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Fortnightly Magazine - October 15 1998

IN ACCORDANCE WITH OUR PREVIOUS DISCUSSIONS. we understand that the City of Alameda, Calif. and our municipal utility, the Bureau of Electricity are to be featured in an article to be published in your September edition. The article is being prepared by Mr. Len Grzanka, a local freelance writer, and is to discuss municipal telecommunications ventures. Based on recent staff discussions with Mr. Grzanka, we have some concern that Alameda's situation be represented accurately.

Approximately 2 years ago, the bureau began an effort to develop systems affording greater command and control over our electric facilities. This effort evaluated technologically advanced infrastructures, including the installation of fiber-optic cable. As your readership is well aware, today's fiber-optic systems have tremendous capacity and also hold great promise for a variety of telecommunications products.

Because of the multiplicity of possible uses for this infrastructure, the bureau's governing Public Utilities Board authorized a study by Stanford Research Institute Consultants to enumerate and evaluate additional uses for the fiber-optic system in order to make the best use of these city-owned facilities. This initial study confirmed that further development of applications would be in the best interests of our citizen-owners. Last July, the bureau published a Telecommunications Business Plan. Briefly, the plan recommends Alameda's entry into telecommunications ventures for three reasons:

(1) To capitalize on the organizational synergies and similarities of our electric utility and telecommunications endeavors in order to provide best use of City assets and greatest efficiencies.

(2) To fill a gap in the franchised Alameda telecommunications market with a locally owned, managed, and operated telecommunciations entity.

(3) To provide additional revenues to the City of Alameda's General Fund.

Extensive investigations have revealed that our prospective telecommunications ventures carry significant benefits with minimal risk. Areas of differentiation from the present franchised provider of cable television service include:

(1) Improved picture quality and service reliability yielded by the best technology and a reduction in amplifier cascades.

(2) Improved customer service, including a reduction in queues and wait times.

(3) Reduced charges for basic, extended, and pay-per-view services.

(4) Improved channel lineups catering to individual subscriber interests and needs.

(5) Better interdiction technologies affording our customers complete control over their video equipment.

(6) Future value-added services, such as Internet access and telephony.

The capital costs for this initial venture total $8 million. It has been proposed that funds be borrowed from Bureau of Electricity reserves, with competitive market-based interest rates paid on a monthly basis and the principal to be repaid in 10 years.

We believe that the above, greatly abbreviated discussion illustrates a considered, measured, and cautious approach toward any possible entries into new business ventures. Our goal is simply to provide the highest possible level of service at competitive rates.

Also of relevance, the Bureau of Electricity is the oldest municipal electric utility in California and among the oldest in the world. We have unmatched experience that will be brought to bear on our prospective telecommunications ventures. The bureau has a record of service reliability and a record of safety that are among the best in the

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