Report
to/Rapport au :
Agriculture and Rural Affairs Committee
Comité de l'agriculture et des questions
rurales
and Council / et au Conseil
Submitted by/Soumis par : Nancy Schepers, Deputy City Manager/Directrice
municipale adjointe,
Planning, Transit, and the Environment / Urbanisme,
Transport en commun et Environnement
Contact Person/Personne
ressource : Michael Murr, Manager, Economic Development
Economic Development and Strategic
Projects/Développement économique et Projets stratégiques
613-580-2424, ext./poste 25195,
michael.murr@ottawa.ca
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SUBJECT: |
Selecting A Private Sector
Partner To Complete Rural Broadband Coverage |
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|
|
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OBJET : |
CHOIX
D'UN PARTENAIRE DU SECTEUR PRIVÉ POUR COMPLÉTER LA COUVERTURE À LARGE BANDE
DANS LE SECTEUR RURAL |
REPORT RECOMMENDATION
That the Agriculture and Rural Affairs
Committee recommend Council:
1.
Endorse Barrett
Xplore Inc. (BXI) as preferred partner in a Public-Private Partnership (P3) to
complete broadband coverage in rural Ottawa; and
2. Authorize the Deputy City Manager of Planning, Transit, and the Environment, to finalize negotiations and conclude and execute all necessary agreements with Barrett Xplore Inc. for the design, construction, financing and operation of the required broadband infrastructure and service delivery in accordance with the terms and conditions of the Request for Proposals (RFP), the proposal submitted, the subsequent negotiations between the parties, and the framework set out in this report.
RECOMMANDATION DU RAPPORT
Que le Comité de l'agriculture et
des questions rurales recommande au Conseil :
1. D'appuyer le choix de
Barrett Xplore Inc. (BXI) comme partenaire privilégié d'un partenariat
public-privé (P3) visant à compléter la couverture à large bande dans le
secteur rural d'Ottawa.
2. D'autoriser
le directeur municipal adjoint, Urbanisme, Transport en commun et
Environnement, à finaliser les négociations et à conclure et signer toutes les
ententes nécessaires avec Barrett Xplore Inc. pour la conception, la
construction, le financement et l'exploitation de l'infrastructure à large
bande nécessaire et la prestation du service conformément aux conditions de la
demande de propositions, de la proposition soumise, des négociations
ultérieures entre les parties et du cadre énoncé dans le présent rapport.
BACKGROUND
The City has made steady progress expanding rural broadband availability since the Broadband Plan was first adopted in 2003. From a starting position of two per cent, access to some form of high-speed Internet is now available to approximately 60 per cent of the city’s rural residents. Despite this success, the low hanging fruit has been picked and it is now clear that advancement is slowing.
To address this concern, on 27 September 2006, City Council approved a funding contribution of up to $1 million to complete the delivery of broadband access to all parts of rural Ottawa. The funding is intended to be used as a catalyst to cause a private company to complete broadband deployment so that reliable, affordable broadband connectivity is available to 100 per cent of residences, farms, businesses and public sector institutions that are located in currently un‑serviced and underserved rural areas of the City of Ottawa. The target date for substantial completion is the fall of 2007 although the RFP specified that project must be fully complete at the very latest by April 2008, Council’s specified date in the Broadband Plan.
This report recommends the preferred partner to complete broadband coverage in rural Ottawa and outlines the terms of the proposed business arrangement. This arrangement allows the City to meet its stated goal of 100 per cent broadband coverage, while achieving more than 10 to 1 leverage of its one-time investment.
DISCUSSION
A Request For Proposal (RFP) was issued 20 November 2006 on MERX by the Supply Management Division, to seek proposals from qualified broadband service providers to identify a company with which the City can partner over the long term to meet the immediate and growing broadband connectivity needs of homes, businesses, farms and public sector institutions located in Ottawa's rural communities.
Interest from service
providers was high, with 39 companies downloading the RFP documents. Five of
these companies met with City officials in “Commercially Confidential”
meetings. The purpose of these meetings was to anchor key elements of the RFP
and provide an opportunity for proponents to ask any questions that they may
have, related to the process, or the information contained in the RFP. In order to ensure an independent level of
scrutiny, Howard Grant, of Partnering & Procurement Inc. was appointed as
Fairness Commissioner and questions and answers provided at these meetings,
that were considered by the Fairness Commissioner to be of a general nature
were issued as addenda. Questions and answers viewed as proprietary were only
shared with the proponent requesting the information.
The RFP closed at 3:00 p.m. on Monday, 22 January 2007. Proposal submissions were received from three service providers: Barrett Xplore Inc., Inukshuk Wireless Inc. and 4177347 Canada Inc., a partnership operating as Storm Internet Services.
An evaluation team was formed, comprised of representatives from the Economic Development Branch, the Rural Affairs Office and external subject matter experts, facilitated by the Supply Management Division. The evaluation team evaluated each submission in accordance with the stated project objectives and Council approved priorities, based solely on the written content and the evaluation criteria stipulated in the RFP document. The Fairness Commissioner scrutinized the evaluation process to ensure that it followed the process stipulated in the Request for Proposal document.
It was the consensus of the Evaluation Team that the proposal submitted by Barrett Xplore Inc. (BXI) represents "best value" to the City having met all the mandatory criteria of the RFP, having achieved a passing score for the Qualification Stage of the RFP, and the highest point total of the 200 points available. Based on the proposal, the City will contribute $750,000 as its one-time contribution to the project, to be flowed based on key milestones
Following the evaluation process and having identified BXI as Preferred Partner, staff initiated discussions to clarify outstanding questions and confirm the terms of a proposed business arrangement. These discussions were facilitated by Supply Management and scrutinized by the Fairness Commissioner. BXI was advised that any staff recommendations, including the recommendation of BXI as Preferred Partner and the business agreement, are subject to Council approval.
Barrett Xplore Inc. (BXI) is Canada’s largest and fastest growing wireless broadband provider. The brand under which BXI sells and markets its high-speed Internet service is “Xplornet.” Over the last three years, BXI has developed a business model to deliver broadband access, applications, and accessories to rural Canada, in a way that is sustainable, viable and completely aligned with the City of Ottawa’s broadband objectives. To date, the company has deployed its wireless service in over 200 rural communities.
Barrett Xplore is also part of a larger diversified company with interests in the distribution of recreational products, real estate development, and self-sufficient energy technology. In operation for 31 years, BXI is headquartered in Woodstock, New Brunswick, and, has operations in Canada, the United States, as well as Europe and Africa.
Subject to final negotiations, it is anticipated that the agreement between the City and Barrett Xplore Inc. will be developed in accordance with the framework attached hereto as Document 1.
Availability to broadband is becoming an essential means for rural communities to fully participate in the digital economy. Citizens and businesses will benefit from new and improved services, increased investment opportunities and business expansion.
This unique public-private (P3) partnership with Barrett Xplore will allow the City to fully complete broadband coverage in the rural area. The partnership will fulfill Council's stated objectives and responds to the needs of rural businesses and residents as expressed at the Rural Summit and through the Rural Issues Advisory Committee.
Applications such as government services, health care, education etc. are present among a growing range of online applications and information sources that require this type of connection speed. In addition, broadband has proven to be an economic enabler and developing new ways of doing business with broadband will allow farms and rural companies to become more efficient by lowering costs and improving productivity.
Farming has become
progressively more dependent on information technology. More and more farmers
rely on timely access to information, weather, current market pricing, fuel
costs, etc. Access to information and reducing transactional costs has become
critical to a farmer's ability to maintain a profitable operation. The
requirement for high-speed communications has also been identified by
businesses that support the farming community such as implement dealers and
feed suppliers.
Importantly, broadband access enables people to telecommute, which in many cases can eliminate or reduce the need for driving to the urban core to work. Similarly, workers and businesses that currently reside in Ottawa's rural areas are now stating that they need access to broadband networks. For example, knowledge workers such as engineers, lawyers and consultants have indicated a need for access to high-speed communications to provide required services to clients across Canada and around the world. Some employers insist that their employees have an ability to telecommute. Cottage and small/home-office (SoHo) businesses need broadband to compete effectively in a shrinking global market.
CONSULTATION
Stakeholder groups including the Rural Issues Advisory Committee, ORCnet (Ottawa’s Rural Community Network), agricultural councils including Dairy Farmers, Ontario Rural Council, Ontario Federation of Agriculture OFA, EOBC (Eastern Ontario Broadband Coalition) have been consulted on the development of this report. An IPD information report was provided to the members of the Agriculture and Rural Affairs Committee on 8 March 2007.
FINANCIAL IMPLICATIONS
The City's funding contribution of up to $1 million has been provided for in internal order 904071, Rural Road Reconstruction/Rehabilitation.
SUPPORTING DOCUMENTATION
Document 1 Agreement Framework between the Corporation of the City of Ottawa and Barrett Xplore Inc. (BXI)
DISPOSITION
Following the approval of this report by Council, the City and BXI will immediately proceed to finalize the necessary legal agreements and then seek the necessary site planning and construction approvals. A start of construction is anticipated by early May 2007 with the launch of the network in September/October 2007.
Between
The Corporation of
the City of Ottawa
And
Barrett Xplore Inc. (BX))
Subject to final negotiations, it is anticipated that the agreement between the City and Barrett Xplore Inc. will be developed in accordance with the following framework:
Agreement:
Upon approval by Council, BXI and the City will enter into a final agreement incorporating the business terms provided in BXI's RFP submission and summarized here. The RFP document, including Annex A, entitled Terms of Reference and Annex B, entitled General Terms and Conditions will provide the basis for the final agreement.
Term of Agreement:
The term of the agreement will be effective on the date of its execution by the parties and will continue in full force and effect for a period of five years.
Broadband Coverage Model:
BXI will deploy a robust, Motorola-based fixed wireless broadband platform, designed to achieve the target of 100 per cent geographic coverage of the rural Ottawa market. The deployment will employ a hybrid model of both line-of-sight (LOS) and non-line-of-sight (NLOS) technologies. The platform is designed to provide reliability and capability (speed) at affordable pricing, comparable with urban broadband offerings.
Understanding that all forms of terrestrial wireless service offerings have theoretical limitations, BXI will also offer high-speed satellite services to the estimated 275 to 475 dwellings that may for technical reasons be unable to obtain a satisfactory signal from the terrestrial wireless network at similarly affordable rates, made possible through this unique partnership with the City of Ottawa and the additional support of BXI's strategic partner Telesat Canada.
Capital Investment and Leverage:
BXI will invest over $10 million in this rural Ottawa broadband deployment over five years through:
§ $6.0 million in capital expenditures; and
§ $4.7 million to drive sales, awareness and promotion.
The City of Ottawa will contribute $750 thousand, as its one-time contribution to BXI’s capital expense, flowed to BXI on the basis of the following milestones:
§ 10 per cent at time of contract execution;
§ 70 per cent on System Completion;
§ 10 per cent on successful completion of the first independent performance audit, conducted not less than three (3) or more than six (6) months following System Completion; and
§ 2 per cent at the first (1st), second (2nd), third (3rd), fourth (4th) and the fifth (5th) anniversaries of the contract and successful completion of an independent performance audit each year.
Schedule:
BXI has committed to execute this broadband build with substantial completion scheduled to occur on or before 31 August 31 2007.
Marketing and Communications:
BXI plans an aggressive marketing and advertising campaign throughout a sequential rollout.
Marketing tactics throughout this process will include the following:
§ initial mass marketing to generate overall brand awareness and service availability, followed by a staged campaign through each of the rollout stages utilizing the following media:
§ direct mail
§ local/community newspapers
§ local/community radio
§ signage and posters
§ telemarketing
§ door-to-door
§ direct mail
§ special events
§ channel partners will be encouraged to plan and execute marketing initiatives that are complementary to BXI’s corporately led marketing campaigns
§ BXI will work closely with the City of Ottawa to leverage its existing communication vehicles to drive awareness of the broadband program and its progress to completion.
Customer Price:
In alignment with the City's stated objectives of rural parity with urban services, BXI has developed pricing and packaging to be offered through this partnership that enables it to compete directly with urban wireline solutions. Customer pricing will at minimum remain at currently defined pricing for the duration of the 5-year Partnership Agreement with the City and in addition, BXI will “Future Proof” its pricing such that it will remain in-line with the rest of its national pricing and will decline appropriately in response to reduced equipment pricing and increased national market competition.
Monthly service fees for wireless service: BXI's wireless services will be offered at multiple levels including home, business and enterprise offerings.
Residential service packages will be available for light, medium or heavy Internet users with affordable monthly pricing as follows:
|
Monthly Service Fee: |
$29.99 |
$39.99 |
$49.99 |
$59.99 |
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Download Speed (up to): |
300 kbps |
1.5 Mbps |
3 Mbps |
5 Mbps |
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Upload Speed (up to): |
100 kbps |
300 kbps |
600 kbps |
1.2 Mbps |
Similarly, Business and enterprise packages will be offered at multiple levels with monthly pricing as follows:
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Monthly Service Fee: |
$59.99 |
$99.99 |
$149.99 |
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Download Speed (up to): |
3 Mbps |
5 Mbps |
5 Mbps |
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Upload Speed (up to): |
750 kbps |
1.5 Mbps |
3 Mbps |
Equipment, Installation and upfront costs for wireless service: The subscriber equipment is included in the monthly service fees shown above. By virtue of BXI retaining ownership of the equipment the subscriber module carries a limited lifetime warranty.
In some cases customers may require additional hardware, such as a reflector dish or a 900 MHz subscriber module to receive service. There will be 3 pricing options for such additional equipment. Customers will choose from a monthly fee of $5, a one-time fee of $99 or in the case of a 2 or 3-year contract, the cost of additional hardware will be waived.
The price of basic installation with a 2-year contract will be $149 and $99 with a 3-year contract. If a customer requires installation work that falls outside the scope of a basic installation or when a customer prefers not to enter into a contract, the installing dealer will provide a quotation for installation.
Satellite Service: BXI’s proposed wireless network will be capable of providing service for more than 95 per cent of the remaining broadband gaps in rural Ottawa. BXI will also offer a special program in Ottawa, to provide unique entry-level satellite pricing for the remaining small percentage of rural customers, who for technical reasons are unable to achieve a satisfactory signal from the terrestrial wireless service, (estimated to be 275 to 475 households) as follows:
Basic Install and Activation
(all in):
3 yr contract $199.00
2 yr contract $299.00
1 yr contract $399.00
Monthly Recurring:
3 yr contract $49.99/mth
2 yr contract $49.99/mth
1 yr contract $54.99/mth
Satellite subscribers will be converted to wireless service where available at no additional cost to the subscriber. Conversions to wireless are guaranteed, where wireless signal is available. The equipment required will be considered to be leased to the subscriber.
Special Rates:
These special rates are unique to Ottawa customers and are made possible through the unique partnership between the City of Ottawa and Barrett Xplore and Barrett’s strategic partner, Telesat Canada.
Quality Assurance:
BXI will design, build and deliver a high quality “Best in Class” service platform in the City of Ottawa, providing scaleable end-to-end business processes from network design, to initial build, to promotion and sales, and to ongoing support.
BXI has demonstrated strong customer loyalty as evidenced by its other regional deployments. Ninety-four percent of BXI's existing customers indicate customer satisfaction when polled and further, some 90 per cent of BXI’s customers indicate that they would “refer a friend” or “buy again.”
§ Service Level Agreement
An important element in the agreement between BXI and the City will be a Service Level Agreement (SLA).
The SLA will be based on a detailed list of performance indicators listed in the RFP.
- Customer Satisfaction Surveys will be used to measure: service delivery, service availability, customer service and BXI's ability to meet commitments.
- Performance measures will be applied to: service delivery standards, network availability (for each tiered service), billing & credit matters, help desk, trouble reporting.
- Each service level category or element may be weighted in accordance with the seriousness of non-compliance. Performance will be rated as: meets target, warning, and alert.
§ Service and Support
- 7 X 24 Customer service and support will be provided, with service levels monitored by supervisory staff and measured through daily reports using hourly statistical data.
- 7 X 24 Network support will be provided by a network operations team, responsible for network monitoring and support of all network infrastructures.
- 7 X 24 Field support will be provided by BXI’s Field Operations Team and also through a large network of tower maintenance contractors with Service Level Agreements in place.
- 7 X 24 Engineering support is provided by BXI’s Engineering team.
- Customer installation support is provided though BXI’s dealer network.