Councilwoman, specifically, it's Section No. 4. I don't know if you mentioned that or not. It's Section No. 4 that has to do employee diversity. You can refer all of the details which I think are pretty well spelled out with respect to what John just said in a more general way.
Councilmember Nutter -- I'm sorry, Councilmember Miller.
Thank you, Mr. Chair. I'd still be interesting in seeing some written information along the lines of customer satisfaction. You have anything written since 1997?
Customer 79 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 satisfaction surveys, do you have anything written? Do you any results? I know your answer was competition is good. I understood that. But have you taken any customer satisfaction surveys? And if so, do you have written results?
We are measuring our overall customer satisfaction benchmarking --
I know you're still kind of new, but still, I know you have something.
We do. We have a whole program devoted to measuring and improving our customer satisfaction across our whole company. And we didn't submit that because that was not a request at the prior hearing.
I'd like to get that. Thank you. What do you plan to do after year seven? In year seven it just stops or you're only 80 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 interested in what you're doing on the map from one through seven?
Well, that's a construction schedule. We plan to operate all the areas that have been constructed. But I would think that between now and then there may be some discussions about the other areas; that's one possibility. Another possibility could be that you're involved with another one of the overbuilders about those areas. But it's a sizable area. So I think we'd have our hands full in year seven in operating the areas that we had just completed constructing.
What made you decide to do the areas that you decided? What made you decide to start with Area 1? MR. Pitts: Not to start in Area 1?
I'm talking about on your map, year one. Year one. I'm sorry.
The reason that we chose 3 and 4, and it was a long process as partially Joe James described, but after we got to the point that we were talking about two areas and not all 4, we had to decide which two areas. There were a number of factors. One, Councilman Clarke talked about, 81 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 you know, being close to the plug. There were some technical issues, but there also was the issue of Areas and as already being established as one area with Comcast having operated those areas together as one company, you know, with one company for many, many years, it seemed that if we had to choose two areas that that had already been established and that there probably wouldn't be much discussion. We weren't quite right in that estimation that there wouldn't be discussion. In terms of the order, we tried to just choose an order that sort of logically progressed just so we could have contiguous construction. Also being cognizant of the different neighborhoods to make sure that we wouldn't be leaving any particular group till later in the construction process. We wanted to be fair and go across a diverse area of neighborhoods in what could be considered fair by anyone who looked at it. So we started at one end and we moved across to the other, and we thought that it proceeded in a way that was without regard to who lived where or what.
Councilwoman, excuse me. Just to add to what John said, in the written 82 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 response from the previous hearing, Section B Paragraph No. 3, which is the technology explanation goes into just a little bit more detail again and more specifics on what John just described. So I would just refer you to that if you want some additional information.
There is an issue of where our sonant ring would enter the City and so on. And as Scott Burnside described, that is in that section 11 that he mentioned.
Because, you know, it's not diverse. You just mentioned that it's kind of diverse and diversity was included in the planning. That is not really -- when I looked at the map, that's not a representation of diversity. Are you -- where are you closest to Philadelphia right now? Are you in Bucks County or Montgomery County.
See, that's what I -- there's some comments up here, but someone told me that you were coming the way you were coming in because you were already connected or wired in that 83 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 particular section geographically. But you're all the way up here in the Northeast and then Delaware County us all the way over there on the other end. This doesn't kind of make sense to me.
I understand the confusion. The sonant ring that will feed Philadelphia, it comes from Bucks County. It swings around. Like we have a ring that, I think I described it in my testimony before, that circles the entire area, and we would be heading south from Bucks County down into Areas 3 and 4. And we have to do that to -- the technical reason is probably, if I had to rank them, probably at the low end of the reasons why we chose it; it's just one thing. We were asked why, so we gave you all the reasons. But I think probably the larger or what I would rank the first reason would be that it had already been established as one area. And if we were going to build two, building two that were already considered to be or operating as one area seemed to make more sense than two independent areas.
Councilmember Miller is yielding to Councilmember Nutter.
Thank you. Mr. 84 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 Pitts, I have no idea what you were saying. On a couple of occasions you used the phrase "one area." What do you mean by that? I don't understand that.
For many years as -- again, this was during discussions and trying to figure out what we would bring forth. For many years Areas and have been operated by one company, Comcast. And from our view, that in itself, whenever I would -- as an operator in the City of Philadelphia, we would refer to Area 1, Area 2 and then 3 and 4 as one area. Even though they're two areas, because there's one company, you know, one management team, that it was referred to as on area. So when I say that, it had already been established as one operating entity, that's what I mean. That one company was already operating it. If we had to choose two areas --
What's that got to with where you come into the City and how you determine where you're going to put up service and any of that? What difference does that make?
Well, if we start from the point of view that we're not going to build all four that we're going to build two, then the question is, 85 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 well, which two? So we bounced around. We first talked about what Areas 1 and 2.
I don't understand the building two strategy which is a part of the next round of questions, but you can go ahead.
We decided, you know, would it be Areas and 2, would it be areas and 4? One of the reasons that and made more sense than 1 and 2 was because of what I just said, that we figured that it was already established as one operating entity already. So for another company to come in and ask to operate in that same entity seemed -- I didn't think that there was much push back there because it was already established.
What about and 3, what about and 3? Councilwoman, I appreciate the extended yield. I guess what I'm not understanding in terms of where you lay cable or fiberoptic or wherever it's going or wherever it's eventually going to be, what different does it make who the operators are, is it considered one area, is not one area? I don't necessarily know that we technically 86 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 consider it one area or not. What difference does it make to you?
I think this process illustrates part of the reason why we had the kind of discussions and came to the conclusion that we did. Regardless of what area we chose, what two areas, someone would ask the question, why these two areas? If we chose 1 and 3, we would be answering the same question, why 1 and 3. We -- and I know you're going to get to why we chose to do two areas instead of four, but once we decided that it was going to be two areas, then we had to decide what two areas are logical for us to build. And under scrutiny, what could we have an answer for. And it just seemed that it made sense that if we had to choose two, that we would --
You didn't choose your areas based on what you thought was going to be the best answer to give us in a public hearing. You chose your areas based on some array of circumstances, opportunities, situations, demographics, who's going to sign up, who's not going to sign up, who's going to pay a bill, whose not going to pay a bill, and a whole host of other 87 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 factors having nothing to do with anything you might have to answer for us one day.
I beg to differ, Councilman. We figured that this is a political process and we would have to answer to -- I mean, I've operated in the City prior to working for RCN. We would have to answer for why we chose those areas. So we were very sensitive to not being accused of doing this and not being accused of doing that --
So when you put all of that together, it's a multi-billion dollar company, investors all over the country and Wall Street and whole host of things, and what it finally came down to was, "Well, we have to have a good answer for the Philadelphia City Council and we figured we'll just do and because, well, we always considered them to be one area and it's one company so that makes sense so we'll pick 3 and 4." Is that how it goes?
That sounds like a strange answer if we didn't think that any combination of the four areas would have been okay for us. And we did think that. We would have been fine with Areas and or Areas 2 and 4, but we felt that we had to 88 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 come up with a combination that made sense. But in terms of our strategy of wanting to get into a high dense area and offer all three of our services --
Did you do like focus groups on trying to figure out which two if you put them together would be more likely that people would think made sense or be politically acceptable?
Right. Not focus groups, no. Internally, we discussed. We had to submit something. We would have been -- originally, we talked about all four areas, originally. But we agreed, we came to a mutual agreement that it was going to be 2 instead of 4.
Let me say this, though. But you're after all of this back and forth, because I think I've given you about a half of dozen opportunities. You're going to not say that at least some of the elements in terms of making this decision did not entail the demographic population of the area served, the income levels 89 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 involved, proximity of neighborhoods, and who you would have the opportunity to go head to head with; are you telling me that none of those factors came into play in terms of making this decision? It's a yes or no question.
We felt that -- a number of things. One, there was a technical consideration and that's in our response to you. The area of it's a political process so we had to have a logical reason for choosing two areas and we didn't want to be accused of two areas at the expense at some other areas. Also, we think that if you look at Areas and that if you look at the entire area that it represents a cross-section of the City so that we didn't think that we would be accused of trying to avoid a certain area or certain areas of the City. 90 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452
How about this. You said it about a half dozen times about this oh so political process. You know, I guess that's a fair statement. We happen to be politicians and I guess we act in a somewhat political fashion. What's the political dynamic or political benefit of you doing and versus 4 and 1, 2 and 3? I mean, what difference does it make? Don't you think you end up answering all the same question?
No, I don't, Councilman. We were concerned that, say, if we chose Area 2 that we might be accused of going after a new company in Urban Cable Works that wasn't established and we might have answer question of why were we going after them. We thought --
Are you talking Area 2 that's Urban Cable Works which is a subsidiary of a little firm up in New York called Time-Warner, you were worried that somebody might be upset that you competing with Time-Warner?
These were discussions that go back two years now, over two years.
I don't no that Urban Cable Works existed two years ago. 91 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452
They were in transition because when I was still at Greater Media --
So you didn't come to Area 2 because you were afraid that people would be upset that you were coming into Area 2.
People would ask, well, why wouldn't we pick on some our own size, for lack of a better term. I know --
Well, I meant that in terms of my knowledge of operation of the City in --
Who is the operator of the area, Time-Warner, correct?
Well, my view from being an operator in the City all these years is that in terms of who had the highest penetration, in terms 92 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 of, you know, that there were some concerns. And we didn't want -- maybe we made a mistake here, but I'm telling you our thought process. We thought there could be concerns that we were going after a company that may be less able to handle competition head-on than Comcast would. That was one issue. I mean, there were a number of factors. We didn't want to go into an area where it might be considered that we were avoiding certain demographics.
Did you ask anybody while all y'all was sittin' around thinkin'? Did you ask anybody, all these people that you were worried about possibly accusing you of all these savory competition-type charges? Did you contact anybody and say, "What do you think about this?"
Councilman, we would have -- I'm submitting to you now that regardless of what areas we chose, we would have to answer to somebody, "Why didn't you choose the other areas?"
All right. Councilwoman, I appreciate the yield. 93 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 Thank you.
Did you do the demographics of the areas that you chose by year 1, 2, 3, et cetera? Did you do demographics? You looked at the demographic, am I not correct, of year 1?
You looked at demographics of year and year through 4? Certainly, you couldn't have found a whole bunch of diversity.
Diversity is just an issue for me. I mean, all this indicates that diversity was not a part of why you chose where you start from year 1 through year 4. I just really want to make that statement because this is what you've chosen. Politically, if you'd asked me, if I'm going to be concerned about competitive prices, then I want to see it spread out in the income brackets in my councilmatic district. And certainly, this is not an example of getting all of my citizens in my district to have the opportunity 94 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 to participate in competitive pricing. So politically, that's where I would have come from. I don't have any more questions. Thank you.
Thank you, Mr. Chairman. Mr. Chairman, I apologize for having to step out of the room for a moment. I had a meeting across the hall. But as I come back, it's quite amazing to me that we're talking about this whole issue of placement and I hear another story. Earlier on we talked about the power line and the connection to Princeton. Then I thought we kind of concluded that it had something to do with the economics of the deal in the first phase. Now I'm hearing there's certain political considerations. And I'm wondering as a Councilperson for a district that's not represented, are you now telling me that the politicians associated with and don't have the level of influence of the politicians in Areas 3 and 4? I mean, what are you talking about? I don't understand.
Councilman, that is not a 95 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 correct conclusion. We simply chose to do two areas. I, for one, wanted to compete directly with Comcast, and a lot of us did and we chose those two areas for all of the reasons we've just explained. And if you want to add a couple more, it's easier to construct in those areas. We did all of the homework we could do. Economically we couldn't do more than two areas. We chose Areas and for all the reasons we've talked about. It has nothing to do slighting you or any other representative from districts other than 3 and 4. But all John was saying is that no matter what process you go through, it's a political process. And we knew that we would have tough, tough, tough questions regarding why it was we only chose two out of four and why we chose the two that we did. I think we've answered that in a number of different ways. I don't know what other information we can give you.
That's my problem. You've answered it in so many different ways, I don't know which one to believe.
We gave you a number of answers all pointing to the same decision.
I'm afraid I 96 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 disagree with that conclusion.
I understand that, but I'm telling you we had a number of issues, construction issues, technical issues, political issues, economic issues. We've gone through all of them. You can arrange them in any way you want --
Would it be possible for you to do this for me then: Can you arrange them in whatever order that you may choose as it relates to levels of priority? I'm assuming when you make determinations as to what you do from a business sense, you prioritize them. Would it possible, so I can have a sense of what went into this decision-making process? Because at some point, I'm going to ask Mr. James, assuming this will achieve the level of better service and level of competitive nature of the company will reduce these rates, I'm going to ask Mr. James and the City of Philadelphia to get proactive in other areas, particularly in and 2 so we can get some competition that people say ultimately will drive down the rates. It will be helpful to us if we know what, in fact, will create that environment that makes people make these 97 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 decisions. So if you can somehow list them in order of some priority or categorize them so I'll understand what the correct nature of the business decision is.
Councilman, those reasons that we have given without any particular reference to order here in this process, because the questions weren't coming in any particular order, are all answers in Section 2. And I think if you read those responses, you will see, and I think they are properly ranked --
I didn't recall the political decision being in Section 2.
I think there are references. I may not use the word "political," but there are reasons listed that I would consider --
I'll ask you like this: Can you do me a favor as we move ahead? Can you incorporate a summary of the decision-making process as it relates selections of areas from a business standpoint?
I think there is a summary, sir, Section 2. If you read that and determine that that's not enough -- 98 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452
My point is that I'm hearing things that I didn't hear before. And I'm asking you -- you know, because at some point we're going to have to come to some conclusion on this issue. I'm asking you for me as a favor, because you don't have to do anything, right, I'm being told by the Telecommunications Act that nobody has to do anything, right.
As it relates decision-making process, I just ask you if you kind of prioritize this whole process, because I don't know. I'm probably the only person in this room who does not have cable. I don't have cable, so this is about the business of the people that I represent, it's not personal because the rates right now for me are free.
Let me try it one more time, all right, in terms of prioritization. If you were an engineer, if you were engineer or a technician, you would prioritize it by saying, "I can't build it unless I come in in a logical fashion." That says from that priority, the sonant 99 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 ring has to come in from Bucks County, that's priority No. 1. If you are a government affairs guy or a regulatory guy, you say, "We have a lot of concerns with respect to how people accept the decision to build only two." So it might be if you're one of those guys, that's your No. 1 priority. And if you are a construction guy --
Are you saying all these different people are in your company?
All of these thought processes go into making up this company. If you're a construction guy, you say, "Where can I build this thing quickest? Because the pressure's on to build it and get customers up." And you say, "I can more easily build it in this section. There's lots of underground in this Section. And then if you're marking guy, you say. "I don't want to go downtown the City because that's where the offices and buildings and businesses are and our market is the residential market. So depending on who you are, that's how you prioritize. And the composite of all of those discussions added 100 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 up once we realized that economically we had to make a choice how we made. Now, I don't know how else to tell you.
So these various priorities within the company pretty much reflect the different nature of the responses to our various questions over this last year?
But I think the question was asked and it was asked for us to elaborate and our response in Section 2 lays out the competitive considerations, the demographic considerations, and the technical considerations, and I think overall the order that they're in are the prioritized order. And, again, it's one-page and one-paragraph summary I think clearly states our position there.
Thank you. Based on your priority list and let's say that we didn't want to do this. You hear the concerns at this hearing. Could you revisit your plan and still do the build-out and do it in a way that would satisfy the concerns that you're hearing today? Technically, again, you're trying to make the best business 101 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 decisions you can, but now maybe the person that you've gotten political slot making the decision is a little weak and didn't give you really enough information on how to come here today. What could you do to tweak this priority list to accomplish what you're hearing in your concerns.
Two separate issues. If we're talking about do we want to revisit areas of 3 and 4, I would say we would not want to do that. If the question is the construction schedule, and I think that would address some of the concerns where we're starting and what's in year one through -- that is something that -- I think, as it exists, the agreement calls for us to submit a construction schedule after signing of the agreement. And at that point, we would negotiate that construction schedule. So that is open to tweaking.
You said something that put my antenna up, "after we sign the agreement." What kind of construction schedule could you give us to assure us that after the --
I don't want to -- Joe James may have something to add to it, but --
Again, you're hearing 102 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 the concerns here, and honestly, once it's done, we need to have some confidence that this is going to -- DEPUTY COMMISSIONER JAMES: If I can just jump in for a minute. The way the agreement is set up, Councilman, and it's very similar to what's been done what the other providers, is that once --
Could I stop you just for a second, Commissioner? DEPUTY COMMISSION JAMES: Sure.
Why do we always have to refer back how we did it. This is a new deal. I don't think that we have a book of rules on how to do this. If we do, I've never heard of it. Do we really -- is what we did any past any concern of ours here? DEPUTY COMMISSIONER JAMES: Well, yes, it is. It's only rom a sense that we want to ensure equity because everyone refers to this whole discussion regarding a level playing field. So we want to make sure that everyone understands that we're trying to make this as level as possible.
By law, is equity required? 103 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 Again, just tell me. Do we have to look back in this deal at all? DEPUTY COMMISSIONER JAMES: No, we don't have to look back. But to satisfy some of the concerns that are always expressed is to make sure -- about the issue about parity and the issue about equal distribution of the benefits and the opportunity, we're trying to make it as level as possible so that we don't create an undue burden upon the operator who is attempting to construct or the operator that is currently in place. The only point I was trying to make is that our process in the Department of Public Property is to request from the operator to submit a detailed construction plan. That detailed construction plan happens after they have the authorization to proceed. Where we get down to real specific minute details about the routes, about the areas they're going to pass, about the specific distribution system they're going to use, and we can get into those issues that we talk about as far as making sure -- if there has to be a modification in their plan because they want to go any specific route that somehow creates an undue equity issue, we can make that modification before 104 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 they are able to proceed.
If that plan did not satisfy the Department of Public Property, could you stop the process? DEPUTY COMMISSIONER JAMES: Yes, we can because the process is for them to submit to us a detailed plan within the six months from the date that this authorization and the bill is passed.
And you're not satisfied, what happens? DEPUTY COMMISSIONER JAMES: We enter a set of discussions and modifications because they can't pull their permits to do their construction until we sign off on their plan and give them the authorization to proceed. What we further have done is that in our process, we're providing details down to the Council level about the activities that they're operate under construction, that's part of the amendment which is to give you the assurance that you know where they're going and that they've been approved where they're supposed to go. And if you have a concern about the route that they're taking and you would like them to make an adjustment, we have the opportunity to make that 105 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 change before we create an inequity. It's not a perfect plan, but it's an attempt to interject the department in the process as a regulator to regulate their activities ensure that there's fairness and equity in their build-out in their construction schedule.
Before I recognize Mr. Singley, I'd just like to compliment you on what I call the David L. Cohen slide. I saw you at the back of the room, and then in the middle of room, and then the front row, and you finally made it up here. I was wondering exactly when you were get there. And for eight years, seven, eight years I watched David L. do that same thing. As things were going down hill, he just started moving forward and forward. So the Chair recollect Mr. Singly.
Thank you very much, Mr. Chairman. My name is Carl Singley. I'm Council to RCN, and I suppose I learned that at the feet of the master. I have heard, and one of the reasons 106 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 that I elected to come forward is that in an effort to assist RCN in answering the questioning that have been posed by the committee, both today as well as in the previous hearing, I thought I understood someone to say that there are concerns. And I don't know that the concerns have been clearly articulated from this Council. Now, the reason I chose to come forward is that I think that there may very well be some type of undercurrent that has not been clearly articulated that suggests that perhaps RCN's decision about what areas they would build in what order may have in some way been influence by improper considerations. Because I think I heard it earlier said the phrase "racial disparity" was used. I think what I have heard certainly during the earlier hearing that somehow the determination that was made by RCN to build out the areas that they wanted to build and the order in which they build it may have been based on those improper considerations. If in fact those are the concerns, as Councilman Rizzo and others expressed, if you are concerned that perhaps that might have been a consideration, I think in fairness to RCN they need an opportunity to have it expressed in that way and 107 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 to address it directly. Now, between the past hearing, the previous hearing, and today's hearing, we were given a significant number of questions. We have addressed fully each and every one of those questions. Today for the first time, they now find themselves put in the position that they are asked to justify the business considerations or the business decision that was made as to what areas. So I thought that if perhaps that is in fact a part of the undercurrent and unease that we hear, then I'd like to know that and I'd like for them to be given an opportunity to respond to it directly.
Well, let me say for the record that you are correct, there are a number of extensive questions that have been asked of RCN through the course of this very lengthy process. Understand from a historical standpoint, I think the record should understand it, too, is that two years ago I was not Chair of the Public Property Committee. I don't believe anybody on this panel was -- I was a member of the Public Property Committee, but not the Chair. And the first foray 108 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 into the Rendell administration, which had been clearly explained in the recent "Inquirer" story, may have created this impression that somehow when it finally got to us, we had been part of this two-year loop. We received the legislation sometime, I guess, mid-May, went out in summer in mid-June, came back to a major problem with the City and that was the issue of construction sports facilities which took up an inordinate amount of our time, and then had a hearing in October. As a result of that hearing, you are correct, there were a number of questions raised. But I think it's important for the record to understand, from our perspective, we're not professionals in this business. We don't understand the industry as the people at the table understand the industry. And we are given the responsibility of trying to make a decision that's both fair for the citizens and cable viewers of the City of Philadelphia along with the company that wants to enter into this marketplace. So I guess our questions arise as a result of ongoing dialog. Sometimes that happens. I mean, as Chairman of the committee, I am happy with the way in which RCN 109 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 responded to those questions from the October 31st hearing and have been happy with the cooperation I've received on some of the amendments that I've asked for. However, as chairman of the committee, I am only one member. There are other members at this table who, during the course of the hearing, questions are raised, we go in different directions, other questions are raised. I mean, that's part of the good and bad of the public hearing process. Issues are discussed in an open foreman and sometimes they go in a direction that we don't anticipate. As chairman, obviously, any Councilmember of this committee can asked any question they want. I do think I understand you'd like perhaps members to be a little more specific as to what -- if the concerns are those of demographics and ethnicity and income, that we air them. That's up to each individual committee member. But I think it's important that we understand that I've tried and I think the members of this committee have tried to perform in a diligent way to examine this issue which is very, very complicated and important and expensive issue, and to do the best we can to move 110 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 it in a position to be approved at some point in time. That's where I am as chairman of the committee. I think the record needed to reflect the fact that despite the consternation and perhaps the frustration of this company in dealing with the City of Philadelphia as a whole, it's not all been a Council issue. It's been an administration issue, actually the last administration's issue, for a year and then the new administration's issue year, and then finally we've had it in reality for about six months, five or six months. So I think I do understand where you're coming from, but I want you to understand that we're doing our best to understand and move this thing forward.
I do understand, Mr. Chairman. And if I might just for a moment, there's been a lot of discussion fairness, fairness to the consumers, fairness to those persons who are potentially affected by the matter that is pending before you. But I come to you to talk about basic and fundamental fairness to this company. Now, there is, as you have heard us articulate in other forums, a belief that this company is being subject to a double standard. When 111 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 I hear questions being asked, for example, as to why you chose this location, what did you consider, what were the demographics, it is clear to me that that is a legitimate inquiry that this body is entitled to make. By way of analogy, for example, if a Fresh Fields made a decision to open a new supermarket in Center City, if they made a decision to open a new supermarket in Chestnut Hill, if by chance they had to come before a public body to seek public approvals and then would be grilled and examined on the business considerations that went into the choice to locate a business in Center City Philadelphia, in Northwest Philadelphia, and the implication being that you chose areas that were economically profitable to you. We think that that is legitimate prerogative of a business. Here we have a company that seeks to come into Philadelphia and has been for the last two years to build a project that's going to be in excess of $200 million and questions get asked as to their business motivation. We certainly understand that that's your right, that is your prerogative, and we understand that. But what our appeal to you here is the fundamental fairness. 112 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 And lastly I'll say, because I don't think my clients expected me to say this at all. But I think one of the concerns, obviously, is the implication is that if we can't bring competition and reduce rates to all of the citizens of the Philadelphia, that perhaps we shouldn't bring them any of the citizens of Philadelphia. I don't think that that is your intention, but that would be the implication of a line of inquiry that suggest if you're not building out the whole City, then there are some folks who are disadvantaged and perhaps nobody should get the benefit of the competition and the reduced rates.
I do understand your position and your analogy to Fresh Fields. However, I'm sure you will agree that cable TV not the same as arugula. There's a little more involved in high speed internet service, telephone service, cable TV service. I think part of what has Councilmembers concerned is that the reasoning behind having this company come in is competition and ultimately stabilized or reduce rates. And I guess because some of them are district council people, there is a parochial view that we agree with that, but we want 113 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 our people to experience it too. I don't think it goes as far to the extent as saying we don't anybody to get it if our people can't get you. But you can also understand why Councilmember Miller or Councilmember Clarke or somebody may get a call and say, "You know, I been talking to my cousin across town and their rates actually went down $5 a month. Why can't we have that?" So I think that's what these questions kind of come from, is that people want to know, -- well, for example, why year one and two it seems to be a more economically advantaged area that we're building in and we really don't start getting some people modest or low-income means until year three. And then we don't even get to some other modest or low-income people until year six. I think their questions as to what the business decisions are relative to that I think are germain. And I do understand and take account of what you've had to say. Councilmember Clarke.
Thank you, Mr. Chair. 114 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 Mr. Singley, I understand your concern for your client and being before us today, but you need to understand the concern for the 150,00 constituents that I represent in an area that is not being discussed here for the potential cable franchise that allegedly may make more competitive rates. I am going to ask the questions as it relates to a business decision to anyone who comes before this body if I think it effects my 150,000 constituents. And I don't think that you would expect me not to.
So I'm trying to get a sense why you feel we're somehow bing unfair. As Councilman Kenney said, we are novices at this; at least I know I am. I don't even cable, to show you how much I know about it. I have to ask these questions because if in fact this happens and if in fact the residents in my district are forced to pay higher rates, they're going to want to understand why I didn't ask these types of questions and why they're not getting the rates that they're getting. So I hope you understand why we ask these questions here today and will continue to ask these question 115 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 regardless who is at that particular witness table.
Absolutely, Councilman. And I wouldn't presume to tell this body how to do its business. But I would urge the body and just reemphasize the fact that we recognize that for this committee, this has been relatively new process. But for these for this company, it has been a two-year other deal. And given the reality of who this company has elected to compete against --
I'm new here, Mr. Singley, so I wasn't here for the two years. I'm done. Thank you.
As Councilman Clarke said, I also appreciate, Mr. Singley, your concern for your client, but I think you've also simultaneously made the case that they have certain rights to make certain decisions and we certainly have certain rights to ask certain questions. I think you've known me long enough to know that I'm going to ask whatever question I want to ask. 116 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452
Thank you. When the map was presented and decisions have been made, I do again agree with my colleague Councilman Clarke that it does raise a question as why did you decided to do X versus Y. And we have to assume that business people have good business reasons for doing certain things. If it answer makes sense, we move on to the next question. If it doesn't, you'll continue to pursue it. One of the items that we've discussed up here is, has been said different times during the 15 course of this exchange back and fourth is, you know, the company tried to make some quote/unquote political decisions or deal with the political process. As some of my colleagues have said, people ask us different questions than they're ever going to ask the representatives of the company because more than likely, they will never talk to the representatives of the company. And that's no 24 disrespect to RCN because on most days, they probably don't talk to the senior vice president of 117 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 Comcast or the senior vice president of Time-Warner, Urban Cable Works or anybody else. But they can call us. And if you don't have the answer and you had an opportunity to get one, then I think that that responsibility falls on us. So I don't know the answer to that particular question. It is clear, though, that moving down from the Northeast, there's a year one, a year two, a year three, and then simultaneously year three skips to the top end of North Philadelphia, skipping over a couple areas. I don't know, you know, what the technology is that allows for that to happen, but it certainly seems to indicate that other variations on this same theme might be possible. Look, I appreciate the company feels that they've been going through a long drawn out process. I said it the other day, I think I've said it privately, I'll say it again publicly. That time was on somebody's clock. I'm not taking responsibility for that. That was in another forum. I think that we have tried to deal with this in as timely a fashion, all other things considered, as possible. You are now here and we've had this opportunity on a second occasion to get into this. 118 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 But, you know, I don't have any control over what you did or didn't do with the City Administration. And as far as our process is concerned, quite honestly, you haven't been with us that long. In addition, I will also say that at some level it has not been helpful, some of the comments that have been made, if not at times some of the threats. I don't respond to threats at all under any circumstance. Haven't in the past, won't today, won't in the future. So if we're going to deal straight and be realistic about this, we can go through the Q and A process. We'll ask our questions, hopefully you'll answer as many of them as possible, and we'll move forward. Now, can you tell me about any variations on this build-out plan?
Let me try to take a shot at it, John, and then you can pick up. As Mr. James said, Councilman Nutter, that the finite details of the construction plan within Areas and can be adjusted for a number of reasons.
Can, can be adjusted. 119 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452
Can be adjusted. And I can tell you from experience they will be. There will be lots of reasons over the next seven years as to why our plan isn't in sync with what the City wants. But to forecast exactly what all of the details of the construction plan will be prior to even having a license to come into this City is just not economically feasible. That's exactly why the language in the agreement is written as it is written, to give the City once the agreement has been inked or the license has been issued, the authority and the responsibility to look at the detailed plans and adjust them to whatever conditions are influencing that. It may be something as simple as, let's say, the City of Philadelphia is fortunate enough -- and I say fortunate enough, not everybody may agree -- is fortunate enough to have another political convention four years from now. And in the midst of that, any street construction may have to be adjusted to accommodate whatever was going on. And that's just one example. There maybe others. You may have interests, you personally, 120 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 and you convey them. This is the second point I wanted to make. You will not lose the opportunity to have input through the document, through the license. But in addition to that, you will not lose the opportunity to communicate with the company, just like you can communicate with existing companies in this City. Anybody in their right mind trying to operate a business like we're attempting to do in this City has to be available on a regular basis. And to that end, you will have that access, obviously.
I understand that Mr. Burnside. I don't mean to talk across you, but I think what you have to understand about us and what we do, for the most part, this is pretty much the last time we will see you folks. You'll be around, you'll build whatever you're going to build, you'll send to billings to customers, you'll have operations, you'll have buildings and all of that. From a process standpoint, this is the last time we will see you. All the other agreements and everything else you signed, most of your dealings will be with the Department of Public Property going forward. And so not only by way of the company, but 121 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 also certainly your time here in the City. Again, I appreciate the two years and I don't discount what two years mean. You've been in business for about three or four years. You've been in this process for about two. You seek to do something which very well could be a good thing. We're in a public hearing process reading documents, talking to people that we really don't know. You may have actually signed an agreement with us, and you will then go away. So whatever's going to happen and whatever's going to be said more often times than not is going to happen right here in this process. And if a person is handed a piece of paper and it says this is the build-out schedule, from our perspective, more than likely that's the build-out schedule. If there are options, if there are variations, I'd certainly like to hear about them. DEPUTY COMMISSIONER JAMES: Councilman, if I could just interject for a second. The way the agreement is structured does not preclude the opportunities for RCN to come back to this table. As explained in the agreement, they've already expressed the intent to obtain a traditional cable franchise, which means they will be back here again 122 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 before you for Areas and to obtain that franchise, hopefully, with a detailed construction plan for the areas with you having, again, and the full body having again to ask those specific questions and have a better understanding of their capabilities and what they want to establish. So the process does not presume that you will not have the opportunity, hopefully, when they will come back for Areas 1 and 2 as well.
I understand. But I think, Mr. James, you are very much aware, and certainly Vince Costello and other folks, about the realistic nature of what any opportunity there is to move a cable company to do certain things or perform in certain fashions. We had the issue last year, and apparently it's an ongoing issue this year, with the -- last year it was Time-Warner and Channel 6. And this year out of last year it's Comcast and Channel 6. Now, these are mega companies. They'll always take our phone calls, they'll always try to be responsive. Whether something actually happens or not is a whole other story. We can deal with the Comcast/Channel 6 issue at another time in another forum. 123 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 I also understand, though, that RCN has apparently some unresolved business with a local television station Channel 48. I'd like to get an understanding if what's going on in that situation. DEPUTY COMMISSIONER JAMES: To the first point, we do look forward to them coming back for a cable franchise. And that cable franchise from RCN for Areas and has to be granted by City Council; it cannot be granted by the Administration so they do have to come back before you because they can't get the 15-year term that they really want and the certainty that they will get through a cable franchise. They were not obtained in this interim agreement.
I understand that. Is it also true, though, if they never come back, they get 10? DEPUTY COMMISSIONER JAMES: They would have the ability to get 10, yes.
Without ever coming back to the door, correct? DEPUTY COMMISSIONER JAMES: I don't think 10 works for their funding, but, yes.
I understand that. 124 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 DEPUTY COMMISSIONER JAMES: I think that's a debatable issue over what certainty they prefer, but the opportunity is preserved if they want to get the cable franchise. On the second issue, on the issue related to WTGW, Channel 48 --
WGTW? DEPUTY COMMISSIONER JAMES: WGTW. I don't watch it that often, but Channel 48, there was the issue about the channel allocation prior to this hearing. There's been further discussion with representatives from Channel 48 and from RCN. And to my understanding, and Mr. Pitts can speak to it, that there is no issue related to their placement on the Philadelphia system and that that issue is not an issue that's open right now that they have any contentions about as far as where they're going to be located once they get on the RCN system in Philadelphia.
Well, when did the issue get revolved? Because it did not appear to be resolved yesterday. DEPUTY COMMISSIONER JAMES: Well, from the discussions, I understand, there was just a 125 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 misunderstanding over the channel number. But that seemed an easy conclusion once they had an opportunity to talk this afternoon.
Mr. Chairman, I get the impression that that is necessarily the case, at least if my ears are serving me correctly. Just so that the record is very clear, Channel 48 is located in my district on Main Street, and I'd like to get a better understanding of what's going on in terms of whether the station is going to be carried.
Just let me make a suggestion. Again, similar to what we did with the labor issue, in the interest of having a coherent record, I believe Ms. Brunson is here. You want come forward? You may proceed.
There are two issues that were pending. One was -- both of them related to channel placement of Channel 48, one of them on our Philadelphia market systems and the other in our Lehigh Valley market systems. The agreement was in Philadelphia for us to put them on Channel 18. I believe that was to be done as of January 1st, and that has been done -- December 1st; excuse me. So 126 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 as of December 1, 2000 in the Philadelphia market, Channel 48 is now on Channel 18. It was on Channel 16. There was a discrepancy before this session started of whether that it happened already but it has happened and I believe that they know that. The issue that is still outstanding is a disagreement about the placement of Channel 48 on our Lehigh Valley systems in the Allentown area. There's a request to put it, I believe, on either 48 or 18, and there's some technical issue there that we need to resolve before we can agree to do that, and I think that issue is still open.
Ms. Brunson, would you please identify yourself for the record and make whatever comment regarding this particular situation you feel is appropriate.
My name is Dorothy Brunson and I'm the president general manager of Channel 48 television. RCN has been very convenient in isolating the issue. But there is a federal law which allows me the right to be on their cable system. They have abridged that right. And since October of 1999, I have been trying diligently to be 127 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 placed on those cable systems on my right channel. All of the cable systems have complied, and as recent as December 14th after numerous FCC cable -- let me read it. My attorney sent me a fax. That the Cable Service Bureau authorized RCN to place me on their cable systems at my appropriate number for the last year and a half. And for the last year and a half, RCN has refused to do so and very conveniently within the last few weeks they placed me on Channel in this market because they knew 12 they were coming before this body. But it has been 13 a two-and-a-half-year fight, and only one portion of 14 that fight which has been authorized and granted by 15 law to me has been adhered to by RCN. They have 16 appealed, kept me courts, asked for extensions, 17 filed that it was too expensive, and I have at least 18 seven inches of papers documenting that RCN has refused to carry me on their entire system.
So you've had your own two-year odyssey in terms of trying to get something done.
Well, I disagree with some 128 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 of the particulars.
In this market, we've been operating since March of 2000. And when we initially launched the system in March of 2000, we put Channel 48 on Channel 16. And I don't know --
I'm not sure. I think that their desire was to either be on 48 or to be on a lower channel.
Generally people want to have like the channel number that goes with their chance. Do you have 6 on 6 or do you have them on 16?
No, we have 6 on 6. But the request was either to put them on 48 --
I requested 48. They came to me throughout approximately August of this past year and asked could we negotiate. I said most 129 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 certainly. What would be most convenient to you? They said that we could do this on Channel 18. I then agreed. At least with the being very 5 similar to the 48, that that would be somewhat of a 6 compromise. It is only within the last several 7 weeks that that was finally accomplished just in 8 this market. But prior to RCN come being in to the 9 Philadelphia market, they are in the surrounding 10 areas as well. And since our signal covers those 11 areas, the Federal Cable Commission has authorized 12 and the Federal Communication Commission, must carry 13 on your channel in those areas that you cover. And 14 those, they have failed to deal with me at all on 15 and they have fought me in court even though I 16 received approval by law to be carried as recently 17 as December 14th of 2000 again when I challenged 18 their appeal to be put on those cable systems on my number. They have since repealed for that. Yes, they did put me on it Philadelphia within the last few weeks.
So in looking at the chronology, we launched in March, we launched on Channel 16. We got a complaint. We compromised, we 130 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 agreed to put them on and we came up with a date that we would do that. In the Philadelphia area, it was a matter of making an adjustment in the head end. In the Lehigh Valley system, it's a much more complicated issue and that was filing for some relief in that regard because moving them from a V band channel to Channel 48 would require us to trap everyone that doesn't have the level of service that where Channel 48 resides and because of the technical considerations and the amount of truck roles that it require, we asked for some relief and we were trying to work through that process, which the law allows us to do. I would ask that since we have resolved the matter of Philadelphia with Channel 48, that this body would allow us to, in a forum that probably makes more sense than here, for us to come up with an agreement on how we can deal with it in the Lehigh Valley.
Ms. Brunson, did you tell me that all the other cable systems are carrying you?
Yes, sir. 131 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452
In Philadelphia and outside of Philadelphia. At one time, sir, there were 45 different cable companies, and on 45 different cable companies we were carried. Of course, there's been major consolidation. On all of those systems without any hesitation, we were put on Channel 48. In one or two we accepted Channel 11 which was what I suggested to them as a compromise. 12 Albeit, even though they're willing to 13 talk now, there has never been any dialog, and I 14 have consistently been put into courts to try to 15 defend my position as it relates to the systems just 16 in Princeton and other surrounding areas. 17 Prior to their having entered into the 18 Philadelphia market, it has been a very tedious, very long, and very expensive process.
I may have missed 132 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 this, but could someone explain the rationale why you would want -- why you would not Channel 48 on 48? What's on 48 that's prohibiting you to put Channel 48 on Channel 48?
In this market, Cartoon Network is on 48. And moving it to as we 8 compromised was a relatively easy thing to do, like 9 many of the other operators, and we did that. 10 In Lehigh Valley system, our Allentown 11 market is a legacy system; it's not a brand-new 12 system like our system is here it. And there's some 13 other issues. It would involve us going -- because 14 we have different level of services in the field. 15 So in order for us to ensure that everyone gets 16 Channel 48 and does not get the other channels that 17 they don't pay for because they don't subscribe to 18 that level service, we would have to install traps on thousands of customers' homes that don't have traps now. We were trying work out a way not to have to do that. And let me just say that the issue of must carry or retransmission was talked about before. That's a contentious issue between broadcasters, and it's not particular to RCN, and 133 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 we'll work through this issue like we came up with a compromise and we worked it out in Philadelphia, we'll work it out in the Lehigh Valley as well.
Thank you for explaining that. It's clearer now to me exactly what the situation is. There's other television station over the air, I believe, 33 -- I'm talking about the one Philly News.
The way I understand the rules are that the broadcast channels are to be on their designated channel or another channel that you agree to. We tried to do that. I think -- now, I don't wan to -- I wasn't associated with the Lehigh Valley through the whole history of this situation, but I don't think that it was from day one that one side wanted one channel and the other side said no 25 and that they stayed there. I think that the 134 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 request changed a few times. That's the way I understand it, anyway. But we are where we are. There are no issues with channel placement in the Philadelphia market.
So Channel 51 will be on Channel 51 in this market? DEPUTY COMMISSIONER JAMES: Excuse me, Councilman. Channel 51 on the cable system is the School District channel.
I realize that, but I know that there's some conversation between Comcast now to try to do a swap for -- I mean, really, it's really inconvenient if I want to see something that's on 51, I don't have a clue where to find it unless I go to the menu. DEPUTY COMMISSIONER JAMES: I don't want to confuse you. The plan that's been submitted for the channel line-up mimics, again, the incumbents and puts Channel 51 on the School District channel. If that should change as a compromise with Comcast, and that would probably change in the RCN plan, but right now it's the School District channel.
But from what I understand, there is some conversation to work that 135 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 out like you worked it out with Channel 48.
I don't I really want to get to this nitty-gritty, but I recollected getting a letter from an individual that complains that Channel 51 wasn't on 51 and then I found, as you just described, that it's the School District channel and I learned that there is some negotiations to try to rectify that situation. DEPUTY COMMISSIONER JAMES: If 51 moves, then they will move it.
Thank you very much. While we have a quorum I need to do a housekeeping bit of business. I want for just short period of time recess the committee hearing. (Public hearing recessed.) - - - 136 2/1/01 - PUBLIC MEETING - BILL 000452
I want to convene the public meeting. I want to recognize Councilmember Nutter for the purposes for approving the amendments which have been offered earlier in the hearing by Deputy Commissioner James.
Mr. Chairman, just so I'm certain, there were two packages, as I can best understand, of amendments. One is amending various sections of the bill, and the other it says substitute for Appendix J to the current Exhibit A to the bill the Appendix J which is attached here to. Mr. James, does that comprise all of the amendments? DEPUTY COMMISSIONER JAMES: That's correct.
They've been distributed to members of the panel and also to the stenographer.
Mr. Chairman, I move that the first set of amendments, which is amending Sections 1, 2, 6, 3 and a variety of other sections, that set of amendments be adopted.
Is there second? 137 2/1/01 - PUBLIC MEETING - BILL 000452 (Duly seconded.)
There are none opposed. The amendments as offered by Mr. James in earlier testimony moved by Councilman Nutter are approved. We now recess the public meeting and return to our public hearing. DEPUTY COMMISSIONER JAMES: The appendix which was submitted back in October J needed to be --
Let me re-recess the public hearing and reconvene the formerly recessed public meeting to recognize Councilmember Nutter for an additional motion on an amendment.
Thank you, Mr. Chairman. I also move the adoption of the second set of amendments with regard to Appendix J. I move that those amendments be adopted as well. (Duly seconded.)
Moved and seconded. All in favor? 138 2/1/01 - PUBLIC MEETING - BILL 000452 (Aye.)
There are none opposed. The amendment to Appendix J are approved. We now recess the public meeting and return again to the public hearing. (Public meeting recessed.) 139 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 (Public hearing resumes.)
I think we were just having a discussion or there was some back and forth on the Channel 48 situation. What's the end of that? What's the end result?
The Philadelphia issue is resolved and we need to work towards a resolution 11 with Lehigh Valley. It's a more complicated issue that cannot be resolved at this table today.
How long would estimate that's it's going to take? Why is it complicated for you?
Because of the cost involved and the trapping issue. And I'm not fully versed on where we are with that, so I wouldn't want to make a guess on time here and have it be as a part of the record.
Have you been in regular discussions and conversation about this?
There have been others in my 140 2/1/01 - PUBLIC PROPERTY PUBLIC WORKS - BILL 000452 company that --
Well, I have not been involved in it. But I will get involved. I will put that into the record.
I would hope that you would certainly understand -- I mean, it's a very serious issue for me.