And what it does, it assures -- unless the company is out of business, they're going to comply with what they agreed to. It really keeps your commitments where they were at the beginning.
Thank you, Councilman. Counselor, let's go back to the liquidated damages versus the performance bond. The incumbent, did they have liquidated damages or a performance bond?
The incumbent has a 95 12/11/08 - PUBLIC PROPERTY - BILL 080879 liquidated damages provision in the renewal agreement.
And a much smaller performance bond and construction bond, but much smaller than the bond that is in this agreement.
So why would we differ in our legal position for Verizon than we did with the incumbent?
Well, it's not a matter of deferring, Councilman. We negotiated very hard over many issues. Verizon refused to pay liquidated damages.
We looked hard at the security that is necessary in order to protect the City. We required that the security be increased during the high-risk years, the build years. Verizon complied with that requirement of 96 12/11/08 - PUBLIC PROPERTY - BILL 080879 the City. The City's judgment is that we have adequate protection. Pretty much any contract, including any franchise agreement, you can look at it and you can find ways to make it better for one party or the other. This was a tough negotiation. That was a compromise.
Tell me, when was the last time the City collected, if ever, on a performance bond?
Well, we go against performance bonds on construction contracts. We go against performance bonds when there's a breach. It's not a real --
Have you collected any -- has there ever been revenue collected from a performance bond?
Could you 97 12/11/08 - PUBLIC PROPERTY - BILL 080879 get that information for the Chair? I'd like to know how many occasions in, let's say, the last five fiscal years that we've ever acted on a performance bond.
Who is the ward leader of the 15th Ward, by the way?
Thank you, Mr. Chairman. Question in a different vein, if I could. Councilwoman Miller and I were talking about this. Community Advisory Board, is there a plan to have one with Verizon? I think there is one with Comcast. Has that been discussed? Is that something that's -- 98 12/11/08 - PUBLIC PROPERTY - BILL 080879
Well, what we indicated at the last meeting, although there's no contractual obligation for Comcast to have an Advisory Board, our understanding is they have one, and Verizon is committed to work with the community. If they want to have one, we'll participate.
So you're saying there's no contractual obligation, but you are going on record that you're committing to having one?
I'll also point out, Verizon will have a franchise service manager dedicated to Philadelphia. It will be an employee that will be the liaison between the company and the government and the community.
Okay. 99 12/11/08 - PUBLIC PROPERTY - BILL 080879 All right. Thank you. Thank you, Mr. Chairman.
Thank you, Councilman. Any other questions of these witnesses by members of the Committee? Councilman Green.
It doesn't necessarily have to be these witnesses, but while they are there and while Mr. James is still in the room, I asked two pieces of information be delivered to the Chair before the next hearing, and I just wanted to check and see if you had gotten it. They were going to do a chart of the different cable franchise agreements between --
It's my understanding that you do have them, Mr. James; am I correct?
Would you please deliver it to the Chair. I don't need to look at it now, but just make sure the Chairman gets it so he can disseminate it to the rest of the Councilmembers. And I think that chart will show that some of those agreements have liquidated damages clauses. Thank you.
I don't know if we asked for -- I think we asked for rates. Do you have any other information?
I asked for all material terms of the contract be prepared, every single material term.
Okay. So you'll still have to get that, right? Okay. All right. There being no other questions, thank you very much for your testimony. I don't have to ask you to stay around, because I'm sure you will. Thank you. I'll try to move this along. 101 12/11/08 - PUBLIC PROPERTY - BILL 080879 Our next panel, we actually have -- Mr. Medin, am I correct, Russell Medin? Ms. Schaffer is still here. I know you were at the last hearing. I want to get you on as quickly as possible. And then we're going to have Ms. Brigitte Daniels from Wilco. You actually can come up now, have a seat, and then we'll talk to Ms. Schaffer. I think you may have different issues, but...
It's good to see you on this side, after covering your exploits for many years.
It's actually good to see you at that side, too. 102 12/11/08 - PUBLIC PROPERTY - BILL 080879
So my name is Gwen Schaffer and I'm testifying on behalf of the Philadelphia Digital Inclusion Coalition, and I'm here to urge City Council to ensure that this franchise agreement with Verizon includes free Internet accounts for low-income residents, as well as funding earmarked specifically for Broadband deployment. And we're thinking that those earmarks either as part of the $2 million technology grant or preferably as a separate grant. About half of all Philadelphians lack Broadband access at home. Since EarthLink shut down its network this past summer, the City of Philadelphia has failed to offer an alternative plan for getting low-income residents online. This is particularly 103 12/11/08 - PUBLIC PROPERTY - BILL 080879 ironic given that many of the policy priorities articulated by City Council and the Nutter Administration require reliable Internet access. Among the Mayor's most prominent campaign issues was improving the graduation rate for public school students. Yet, students can't do basic research without a Broadband connection. The City's goal to expand economic development necessitates that small business owners have access to high-speed Internet at affordable rates. Mayor Nutter also ran on a platform of creating transparency in government, which means posting information electronically and communicating with constituents online. Furthermore, ubiquitous access would make City services far more efficient and actually save the City money. Already Philadelphians with Internet connections benefit from more government services than those who lack 104 12/11/08 - PUBLIC PROPERTY - BILL 080879 access. To name just a few, the Department of License and Inspection's website enables property owners to obtain electronic permits and forms. The Philadelphia court system is increasingly moving functions online, and beginning in January, the Court of Common Pleas will require that all civil suits be filed electronically. Through the Philadelphia Police Department website, residents with Internet access can file complaints about non-emergencies, like narcotics activity and abandoned vehicles in their neighborhoods. The Streets Department urges residents to report potholes online. As part of the Philadelphia's community alert system, officials will send emergency alerts to residents' e-mail accounts. Numerous studies demonstrate that closing the digital divide helps close other divides. This refers to 105 12/11/08 - PUBLIC PROPERTY - BILL 080879 disparities in education, healthcare, housing and economic opportunity. For instance, Americans who possess technology and computer skills earn higher incomes than those who lack so-called digital knowledge. An increasing number of Americans depend on the Internet to locate healthcare information. Today, McDonald's and Home Depot accept only job applications filed online. The reality is that digital communications are becoming integrated into nearly every aspect of our daily routines. Whether that entails registering for a college course, getting a SEPTA schedule, e-mailing our Councilmembers or even downloading a grocery coupon, these tasks comprise our economic, social and cultural lives. Complete participation in these realms is impossible without Internet access. Philadelphia lags behind the national average for Internet access. 106 12/11/08 - PUBLIC PROPERTY - BILL 080879 For this reason, I again urge City Council to ensure that the franchise agreement with Verizon includes earmarks for Broadband deployment and free Internet accounts for low-income residents. Thank you for your time, and I'm happy to answer any questions.
Thank you. Thank you so much for your testimony, Ms. Schaffer. Sorry that you had to come back. Thank you. Before I proceed, I had on the witness list, there were a number of ministers here, but I do not see them. So I'm just going to ask if they're in the hallway or they're within earshot, please come forth. I do not see them, do not hear them, so we're going to proceed to Ms. Daniels from Wilco. (Witnesses approached witness table.)
Good 107 12/11/08 - PUBLIC PROPERTY - BILL 080879 afternoon.
Good afternoon. Mr. Committee Chair, Councilmembers of the City of Philadelphia, members of the audience and members of the press, thank you for inviting me to appear before you today and to be a part of the Philadelphia City Council's Verizon Pennsylvania franchise agreement public hearing. My name is Brigitte Daniel and I am the Executive Vice-President of Wilco Electronic Systems, Incorporated. I'm very honored to be here today, and I thank you for the opportunity to testify. Let me first begin by saying that we applaud the City of Philadelphia's intent to bring competition and choice to the citizens of Philadelphia. In any major metropolitan city, the citizens always benefit from increased competition, particularly in the video distribution market. And this is a sentiment that we're not arguing against at all. What we are urging, 108 12/11/08 - PUBLIC PROPERTY - BILL 080879 however, is that City Council consider that diversity of ownership and the inclusion of local minority and disadvantaged business participation is not only an extreme benefit also to the citizens of Philadelphia through additional choice, diversity of public interest and increase in local job growth, but has been a documented historical legislative policy precedent that has been implemented and enforced by the City of Philadelphia and City Council since the beginning of the Philadelphia municipal franchising process. Wilco Electronic Systems is a local minority and family-owned private cable operator located in Philadelphia. As one of the last remaining African American-owned cable systems in the eastern region of the nation, this year marks Wilco's 31st year of service to the Greater Philadelphia community. Since 1977, Wilco has been serving the Philadelphia area as a multiple-dwelling 109 12/11/08 - PUBLIC PROPERTY - BILL 080879 unit building service provider and a cable service provider for the low-income residential communities. It was in 2001 that Wilco became the first sole and exclusive provider of cable television services for the Philadelphia Housing Authority. Wilco was contracted to provide all of the design work, construction, operation, installation and maintenance of the cable system designed for the Housing Authority units. Will Daniel, the President and Founder of Wilco, who is also my father and who is sitting here today, was able to obtain a contract with the Housing Authority because of the ownership opportunities made available during the early franchising process. This is actually how many minorities in cable and media were able to begin and grow their businesses, by having ownership opportunities made available during franchising processes and contracting bids. 110 12/11/08 - PUBLIC PROPERTY - BILL 080879 Just for background purposes, I thought it would be a benefit to briefly explain how the Philadelphia municipal cable franchising process developed in the early '80s around the building of the first cable systems in the City. Cable service was regulated by the Philadelphia municipality, which controlled the easements under and over public rights-of-way that cable service providers needed to wire Philadelphia local communities. The original franchise agreement was allotted for cable service providers to bid for service in four areas of the City. The four service providers who bid for those areas at the time were, one, Rollins Cablevision, Comcast Cablevision, Wade Cable and Greater Media Cable. Under the Mayor Bill Green and Mayor Wilson Goode Administrations, the City developed, proposed and finally implemented policy that a percent minority participation 25 inclusion via a minority ownership 111 12/11/08 - PUBLIC PROPERTY - BILL 080879 opportunity be established for the granting of the cable franchises in Philadelphia. In addition, each cable provider was required to have a minority partner or minority ownership opportunity within its own individual franchise agreement with the City.
Thus, this minority ownership mandate was fulfilled by the following actions: One, percent of the entire 12 City franchise went to Jim Wade of Wade 13 Cable. Jim Wade was an African American 14 owner that partnered with Cablevision 15 Industries to build the system. 16 Rollins Cablevision had a 17 minority ownership opportunity that went 18 to Will Daniel of Wilco Electronic 19 Systems and a women-owned opportunity 20 that went to a group of local women-owned 21 businesses. 22 Comcast Cablevision offered 23 stock and equity opportunities to 24 minority partners for their franchise 25 agreement, and Greater Media offered 112 12/11/08 - PUBLIC PROPERTY - BILL 080879 stock and equity opportunity to a single minority partner. Now, the power for City Council to support and promote this policy is derived from the City having the right to regulate the use of the public rights-of-way within its borders. The public rights-of-way are actually what govern a service provider's ability to build a system. The City's power to regulate these rights-of-way is through ordinances that are then passed by City Council. The justification for this use of power by City Council is that the Council is in charge of making sure that the use of the public right-of-way benefits the citizens of Philadelphia and is not being used to the detriment of the citizenry. So an important factor to consider, besides choice, is that citizens directly benefit from diversity of ownership. Diversity of ownership provides for choice. Diversity of 113 12/11/08 - PUBLIC PROPERTY - BILL 080879 ownership provides for diversity of interests, programming and community awareness truly reflective of a city's population. Lastly, which in these economic times is very important and priority, diversity of ownership creates job growth, in this case local job growth. Thus, the lack of diversity ownership, particularly in a cable franchise agreement that is proposing to invest $1 billion of infrastructure into Philadelphia, would not only be a disgrace, but should be considered a detriment to the citizens of Philadelphia as a policy issue. That being said, the City of Philadelphia and the Philadelphia City Council has the power to attach conditions via ordinances and amendments permitting the use of the public right-of-way via cable franchise agreements that encourages investment in and ownership opportunities for 114 12/11/08 - PUBLIC PROPERTY - BILL 080879 disadvantaged businesses, minority, women-owned and disabled businesses. Moreover, the power to attach these conditions through ordinances and amendments comes from the right to promote policies that encourage local job growth. That is the spirit, the intent and the heart of the law and policy established by this City's Administration and by this Philadelphia City Council. So some people ask why is diversity of ownership opportunities still even an important issue. I'm sure Verizon is asking that right about now. But it's important because ownership, particularly media ownership, breeds competition, and competition breeds more job opportunities, and job opportunities can be offered by offering better services, and in this instance, through diversity of ownership, better services include customized, community-focused and diverse perspectives in programming 115 12/11/08 - PUBLIC PROPERTY - BILL 080879 reflective of the local communities. Ultimately, diversity of ownership issues ensures the public interest of people living in these communities. This is a policy issue. For example, at Wilco, we own a cable television channel called WPHA-TV, which is online via the Internet as well as our own cable system. The channel features programming that includes educational, entertainment and learning-based original programming geared to the residents that we serve. In addition, we own and operate a television studio that houses WPHA-TV.
The studio provides local officials and PHA community residents the opportunity to create programs and then learn how to produce local community television shows. Lastly, we also hire directly from our customer base. Approximately half of our staff lives in our video service footprint in Philadelphia. We partner with local job placement non-profits, 116 12/11/08 - PUBLIC PROPERTY - BILL 080879 such as the Greater Philadelphia Urban Affairs Coalition's Philadelphia Comprehensive Center for Fathers, for potential candidates to work in all of our office departments. So all of these things and more is what diversity of ownership provides: choice for the consumer, economic stimulus through the creation of local job growth and a benefit to the citizenry through a diversity of perspective and the addressing of the public interest. And as long as the people of Philadelphia freely give up their right to the public right-of-way, this is something that should never be considered a last-minute issue. It is only last minute when we find out that it is not included in the local legislation. So to conclude, we by no means want to stop or impede Verizon from coming into the City of Philadelphia. We by no means want to stop the City from getting done this franchise agreement 117 12/11/08 - PUBLIC PROPERTY - BILL 080879 between Verizon. We are the little guy. We're very neutral. We are the David between all of these Goliaths. But all that we are saying is, if you're going to get it done, just get it done right. And getting it done right means considering the precedent that was done before through two Administrations. Getting it done right means that this provider, like every other provider that came before them had to do to obtain franchise, include minority opportunities. And getting it done right means taking the time to make sure that this very important national and federal policy issue and locally documented legislation is seriously considered and included before approval is granted. Therefore, we are asking that City Council amend any legislation approving and/or authorizing any additional franchising licenses and/or agreements for the City to include provisions which provide for meaningful 118 12/11/08 - PUBLIC PROPERTY - BILL 080879 and substantial disadvantaged business ownership interests and opportunities, as is consistent with the fine history of this legislative body and the goals and objectives of the City of Philadelphia. Thank you.
Councilman Clarke, I do have one more letter that was submitted by LEVAS Communications. They are the owner of WURD in support of this position we have, and I would like to read it into the record.
I'd like to read it actually, sir. It's actually submitted to you. It's not long, Councilman. It's addressed to you.
I know WURD. If they want it read into the record, it's going to be read into the record. 119 12/11/08 - PUBLIC PROPERTY - BILL 080879
Okay. Thank you. Letter dated December 10, 2008 to Councilman Darrell L. Clarke. Dear Councilman Clarke, we at LEVAS Communications, LLC, owners of 900 AM WURD, are writing to express our support for black ownership and diversity in media. As another minority-owned media outlet, Philadelphia's only black talk radio station, we are keenly aware of the limited diversity that exists in the ownership of media outlets and how the effects of the lack of minority owners in media are detrimental to a city's population and the communities in which they reside. We understand that the Philadelphia City Council is currently considering amending the provisions of the law governing the use of the public right-of-way to allow increased competition. We ask and urge that City Council seriously work to address this issue concerning minority ownership as it 120 12/11/08 - PUBLIC PROPERTY - BILL 080879 expands the opportunities for the citizens of Philadelphia to receive video distribution from additional and diverse sources. We believe Philadelphians should not merely receive video distribution services from multiple providers, but that the diversity of ownership of those providers should truly reflect the diversity of this great city. Therefore, we ask that the current Administration and the Philadelphia City Council build upon the foundation of precedent in Philadelphia laid by the work done on this issue by Mayors Bill Green and Wilson Goode by providing for minority ownership opportunities in any additional video distribution/cable franchising agreement currently being considered. Sincerely, Dr. Walter P. Lomax, Chairman.
Quick question. Earlier there was some discussion about the PHA developments, and I understand you currently have contracts with PHA developments, and I know over the last several years, particularly under this Administration, there's been significant conversions from the traditional conventional sites, which are the, as you know, the high-rise multi-family units, to more -- or should I say, less dense developments that essentially are built on the existing street grid. Do you still have contracts with those PHA residents in those new developments, such as Cambridge and Richard Allen?
And you 122 12/11/08 - PUBLIC PROPERTY - BILL 080879 anticipate continuing to be able to provide service?
Because I was concerned that that opportunity may no longer exist as a result of the change in the development scenarios. Okay.
We wired pretty much all of the buildings in PHA to this point, sir.
All with the exception of scatter sites, right? You don't do scatter sites?
And if the Verizon franchise was successful in their contract with the City of Philadelphia in being in a position to wire up the City, I'm assuming -- and correct me if I'm wrong -- that you would also like to offer the Verizon service to the -- FiOS, as it's referenced -- to existing PHA residents, or are you locked into some 123 12/11/08 - PUBLIC PROPERTY - BILL 080879 contractual relationship with the Housing Authority that would prohibit that?
Well, how we provide the service is pretty much and what we provide is pretty much on our end. We met with Verizon in February of this year to actually talk about the issue of providing their wonderful product, FiOS TV. At the time, I think there was not a surety if it could be done and it wasn't proposed as a priority at the time, but we went to them to talk about the partnership. We went to them to talk about just how we could even lessen their barriers to entry in the franchise process and have minority inclusion. So this is not a new conversation. This is not a last-minute issue that we brought to Verizon. This is something that's been brought before them before. But we are neutral, and we have to be neutral in the position that we're in. We can work with whomever and 124 12/11/08 - PUBLIC PROPERTY - BILL 080879 whatever we want to provide to the Housing Authority. We just want to make sure the residents get exactly what they need to get, and in this terms, it's access, it's technology, it's everything that everyone else can get in the City.
Right. Okay. Thank you. Councilman, go ahead, I'm done.
When this franchise agreement happens, could there ever be an opportunity of choice?
In the Housing Authority? Our position is at least that we're not trying to at least -- well, let me say this: I think we're willing to partner with Verizon or we can partner with another provider, but the choice comes in making sure that people can at least have access to all technology that everyone else in the City can get. I 125 12/11/08 - PUBLIC PROPERTY - BILL 080879 think that when choice is coming up, that's what it really means.
Isn't satellite television a factor in public housing also?
Yes. A lot of our market is actually somewhat getting a lot of saturation from the satellite providers.
Because one of my colleagues -- I don't know who it was now -- talked about the quality and the appearance of some of these areas with satellite receivers. These beautifully built buildings now have been -- I can't even think of the word -- have the satellite dishes just stapled all over them, and I think eventually we'll have to deal with that issue of those installs. But so we have satellite in public housing?
So how did 126 12/11/08 - PUBLIC PROPERTY - BILL 080879 the satellite happen?
Well, satellite, unlike cable, is not regulated. There's not a franchise process. So satellite can come into anywhere.
Or Direct TV will market within the Housing Authority, because there's no regulation saying that they cannot -- or there's no contract saying they can or they cannot. So Direct TV does come into our market as well.
I guess I'm a little confused, and I'll keep it 127 12/11/08 - PUBLIC PROPERTY - BILL 080879 short. Is one of these services provided by the Housing Authority to the residents?
No. None of the services are provided by the Housing Authority.