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Q,� �' <br /> a a es include confusion for some over which provider to subscrib� to the <br /> c�isadv nt g <br /> �act that another system will be constructed in the public right-of-way. Also, in future S� <br /> Fra�chise rene�val negotiations the incumbent cable operator, AT&T, may desire to <br /> nc,gotiate terms that are less favorable to the City based upon the argument that <br /> c�mpetition has now decreased their profits making it difficult for them to maintain their <br /> existing commitments. Usually this is reflected in a decrease in their funding of the <br /> Public, Educational, and Group (PEG) access channel. It is staff's view that the <br /> advantages of compe�ition will outweigh the disadvantages. <br /> Within the past year the City has been approached by RCN, Inc. which has requested <br /> that the City issue encroachment permits to construct a telecommunications system in <br /> Redwood City. RCN has also requested that the City begin negotiating an agreement <br /> that will permit RCN to operate a cable television system in Redwood City. Approvals of <br /> these agreements will result in direct competition for Pacific Bell for local telephone <br /> service and AT&T for cable television service. <br /> Who is RCN, what is their background, and what services do they intend to offer? <br /> RCN is a relatively new telecommunications business based in New Jersey that <br /> provides local telephone senrice, cable television, and Internet access. Most of RCN's <br /> experience is on the East Coast and only recently has RCN entered California. They <br /> are aggressively pursuing franchise or open video system (OVS) agreements in San <br /> Mateo County'. In the past twelve months, RCN has entered into agreements with <br /> South San Francisco, Daly City, and San Mateo. A thorough analysis and discussion of <br /> RCN and their capabilities is included in the attached report from Mr. Pilnick. <br /> With the experience gained from its construction and operations to date and with <br /> adequate funding, RCN appears technically qualified to build and operate cable <br /> systems in the San Mateo County area. <br /> It has been RCN's practice to "bundle" a number of services together and offer <br /> "packages" to potential subscribers. In the long-term, AT&T (and other cable operators) <br /> is expected to offer the same bundled choices. If P.CN com�letes its system <br /> construction in communities before the incumbent cable operator upgrades its system, <br /> RCN could conceivably be competing with the locat telephone company, Pacific Belf, for <br /> voice and data services while competing with the locat cable operator for video services. <br /> This may lead to some subscriber confusion in terms of pricing and service, but also will <br /> provide more choices for the cor� residents and businesses. <br /> RCN has approached the City and requested encroachment permits so that RCN may <br /> begin installing wires and equipment in the public right-of-way. Since RCN intends to <br /> use these facilities in part to deliver local telephone service, the City must, by law, grant <br /> these permits to RC�! subject to reasonable restrictions. The issuance of encroachment <br /> permits is being handled by the Community Development Services Department and is <br /> being conducted parallel to the Finance Department negotiating a franchise agreement <br /> with RCN. <br /> ' Under law the City may enter into either a franchise agreement or open video systems (OVS) agreement <br /> with a firm that desires to provide cable television service. The difference between these two agreements <br /> is fairly technical and is not pertinent at this time. A more detailed explanation of the difiierences between <br /> these two agreements is discussed in Mr. Pilnick's report. <br /> 2 <br /> .. . _ _. _.._._.. _�._t <br />