ADMINISTRATIVE REPORT
Date: February 27, 1997
CC File No. 5806-1
TO: Vancouver City Council
FROM: General Managers of Corporate and Engineering Services
SUBJECT: Broadband RFI - Selection of a Business Partner
RECOMMENDATION
A. THAT Rogers Communications be invited to develop a
public/private partnership model in conjunction with City and
School Board staff as the next step in the process of
selecting a Broadband Network partner, along the lines
discussed in this report, and should that process fail for
whatever reason, that BC Telephone be invited to participate
on the same basis immediately thereafter;
FURTHER THAT the other firms who submitted proposals in
response to the City's RFI be immediately notified of this
decision through an appropriate de-briefing letter from the
City; and
FURTHER THAT staff be instructed to report back to Council at
the conclusion of a Memorandum of Understanding (MOU) for
approval of that agreement, along with appropriate
recommendations and estimated costs to proceed into the
Partnership Trial. Similar approvals will be sought from the
School Board as well.
B. THAT Teleconsult be engaged as the City's consultant to assist
staff with the development of a public/private partnership
model at an estimated cost of $100,000 inclusive of
out-of-pocket expenses and GST, with funds provided from the
Strategic Initiatives account in the Operating Budget, noting
that this cost will be shareable between the participating
parties under a sharing arrangement documented in the MOU.
C. THAT the City Manager be authorized to approve additional
staff costs associated with the development of a Memorandum of
Understanding at a total estimated cost of $15,000, with funds
provided from the Information Technology Replacement account
in the Operating Budget.
CITY MANAGER'S COMMENTS
The City Manager RECOMMENDS approval of A, B and C.
COUNCIL POLICY
Council is the appropriate body to establish corporate policy in the
telecommunications area.
Council is the approving body for contract awards of over $300,000.
The decisions made this day will likely lead to a partnership agreement
having a value well over the $300,000 approval threshold.
PURPOSE
The purpose of this report is to bring Council up-to-date on the results
of the City's Broadband Network Partnership RFI process and to recommend
proceeding to the next stage of implementation around selecting a
business partner. This step will involve prototyping the business
relationship and formalizing that relationship in a partnership
agreement for subsequent review and approval by Council.
Additionally, we note that the Vancouver School Board, having immediate
needs to connect its schools and administrative facilities with a
broadband telecommunications network and the appropriate funding in
place, has indicated a strong desire to participate with the City in the
development of a public/private partnership model, and would like to
establish a communications link to a number of its schools as one of the
pilot projects for the partnership trial. Moreover, the School Board has
committed to have all of its schools connected to the network by June,
1998.
BACKGROUND
On July 30, 1996, Council recognized the increasingly important role
that telecommunications plays in the economy of the city of Vancouver
and adopted a leadership policy for the corporate City around the
following telecommunication policy goals:
- facilitate rapid deployment of advanced
telecommunications services, not only to support
City operations, but to facilitate communications
between the City and its citizens and its
businesses;
- encourage the development and use of advanced
telecommunications services to stimulate broader and
deeper participation in local government;
- work towards making access to advanced
telecommunications services equitable and affordable
to all citizens and businesses;
- develop, use and promote advanced telecommunications
services to allow for more efficient delivery of
City services;
- ensure that the City maintains its authority to
regulate equitable access to rights-of-way, secure
valuable compensation for their use, minimize
negative impacts associated with their use, and
utilize them in a manner that furthers other
telecommunications policy objectives; and,
- influence the regulation of telecommunications in
Canada to the benefit of municipal government and
its constituents.
In approving the above-noted policy goals, Council instructed staff to
explore alternative business models for creating a broadband
telecommunications network by issuing a RFI (request for information) to
potential partners in the telecommunications sector, and to report back
the results.
Staff, with the assistance of the City's consultant for this project
(Teleconsult), prepared a RFI document based on the principles embodied
in Teleconsult's Broadband Network Feasibility Study (on file with the
City Clerk's Office) and the City's telecommunications policy goals, and
issued the RFI on October 31, 1996 with a closing date of November 29,
1996. Teleconsult was given conduct of the RFI process and dealt
directly with questions from the proponent community up to the closing
date.
In total, five responses were received to the City's RFI on a Broadband
Network Partnership from the following proponents.
- Rogers
- BC Telephone Company
- BSC Broadband Solutions Corp.
- MetroNet
- CellularVision Canada Ltd.
Four of the submissions were of good to excellent quality and responded
appropriately to the questions posed in the City's RFI document.
The submission from CellularVision Canada, however, was put aside in the
first round of evaluation as being incomplete. The firm cited business
reasons for its brief (one page) response.
The four remaining proponents were advanced to the second round of
evaluation, as discussed below.
DISCUSSION
The quality of the responses the City received to its Broadband Network
Partnership RFI essentially led staff and Teleconsult to believe that
neither the lease nor the build/own/operate business models were
appropriate for the City. Moreover, in terms of the RFI itself, we
pointed out to potential proponents that the City could, instead of
taking a more normal route of issuing an RFP, short-cut the process and
negotiate directly with a preferred candidate(s), leading to a
partnership agreement for Council review and approval, if a proposal had
considerable merit.
With the foregoing in mind, City staff (the City Manager, the General
Managers of Corporate and Engineering Services, and the Utilities
Management Engineer) and Teleconsult met with each of the four
proponents during the month of December in the second round of
evaluation. These meetings afforded the opportunity for each proponent
to "showcase its wares" and for staff to ask questions on the
proponent's responses to the RFI to clarify comments and/or direction.
As well, the proponents asked questions of the City. In terms of these
discussions, each of the proponents suggested that it would be
advantageous to the City and themselves to have the School Board
involved in the roll-out of a comprehensive broadband communications
network, recognizing that the City and the School Board are logical
public sector partners having a commonality of interest and a
significant combined purchasing power.
In the third and final round of evaluation, staff and Teleconsult met in
early January/97 to make a decision around a preferred/favoured
proponent to recommend to Council. We immediately established that the
four proponents fell into two categories - the larger, mature firms
represented by Rogers and BC Telephone with more or less ubiquitous
installed networks, and the smaller, fledgling firms represented by BSC
and MetroNet. Given the City's evaluation criteria and scoring process,
the smaller firms were set aside at this time on the basis that the
larger firms could provide almost immediate connectivity to a city-wide
communications network. We note, however, that should the partnership
trials prove unsuccessful with the two larger firms, the City could
entertain a similar partnership trial with either or both of these
smaller firms.
In terms of the larger firms, Rogers and BC Telephone, a seven point
rating system was used to rank each firm. Staff felt that the Rogers bid
won out on the basis of its superior broadband service depth and its
perceived ability to meet the City's policy objectives in a shorter time
period, although the two larger firms were very close in ranking and the
decision was difficult. The Rogers' bid was innovative and seemed to
provide a better basis for the development of an ongoing relationship
with the City, and that view was shared by the consultant as well.
In the final analysis, the joint venture business model with a private
partner was selected as the preferred option. Staff then approached the
School Board inviting them to partner with the City in the development
of a public/private sector partnership model. The School Board indicated
a strong desire to participate supported, in part, by its plans to
implement a broadband telecommunications network in the immediate future
to connect all of its schools and administrative facilities, for which
funding is in place.
The role of the City and School Board in a joint venture business model
would be one of ROW providers and anchor tenants, with a view to
encourage deployment of competitive and enhanced network services to
citizens, students and businesses. Additionally, a joint venture
relationship would reduce the public partners' capital investment
requirements, and alongside that, the business risk of implementing a
leadership policy in broadband telecommunication services. Conversely,
we also recognize that a public/private partnership must be managed, and
managed well, if the deemed benefits to the public partners flowing from
the relationship are to materialize. There may, as well, be
opportunities and problems associated with the public interest to
influence the regulation of telecommunications in Canada (at the CRTC
table) in order to facilitate the widest and most rapid deployment of
advanced telecommunications services at competitive prices. All of this
suggests that an appropriate partnership agreement must be negotiated
before implementation in order to clearly spell out the obligations of
the parties (the City, School Board and their private partner),
compensation/contributions of each of the parties to the agreement,
performance criteria and measurements, and an acceptable dispute
resolution process.
We are therefore recommending that Rogers be invited to participate in
the next step of the selection process as discussed below, and should
that prove unsuccessful for whatever reason, that BC Telephone be given
the same opportunity to participate. We did consider and discuss
whether the City/School Board should attempt to move further down the
road with two firms concurrently, instead of one, but neither we nor
they believed that the resource allocation commitment to proceed on that
basis could be justified.
NEXT STEP
The next step of the selection process for a Broadband Network partner
involves the development of a public/private partnership model, jointly
with the School Board, that will reflect the essential elements of a
working partnership agreement. The results will be reported back to
Council/School Board for consideration and approval at appropriate
points in the process.
In terms of getting the work plan on a strict time line and with stated
deliverables that all parties (the City, School Board and Rogers) may
evaluate along the way, the model would incorporate the following items.
1. Memorandum of Understanding
The City, School Board and Rogers (the "Partner") will develop and
execute a Memorandum of Understanding (MOU) within sixty days of a
mutually agreed start date. If this timing is not met, the City will
invite BC Telephone to participate on the same basis.
The MOU would embody these guidelines:
- the City's objective to negotiate a partnership
agreement jointly with the School Board and a
private partner who is able to satisfy the terms and
conditions of the Partnership Trial (discussed
below) within a stated time frame;
- the nature of the relationship to be created as a
result of the partnership agreement, especially
regarding the purchasing intentions of the City and
the School Board in regards to network facilities
and telecommunications equipment;
- the milestones and deliverables each party is to
achieve in the Partnership Trial; and,
- the resources that the parties will contribute to
achieving the objectives of the Partnership Trial,
any ongoing benefit the Partner may derive from
completion of the Partnership Trial, and the
circumstances under which the parties may exit the
process and the notification required.
2. The Partnership Trial
The timing for completion of the Partnership Trial activities may be
from six to nine months in duration, after a mutually agreed start date.
The Partner will be required to deliver the following items to the City
and the School Board over the term of the Partnership Trial, with
appropriate assistance provided by the City and the School Board as
documented in the MOU.
a) Pilot Projects - the choice of pilots would be agreed on by the
City, School Board and the Partner. These pilots are intended to
allow the Partner to demonstrate its ability to deliver new and
innovative services that the City and/or School Board could use in
its operations.
The areas of City and School Board interest for pilot projects
include:
- basic telecommunications facilities - e.g., connecting
two or more facilities and/or buildings with a high
capacity communications pipe for the trans-mission of voice, data, graphic images and video.
- telephony - e.g., advanced land line and/or cellular
communications.
- telemetry - e.g., monitoring pumping stations, water
flows, and traffic signals.
- public service - e.g., a community channel application.
- physical plant - e.g., an application using the City's
underground network in conjunction with broadband
technology.
- policy objectives - e.g., an application using two-way
coaxial technology to test the benefits of telecommuting
as a means to turn down traffic volumes.
- operations support - e.g., a number of pilots around
kiosk technology for paying parking fines or applying for
a parking permit; hand-held wireless devices to
communicate directly with City data files to issue
parking tickets, tow away scoff-law offenders, enter
field inspection data and others.
- education - e.g., an application that involves the School
Board and a City department. The School Board has also
indicated a strong desire to pilot the connection of a
number of schools in a city neighbourhood with a high
capacity, broadband telecommunications network as a top
priority, and to complete the network by June, 1998.
b) Service Delivery Plan - the Partner will develop a vision and a
plan for service delivery that will form the basis of the
partnership, incorporating feedback from extensive discussions with
the City, School Board and community representatives.
c) Technical Design - the Partner will develop a conceptual network
design to support the service delivery plan.
d) Organizational Model - the Partner will develop an organizational
model that identifies how the partnership will be structured and
maintained, including a corresponding structure for the City and
the School Board.
e) Measurement/Performance - the City, School Board and the Partner
will determine what will be measured and the measurement criteria
that will be used.
f) Access/Rights of Way - the City and the Partner will develop a
suitable Municipal Access Agreement for the use of the City's
streets, lanes, bridges, land and buildings, and other facilities,
including appropriate compensation arrangements. The School Board
will negotiate a similar arrangement for its facilities (buildings
and property).
3. The Partnership Agreement
The partnership agreement is the product of a successful completion of
the Partnership Trial and will outline the services to be provided by
each of the parties over the term of the agreement, which is nominally
set at five years at this point. The agreement will spell out the
obligation of all parties, compensation/contributions of each of the
parties, performance expectations and measurement criteria, a dispute
resolution process, and other normal terms and conditions.
CONCLUSION
On July 30, 1996, Council adopted a leadership policy in the area of
broadband telecommunications and approved six policy goals to further
implementation. As a first step down that road, staff issued a Request
for Information document to potential business partners in the
telecommunications sector and received five responses to evaluate.
Based on the quality of the proponents' submissions generally, staff are
recommending that the City advance directly to the negotiation stage of
the process with Rogers communications and, should that fail, a
subsequent negotiation with BC Telephone, instead of the more
traditional RFP (request for proposal) method. This would involve
prototyping the business relationship jointly with the School Board that
likely will exist in the form of a partnership agreement should the
prototype prove successful.
The recommendations of this report support taking the next step in that
direction.
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