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HomeMy WebLinkAbout32-07 RESOLUTIONRESOLUTION NO. 32-07 A RESOLUTION TO APPROVE AN AGREEMENT WITH AT&T ARKANSAS TO ALLOW IT TO OFFER INTERNET PROTOCOL/CABLE TV TYPE SERVICE IN FAYETTEVILLE. WHEREAS, AT&T Arkansas wishes to use City of Fayetteville rights-of- way to provide Internet Protocol enabled broadband voice, data, and video (TV) services to Fayetteville residents, and WHEREAS, the law regulating such service is unclear and still evolving; and WHEREAS, it is in the best interests of the citizens of Fayetteville to provide "legal" means for AT&T Arkansas to provide cable TV type competition into our market under similar conditions existing for Cox Cable. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby approves the Agreement with AT&T Arkansas allowing it to use the City's rights-of-way to furnish its Internet protocol cable television type services for the same 5% franchise fee paid by Cox Cable and with the same requirement to carry the Public, Educational and Government channels on it lowest tier, basic cable package and authorizes Mayor Coody to sign this agreement attached to this resolution as Exhibit A. PASSED and APPROVED this 20th day of February, 2007. APPROVED: ATTEST:• .s`` FR cq r'. • -0 3 :FAYETTEVILLE• •` 3 BY 1 4 /%/� BY �N e�J N cceld%INGroN �,. DA COODY, Mayor SONDRA SMITH, City Clerk/Treasurer " uwhmuh` AGREEMENT THIS AGREEMENT ("Agreement") dated this 20`h day of February, 2007 ("Effective Date") is made by and between Southwestern Bell Telephone, L.P., a Texas limited partnership doing business as AT&T Arkansas ("AT&T Arkansas") and the City of Fayetteville, Arkansas, a municipal corporation ("Fayetteville"). AT&T Arkansas and Fayetteville shall sometimes be referred to separately as a "Party," and collectively as the "Parties." RECITALS A. As a telecommunications provider, AT&T Arkansas has statewide authority under Ark. Code Ann. §23-17-101 to construct, operate and maintain its telecommunications facilities in the public rights of way ("ROW") throughout the state of Arkansas. B. Under Ark. Code Ann. §14-200-101, Fayetteville is permitted to impose reasonable terms and conditions on AT&T Arkansas' use and occupation of the Fayetteville's ROW and to collect a reasonable franchise fee for such use and occupation of its ROW. C. AT&T Arkansas is in the process of upgrading its existing telecommunications network to provide an integrated Internet Protocol ("IP") enabled broadband platform of voice, data and video services ("IP Network"), the video component of which is a switched, two-way, point-to-point and interactive service ("IP - enabled Video Service"). The IP Network upgrade will involve the use of Fayetteville's ROW. D. AT&T Arkansas believes that Ark. Code Ann. §23-17-101 covers the construction, operation and maintenance of the IP Network, and that AT&T Arkansas is not required to obtain a separate franchise or other authorization from Fayetteville to offer IP -enabled services including IP -enabled Video Services within Fayetteville over the IP Network. E AT&T Arkansas further believes that Fayetteville's right to regulate the construction of the IP Network in Fayetteville's ROW is limited to the right to impose reasonable conditions regarding the time, place, and manner of AT&T Arkansas' use and occupation of Fayetteville's ROW. F. Fayetteville believes that the provision of IP -enabled Video Services by AT&T Arkansas is beyond the scope of Ark. Code Ann. §23-17-101 and is subject to Fayetteville's cable television franchising authority. G. Both AT&T Arkansas and the City of Fayetteville agree that the deployment of the IP Network and the provision of IP -enabled Video Services should not 1 be delayed by litigation to establish the scope of Ark. Code Ann. §23-17-101 or the application of Fayetteville's franchise ordinance to IP -enabled Video Services. H. Fayetteville and AT&T Arkansas further agree that litigation to resolve this issue would be complex and protracted, and that it is in the best interests of both Parties and the residents of Fayetteville to reach a compromise of each other's positions and claims. NOW, THEREFORE, in consideration of and reliance upon the respective representations, promises, concessions, terms and conditions contained herein, Fayetteville and AT&T Arkansas agree as follows: 1. Term. The term of this Agreement shall commence on the Effective Date of this Agreement and continue through the end of 2011. The term may be extended upon mutual agreement of the Parties. 2. Change of Law. AT&T Arkansas and the City of Fayetteville agree to consult in the event that after the Effective Date, any court, agency, commission, legislative body, or other authority of competent jurisdiction issues a finding that limits the validity or enforceability of this Agreement, in whole or in part. Should the finding be final, non -appealable and binding upon either Fayetteville or AT&T, this Agreement shall be deemed modified or limited to the extent necessary to address the subject of the finding unless either party, within thirty (30) days of receipt of the ruling provides written notice to the other party of election to terminate, in which case this Agreement shall terminate within six (6) months or such earlier period as the parties mutually may agree Where the effect of a finding is a modification, the parties shall enter into good faith negotiations to modify this Agreement in the manner which best effectuates its overall purposes and the intentions of the parties. Failure to reach a mutually satisfactory modification within ninety (90) days of the commencement of such efforts shall entitle either party to terminate the Agreement on the provision of thirty (30) days' written notice. 3. Compensation to Fayetteville. During the term of this Agreement, AT&T Arkansas shall pay to Fayetteville a fee of 5% of the gross revenues from subscription fees, pay-per-view fees and equipment rental, installation and repair fees collected from each subscriber to AT&T Arkansas' IP -enabled Video Services product delivered over the IP Network in Fayetteville's rights of way. It is understood by the parties that the 5% fee paid to Fayetteville by AT&T Arkansas is applicable to the same gross revenue items as presently required of the current cable television provider for all subscriber paid services and no others until and unless the FCC or a Court determines the fee should apply to more or fewer items. The fee does not apply to non -video revenues or the non - video revenues of a bundled product containing video and non -video offerings. The fee will be forwarded to Fayetteville quarterly by the twenty-first day of the first month of the subsequent quarter Upon request, AT&T Arkansas shall make their records available to Fayetteville to demonstrate compliance with this paragraph for a period of three (3) years preceding the request. -2- 4. Public. Educational and Governmental Programming. (a) AT&T Arkansas shall provide some form of access for Fayetteville's noncommercial, public, education and governmental ("PEG") programming through AT&T Arkansas' IP -enabled Video Services. (b) AT&T Arkansas shall not be responsible for content of PEG programming. (c) As soon as practicable, AT&T shall provide written notice that it has the technical capability to provide IP based access for Fayetteville's PEG channel (in use on the Execution Date of this Agreement) over the platform AT&T wishes to use with this agreement. If technological feasibility requires a change in the current Fayetteville technology, Fayetteville may be required to support a change in or addition to current Fayetteville technology now in use for PEG programming to make it compatible with AT&T Arkansas' IP enabled video technology. (d) AT&T Arkansas will provide Fayetteville capacity on its platform to carry the same number of PEG channels that Fayetteville currently has activated as of the effective date of this Agreement PEG content will be made available by Fayetteville placing its content on the public Internet. AT&T Arkansas will carry this PEG content on its video platform in its basic (lowest tier package) using its standard Internet -sourced PEG solution. AT&T will provide Fayetteville a one-time up front capital grant to cover the initial set up costs incurred by Fayetteville to make this content available on the Internet. Should AT&T seek to improve its transmission method in a fashion that will substantially affect the integrity of the Internet sourced PEG solution (compatibility), AT&T accepts the responsibility for necessary costs of capital improvements that might be needed by Fayetteville. (e) PEG programming will be available via Internet for AT&T Arkansas' IP Video subscnbers to view both on the TV and computer. PEG programming will be available via the Internet from the end user's computer for AT&T HomeZone subscnbers who also have High Speed Internet Access. 5. Emergency Message. AT&T Arkansas shall carry all Federal, State and Local alerts provided over the Federal Emergency Alert System through AT&T's IP - enabled Video Services in the event of a public safety emergency, which at a minimum will include the concurrent rebroadcast of local broadcast channels. 6. Customer Service. AT&T Arkansas will offer IP -enabled Video Services and provide customer service consistent with the requirements of 47 C.F.R. Section 76.309(c). AT&T Arkansas will respond to complaints and outages in a diligent fashion. (a) AT&T Arkansas shall give subscribers in Fayetteville thirty (30) days notice of any rate increases, channel lineup changes, or other substantive service changes. -3- (b) AT&T Arkansas shall restore any pavements, sidewalks, driveways that are disturbed during the installation, improvement or extension of IP -enabled Video services to a standard that is both commercially reasonable and in compliance with the ordinances of Fayetteville. (c) AT&T Arkansas shall not refuse to render IP -enabled Video Services based solely upon the income or minority status of any resident or group of residents. 7. Service area This Agreement shall apply to AT&T's service area within the mumcipal boundaries of Fayetteville as they exist upon the date of execution of this agreement and may hereafter be extended AT&T shall make video programming available, subject to technology or other economic feasibility, to all residential units within the service area, by use of IP -based video technology or other alternative video programming technology. (a) On December 31, 2007 and the same date in every year thereafter, AT&T Arkansas shall tender an annual report indicating the status of its video programming service The report shall: (i) indicate the number of subscribers; and (ii) the technology being used to provide such video programming. (b) AT&T Arkansas shall be considered to have breached this agreement if AT&T Arkansas fails to diligently offer video programming throughout Fayetteville, unless: (i) delay is attributable to Force Majeure; (ii) delay is attributable to Fayetteville; (iii) delay is attributable to AT&T Arkansas' inability to obtain needed private easements: (iv) delay is attributable to special technical requirements; or (v) delay is justified by reasonable commercial standards of construction. 8. Obligations of Fayetteville. During the term of this Agreement Fayetteville will not attempt to nor subject the provision of AT&T Arkansas' IP -enabled Video Services over the IP Network to regulation under any cable television franchise ordinance or similar ordinance. In addition: (a) Fayetteville agrees to subject the construction and installation of the IP Network to the same process and review as it subjects the installation and construction of AT&T Arkansas' existing telecommunications infrastructure. (b) Fayetteville agrees not to unreasonably block, restrict, or limit the construction and installation of the IP Network. (c) Fayetteville agrees to process any and all applicable permits for the installation, construction, maintenance, repair, removal, and other activities associated with the IP Network in a timely and prompt manner. 9. Jurisdiction and Venue This contract shall be construed pursuant to the laws of Arkansas. Jurisdiction and venue shall be in Washington County, Arkansas. -4- 10. Breach of Agreement. Should either party claim that a breach of any part of this Agreement has occurred, that party will provide prompt written notice to the other, specifying the nature of the breach; and upon receipt the other party shall cure such breach within 60 days. 11 Mediation Recommended. Both AT&T Arkansas and the City of Fayetteville shall make diligent good faith efforts to resolve all issues and disputes that might anse in the administration of this Agreement through discussions between designated representatives of the Parties. If such discussions have failed, the use of a mediator is recommended. 12. Insurance. AT&T Arkansas shall maintain, throughout the term of this Agreement, insurance in the minimum amounts as follows: Workers Compensation Commercial General Liability Auto Liability Umbrella Liability Statutory Limits $1,000,000 per occurrence, Combined Single Liability (CSL) $2,000,000 General Aggregate (including all owned, non -owned, and hired vehicles) $1,000,000 per occurrence (CSL) $1,000,000 per occurrence (CSL) 13. Notices. Any notice to be given under this Agreement shall be in writing and may be delivered to either personally, by facsimile or by certified or registered mail with postage prepaid and return receipt requested, addressed as follows: If to The City of Fayetteville: If to AT&T Arkansas: City Attorney's Office City of Fayetteville 113 W. Mountain Street, Ste. 302 Fayetteville, AR 72701 FAX: (479) 575-8315 Mr. Edward Drilling, President, AT&T Arkansas AT&T Arkansas 1111 W. Capitol Avenue Little Rock, AR 72201-3005 14. Modification. This Agreement may be amended or modified only by a written instrument executed by both Parties. 15. Assignment. AT&T Arkansas may not assign or transfer this Agreement or any interest therein without the prior consent of Fayetteville except to any affiliate of AT&T Arkansas. -5 16. Entire Agreement. This Agreement embodies the entire agreement and understanding of Fayetteville and AT&T Arkansas with respect to AT&T Arkansas' use of Fayetteville ROW in connection with the offering and provision of IP -enabled services including IP -enabled Video Services within Fayetteville using facilities constructed and placed within Fayetteville's ROW. As such it merges and supersedes all prior verbal agreements, understandings and representations by either party on the matters set forth herein. 17. Waiver. Failure on the part of either Party to enforce any provision of this Agreement shall not be construed as a waiver of the right to compel enforcement of such provision or any other provision. 18. Miscellaneous. (a) AT&T Arkansas and Fayetteville each hereby warrants that it has the requisite power and authority to enter into this Agreement and to perform according to the terms hereof. (b) The headings used in this Agreement are inserted for convenience or reference only and are not intended to define, limit or affect the interpretation of any term or provision hereof. The singular shall include the plural; the masculine gender shall include the feminine and neutral gender. (c) AT&T Arkansas and Fayetteville shall cooperate fully with one another in the execution of any and all other documents and in the completion of any additional actions including, without limitation, the processing of penmts that may be necessary or appropriate to give full force and effect to the terms and intent of this Agreement. (d) Nothing contained in this Agreement is intended or shall be construed as creating or conferring any nghts, benefits or remedies upon, or creating any obligations of the Parties hereto toward any person or entity not a party to this Agreement, unless otherwise expressly set forth herein (e) Nothing contained in this Agreement is intended or shall be construed as amending, modifying or otherwise affecting any other agreements, authorizations or memoranda which Fayetteville and AT&T Arkansas have now. Further, nothing contained in this Agreement is meant to change, limit, modify, restrict or limit any current rights or junsdiction that either Fayetteville or other governmental entities currently have nor is this Agreement intended to change, limit, modify, restrict or limit any rights AT&T Arkansas currently has under existing federal and state law and under existing Fayetteville ordinances and existing construction permits issued by Fayetteville. 19. Binding Effect This Agreement shall be binding upon and for the benefit of AT&T Arkansas and the City of Fayetteville -6- 20. Counterpart Execution. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. Signature pages may be transmitted by facsimile and any signature transmitted by facsimile will be given the same force and effect as an original signature. 21. Authority of City Council. This agreement is not intended to limit the authority of the Fayetteville City Council regarding the use of streets, easements, and public rights of way ("ROW") by public utilities, specifically including those that communicate information. The City Council expressly reserves the right to increase the fee imposed in paragraph 3 of this Agreement to that which is imposed on other video service providers in order to generally maintain competitive neutrality, so long as such fee does not exceed the maximum rate authorized under Section 622 of the Federal Communications Act (47 U.S.C. Section 542). IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives, have executed this Agreement and made the same effective as of the 6th day of February, 2007. AT&T ARKANSAS By: Name: Edward Drilling U Title: President — AT&T Arkansas CITY OF FAY TTEVILLE, ARKANSAS By: Name: DAN COOD Title: Mayor ATTEST: By: �� 6)1AA-sifik) SONDRA SMITH, City Clerk ... RK/TR� . E, (.°°G\tY p,: • SGS cU.•�•: e :FAYETTEVILLE: % r7.1:91ANSQcJ�'a C13\ -7- • AGENDA REQUEST FOR: COUNCIL MEETING OF FEBRUARY 6, 2007 307-07 iti7%Arlo .Jnf..erivl 5ter/rce. FROM: KIT WILLIAMS, CITY ATTORNEY ORDINANCE OR RESOLUTION TITLE AND SUBJECT: A Resolution To Approve An Agreement With AT&T Arkansas To Allow It To Offer Internet Protocol/Cable TV Type Service In Fayetteville APPROVED FOR AGENDA: Public nformation and ,tolicy*-Advisor 'm/7 Date Date - /g/ Date 74Wed 516 ooicv7 ae 4 c)107 FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST CITY ATTORNEY DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO: Dan Coody, Mayor City Council Susan Thomas, Public Information & Policy Advisor FROM: Kit Williams, City Attorney( �1 DATE: January 19, 2007 RE• Proposed Agreement with AT&T Arkansas to provide Internet Protocol/Cable Television type service in Fayetteville The Fayetteville Telecom Board held a hearing about the proposed Agreement with AT&T Arkansas on January 18, 2007. The Internet Protocol services to be offered by AT&T Arkansas were explained by representatives from AT&T and citizens were allowed to present their opinions and questions about the proposal-. I also attended (after leaving the Ordinance Review Committee meeting on Public Art) and explained that this proposed Agreement was an interim agreement because the law concerning the power of cities in Arkansas to regulate the type of services to be offered by AT&T Arkansas to our citizens was unsettled both at the state and federal levels. I have tried to formulate this interim agreement so that AT&T Arkansas would have to match (approximately) the basic terms of our agreement with Cox Communications. The Telecom Board unanimously gave their general approval to this proposed agreement. AT&T Arkansas would pay the same 5% franchise fee (although it might not cover allthe components Cox Communications is paying the 5% fee on). AT&T Arkansas would also carry the Public, Educational and Government Channels on its basic package (lowest tier). AT&T Arkansas would also be required to pay for the new equipment our PEG station would need to convert our programs to run on an Internet Protocol cable. If the law becomes clearer in the future, which removes, alters, or enhances the City's power of regulation over internet protocol services, this interim agreement would be modified after further negotiation between the parties. To avoid the necessity for litigation and to bring further competition into the cable/satellite television market in Fayetteville, I join with the Telecom Board in recommending that the City Council approve this agreement • FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST CITY ATTORNEY DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO: City Council CC: Telecom Board FROM: Kit Williams, City Attorney �C DATE: February 7, 2007 RE: Proposed AT&T Arkansas contract Attached is the final proposed Agreement accepted by AT&T Arkansas. This contract differs from the one submitted to the Telecom Board in a few sections: (1) Paragraph 3. Compensation to Fayetteville. In order to make this more comparable to the City's agreement with Cox Communications, I enlarged the definition of "gross revenues" to include "pay per -view fees, equipment rental, installation and repair fees ..." I also included the language that "the 5% fee paid to Fayetteville by AT&T Arkansas is applicable to the same gross revenue items as presently required of the current cable television provider for all subscriber paid services ..." This 5% fee is payable to Fayetteville "quarterly by the twenty-first day of the first month of the subsequent quarter." I believe these additional terms create a more level playing field for Cox and AT&T Arkansas. (2) Paragraph 4. Public. Education and Government Programming. In response to concerns of the Telecom Board and others, I added: "AT&T Arkansas will .carry this PEG content on its video platform in its basic (lowest tier package) ..." I cannot recommend, nor will I include within the proposal unless so instructed by the City Council, a provision to charge AT&T Arkansas more (1% of gross revenues for the PEG channels) than is charged to Cox. The City Council long ago determined that the franchise fees generated by Cox should not be designated for nor paid directly to the PEG channel operation, but should be paid into the City's General Fund to be appropriated by the City Council for all City needs. These funds are not generated by the PEG channels, but are derived from the use of the City's streets and rights of way by Cox (or now by AT&T Arkansas). Therefore, I will follow the City Council's established policy and not designate any part of the fee on gross revenue for PEG. Requests for free INET services or other extra benefits are premature for this contract. In four years, I. hope Fayetteville has at least two viable, healthy competitors in this market. At that point, we will be in a much better position to offer incentives (such as a longer contract) for providers in exchange for additional services for the City. That will also be the time to look at and address coverage and availability issues (if any). This contract will give AT&T Arkansas enough time to expand its system and demonstrate to the City that it will voluntarily provide the wide and equitable accessibility for our citizens that our City Council desires. If we find problems with fair accessibility after this initial four year expansion, the City will be in a better and more informed position to require improvements. CONCLUSION I recommend we agree to the terms presented by AT&T Arkansas in the attached contract. Competition is surely healthy and will likely lower costs and improve services and choices for our citizens. Our more detailed and lengthy contract with Cox was negotiated when the City had clear franchising rights with which a TV cable company had to comply. It was also negotiated not when the cable company was first entering Fayetteville's market, but after it had been here for years and had an established system and customer base. The voluntary agreement offered by AT&T Arkansas satisfies the basic needs of Fayetteville, ensures a fairly level playing field for both Cox and AT&T Arkansas, and fosters healthy competition for our citizens' cable options. I recommend its approval. RESOLUTION NO. A RESOLUTION TO APPROVE AN AGREEMENT WITH AT&T ARKANSAS TO ALLOW IT TO OFFER INTERNET PROTOCOL/CABLE TV TYPE SERVICE IN FAYETI'EVILLE WHEREAS, AT&T Arkansas wishes to use City of Fayetteville rights-of-way to provide Internet Protocol enabled broadband voice, data, and video (TV) services to Fayetteville residents; and WHEREAS, the law regulating such services is unclear and still evolving; and WHEREAS, it is in the best interests of the citizens of Fayetteville to provide "legal means for AT&T Arkansas to provide cable TV type competition into our market under similar conditions existing for Cox Cable. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby approves the Agreement with AT&T Arkansas allowing it to use the City's rights-of-way to furnish its intemet protocol cable television type services for the same 5% franchise fee paid by Cox Cable and with the same requirement to carry the Public, Educational and Government channels on its lowest tier, basic cable package and authorizes Mayor Coody to sign this Agreement attached to this Resolution as Exhibit A. PASSED and APPROVED this 20,1, day of February, 2007. APPROVED: ATTEST: By: By: DAN COODY, Mayor SONDRA SMITH, City Clerk AGREEMENT THIS AGREEMENT ("Agreement") dated this 20`h day of February, 2007 ("Effective Date") is made by and between Southwestern Bell Telephone, L.P., a Texas limited partnership doing business as AT&T Arkansas ("AT&T Arkansas") and the City of Fayetteville, Arkansas, a municipal corporation ("Fayetteville"). AT&T Arkansas and Fayetteville shall sometimes be referred to separately as a "Party," and collectively as the "Parties." RECITALS A. As a telecommunications provider, AT&T Arkansas has statewide authority under Ark. Code Ann. §23-17-101 to construct, operate and maintain its telecommunications facilities in the public rights of way ("ROW") throughout the state of Arkansas. B. Under Ark. Code Ann. §14-200-101, Fayetteville is permitted to impose reasonable terms and conditions on AT&T Arkansas' use and occupation of the Fayetteville's ROW and to collect a reasonable franchise fee for such use and occupation of its ROW. C. AT&T Arkansas is in the process of upgrading its existing telecommunications network to provide an integrated Internet Protocol ("IP") enabled broadband platform of voice, data and video services ("IP Network"), the video component of which is a switched, two-way, point-to-point and interactive service ("IP - enabled Video Service"). The IP Network upgrade will involve the use of Fayetteville's ROW. D. AT&T Arkansas believes that Ark. Code Ann. §23-17-101 covers the construction, operation and maintenance of the IP Network, and that AT&T Arkansas is not required to obtain a separate franchise or other authorization from Fayetteville to offer IP -enabled services including IP -enabled Video Services within Fayetteville over the IP Network. E AT&T Arkansas further believes that Fayetteville's right to regulate the construction of the IP Network in Fayetteville's ROW is limited to the right to impose reasonable conditions regarding the time, place, and manner of AT&T Arkansas' use and occupation of Fayetteville's ROW. F. Fayetteville believes that the provision of IP -enabled Video Services by AT&T Arkansas is beyond the scope of Ark. Code Ann. §23-17-101 and is subject to Fayetteville's cable television franchising authority. G. Both AT&T Arkansas and the City of Fayetteville agree that the deployment of the IP Network and the provision of IP -enabled Video Services should not be delayed by litigation to establish the scope of Ark. Code Ann. §23-17-101 or the application of Fayetteville's franchise ordinance to IP -enabled Video Services. H. Fayetteville and AT&T Arkansas further agree that litigation to resolve this issue would be complex and protracted, and that it is in the best interests of both Parties and the residents of Fayetteville to reach a compromise of each other's positions and claims. NOW, THEREFORE, in consideration of and reliance upon the respective representations, promises, concessions, terms and conditions contained herein, Fayetteville and AT&T Arkansas agree as follows: 1. Term. The term of this Agreement shall commence on the Effective Date of this Agreement and continue through the end of 2011. The term may be extended upon mutual agreement of the Parties. 2. Change of Law. AT&T Arkansas and the City of Fayetteville agree to consult in the event that after the Effective Date, any court, agency, commission, legislative body, or other authority of competent jurisdiction issues a finding that limits the validity or enforceability of this Agreement, in whole or in part. Should the finding be final, non -appealable and binding upon either Fayetteville or AT&T, this Agreement shall be deemed modified or limited to the extent necessary to address the subject of the finding unless either party, within thirty (30) days of receipt of the ruling provides written notice to the other party of election to terminate, in which case this Agreement shall terminate within six (6) months or such earlier period as the parties mutually may agree. Where the effect of a finding is a modification, the parties shall enter into good faith negotiations to modify this Agreement in the manner which best effectuates its overall purposes and the intentions of the parties. Failure to reach a mutually satisfactory modification within ninety (90) days of the commencement of such efforts shall entitle either party to terminate the Agreement on the provision of thirty (30) days' written notice. 3. Compensation to Fayetteville. During the term of this Agre ment, AT&T Arkansas shall pay to Fayetteville a fee of 5% of the gross revenues from subscription fees, pay-per-view fees and equipment rental, installation and repair fees collected from each subscriber to AT&T Arkansas' IP -enabled Video Services product delivered over the IP Network in Fayetteville's rights of way. It is understood by the parties that the 5% fee paid to Fayetteville by AT&T Arkansas is applicable to the same gross revenue items as presently required of the current cable television provider for all subscriber paid services and no others until and unless the FCC or a Court determines the fee should apply to more or fewer items. The fee does not apply to non -video revenues or the non - video revenues of a bundled product containing video and non -video offerings. The fee will be forwarded to Fayetteville quarterly by the twenty-first day of the first month of the subsequent quarter. Upon request, AT&T Arkansas shall make their records available to Fayetteville to demonstrate compliance with this paragraph for a period of three (3) years preceding the request. • 4. Public, Educational • and Governmental Programming. (a) AT&T Arkansas shall provide some form of access for Fayetteville's noncommercial, public, education and governmental ("PEG") programming through AT&T Arkansas' IP -enabled Video Services. (b) AT&T Arkansas shall not be responsible for content of PEG programming. (c) As soon as practicable, AT&T shall provide written notice that it has the technical capability to provide IP based access for Fayetteville's PEG channel (in use on the Execution Date of this Agreement) over the platform AT&T wishes to use with this agreement. If technological feasibility requires a change in the current Fayetteville technology, Fayetteville may be required to support a change in or addition to current Fayetteville technology now in use for PEG programming to make it compatible with AT&T Arkansas' IP enabled video technology. (d) AT&T Arkansas will provide Fayetteville capacity on its platform to carry the same number of PEG channels that Fayetteville currently has activated as of the effective date of this Agreement PEG content will be made available by Fayetteville placing its content on the public Internet. AT&T Arkansas will carry this PEG content on its video platform in its basic (lowest tier package) using its standard Internet -sourced PEG solution. AT&T will provide Fayetteville a one-time up front capital grant to cover the initial set up costs incurred by Fayetteville to make this content available on the Internet. Should AT&T seek to improve its transmission method in a fashion that will substantially affect the integrity of the Internet sourced PEG solution (compatibility), AT&T accepts the responsibility for necessary costs of capital improvements that might be needed by Fayetteville. (e) PEG programming will be available via Internet for AT&T Arkansas' IP Video subscribers to view both on the TV and computer. PEG programming will be available via the Internet from the end user's computer for AT&T HomeZone subscribers who also have High Speed Internet Access. 5. Emergency Message. AT&T Arkansas shall carry all Federal, State and Local alerts provided over the Federal Emergency Alert System through AT&T s IP - enabled Video Services in the event of a public safety emergency, which at a minimum will include the concurrent rebroadcast of local broadcast channels. 6. Customer Service. AT&T Arkansas will offer IP -enabled Video Services and provide customer service consistent with the requirements of 47 C.F.R. Section 76.309(c). AT&T Arkansas will respond to complaints and outages in a diligent fashion. (a) AT&T Arkansas shall give subscribers in Fayetteville thirty (30) days notice of any rate increases, channel lineup changes, or other substantive service changes. -3- (b) AT&T Arkansas shall restore any pavements, sidewalks, driveways that are disturbed during the installation; improvement or extension of IP -enabled Video services to a standard that is both commercially reasonable and in compliance with the ordinances of Fayetteville. (c) AT&T Arkansas shall not refuse to render IP -enabled Video Services based solely upon the income or minority status of any resident or group of residents. 7. Service area. This Agreement shall apply to AT&T's service area within the municipal boundaries of Fayetteville as they exist upon the date of execution of this agreement and may hereafter be extended. AT&T shall make video programming available, subject to technology or other economic feasibility, to all residential units within the service area, by use of IP -based video technology or other alternative video programming technology. (a) On December 31, 2007 and the same date in every year thereafter, AT&T Arkansas shall tender an annual report indicating the status of its video programming service. The report shall: (i) indicate the number of subscribers; and (ii) the technology being used to provide such video programming. (b) AT&T Arkansas shall be considered to have breached this agreement if AT&T Arkansas fails to diligently offer video programming throughout Fayetteville, unless: (i) delay is attributable to Force Majeure; (ii) delay is attributable to Fayetteville; (iii) delay is attributable to AT&T Arkansas' inability to obtain needed private easements: (iv) delay is attributable to special technical requirements; or (v) delay is justified by reasonable commercial standards of construction. 8. Obligations of Fayetteville. During the term of this Agreement Fayetteville will not attempt to nor subject the provision of AT&T Arkansas' IP -enabled Video Services over the IP Network to regulation under any cable television franchise ordinance or similar ordinance. In addition: (a) Fayetteville agrees to subject the construction and installation of the IP Network to the same process and review as it subjects the installation and construction of AT&T Arkansas' existing telecommunications infrastructure. (b) Fayetteville agrees not to unreasonably block, restrict, or limit the construction and installation of the IP Network. (c) Fayetteville agrees to process any and all applicable permits for the installation, construction, maintenance, repair, removal, and other activities associated with the IP Network in a timely and prompt manner. 9. Jurisdiction and Venue. This contract shall be construed pursuant to the laws of Arkansas. Jurisdiction and venue shall be in Washington County, Arkansas. 4 10. Breach of Agreement. Should either party claim that a breach of any part of this Agreement has occurred, that party will provide prompt written notice to the other, specifying the nature of the breach; and upon receipt the other party shall cure such breach within 60 days. 11. Mediation Recommended. Both AT&T Arkansas and the City of Fayetteville shall make diligent good faith efforts to resolve all issues and disputes that might arise in the administration of this Agreement through discussions between designated representatives of the Parties. If such discussions have failed, the use of a mediator is recommended. 12. Insurance. AT&T Arkansas shall maintain, throughout the term of this Agreement, insurance in the minimum amounts as follows: Workers Compensation Commercial General Liability Auto Liability Umbrella Liability Statutory Limits $1,000,000 per occurrence, Combined Single Liability (CSL) $2,000,000 General Aggregate (including all owned, non -owned, and hired vehicles) $1,000,000 per occurrence (CSL) $1,000,000 per occurrence (CSL) 13. Notices. Any notice to be given under this Agreement shall be in writing and may be delivered to either personally, by facsimile or by certified or registered mail with postage prepaid and return receipt requested, addressed as follows: If to The City of Fayetteville: If to AT&T Arkansas: City Attorney's Office City of Fayetteville 113 W. Mountain Street, Ste. 302 Fayetteville, AR 72701 FAX: (479) 575-8315 Mr. Edward Drilling, President, AT&T Arkansas AT&T Arkansas 1111 W. Capitol Avenue Little Rock, AR 72201-3005 14. Modification. This Agreement may be amended or modified only by a written instrument executed by both Parties. 15. Assignment. AT&T Arkansas may not assign or transfer this Agreement or any interest therein without the prior consent of Fayetteville except to any affiliate of AT&T Arkansas. 5 16. Entire Agreement. This Agre ment embodies the entire agreement and understanding of Fayetteville and AT&T Arkansas with respect to AT&T Arkansas' use of Fayetteville ROW in connection with the offering and provision of IP -enabled services including IP -enabled Video Services within Fayetteville using facilities constructed and placed within Fayetteville's ROW. As such it merges and supersedes all prior verbal agreements, understandings and representations by either party on the matters set forth herein. 17. Waiver. Failure on the part of either Party to enforce any provision of this Agreement shall not be construed as a waiver of the right to compel enforcement of such provision or any other provision. • 18. Miscellaneous. • (a) AT&T Arkansas and Fayetteville each hereby warrants that it has the requisite power and authority to enter into this Agreement and to perform according to the terms hereof. (b) The headings used in this Agreement are inserted for convenience or reference only and are not intended to define, limit or affect the interpretation of any term or provision hereof. The singular shall include the plural; the masculine gender shall include the feminine and neutral gender. (c) AT&T Arkansas and Fayetteville shall cooperate fully with one another in the execution of any and all other documents and in the completion of any additional actions including, without limitation, the processing of permits that may be necessary or appropriate to give full force and effect to the terms and intent of this Agreement. (d) Nothing contained in this Agreement is intended or shall be construed as creating or conferring any rights, benefits or remedies upon, or creating any obligations of the Parties hereto toward any person or entity not a party to this Agreement, unless otherwise expressly set forth herein. (e) Nothing contained in this Agreement is intended or shall be construed as amending, modifying or otherwise affecting any other agreements, authorizations or memoranda which Fayetteville and AT&T Arkansas have now. Further, nothing contained in this Agreement is meant to change, limit, modify, restrict or limit any current rights or ,jurisdiction that either Fayetteville or other governrnental entities currently have nor is this Agreement intended to change, limit, modify, restrict or limit any rights AT&T Arkansas currently has under existing federal and state law and under existing Fayetteville ordinances and existing construction permits issued by Fayetteville. 19. Binding Effect This Agreement shall be binding upon and for the benefit of AT&T Arkansas and the City of Fayetteville. • -6- 20. Counterpart Execution. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. Signature pages may be transmitted by facsimile and any signature transmitted by facsimile will be given the same force and effect as an original signature. 21. Authority of City Council. This agreement is not intended to limit the authority of the Fayetteville City Council regarding the use of streets, easements, and public rights of way ("ROW") by public utilities, specifically including those that communicate information. The City Council expressly reserves the right to increase the fee imposed in paragraph 3 of this Agreement to that which is imposed on other video service providers in order to generally maintain competitive neutrality, so long as such fee does not exceed the maximum rate authorized under Section 622 of the Federal Communications Act (47 U.S.C. Section 542). IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives, have executed this Agreement and made the same effective as of the 20t° day of February, 2007. AT&T ARKANSAS By: Name: Edward Drilling Title: President — AT&T Arkansas CITY OF FAYETTEVILLE, ARKANSAS By: Name: DAN COODY Title: Mayor ATTEST: By: SONDRA SMITH, City Clerk -7- AGREEMENT THIS AGREEMENT ("Agreement") dated this 6`h day of February, 2007 ("Effective Date") is made by and between Southwestern Bell Telephone, L.P., a Texas limited partnership doing business as AT&T Arkansas ("AT&T Arkansas") and the City of Fayetteville, Arkansas, a municipal corporation ("Fayetteville"). AT&T Arkansas and Fayetteville shall sometimes be referred to separately as a "Party," and collectively as the "Parties." RECITALS A. As a telecommunications provider, AT&T Arkansas has statewide authority under Ark. Code Ann. §23-17-101 to construct, operate and maintain its telecommunications facilities in the public rights of way ("ROW") throughout the state of Arkansas. B. Under Ark. Code Ann. §14-200-101, Fayetteville is permitted to impose reasonable terms and conditions on AT&T Arkansas' use and occupation of the Fayetteville's ROW and to collect a reasonable franchise fee for such use and occupation of its ROW. C. AT&T Arkansas is in the process of upgrading its existing telecommunications network to provide an integrated Internet Protocol ("IP") enabled broadband platform of voice, data and video services ("IP Network"), the video component of which is a switched, two-way, point-to-point and interactive service ("IP- enabled Video Service"). The IP Network upgrade will involve the use of Fayetteville's ROW. D. AT&T Arkansas believes that Ark. Code Ann. §23-17-101 covers the construction, operation and maintenance of the IP Network, and that AT&T Arkansas is not required to obtain a separate franchise or other authorization from Fayetteville to offer IP-enabled services including IP-enabled Video Services within Fayetteville over the IP Network. E. AT&T Arkansas further believes that Fayetteville's right to regulate the construction of the IP Network in Fayetteville's ROW is limited to the right to impose reasonable conditions regarding the time, place, and manner of AT&T Arkansas' use and occupation of Fayetteville's ROW. F. Fayetteville believes that the provision of IP-enabled Video Services by AT&T Arkansas is beyond the scope of Ark. Code Ann. §23-17-101 and is subject to Fayetteville's cable television franchising authority. G. Both AT&T Arkansas and the City of Fayetteville agree that the deployment of the IP Network and the provision of IP-enabled Video Services should not 1Is - be delayed by litigation to establish the scope of Ark. Code Ann. §23-17-101 or the application of Fayetteville's franchise ordinance to IP-enabled Video Services. H. Fayetteville and AT&T Arkansas further agree that litigation to resolve this issue would be complex and protracted, and that it is in the best interests of both Parties and the residents of Fayetteville to reach a compromise of each other's positions and claims. NOW, THEREFORE, in consideration of and reliance upon the respective representations, promises, concessions, terms and conditions contained herein, Fayetteville and AT&T Arkansas agree as follows: 1. Term. The term of this Agreement shall commence on the Effective Date of this Agreement and continue through the end of 2011. The term may be extended upon mutual agreement of the Parties. 2. Change of Law. AT&T Arkansas and the City of Fayetteville agree to consult in the event that after the Effective Date, any court, agency, commission, legislative body, or other authority of competent jurisdiction issues a finding that limits the validity or enforceability of this Agreement, in whole or in part. Should the finding be final, non -appealable and binding upon either Fayetteville or AT&T, this Agreement shall be deemed modified or limited to the extent necessary to address the subject of the finding unless either party, within thirty (30) days of receipt of the ruling, provides written notice to the other party of election to terminate, in which case this Agreement shall terminate within six (6) months or such earlier period as the parties mutually may agree. Where the effect of a finding is a modification, the parties shall enter into good faith negotiations to modify this Agreement in the manner which best effectuates its overall purposes and the intentions of the parties. Failure to reach a mutually satisfactory modification within ninety (90) days of the commencement of such efforts shall entitle either party to terminate the Agreement on the provision of thirty (30) days' written notice. 3. Compensation to Fayetteville. During the term of this Agreement, AT&T Arkansas shall pay to Fayetteville a fee of 5% of the gross revenues from subscription fees collected from each subscriber to AT&T Arkansas' IP-enabled Video Services product delivered over the IP Network in Fayetteville's rights of way; such product to be defined by AT&T Arkansas when it is offered to the public. The fee does not apply to non -video revenues or the non -video revenues of a bundled product containing video and non -video offerings. The fee will be forwarded to Fayetteville monthly on the last of each month. Upon request, AT&T Arkansas shall make their records available to Fayetteville to demonstrate compliance with this paragraph for a period of three (3) years preceding the request. -2- 4. Public, Educational and Governmental Programming. (a) AT&T Arkansas shall provide some form of access for Fayetteville's noncommercial, public, education and governmental ("PEG") programming through AT&T Arkansas' IP-enabled Video Services. (b) AT&T Arkansas shall not be responsible for content of PEG programming. (c) As soon as practicable, AT&T shall provide written notice that it has the technical capability to provide IP based access for Fayetteville's PEG channel (in use on the Execution Date of this Agreement) over the platform AT&T wishes to use with this agreement. If technological feasibility requires a change in the current Fayetteville technology, Fayetteville may be required to support a change in or addition to current Fayetteville technology now in use for PEG programming to make it compatible with AT&T Arkansas' IP enabled video technology. (d) AT&T Arkansas will provide Fayetteville capacity on its platform to carry the same number of PEG channels that Fayetteville currently has activated as of the effective date of this Agreement. PEG content will be made available by Fayetteville placing its content on the public Internet. AT&T Arkansas will carry this PEG content on its video platform in its basic (lowest tier package) using its standard Internet -sourced PEG solution. AT&T will provide Fayetteville a one-time up front capital grant to cover the initial set up costs incurred by Fayetteville to make this content available on the Internet. Should AT&T seek to improve its transmission method in a fashion that will substantially affect the integrity of the Internet sourced PEG solution (compatibility), AT&T accepts the responsibility for necessary costs of capital improvements that might be needed by Fayetteville. (e) PEG programming will be available via Internet for AT&T Arkansas' IP Video subscribers to view both on the TV and computer. PEG programming will be available via the Internet from the end user's computer for AT&T Home7_one subscribers who also have High Speed Internet Access. 5. Emergency Message. AT&T Arkansas shall carry all Federal, State and Local alerts provided over the Federal Emergency Alert System through AT&T's IP- enabled Video Services in the event of a public safety emergency, which at a minimum will include the concurrent rebroadcast of local broadcast channels. 6. Customer Service. AT&T Arkansas will offer IP-enabled Video Services and provide customer service consistent with the requirements of 47 C.F.R. Section 76.309(c). AT&T Arkansas will respond to complaints and outages in a diligent fashion. (a) AT&T Arkansas shall give subscribers in Fayetteville thirty (30) days notice of any rate increases, channel lineup changes, or other substantive service changes. -3- (b) AT&T Arkansas "shall restore any pavements, sidewalks, driveways that are disturbed during the installation, improvement or extension of IP-enabled Video services to a standard that is both commercially reasonable and in compliance with the ordinances of Fayetteville. (c) AT&T Arkansas shall not refuse to render IP-enabled Video Services based solely upon the income or minority status of any resident or group of residents. 7. Service area. This Agreement shall apply to AT&T's service area within the municipal boundaries of Fayetteville as they exist upon the date of execution of this agreement and may hereafter be extended. AT&T shall make video programming available, subject to technology or other economic feasibility, to all residential units within the service area, by use of IP-based video technology or other alternative video programming technology. (a) On December 31, 2007 and the same date in every year thereafter, AT&T Arkansas shall tender an annual report indicating the status of its video programming service. The report shall: (1) indicate the number of subscribers; and (ii) the technology being used to provide such video programming. (b) AT&T Arkansas shall be considered to have breached this agreement if AT&T Arkansas fails to diligently offer video programming throughout Fayetteville, unless: (i) delay is attributable to Force Majeure; (ii) delay is attributable to Fayetteville; (iii) delay is attributable to AT&T Arkansas' inability to obtain needed private easements: (iv) delay is attributable to special technical requirements; or (v) delay is justified by reasonable commercial standards of construction. 8. Obligations of Fayetteville. During the term of this Agreement Fayetteville will not attempt to nor subject the provision of AT&T Arkansas' IP-enabled Video Services over the IP Network to regulation under any cable television franchise ordinance or similar ordinance. In addition: (a) Fayetteville agrees to subject the construction and installation of the IP Network to the same process and review as it subjects the installation and construction of AT&T Arkansas' existing telecommunications infrastructure. (b) Fayetteville agrees not to unreasonably block, restrict, or limit the construction and installation of the IP Network. (c) Fayetteville agrees to process any and all applicable permits for the installation, construction, maintenance, repair, removal, and other activities associated with the IP Network in a timely and prompt manner. 9. Jurisdiction and Venue. This contract shall be construed pursuant to the laws of Arkansas. Jurisdiction and venue shall be in Washington County, Arkansas. -4- 10. Breach of Agreement. Should either party claim that a breach of any part of this Agreement has occurred, that party will provide prompt written notice to the other, specifying the nature of the breach; and upon receipt the other party shall cure such breach within 60 days. 11. Mediation Recommended. Both AT&T Arkansas and the City of Fayetteville shall make diligent good faith efforts to resolve all issues and disputes that might arise in the administration of this Agreement through discussions between designated representatives of the Parties. If such discussions have failed, the use of a mediator is recommended. 12. Insurance. AT&T Arkansas shall maintain, throughout the term of this Agreement, insurance in the minimum amounts as follows: Workers Compensation Commercial General Liability Auto Liability Umbrella Liability Statutory Limits $1,000,000 per occurrence, Combined Single Liability (CSL) $2,000,000 General Aggregate (including all owned, non -owned, and hired vehicles) $1,000,000 per occurrence (CSL) $1,000,000 per occurrence (CSL) 13. Notices. Any notice to be given under this Agreement shall be in writing and may be delivered to either personally, by facsimile or by certified or registered mail with postage prepaid and return receipt requested, addressed as follows: If to The City of Fayetteville: If to AT&T Arkansas: Attn: City Attorney's Office City of Fayetteville 113 W. Mountain Street, Ste. 302 Fayetteville, AR 72701 FAX: (479) 575-8315 AT&T Arkansas 14. Modification. This Agreement may be amended or modified only by a written instrument executed by both Parties. 15. Assignment. AT&T Arkansas may not assign or transfer this Agreement or any interest therein without the prior consent of Fayetteville except to any affiliate of AT&T Arkansas. -5- 16. Entire Agreement. This Agreement embodies the entire agreement and understanding of Fayetteville and AT&T Arkansas with respect to AT&T Arkansas' use of Fayetteville ROW in connection with the offering and provision of IP-enabled services including IP-enabled Video Services within Fayetteville using facilities constructed and placed within Fayetteville's ROW. As such it merges and supersedes all prior verbal agreements, understandings and representations by either party on the matters set forth herein. 17. Waiver. Failure on the part of either Party to enforce any provision of this Agreement shall not be construed as a waiver of the right to compel enforcement of such provision or any other provision. 18. Miscellaneous. (a) AT&T Arkansas and Fayetteville each hereby warrants that it has the requisite power and authority to enter into this Agreement and to perform according to the terms hereof. (b) The headings used in this Agreement are inserted for convenience or reference only and are not intended to define, limit or affect the interpretation of any term or provision hereof. The singular shall include the plural; the masculine gender shall include the feminine and neutral gender. (c) AT&T Arkansas and Fayetteville shall cooperate fully with one another in the execution of any and all other documents and in the completion of any additional actions including, without limitation, the processing of permits that may be necessary or appropriate to give full force and effect to the terms and intent of this Agreement. (d) Nothing contained in this Agreement is intended or shall be construed as creating or conferring any rights, benefits or remedies upon, or creating any obligations of the Parties hereto toward any person or entity not a party to this Agreement, unless otherwise expressly set forth herein. (e) Nothing contained in this Agreement is intended or shall be construed as amending, modifying or otherwise affecting any other agreements, authorizations or memoranda which Fayetteville and AT&T Arkansas have now. Further, nothing contained in this Agreement is meant to change, limit, modify, restrict or limit any current rights or jurisdiction that either Fayetteville or other governmental entities currently have nor is this Agreement intended to change, limit, modify, restrict or limit any rights AT&T Arkansas currently has under existing federal and state law and under existing Fayetteville ordinances and existing construction permits issued by Fayetteville. 19. Binding Effect. This Agreement shall be binding upon and for the benefit of AT&T Arkansas and the City of Fayetteville. -6- 20. Counterpart Execution. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. Signature pages may be transmitted by facsimile and any signature transmitted by facsimile will be given the same force and effect as an original signature. 21. Authority of City Council. This agreement is not intended to limit the authority of the Fayetteville City Council regarding the use of streets, easements, and public rights of way ("ROW") by public utilities, specifically including those that communicate information. The City Council expressly reserves the right to increase the fee imposed in paragraph 3 of this Agreement to that which is imposed on other video service providers in order to generally maintain competitive neutrality, so long as such fee does not exceed the maximum rate authorized under Section 622 of the Federal Communications Act (47 U.S.C. Section 542). IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives, have executed this Agreement and made the same effective as of the 6`h day of February, 2007. AT&T ARKANSAS By: Name: Edward Drilling Title: President — AT&T Arkansas CITY OF FAYETTEVILLE, ARKANSAS By: Name: DAN COODY Title: Mayor ATTEST: By: SONDRA SMITH, City Clerk -7- FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST. CITY ATTORNEY A DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO: Dan Coody, Mayor City Council Susan Thomas, Public Information & Policy Advisor FROM: Kit Williams, City Attorney DATE: January 30, 2007 RE: Proposed AT&T Arkansas Cable Contract I have proposed slight modifications to the AT&T Arkansas proposed agreement. The modifications require AT&T Arkansas to carry the public, educational and governmental (PEG) channels on its basic (lowest tier) package just as we require Cox Communications to provide PEG on its basic cable package. This change is in paragraph 4 (d). Another proposed change is in paragraph 3 Compensation to Fayetteville. AT&T Arkansas has already agreed to pay the same 5% fee as Cox Communication pays for its use of the City's rights of way. The change specifies that the 5% fee applies to the identical revenues generated by both carriers including pay -per -view charges, equipment rental, installation and maintenance fees and advertising revenue generated or attributable to Fayetteville subscribers. The City wishes to place AT&T Arkansas and Cox Communications on a level playing field so that fair competition will improve services while restraining costs for our citizens. i, Le�Q ,Fo A/p GC o3/6/a KIT WILLIAMS FAYETTEVILLE CITY ATTORNEY DAVID J. WHITAKER Assistant City Attorney Judy Housley Office Manager Phone (479) 575-8313 FAX (479) 575-8315 January 30, 2007 Mr. Edward Drilling President, AT&T Arkansas, Inc. I 1 I I W. Capitol Avenue Little Rock, AR 72201-3005 Dear Mr. Drilling: THE CITY OF FAYETTEVILLE. ARKANSAS 113 W. Mountain, Suite 302 Fayetteville, AR 72701-6083 Enclosed please find a copy of a letter sent by Cox Communications to Mayor Dan Coody. It is the City's intent to treat Cox and AT&T equally in terms of your proposed use of the City's right of ways to deliver television signals to Fayetteville residents and businesses. We appreciate your agreement to the same 5% franchise fee rate that Cox pays. To be further equitable, this 5% rate should be applied not only to your subscription rate but to the same items of "gross revenue" which Cox must apply the franchise fee. If later rulings by the FCC (as affirmed or modified after any court review) or separate Court Judgment changes the definition of "gross revenue" to which cities may charge a franchise fee, the City of Fayetteville will immediately apply such final Judgment or ruling to your contract. Until that point, the City believes the same current definition of "gross revenue" applied for years to our television cable provider should also be applied to the newest proposed television cable provider, AT&T Arkansas. Attached is the amendment to your proposed contract to provide the level field so that both you and Cox will be treated as equitably as possible. With kindest regards, KIT WILLIAMS Fayetteville City Attorney KW/jh Enclosure cc: Mayor Dan Coody Nelson Mower, Cox Communications January 24, 2007 4901 South 48th Street Springdale, AR 72762 (479) Honorable Dan Coody 27 (479)-5644 273-5644 Mayor, City of Fayetteville (479) 756-1081 tax 113 W. Mountain Street Fayetteville, Arkansas 72701 Co%t COMMUNICATIONS Dear Mayor Coody: Thank you for visiting with Jay Allbaugh and me this past Friday, January 19th. We app rec.iate_y"our interest_in.ensuring access to Fayetteville's rights_of way is_providedin a non-discriminatory manner. Cox Communications has been at the forefront of bringing the benefits of competition to consumers for video, voice and data services. We compete every day for video customers against satellite providers many times our size. We compete for Internet customers against my............a'ce providers and against a century old monopoly for'tele'phone'customers. tAnd if -the numerous LID. Power Awards Cox has received'. are any indication, we compete successfully. �JQ R^:�;'Suc O.(. d'(dF�A^;.i"JuC: Cl; i !'vL USA.Ai Cl Cox.Communications`'has'been'a'leadeinih'thecrriationaldebate-over:cable`franchiise `reform. We`do"not seek to'irnpede`tlfe entry'of competitors; but=we"ask'that,'regul'atoryar Bodies treat• • rall providers equally' "' r= r; 1Cot 1t C This reasonable approach has been the policy of Fayetteville and is expressly stated in Section V (B) of Cox's franchise with the City: B. Franchise Required - No person shall construct, install, maintain or operate on or under any street, any equipment or facilities for the distribution of television ���_ signals. or radio signals or other intelligence, either analog or digital, over a — Broadband Tel ce ommunications Network to any subscriber unless a franchise authorizing the use of the streets has first been obtained. Such a franchise shall contain material terms and conditions no less restrictive than those set forth in this Franchise. This language, which encompasses an authorization such as that being considered by the City to allow AT&T to provide its IPTV service, requires the City to make a choice: regulate AT&Tas Cox isregulated or regulate Cox as the City chooses to regulate AT&T. N • either'provider should.have special rule's'or be given' a' special;advantage.OThe Citty'Isrole'should'be-unbiased!anditshould'not; through -its •regulato"ry;authonty r advantage or disadvantage either provider. u1. ;A� 'llr `IIfLI�i" I on-; :lhl." riy)- We`arelcoricerried that the document being considered by the City provides AT&T'with ndue advantages.'- For instance, the definition of "gross revenue" in the AT&T' ' agreement would require AT&T to pay a far smaller price for access to exactly the same public rights -of -way used by Cox. Our analysis indicates that the difference in 2006 would have been more than $86,000. Specifically, AT&T would pay no fees on revenues collected for advertising, Pay -Per -View, equipment rental, or installation and maintenance agreements. There are other instances where the AT&T agreement contains provisions that are far less restrictive than those in Cox's franchise. We appreciate your consideration of these issues. Again, our intent is not to impede the entry of AT&T into the Fayetteville video market. Al] we ask is that the City exercises its regulatory authority to ensure that Cox and AT&T compete on a level playing field. Please let me know if you have any questions. • Sincerely, Nelson Mower Vice President Cox Arkansas Operations cc: Kit Williams — City Attorney Susan Thomas — Public Information & Policy Advisor Jay Allbaugh — VP of Public and Government Affairs — Cox Kansas/Arkansas AGREEMENT THIS AGREEMENT ("Agreement") dated this 6'h day of February, 2007 ("Effective Date") is made by and between Southwestern Bell Telephone, L.P., a Texas limited partnership doing business as AT&T Arkansas ("AT&T Arkansas") and the City of Fayetteville, Arkansas, a municipal corporation ("Fayetteville"). AT&T Arkansas and Fayetteville shall sometimes be referred to separately as a "Party," and collectively as the "Parties." RECITALS A. As a telecommunications provider, AT&T Arkansas has statewide authority under Ark. Code Ann. §23-17-101 to construct, operate and maintain its telecommunications facilities in the public rights of way ("ROW") throughout the state of Arkansas. B. Under Ark. Code Ann. §14-200-101, Fayetteville is permitted to impose reasonable terms and conditions on AT&T Arkansas' use and occupation of the Fayetteville's ROW and to collect a reasonable franchise fee for such use and occupation of its ROW. C. AT&T Arkansas is in the process of upgrading its existing telecommunications network to provide an integrated Internet Protocol ("IP") enabled broadband platform of voice, data and video services ("IP Network"), the video component of which is a switched, two-way, point-to-point and interactive service ("IP- enabled Video Service"). The IP Network upgrade will involve the use of Fayetteville's ROW. D. AT&T Arkansas believes that Ark. Code Ann. §23-17-101 covers the construction, operation and maintenance of the IP Network, and that AT&T Arkansas is not required to obtain a separate franchise or other authorization from Fayetteville to offer IP-enabled services including IP-enabled Video Services within Fayetteville over the IP Network. E. AT&T Arkansas further believes that Fayetteville's right to regulate the construction of the IP Network in Fayetteville's ROW is limited to the right to impose reasonable conditions regarding the time, place, and manner of AT&T Arkansas' use and occupation of Fayetteville's ROW. F. Fayetteville believes that the provision of IP-enabled Video Services by AT&T Arkansas is beyond the scope of Ark. Code Ann. §23-17-101 and is subject to Fayetteville's cable television franchising authority. G. Both AT&T Arkansas and the City of Fayetteville agree that the deployment of the IP Network and the provision of IP-enabled Video Services should not -1- be delayed by litigation to establish the scope of Ark. Code Ann. §23-17-101 or the application of Fayetteville's franchise ordinance to IP-enabled Video Services. H. Fayetteville and AT&T Arkansas further agree that litigation to resolve this issue would be complex and protracted, and that it is in the best interests of both Parties and the residents of Fayetteville to reach a compromise of each other's positions and claims. NOW, THEREFORE, in consideration of and reliance upon the respective representations, promises, concessions, terms and conditions contained herein, Fayetteville and AT&T Arkansas agree as follows: 1. Term. The term of this Agreement shall commence on the Effective Date of this Agreement and continue through the end of 2011. The term may be extended upon mutual agreement of the Parties. 2. Change of Law. AT&T Arkansas and the City of Fayetteville agree to consult in the event that after the Effective Date, any court, agency, commission, legislative body, or other authority of competent jurisdiction issues a finding that limits the validity or enforceability of this Agreement, in whole or in part. Should the finding be final, non -appealable and binding upon either Fayetteville or AT&T, this Agreement shall be deemed modified or limited to the extent necessary to address the subject of the finding unless either party, within thirty (30) days of receipt of the ruling, provides written notice to the other party of election to terminate, in which case this Agreement shall terminate within six (6) months or such earlier period as the parties mutually may agree. Where the effect of a finding is a modification, the parties shall enter into good faith negotiations to modify this Agreement in the manner which best effectuates its overall purposes and the intentions of the parties. Failure to reach a mutually satisfactory modification within ninety (90) days of the commencement of such efforts shall entitle either party to terminate the Agreement on the provision of thirty (30) days' written notice. 3. Compensation to Fayetteville. During the term of this Agreement, AT&T Arkansas shall pay to Fayetteville a fee of 5% of the gross revenues from subscription fees, pay -per -view fees and equipment rental, installation and maintenance fees collected from each subscriber to AT&T Arkansas' IP-enabled Video Services product delivered over the IP Network in Fayetteville's rights of way. It shall also apply to advertising revenue generated or attributable to Fayetteville subscribers of AT&T Arkansas IP- enabled Video Services. It is understood by the parties that the 5% fee paid to Fayetteville by AT&T Arkansas is applicable to the same gross revenue items as presently required of the current cable television provider and no others until and unless the FCC or a Court determines the fee should apply to more or fewer items. The fee does not apply to non -video revenues or the non -video revenues of a bundled product containing video and non -video offerings. The fee will be forwarded to Fayetteville quarterly by the twenty-first day of the first month of the subsequent quarter. Upon -2- request, AT&T Arkansas shall make their records available to Fayetteville to demonstrate compliance with this paragraph for a period of three (3) years preceding the request. 4. Public, Educational and Governmental Programming. (a) AT&T Arkansas shall provide some form of access for Fayetteville's noncommercial, public, education and governmental ("PEG") programming through AT&T Arkansas' IP-enabled Video Services. (b) AT&T Arkansas shall not be responsible for content of PEG programming. (c) As soon as practicable, AT&T shall provide written notice that it has the technical capability to provide IP based access for Fayetteville's PEG channel (in use on the Execution Date of this Agreement) over the platform AT&T wishes to use with this agreement. If technological feasibility requires a change in the current Fayetteville technology, Fayetteville may be required to support a change in or addition to current Fayetteville technology now in use for PEG programming to make it compatible with AT&T Arkansas' IP enabled video technology. (d) AT&T Arkansas will provide Fayetteville capacity on its platform to carry the same number of PEG channels that Fayetteville currently has activated as of the effective date of this Agreement. PEG content will be made available by Fayetteville placing its content on the public Internet. AT&T Arkansas will carry this PEG content on its video platform in its basic (lowest tier package) using its standard Internet -sourced PEG solution. AT&T will provide Fayetteville a one-time up front capital grant to cover the initial set up costs incurred by Fayetteville to make this content available on the Internet. Should AT&T seek to improve its transmission method in a fashion that will substantially affect the integrity of the Internet sourced PEG solution (compatibility), AT&T accepts the responsibility for necessary costs of capital improvements that might be needed by Fayetteville. (e) PEG programming will be available via Internet for AT&T Arkansas' IP Video subscribers to view both on the TV and computer. PEG programming will be available via the Internet from the end user's computer for AT&T HomeZone subscribers who also have High Speed Internet Access. 5. Emergency Message. AT&T Arkansas shall carry all Federal, State and Local alerts provided over the Federal Emergency Alert System through AT&T's IP- enabled Video Services in the event of a public safety emergency, which at a minimum will include the concurrent rebroadcast of local broadcast channels. 6. Customer Service. AT&T Arkansas will offer IP-enabled Video Services and provide customer service consistent with the requirements of 47 C.F.R. Section 76.309(c). AT&T Arkansas will respond to complaints and outages in a diligent fashion. -3- (a) AT&T Arkansas shall give subscribers in Fayetteville thirty (30) days notice of any rate increases, channel lineup changes, or other substantive service changes. (b) AT&T Arkansas shall restore any pavements, sidewalks, driveways that are disturbed during the installation, improvement or extension of IP-enabled Video services to a standard that is both commercially reasonable and in compliance with the ordinances of Fayetteville. (c) AT&T Arkansas shall not refuse to render IP-enabled Video Services based solely upon the income or minority status of any resident or group of residents. 7. Service area. This Agreement shall apply to AT&T's service area within the municipal boundaries of Fayetteville as they exist upon the date of execution of this agreement and may hereafter be extended. AT&T shall make video programming available, subject to technology or other economic feasibility, to all residential units within the service area, by use of IP-based video technology or other alternative video programming technology. (a) On December 31, 2007 and the same date in every year thereafter, AT&T Arkansas shall tender an annual report indicating the status of its video programming service. The report shall: (i) indicate the number of subscribers; and (ii) the technology being used to provide such video programming. (b) AT&T Arkansas shall be considered to have breached this agreement if AT&T Arkansas fails to diligently offer video programming throughout Fayetteville, unless: (i) delay is attributable to Force Majeure; (ii) delay is attributable to Fayetteville; (iii) delay is attributable to AT&T Arkansas' inability to obtain needed private easements: (iv) delay is attributable to special technical requirements; or (v) delay is justified by reasonable commercial standards of construction. 8. Obligations of Fayetteville. During the term of this Agreement Fayetteville will not. attempt to nor subject the provision of AT&T Arkansas' IP-enabled Video Services over• the IP Network to regulation under any cable television franchise ordinance or similar ordinance. In addition: (a) Fayetteville agrees to subject the construction and installation of the IP Network to the same process and review as it subjects the installation and construction of AT&T Arkansas' existing telecommunications infrastructure. (b) Fayetteville agrees not to unreasonably block, restrict, or limit the construction and installation of the IP Network. (c) Fayetteville agrees to process any and all applicable permits for the installation, construction, maintenance, repair, removal, and other activities associated with the IP Network in a timely and prompt manner. -4- 9. Jurisdiction and Venue. This contract shall be construed pursuant to the laws of Arkansas. Jurisdiction and venue shall be in Washington County, Arkansas. 10. Breach of Agreement. Should either party claim that a breach of any part of this Agreement has occurred, that party will provide prompt written notice to the other, specifying the nature of the breach; and upon receipt the other party shall cure such breach within 60 days. 11. Mediation Recommended. Both AT&T Arkansas and the City of Fayetteville shall make diligent good faith efforts to resolve all issues and disputes that might arise in the administration of this Agreement through discussions between designated representatives of the Parties. If such discussions have failed, the use of a mediator is recommended. 12. Insurance. AT&T Arkansas shall maintain, throughout the term of this Agreement, insurance in the minimum amounts as follows: Workers Compensation Commercial General Liability Auto Liability Umbrella Liability Statutory Limits $1,000,000 per occurrence, Combined Single Liability (CSL) $2,000,000 General Aggregate (including all owned, non -owned, and hired vehicles) $1,000,000 per occurrence (CSL) $1,000,000 per occurrence (CSL) 13. Notices. Any notice to be given under this Agreement shall be in writing and may be delivered to either personally, by facsimile or by certified or registered mail with postage prepaid and return receipt requested, addressed as follows: If to The City of Fayetteville: If to AT&T Arkansas: City Attorney's Office City of Fayetteville 113 W. Mountain Street, Ste. 302 Fayetteville, AR 72701 FAX: (479) 575-8315 Mr. Edward Drilling, President, AT&T Arkansas AT&T Arkansas 1111 W. Capitol Avenue Little Rock, AR 72201-3005 14. Modification. This Agreement may be amended or modified only by a written instrument executed by both Parties. -5- 15. Assignment. AT&T Arkansas may not assign or transfer this Agreement or any interest therein without the prior consent of Fayetteville except to any affiliate of AT&T Arkansas. 16. Entire Agreement. This Agreement embodies the entire agreement and understanding of Fayetteville and AT&T Arkansas with respect to AT&T Arkansas' use of Fayetteville ROW in connection with the offering and provision of IP-enabled services including IP-enabled Video Services within Fayetteville using facilities constructed and placed within Fayetteville's ROW. As such it merges and supersedes all prior verbal agreements, understandings and representations by either party on the matters set forth herein. 17. Waiver. Failure on the part of either Party to enforce any provision of this Agreement shall not be construed as a waiver of the right to compel enforcement of such provision or any other provision. 18. Miscellaneous. (a) AT&T Arkansas and Fayetteville each hereby warrants that it has the requisite power and authority to enter into this Agreement and to perform according to the terms hereof. (b) The headings used in this Agreement are inserted for convenience or reference only and are not intended to define, limit or affect the interpretation of any term or provision hereof. The singular shall include the plural; the masculine gender shall include the feminine and neutral gender. (c) AT&T Arkansas and Fayetteville shall cooperate fully with one another in the execution of any and all other documents and in the completion of any additional actions including, without limitation, the processing of permits that may be necessary or appropriate to give full force and effect to the terms and intent of this Agreement. (d) Nothing contained in this Agreement is intended or shall be construed as creating or conferring any rights, benefits or remedies upon, or creating any obligations of the Parties hereto toward any person or entity not a party to this Agreement, unless otherwise expressly set forth herein. (e) Nothing contained in this Agreement is intended or shall be construed as amending, modifying or otherwise affecting any other agreements, authorizations or memoranda which Fayetteville and AT&T Arkansas have now. Further, nothing contained in this Agreement is meant to change, limit, modify, restrict or limit any current rights or jurisdiction that either Fayetteville or other governmental entities currently have nor is this Agreement intended to change, limit, modify, restrict or limit any rights AT&T Arkansas currently has under existing federal and state law and under existing Fayetteville ordinances and existing construction permits issued by Fayetteville. -6- 19. Binding Effect. This Agreement shall be binding upon and for the benefit of AT&T Arkansas and the City of Fayetteville. 20. Counterpart Execution. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. Signature pages may be transmitted by facsimile and any signature transmitted by facsimile will be given the same force and effect as an original signature. 21. Authority of City Council. This agreement is not intended to limit the authority of the Fayetteville City Council regarding the use of streets, easements, and public rights of way ("ROW") by public utilities, specifically including those that communicate information. The City Council expressly reserves the right to increase the fee imposed in paragraph 3 of this Agreement to that which is imposed on other video service providers in order to generally maintain competitive neutrality, so long as such fee does not exceed the maximum rate authorized under Section 622 of the Federal Communications Act (47 U.S.C. Section 542). IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives, have executed this Agreement and made the same effective as of the 6`h day of February, 2007. AT&T ARKANSAS By: Name: Edward Drilling Title: President — AT&T Arkansas CITY OF FAYETTEVILLE, ARKANSAS By: Name: DAN COODY Title: Mayor ATTEST: By: SONDRA SMITH, City Clerk -7- FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST. CITY ATTORNEY LEGAL DEPARTMENT DEPARTMENTAL CORRESPONDENCE TO: Dan Coody, Mayor City Council Susan Thomas, Public Information & Policy Advisor FROM: Kit Williams, City Attorney DATE: February 2, 2007 RE: Proposed AT&T Contract for Cable TV services AT&T Arkansas, Inc. has reviewed and agreed to my proposed change to the contract which required the Public. Educational and Governmental channels to be offered on its basic (lowest tier) package. AT&T Arkansas, Inc. has also agreed to most of my proposed changes in paragraph 3 Compensation to Fayetteville. AT&T Arkansas, Inc. agreed that the 5% fee would apply to "pay -per -view fees and equipment rental, installation and repair (as opposed to maintenance) fees collected from each subscriber ...." I will let AT&T Arkansas, Inc. explain the difference between "repair" and ''maintenance'' from its perspective, but I have no opposition to that change. AT&T Arkansas, Inc. did object to application of the 5% fee to potential advertising revenue which I have removed at their request. This would be a very minor item of revenue for the City for the early start-up years for AT&T Arkansas in Fayetteville. By the end of this contract, I hope the law concerning advertising revenue will, have become settled and clear. If AT&T Arkansas is by then serving a large subscriber base in Fayetteville, the potential advertising revenue will also be a much more important revenue consideration for the City. I hope . AT&T Arkansas, Inc. will have signed the amended contract (attached) prior to your meeting: on February 6°i so that we will know that they have accepted the contract and are ready to go forward to serve Fayetteville residents. m6/a' 6drMt( Sp, aool : AGREEMENT THIS AGREEMENT ("Agreement") dated this 6`h day of February, 2007 ("Effective Date") is made by and between Southwestern Bell Telephone, L.P., a Texas limited partnership doing business as AT&T Arkansas ("AT&T Arkansas") and the City of Fayetteville, Arkansas, a municipal corporation ("Fayetteville"). AT&T Arkansas and Fayetteville shall sometimes be referred to separately as a "Party," and collectively as the "Parties." RECITALS A. As a telecommunications provider, AT&T Arkansas has statewide authority under Ark. Code Ann. §23-17-101 to construct, operate and maintain its telecommunications facilities in the public rights of way ("ROW") throughout the state of Arkansas. B. Under Ark. Code Ann. §14-200-101, Fayetteville is permitted to impose reasonable terms and conditions on AT&T Arkansas' use and occupation of the Fayetteville's ROW and to collect a reasonable franchise fee for such use and occupation of its ROW. C. AT&T Arkansas is in the process of upgrading its existing telecommunications network to provide an integrated Internet Protocol ("IP") enabled broadband platform of voice, data and video services ("IP Network"), the video component of which is a switched, two-way, point-to-point and interactive service ("IP- enabled Video Service"). The IP Network upgrade will involve the use of Fayetteville's ROW. D. AT&T Arkansas believes that Ark. Code Ann. §23-17-101 covers the construction, operation and maintenance of the IP Network, and that AT&T Arkansas is not required to obtain a separate franchise or other authorization from Fayetteville to offer IP-enabled services including IP-enabled Video Services within Fayetteville over the IP Network. E. AT&T Arkansas further believes that Fayetteville's right to regulate the construction of the IP Network in Fayetteville's ROW is limited to the right to impose reasonable conditions regarding the time, place, and manner of AT&T Arkansas' use and occupation of Fayetteville's ROW. F. Fayetteville believes that the provision of IP-enabled Video Services by AT&T Arkansas is beyond the scope of Ark. Code Ann. §23-17-101 and is subject to Fayetteville's cable television franchising authority. G. Both AT&T Arkansas and the City of Fayetteville agree that the deployment of the IP Network and the provision of IP-enabled Video Services should not be delayed by litigation to establish the scope of Ark. Code Ann. §23-17-101 or the application of Fayetteville's franchise ordinance to IP-enabled Video Services. H. Fayetteville and AT&T Arkansas further agree that litigation to resolve this issue would be complex and protracted, and that it is in the best interests of both Parties and the residents of Fayetteville to reach a compromise of each other's positions and claims. NOW, THEREFORE, in consideration of and reliance upon the respective representations, promises, concessions, terms and conditions contained herein, Fayetteville and AT&T Arkansas agree as follows: 1. Term. The term of this Agreement shall commence on the Effective Date of this Agreement and continue through the end of 2011. The term may be extended upon mutual agreement of the Parties. 2. Change of Law. AT&T Arkansas and the City of Fayetteville agree to consult in the event that after the Effective Date, any court, agency, commission, legislative body, or other authority of competent jurisdiction issues a finding that limits the validity or enforceability of this Agreement, in whole or in part. Should the finding be final, non -appealable and binding upon either Fayetteville or AT&T, this Agreement shall be deemed modified or limited to the extent necessary to address the subject of the finding unless either party, within thirty (30) days of receipt of the ruling, provides written notice to the other party of election to terminate, in which case this Agreement shall terminate within six (6) months or such earlier period as the parties mutually may agree. Where the effect of a finding is a modification, the parties shall enter into good faith negotiations to modify this Agreement in the manner which best effectuates its overall purposes and the intentions of the parties. Failure to reach a mutually satisfactory modification within ninety (90) days of the commencement of such efforts shall entitle either party to terminate the Agreement on the provision of thirty (30) days' written notice. 3. Compensation to Fayetteville. During the term of this Agreement, AT&T Arkansas shall pay to Fayetteville a fee of 5% of the gross revenues from subscription fees, pay -per -view fees and equipment rental, installation and repair fees collected from each subscriber to AT&T Arkansas IP-enabled Video Services product delivered over the IP Network in Fayetteville's rights of way. It is understood by the parties that the 5% fee paid to Fayetteville by AT&T Arkansas is applicable to the same gross revenue items as presently required of the current cable television provider and no others until and unless the FCC or a Court determines the fee should apply to more or fewer items. The fee does not apply to non -video revenues or the non -video revenues of a bundled product containing video and non -video offerings. The fee will be forwarded to Fayetteville quarterly by the twenty-first day of the first month of the subsequent quarter. Upon request, AT&T Arkansas shall make their records available to Fayetteville to demonstrate compliance with this paragraph for a period of three (3) years preceding the request. -2- 4. Public, Educational and Governmental Programming. (a) AT&T Arkansas shall provide some form of access for Fayetteville's noncommercial, public, education and governmental ("PEG") programming through AT&T Arkansas' IP-enabled Video Services. (b) AT&T Arkansas shall not be responsible for content of PEG programming. (c) As soon as practicable, AT&T shall provide written notice that it has the technical capability to provide IP based access for Fayetteville's PEG channel (in use on the Execution Date of this Agreement) over the platform AT&T wishes to use with this agreement. If technological feasibility requires a change in the current Fayetteville technology, Fayetteville may be required to support a change in or addition to current Fayetteville technology now in use for PEG programming to make it compatible with AT&T Arkansas' IP enabled video technology. (d) AT&T Arkansas will provide Fayetteville capacity on its platform to carry the same number of PEG channels that Fayetteville currently has activated as of the effective date of this Agreement. PEG content will be made available by Fayetteville placing its content on the public Internet. AT&T Arkansas will carry this PEG content on its video platform in its basic (lowest tier package) using its standard Internet -sourced PEG solution. AT&T will provide Fayetteville a one-time up front capital grant to cover the initial set up costs incurred by Fayetteville to make this content available on the Internet. Should AT&T seek to improve its transmission method in a fashion that will substantially affect the integrity of the Internet sourced PEG solution (compatibility), AT&T accepts the responsibility for necessary costs of capital improvements that might be needed by Fayetteville. (e) PEG programming will be available via Internet for AT&T Arkansas' IP Video subscribers to view both on the TV and computer. PEG programming will be available via the Internet from the end user's computer for AT&T HomeZone subscribers who also have High Speed Internet Access. 5. Emergency Message. AT&T Arkansas shall carry all Federal, State and Local alerts provided over the Federal Emergency Alert System through AT&T's IP- enabled Video Services in the event of a public safety emergency, which at a minimum will include the concurrent rebroadcast of local broadcast channels. 6. Customer Service. AT&T Arkansas will offer IP-enabled Video Services and provide customer service consistent with the requirements of 47 C.F.R. Section 76.309(c). AT&T Arkansas will respond to complaints and outages in a diligent fashion. (a) AT&T Arkansas shall give subscribers in Fayetteville thirty (30) days notice of any rate increases, channel lineup changes, or other substantive service changes. -3- (b) AT&T Arkansas shall restore any pavements, sidewalks, driveways that are disturbed during the installation; improvement or extension of IP-enabled Video services to a standard that is both commercially reasonable and in compliance with the ordinances of Fayetteville. (c) AT&T Arkansas shall not refuse to render IP-enabled Video Services based solely upon the income or minority status of any resident or group of residents. 7. Service area. This Agreement shall apply to AT&T's service area within the municipal boundaries of Fayetteville as they exist upon the date of execution of this agreement and may hereafter be extended. AT&T shall make video programming available, subject to technology or other economic feasibility, to all residential units within the service area, by use of IP-based video technology or other alternative video programming technology. (a) On December 31, 2007 and the same date in every year thereafter, AT&T Arkansas shall tender an annual report indicating the status of its video programming service. The report shall: (i) indicate the number of subscribers; and (ii) the technology being used to provide such video programming. (b) AT&T Arkansas shall be considered to have breached this agreement if AT&T Arkansas fails to diligently offer video programming throughout Fayetteville, unless: (i) delay is attributable to Force Majeure; (ii) delay is attributable to Fayetteville; (iii) delay is attributable to AT&T Arkansas' inability to obtain needed private easements: (iv) delay is attributable to special technical requirements; or (v) delay is justified by reasonable commercial standards of construction. 8. Obligations of Fayetteville. During the term of this Agreement Fayetteville will not attempt to nor subject the provision of AT&T Arkansas' IP-enabled Video Services over the IP Network to regulation under any cable television franchise ordinance or similar ordinance. In addition: (a) Fayetteville agrees to subject the construction and installation of the IP Network to the same process and review as it subjects the installation and construction of AT&T Arkansas' existing telecommunications infrastructure. (b) Fayetteville agrees not to unreasonably block, restrict, or limit the construction and installation of the IP Network. (c) Fayetteville agrees to process any and all applicable permits for the installation, construction, maintenance, repair, removal, and other activities associated with the IP Network in a timely and prompt manner. 9. Jurisdiction and Venue. This contract shall be construed pursuant to the laws of Arkansas. Jurisdiction and venue shall be in Washington County, Arkansas. 4- 10. Breach of Agreement. Should either party claim that a breach of any part of this Agreement has occurred, that party will provide prompt written notice to the other, specifying the nature of the breach; and upon receipt the other party shall cure such breach within 60 days. 11. Mediation Recommended. Both AT&T Arkansas and the City of Fayetteville shall make diligent good faith efforts to resolve all issues and disputes that might arise in the administration of this Agreement through discussions between designated representatives of the Parties. If such discussions have failed, the use of a mediator is recommended. 12. Insurance. AT&T Arkansas shall maintain, throughout the term of this Agreement, insurance in the minimum amounts as follows: Workers Compensation Commercial General Liability Auto Liability Umbrella Liability Statutory Limits $1,000,000 per occurrence, Combined Single Liability (CSL) $2,000,000 General Aggregate (including all owned, non -owned, and hired vehicles) $1,000,000 per occurrence (CSL) $1.000,000 per occurrence (CSL) 13. Notices. Any notice to be given under this Agreement shall be in writing and may be delivered to either personally, by facsimile or by certified or registered mail with postage prepaid and return receipt requested, addressed as follows: If to The City of Fayetteville: City Attorney's Office City of Fayetteville 113 W. Mountain Street, Ste. 302 Fayetteville, AR 72701 FAX: (479) 575-8315 If to AT&T Arkansas: Mr. Edward Drilling, President, AT&T Arkansas AT&T Arkansas 1111 W. Capitol Avenue Little Rock, AR 72201-3005 14. Modification. This Agreement may be amended or modified only by a written instrument executed by both Parties. 15. Assignment. AT&T Arkansas may not assign or transfer this Agreement or any interest therein without the prior consent of Fayetteville except to any affiliate of AT&T Arkansas. -5- 16. Entire Agreement. This Agreement embodies the entire agreement and understanding of Fayetteville and AT&T Arkansas with respect to AT&T Arkansas' use of Fayetteville ROW in connection with the offering and provision of IP-enabled services including IP-enabled Video Services within Fayetteville using facilities constructed and placed within Fayetteville's ROW. As such it merges and supersedes all prior verbal agreements, understandings and representations by either party on the matters set forth herein. 17. Waiver. Failure on the part of either Party to enforce any provision of this Agreement shall not be construed as a waiver of the right to compel enforcement of such provision or any other provision. 18. Miscellaneous. (a) AT&T Arkansas and Fayetteville each hereby warrants that it has the requisite power and authority to enter into this Agreement and to perform according to the terms hereof. (b) The headings used in this Agreement are inserted for convenience or reference only and are not intended to define, limit or affect the interpretation of any term or provision hereof. The singular shall include the plural; the masculine gender shall include the feminine and neutral gender. (c) AT&T Arkansas and Fayetteville shall cooperate fully with one another in the execution of any and all other documents and in the completion of any additional actions including, without limitation, the processing of permits that may be necessary or appropriate to give full force and effect to the terms and intent of this Agreement. (d) Nothing contained in this Agreement is intended or shall be construed as creating or conferring any rights, benefits or remedies upon, or creating any obligations of the Parties hereto toward any person or entity not a party to this Agreement, unless otherwise expressly set forth herein. (e) Nothing contained in this Agreement is intended or shall be construed as amending, modifying or otherwise affecting any other agreements, authorizations or memoranda which Fayetteville and AT&T Arkansas have now. Further, nothing contained in this Agreement is meant to change, limit, modify, restrict or limit any current rights or jurisdiction that either Fayetteville or other governmental entities currently have nor is this Agreement intended to change, limit, modify, restrict or limit any rights AT&T Arkansas currently has under existing federal and state law and under existing Fayetteville ordinances and existing construction permits issued by Fayetteville. 19. Binding Effect. This Agreement shall be binding upon and for the benefit of AT&T Arkansas and the City of Fayetteville. -6- 20. Counterpart Execution. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. Signature pages may be transmitted by facsimile and any signature transmitted by facsimile will be given the same force and effect as an original signature. 21. Authority of City Council. This agreement is not intended to limit the authority of the Fayetteville City Council regarding the use of streets, easements, and public rights of way ("ROW") by public utilities, specifically including those that communicate information. The City Council expressly reserves the right to increase the fee imposed in paragraph 3 of this Agreement to that which is imposed on other video service providers in order to generally maintain competitive neutrality, so long as such fee does not exceed the maximum rate authorized under Section 622 of the Federal Communications Act (47 U.S.C. Section 542). IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives, have executed this Agreement and made the same effective as of the 6`h day of February, 2007. AT&T ARKANSAS By: Name: Edward Drilling Title: President — AT&T Arkansas CITY OF FAYETTEVILLE, ARKANSAS By: Name: DAN COODY Title: Mayor ATTEST: By: SONDRA SMITH, City Clerk -7- FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST. CITY ATTORNEY DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO: Dan Coody, Mayor City Council FROM: Kit Williams, City Attorney DATE: February 14, 2007 ��— RE: Signed proposed Agreement with AT&T Arkansas The Fayetteville Telecom Board had a second hearing on the proposed Agreement with AT&T Arkansas yesterday. Members of the public, CAT, AT&T representatives and I all addressed issues surrounding this agreement. The Telecom Board then unanimously passed a motion recommending the City Council adopt this Agreement. After the meeting AT&T Arkansas' representative presented the Agreement signed by its President, Edward Drilling (attached). Also attached is my memo of February 7, 2007 about the minor changes to the contract which were presented to the Telecom Board as well as reasons other changes proposed by CAT and others are not included nor recommended at this time. FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST. CITY ATTORNEY DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT TO: City Council CC: Telecom Board FROM: Kit Williams, City Attorney ____ DATE: February 7, 2007 RE: Proposed AT&T Arkansas contract Attached is the final proposed Agreement accepted by AT&T Arkansas. This contract differs from the one submitted to the Telecom Board in a few sections: (1) Paragraph 3. Compensation to Fayetteville. In order to make this more comparable to the City's agreement with Cox Communications, I enlarged the definition of "gross revenues" to include "pay - per -view fees, equipment rental, installation and repair fees ..." I also included the language that "the 5% fee paid to Fayetteville by AT&T Arkansas is applicable to the same gross revenue items as presently required of the current cable television provider for all subscriber paid services ...." This 5% fee is payable to Fayetteville "quarterly by the twenty-first day of the first month of the subsequent quarter." I believe these additional terms create a more level playing field for Cox and AT&T Arkansas. (2) Paragraph 4. Public Education and Government Programming. In response to concerns of, the Telecom Board and others, I added: "AT&T Arkansas.will. carry this PEG content on its video platform in its basic (lowest tier package) ...." I cannot recommend, nor will I include within the proposal unless so instructed by the City Council, a provision to charge AT&T Arkansas more (1% of gross revenues for the PEG channels) than is charged to Cox. The City Council long ago determined that the franchise fees generated by Cox should not be designated for nor paid directly to the PEG channel operation, but should be paid into the City's General Fund to be appropriated by the City Council for all City needs. These funds are not generated by the PEG channels, but are derived from the use of the City's streets and rights of way by Cox (or now by AT&T Arkansas). Therefore, I will follow the City Council's established policy and not designate any part of the fee on gross revenue for PEG. Requests for free INET services or other extra benefits are premature for this contract. In four years, I hope Fayetteville has at least two viable, healthy competitors in this market. At that point, we will be in a much better position to offer incentives (such as a longer contract) for providers in exchange for additional services for the City. That will also be the time to look at and address coverage and availability issues (if any). This contract will give AT&T Arkansas enough time to expand its system and demonstrate to the City that it will voluntarily provide the wide and equitable accessibility for our citizens that our City Council desires. If we find problems with fair accessibility after this initial four year expansion, the City will be in a better and more informed position to require improvements. CONCLUSION I recommend we agree to the terms presented by AT&T Arkansas in the attached contract. Competition is surely healthy and will likely lower costs and improve services and choices for our citizens. Our more detailed and lengthy contract with Cox was negotiated when the City had clear franchising rights with which a TV cable company had to comply. It was also negotiated not when the cable company was first entering Fayetteville's market, but after it had been here for years and had an established system and customer base. The voluntary agreement offered by AT&T Arkansas satisfies the basic needs of Fayetteville, ensures a fairly level playing field for both Cox and AT&T Arkansas, and fosters healthy competition for our citizens' cable options. I recommend its approval. (2 27 07) Clarice Pearman - Res. 32-07 Page 1 Clarice Pearman Williams, Kit - 2.27.07 11:20 AM Res. 32-07 32-07 AT&T Arkansas.pdf CC: Audit Kit: Attached is a copy of the above resolution passed by City Council, February 20, 2007 regarding AT&T Arkansas. me know if anything else Is needed. Thanks. Clarice Clarice Buffalohead-Pearman, CMC City Clerk/Treasurer Division 113 West Mountain Fayetteville, AR 72701 479-575-8309 cpearman@ci.fayetteville.ar.us