HomeMy WebLinkAboutComcast Letters Menchaca, Clarissa
From: McCracken, Shari
Sent: Monday, October 30, 2017 11:50 AM
To: Connelly, Bill; Kirk, Maureen; Lambert, Steve;Teeter, Doug; Wahl, Larry
Cc: Cook, Holly; Sweeney, Kathleen; Bennett, Robin; Gullickson, Carol]; Hahn, Paul;Alpert,
Bruce; Clerk of the Board
Subject* Comcast letters
Attachments: Letter to Harriet Steiner- May 2017.pdf,, Ltr to P.Rosvall, Response to Comcast re-l-Net-
June 2017,pdf, Ltr to P.Rosvall response to Comcast Proposal-September 2017.pdf
Per our discussion last Tuesday, attached for your information are a letter from Comcast to our outside attorney, Harriet
Steiner, as well as the two responses we sent Comcast.
Shari
Officer
B u t t e".-.', ri ty
025, County C ell t('Y I)rive'Suite 2(:)o
Oroville, CA �)59(i5
Work 530.5)38.1)863 ('(,11 530,990-5029
sniccracken �i))uttecoujqty.net
00 , ;
Direct Line:415765-0369
E-Mail:prosvall@cwclaw.com
May 22, 2017
Via E-Mail and First Class Mail
Harriet Steiner, Esq.
Best, Best& Krieger
500 Capitol Mall, Suite 1700
Sacramento, CA 95814
Re: ComeastButte County—Request for Commercial Agreement to Govern Use
of I-Net
Dear Ms. Steiner:
As I mentioned to you in my voice messages, Comcast is now prepared to move forward
with a complaint for declaratory relief to obtain a judicial determination that Comcast no longer
has a responsibility to provide an Institutional Network("I-Net") in Butte County free of charge.
We intend to file our complaint by July 2017 if we are unable to resolve our dispute with Butte
County regarding the I-Net.
Under Public Utilities Code Section 5870(k), Comcast's I-Net obligations in Butte
County terminated on January 1, 2009. Since that time, we have made several significant efforts
to negotiate with Butte County to reach the terms of a commercial agreement for I-Net access.
No agreement has been reached, principally because Butte County has taken the position that
Comcast must provide I-Net access and service for free. Comcast continues to disagree with this
view, which is at odds with the letter and intent of the Digital Infrastructure and Video
Competition Act of 2006 ("DIVCA"). See Pub. Util. Code § 5870(k).
We ask that you reconsider your position regarding the I-Net and engage with us in a
further negotiation regarding the terms of a commercial agreement. If you are unwilling to move
forward with a commercial agreement that reasonably reflects the market value of the I-Net, we
will unfortunately have to proceed with our complaint. Please confirm your position no later
than June 5, 2017, and let us know whether you will agree to negotiate a commercial
arrangement to govern the I-Net.
201 CALIFORNIA STREET, 17TH FLOOR COOPER, WHITE & COOPER LLP PHONE 415.433.1900 FAX 415.433.5530
SAN FRANCISCO CA 94111 SAN FRANCISCO I WALNUT CREEK CWCLAW.COM
Harriet Steiner, Esq.
May 22, 2017
Page 2
1 can be reached at 415-765-0369 or by email at prosvali g ewclaw.com. We look
forward to your response, and hope that litigation can be avoided through immediate and serious
negotiations to work toward a business solution to this dispute.
Very truly yours,
W-
Patrick M. Rosvall
cc: Steve Holmes, Comcast
Lee-Ann Peling
Shari McCracken, Butte County
1175749.!
Indian Wells • Riverside
(760)568-2611 (951)686.1450
Irvine BEST BEST&KOiEGER n San Diego
(849)263-2600 ATTORNEYS AT LAW (619)525-1300
Los Angeles Walnut Creek
(213)617-6100 (925)977-3300
Ontario 500 Capitol Mall,Suite 1700,Sacramento,CA 95814 Washington,DC
(909)9139.8584 Phone:(916)325-4000 1 Fax:(916)325-4010 1 www.bbklaw.com (202)785.0500
Harriet A.Steiner
(916)551-2821
harriet.steiner@bbklaw.com
June 26, 2017
By EMAIL& U.S.MAIL
Patrick M. Rosvall
Cooper, White & Cooper LLP
201 California Street, 17th Floor
San Francisco, CA 94111
Re: Comcast/Butte County
Request for Commercial Agreement to Govern Use of I-Net
Dear Mr. Rosvall:
I received your letter dated May 22, 2017, and have spoken to Butte County regarding
Comcast's demand that the County enter into a commercial agreement. Your letter states that
Comcast plans to "file a complaint by July 2017, if we are unable to resolve our dispute with
Butte County regarding the I-Net." Upon receiving your demand, I requested that you provide
the commercial agreement Camcast is proposing the County enter in to, but have received
nothing to-date. It is impossible to negotiate or resolve the dispute without knowing what
Comcast is proposing, especially prior to July. Please provide me with Comcast's proposal at
your earliest convenience, We assume that Comcast will not move forward on its threat of
litigation unless and until it has actually provided, and the County has rejected, a proposal for
commercial services.
I take issue with your depiction of past discussions between Comcast and the County.
The County's and my records show that the County and Comcast met, discussed, and traded
draft Fiber Lease Agreements in 2010-2012. Our recollection is that the conversation was ended
by both parties, who agreed to continue the existing relationship for existing fiber, with the
County responsible for paying Comcast or using a different vendor for any new connections or
fiber lengths. Your letter threatening to take the County to court is a drastic step, without
providing adequate information or time for discussions and negotiations. Especially in light of
the fact that Comcast is well aware that the Fiber networks provides the 911 emergency, police,
and fire network for the County.
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June 26, 2017
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The County is willing to sit down and discuss a proposal from Comcast. We can
certainly arrange a meeting when all parties are available and once you have provided the
County more detail.
Because it has been almost five (S) years since our last discussions, and some of the staff
involved for both parties have changed, I am providing information below that has been provided
in the past. The County's concerns with paying for something twice, especially with federal and
State funds, remains. As stated in the past, and especially in light of the terse demand recently
received, the County has grave concerns about Comcast's hardline position that puts public
safety in Butte County in jeopardy and may require federal and/or state agency intervention.
History of Comcast in Butte County
In 2002 Comcast Communications purchased AT&T Broadband, the County's only cable
television provider. As part of the purchase, Comcast's business plan included upgrading cable
television systems for non-governmental customers in Butte County by offering broadband
technology.
From March 2003 until February 2004, County representatives worked with Comcast to
develop an agreement to extend non-exclusive television franchises for the unincorporated areas
of Chico/Durham, Paradise, 4roville, Biggs, and Gridley. The Agreement, which extended
Comeast's franchises to April 7, 2007, also contained the I-Net Agreement referenced
previously. The I-Net was intended as an irrevocable right of use by the County, to continue so
long as Comcast held any type of franchise in the County. The County, as part of its
responsibilities, created a "Project Red Team" consisting of representatives from multiple
County departments and agencies to expedite the permit process associated with Comcast's
upgrade project at no cost to Comcast.
Comcast and the County shared the cost of the design, construction, and maintenance of
the fiber that was laid down to meet Comcast's business needs and the County's communication
needs. Absent the County's partnership, Comcast would have been responsible for 100% of the
costs for its project and without the expedited permit process.
Contents of the I-Net Agreement
Butte County, Comcast of Southern California, Inc. and Comcast of Northern California
II, Inc. entered into an I-Net Agreement effective February 10, 2004. The I-Net Agreement was
based upon the following:
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June 26, 2017
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1) The County had granted to Comcast three cable system franchises under which Comcast
had certain nonexclusive rights, including the right to construct and maintain a cable
system within the County;
2) Comcast was upgrading its cable system for its non-governmental customers by installing
new fiber optic lines and associated equipment and facilities;
3) The County wished to engage Comcast to create an institutional network for the use and
benefit of governmental agencies within the County so that the County would have
long-term stability and use of the fiber for public safety and other purposes; and
4) Comcast was willing to assist the County in the creation of such a network provided the
County reimbursed Comcast as provided in the Agreement for its incremental costs in
designing, installing, and maintaining the system.
The Agreement granted the County the irrevocable right of continued use of the I-Net
during the term of the franchise and any extensions or renewals. With no knowledge that the
cable franchise system would be changed drastically in the near future by legislation that would
eliminate local franchises, the County invested over $600,000 of federal, state, and local funding
in the backbone of the communications network for County government and the 911 system,
including all Primary Public Safety Answering Points (PPSAPs), through the I-Net Agreement.
The PPSAPs include the California Highway Patrol, the County Sheriff's Office and substations,
City police departments (Chico, Oroville, and Paradise), and campus police departments at Butte
College and CSU-Chico. Comcast was aware of the funding and that the County intended to use
the system for 911 and other services that required dedicated fiber.
Other key components of the I-Net Agreement that indicate an expectation of a long-term
relationship include:
1) Allowance for new I-Net locations to be connected, at the County's cost, as County
services grew, new PPSAPs were established, and/or Comcast expanded its services to
the Gridley area;
2) County responsibility for the actual incremental costs of maintenance to its portion of
equipment and/or systems; and
3) Each party bound itself, its successors, assigns, and legal representatives to the other
party.
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June 26, 2017
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Funding Sources for the I-Net
Butte County utilized a combination of federal, State and local taxpayer dollars to fund
the backbone for its County government and public safety/emergency services communications
system. Federal funding came from the U.S. Department of Homeland Security, through the
State of California Office of Homeland Security, for a portion of the cost to connect all PPSAPs.
A combination of federal and State funding came through the County's Welfare Administration
funding to enhance communications related to employment and other social service programs.
Additional funding came from the County's General Fund to support the infrastructure necessary
for high-speed communication between County agencies.
On June 24, 2004, the County paid Comcast $207,212.13. This partial payment was paid
with funds from the County's federal and State Welfare Administration allocation and covered
the costs of connecting various Welfare Department sites in OroviIle and Chico to the County's
network located in Oroville. The invoice from Comcast(#1000 and dated 6/17/04) indicated that
the charges were for "trenching, aerial attachment, routing, and all construction necessary to
complete installation of each site."
On November 10, 2005 the County made a final payment of$406,023 to Comcast for the
County's share of the project. This final payment was funded by a combination of federal
funding from the U.S. Department of Homeland Security ($291,000) and local revenue from the
County's General Fund ($115,023). The project cost breakdown provided by Comcast reflects
costs for "Backbone Fiber (including fiber and splicing), I-Net Extensions (including
engineering, SBC payments, contract labor, materials, design, and internal labor), and Indirect
Costs (10% of subtotal)." Additional costs for "contract labor, SBC inspection and engineering
charges, PG&E inspection and engineering, CanAm Cleanup/Make Ready, replacement of three
failed poles, and 10% in Indirect Costs" were added to the project.
Butte County's Reliance on the I-Net
Public Safety
• Dedicated, direct communications channels between Butte County Primary Public Safety
Answering Points (PPSAPs) including data networking, voice networking, and data
sharing. As stated earlier, PPSAPs include the County; the Cities of Chico and Oroville;
the Town of Paradise; and State agencies including the Highway Patrol, Butte College,
and CSU-Chico
• Improved communications and interconnectivity between public safety agencies and
general government intercommunications.
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June 26, 2017
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• Provided expansion of the radio network by increasing potential radio expansion sites.
Would be primary radio link between Chico and Orovilie.
• Provided secondary, independent Internet access as required by homeland defense
guidelines (bio-terrorism).
• Improved feasibility of projects such as centralized dispatch and interoperability,
General Government
• Direct, secure, fast networking of County departments and employees in remote
locations.
• Basis for Voice over IP (VoIP) technology to integrate into the County voice
communications capability.
• Opened network to streaming projects, such as teleconferencing, online learning, and
voice and video of Board of Supervisors meetings.
• Improved the ability to implement new technologies such as wireless access of PDA's,
laptops, and Mobile Date Terminals (MDT's).
Implementation of DIVCA in Butte Counly
In 2006, the Digital Infrastructure and Video Competition Act ("DIVCA") was signed
into law, with a stated purpose of streamlining the process for granting franchises to providers of
video service. The implementation of state franchises virtually eliminated negotiating powers
local jurisdictions historically held. No provisions were made in DIVCA to protect I-Nets
already in existence; in fact, DIVCA made no provision for continuing support of I-Nets after
January 1, 2009 unless provided for in a separate I-Net Agreement.
In 2007 and 2008, as Comcast and Butte County were discussing the implications of
implementing DIVCA, discussions were held between County staff, myself, and staff from
Comcast. A verbal agreement, supported by a follow-up letter from me to Karen Munro at
Comcast, indicated that the I-Net Agreement would stand as its own separate agreement,
regardless of the fact that Comcast no longer had a local franchise agreement. This was agreed
to at Comcast's request, because Comcast did not want to negotiate a new, separate agreement
according to Comcast's staff. The County had requested that a new agreement be implemented
if the existing agreement was not going to be honored by Comcast but agreed to the letter
exchange and the continuation of the terms of the I-Net Agreement at Comcast's request.
Thus, Comcast did not contest the position stated in the letter to Ms. Munro, dated
October 27, 2008. The County relied on Comcast's authorized representative, namely, that the
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June 26, 2017
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I-Net Agreement remained in active standing and would continue under DIVCA in the same
manner that it would continue under the prior local franchise regulatory regime. At no time did
Comcast indicate that there was an end date to this understanding or that the existing I-Net
Agreement had terminated, until the contact made by Lee Ann Peling in April 2010 with County
representatives.
Ms. Peling's contact with County staff was in response to the County's on-going requests
to Comcast for updates on various projects that had been submitted to Comcast for costing out.
As of December 2009, Comcast was working on the project. In January 2010, it came to County
staff s attention that the Comcast employee that had been working on the County's request was
no longer with Comcast. County staff continued calling Comcast for updates and received no
response until Ms. Peling's call in April 2010. The County then met with Comcast on several
occasions as noted above.
County Concerns
Butte County continues to have numerous concerns with Comeast's stated position,
especially given the past promises that were been made by Comcast staff. The County is
dependent upon the infrastructure it paid for with public tax dollars to provide efficient
communications between County agencies, and most importantly, to provide emergency
response/public safety communications between Primary Public Safety Answering Points. The
investment by the County, State government, and federal government was made with the
expectation that this was a long-term investment, not a short-term investment, as Comcast would
like to believe.
Comcast charged the County a portion of design, construction, and maintenance of the
fiber. The County ultimately ended up with 429 pairs of fiber, ranging from 2 to 36 pairs, within
59 fiber runs. Fifteen (15) of the 59 fiber runs were solely for the County's use and these are
very small runs from the main Comcast lines to individual County facilities. The other 44 fiber
runs were installed to meet Comcast's needs and consist of hundreds of pairs of fiber in large
bundles that Comcast was going to install anyway, with or without the County's participation.
The County's participation in the project only provided further benefit to Comcast and its bottom
line. If the County had not participated in the project, Comcast would have been responsible for
100% of the costs associated with the 44 fiber runs it currently benefits from. Comcast benefited
from a large portion of more than $600,000 in local, State, and federal tax dollars for its project.
Under the I-Net Agreement the County was obligated to pay for its share of maintenance, so
Comcast should have no expectation of incurring costs related to the County's use of the fiber in
the future. The County would expect that any future agreements would have the County
responsible for its share of maintenance, too.
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In closing, the County and I are frustrated that Comcast is opening discussions with a
threat of legal remedies, without first having a conversation with the County. The County has
always been open to a discussion of a mutually agreeable new or modified I-Net Agreement or a
fiber lease, and in fact requested one before DIVCA was fully implemented. Comcast is the
party that did not want to negotiate a new agreement and told the County that the existing
Agreement would continue. We expect that Comcast will take no action regarding litigation until
Comcast has provided a written precise and financially concrete explanation of its demands and
met with the County to discuss the I-Net and Comcast's desire to modify the terms of the current
agreement.
I look forward to hearing from you and getting this matter resolved soon.
S,inchrely, S�7e_�
Harriet A. Steiner
of BEST BEST& KRIEGER LLP
HAS.cp
cc: (Via Email)
Members of the Board of Supervisors
Paul Hahn, Chief Administrative Officer
Art Robison, Information Systems Director
82652,00001129877955 5
I
Indian We115 09 lk Riverside
(760)568-2611 (951)686-1450
Irvine BEST BEST &KRIEGER San Diego
{949)263-2600 ATTORNEYS AT LAW JG 19)525-1300
Los Angeles Walnut Creek
(213),617.8100 (925)977-3304
Ontario 500 Capitol Mall,Suite 1700,Sacramento,CA 95814 Washington,DC
(909)999-8564 Phone:(916)325-4000 1 Fax(916)325-4010 1 www.bbklaw.com (202)785.0600
Harriet A.Steiner
(916)551-2821
harriet.steiner@bbklaw.com
September 29, 2017
VIA EMAIL,
Patrick M. Rosvall
Cooper, White& Cooper LLP
201 California Street, 17th Floor
San Francisco, CA 94111
Re: Butte County/Comcast Proposal
Dear Mr. Rosvall:
I received your e-mail dated September 13, 2017 (4:58 PM) and have spoken to Butte County
regarding Comcast's proposals attached to that e-mail. Butte County and I discussed Comcast's
proposals, and we have a number of questions regarding the proposals, as there is not sufficient
information or context for either proposal to understand the implications for the County.
The County is more than willing to sit down and discuss a proposal from Comcast, once there
is sufficient information to evaluate and respond to. We can certainly arrange a meeting in November
when all parties are available and once you have provided the County more detail. The County
requests that further detail and responses to the County's questions be provided by October 23, 2017,
to allow the County sufficient time for review prior to any November meeting.
First, the County requests draft language for the agreement that would incorporate whatever
pricing proposal the County and Comcast might agree to. It is important to understand all terms that
Comcast is proposing and not just the pricing proposals. If the proposed agreement is the draft
agreement discussed by Comcast and the County in 2012, please indicate so.
The pricing proposals, as defined by you, include a Dark Fiber Lease or a Managed Network
Services Agreement.
The County's questions regarding the Dark Fiber Lease are as follows:
• What is the basis for a ten-year term?
• Year One - $5,000 one-time charge for maintenance
The County would like to know the basis for the x'5,000 one-time charge. Is it the County's
portion of an annual maintenance cost Comcast incurs for all of the fiber in the areas
containing County fiber? If so, please provide the formula and data used to calculate the
$5,000. If not,please provide the basis far the calculation.
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Patrick M. Rosvall
September 29, 2017
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• Year Two - $48,950 MRC
Why the large increase in costs between Year One and subsequent years? What additional
costs will Comcast incur in years after Year One? What does MRC stand for? Is this a
monthly or annual cost? What is the basis for the cost, since there should be very limited costs
associated with the fiber the County already paid over, 600,000 to have installed? The County
does not utilize Comcastfor any equipment or services related to the County's network. Please
provide data supporting the costs and explain what the costs are for.
• Year Three to Ten - $84,550 MRC
Same questions and requests as in Year Two.
As far as the Managed Services Agreement, the County is puzzled by the proposal. The
Managed Network Services Agreement does not provide sufficient information and, per your e-mail,
the costs provided are not the costs that would be proposed for the County. Since Comcast does not
provide any services to the County, such an arrangement for network services does not make sense.
To restate what has been stated many times over the years, the County's relationship with
Comcast is solely related to fiber strands installed by Comcast, and paid for by the County, utilizing
over $500,000 in federal, State, and local funds. All fiber terminates at County equipment in County
facilities. Comcast provides no services related to the County's network beyond the fiber Comcast was
paid to install on the County's behalf and as part of a negotiated local franchise agreement. Comcast
claiming costs for network services related to the County's current system is ludicrous, since Comcast
renders no such services to the County. If Comcast's intention is that the County enter into an
agreement for services for new connections in the future, the County would like to see a realistic cost
proposal for discussion.
I look forward to hearing from you with answers to the County's questions, including further
detail on the proposals and a draft agreement the County can respond to. The County and I look
forward to getting this matter resolved.
Si c rely, g-
Gvv� `�"
d iet A. Steiner
of BEST BEST & KRIEGER LLP
HAS:cp
cc: All Via Email
Members of the Board of Supervisors
Paul Hahn, Chief Administrative Officer
Art Robison, Information Systems Director
Kevin Taggart, Principle Management Analyst
Shari McCracken, Deputy Chief Administrative Officer
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