Resolution No. 2020-035 RESOLUTION NO. 2020-35
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
ADOPTING REVISED FIBER OPTIC RATE SCHEDULES
SECTION 1 . Recitals.
A. Article XI, Section 9 of the California Constitution allows cities to establish
purchase. and operate public works to furnish its inhabitants with means of
communication.
B. Section 10101 of the California Public Utilities Code grants to every municipal
corporation the right to construct, operate. and maintain utility lines along any road. street,
or highway.
C. The Vernon Public Utilities (VPU) Fiber Optic Division is responsible for the design.
construction. installation. and maintenance of the City's network communication
connections using the fiber optic cabling system and infrastructure.
D. The original purpose of the City's Fiber Optic System Network (Network) and
internet service was to supply City-owned facilities with internet service and eventual
upgrades to communications and technology.
E. For that reason, on September 16. 2020. VPU conducted a Rate Restructure Study
("Study") to establish more competitive rates, as seen in the current marketplace. and to
become a more viable option for businesses and residents within the City.
F. The Study concluded that the Fiber Division can remain profitable with the new
proposed rates over the next five years and proposed revised rates would lower
residential rates by 12% and reduce business class rates by 33%-65% depending on
service speed.
NOW. THEREFORE. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
VERNON AS FOLLOWS:
SECTION 2. The City Council of the City of Vernon hereby finds and determines
that the above recitals are true and correct.
SECTION 3. Based on the Study the City Council of the City of Vernon hereby
repeals the existing fiber optic rate schedules and adopts the revised fiber optic rate
schedules for General Services — Dedicated Internet Access (business service). attached
hereto as Exhibit A. and Residential Internet. attached hereto as Exhibit B. effective as of
November 1. 2020.
Resolution No. 2020-35
Page 2 of 14
SECTION 4. The City Council of the City of Vernon hereby further finds and
determines that a reduction in rates to customers will ensure internet service is competitive
while maintaining profitability.
SECTION 5. The City Clerk shall certify the passage and adoption of this
resolution and enter it into the book of original resolutions.
APPROVED AND ADOPTED this 20th d f October. 2020.
L zICIA LOPEZ, Mayor
ATTEST:
Of ad Pox
LISA POPE. City Jerk
(seal)
APPROVED AS T FORM'
NOLD M. ALVAR - ASMAN.
Interim City Attorne
I CERTIFY THAT THE FOREGOING RESOLUTION NO. 2020-35 was passed and adopted by
the City Council of the City of Vernon at the regular meeting on October 20, 2020 by the
following vote:
AYES: 5 Council Members: Davis, Gonzales. Menke, Ybarra, Lopez
NOES: 0
ABSENT: 0
ABSTAIN: 0
Yi it poLc_.
LISA POPE, City Clerk
(seal)
Resolution No.2020-35
Page 3 of 14
EXHIBIT A
Resolution No 2020-35
Page 4 of 14
{of vER�_ CITY OF VERNON
Imit9z. VERNON PUBLIC UTILITIES
FIBER OPTIC DIVISION
too.F
General Service-
Dedicated Internet Access
APPLICABILITY
Applicable to all Dedicated Internet Access provided by the City of Vernon.
TERRITORY
Within the city limits of the City of Vernon.
RATES
Monthly Recurring Charges
RATE SCHEDULE Bandwidth 1 Year Term
(Mbps)
DIA 2 2 Mbp_ S-415 $1001
DIA-5 5 Mbps $775 $2735 4i.:
DIA-10 10 Mbps $975—$490500
DIA-20 20 Mbps $1,725 $875600
DIA-35 35 Mbps $1250
DIA-50 50 Mbps $2,300 $1s.50
DIA-75 75 Mbps $2,100
DIA-100 100 Mbps $2;900-$2,8800
Rate Schedule No. DIA
Rev.6/0920
I of 3
Resolution No.2020-35
Page 5 of 14
Non-recurring Charges
CPE Customer
Installation—One-time Aid- Pi'ovisionin2
RATE SCHEDULE Bandwidth E_juipment:Afte
in-Construction Charges ti+NeOne-time Charge
DIA-5 5 Mbps TBD $975
DIA-10 10 Mbps TBD $975
DIA-20 20 Mbps TBD $975
DIA- Mbps TBD $975
II3D
DI 1f3D
Di - TIM) -;
*Non-recurring charges are waived with initial sign up of(1)year or more. If electing to
begin on a month-to-month contract, construction fees and CPE install charge may
apply. Construction charges will he determined by cost to install, c(:onstruction costs
vary pending location of service.
DARK FIBER LEASE
1. Dark Fiber connections for multi-building businesses or locations are available for
lease. This allows customers to connect multiple locations potentially on one
network or to add service redundancy.
2. Strand lease prices vary depending on distance&routes available between locations
a. Note: The length of strand miles has been rounded to two decimal places
i. (2)Fiber strands x strand miles; $180/mile
ii. (4)Fiber ports costs=$50/port
3. Contract for service terms,duration and conditions is agreed upon by customer and city.
with city council approval.
4. Length of service term promotions are applicable; See section 6 of"Special Conditions"
below.
SERVICES
1. 7 X 24 Toll-free Customer Care Technical Support-(800)949-0103
2. 7 X 24 Network monitoring from Network Operation Center(NOC)
3. Bandwidth utilization reports: upon request, Customer will receive a a-mentlily
report that graphically shows bandwidth usage
in and out of the customer's location.
4. Static IP addresses(/30)is provided to the customer at no charge.
Rate Schedule No. DIA
Rev.6'0920
2 of 3
Resolution No.2020-35
Page 6 of 14
5. Domain Registration
i. Domain Name Reverse DNS Lookup
SPECIAL CONDITIONS
1. COV will provide a CPE device to the Customer's site.
a. The optical link will be terminated/connected in the customer's facility on a COV
owned and managed termination device(CPE)that presents a 10/100 Meg
Ethernet port/handoff to the customer. Fiber Optic type handoff is available upon
request for Dark Fiber connections(SC or LC single mode fiber).
2. COV does not provide any additional LAN/WAN devices such as routers. firewalls or
servers to its business customers.
3. The Customer is responsible for the configuration. operation,and maintenance of its own
LAN/WAN device(s).
4. Customers are responsible for their own web/device anti-virus protection.
5. The network is provided with/30 static IP addresses.
a. Addition static IP block/ranges are available-available per customer request at an
additional monthly charge rate;and pricing is as follows:
Cost Addresses Hosts Netmask Amount of Class C
+=$0 /30 4 2 255.255.255.252 1/64
•
'+$90 /29 8 6 255.255.255.248 1/32
1+$ 190 /28 16 17 255.255.255.240 1/16
*Additional monthly charge rates are added to the services rate schedule month/v cost.
6. Once initial contract term expires.the service will continue as a month to month at the
standard applicable rate for the service plan/tier.
7. Customer is responsible for remaining contract balance if cancellation is requested prior
to initial contract terms end.
CUSTOMER RESPONSIBILITIES
1. At its own expense, prepare its site to comply with COV installation and maintenance
specifications(internal building conduits,construction or building alterations to
accommodate service install). Site visits will be completed with customer by COV
project coordinator prior to scheduling installation to determine potential customer
responsible accommodations.
2. Install, maintain,and pay for cabling that connects the Service to equipment that is not
provided by COV.
3. Maintain equipment space and associated facilities,conduits and rights-of-way for COV
staff,as well as safe places to work. and insure such facilities against fire,theft,
vandalism and other casualty.
4. Be responsible for all damages to COV-provided equipment located on Customer's
premises,excluding reasonable wear and tear and damages caused by COV.
Rate Schedule No. DIA
Rev.6/0920
3 of 3
Resolution No.2020-35
Page 7 of 14
r
CITY OF VERNON
(112471:116A‘
Z
VERNON PUBLIC UTILITIES
FIBER OPTIC DIVISION
General Service - Dedicated Internet Access
APPLICABILITY
Applicable to all Dedicated Internet Access provided by the City of Vernon.
TERRITORY
Within the city limits of the City of Vernon.
RATES
Monthly Recurring Charges
RATE SCHEDULE Bandwidth 1 Year Term
(Mbps)
DIA-5 5 Mbps $275
DIA-10 10 Mbps $490
DIA-20 20 Mbps $600
DIA-35 35 Mbps $1250
DIA-50 50 Mbps $1550
DIA-75 75 Mbps $2,100
DIA-100 100 Mbps $2,800
Non-recurring Charges*
Customer
RATE SCHEDULE Bandwidth Installation—One-time Aid- Provisioning
in-Construction Charges Equipment: One-time
Charge
DIA-5 5 Mbps TBD $975
DIA-10 10 Mbps TBD $975
DIA-20 20 Mbps TBD $975
DIA-35 35 Mbps TBD $975
DIA-50 50 Mbps TBD $975
DIA-75 75 Mbps TBD $975
DIA-100 100 Mbps TBD $975
Rate Schedule No. DIA
Rev. 2 Date 11.01.20
1 of3
Resolution No 2020-35
Page 8 of 14
*Non-recurring charges are waived with initial sign up of(I)year or more. If electing to
begin on a month-to-month contract, construction fees and Customer Provisioning
Equipment install charge may apply. Construction charges will be determined by cost to
install, construction costs vary pending location of service.
DARK FIBER LEASE
1. Dark Fiber connections for multi-building businesses or locations are available for
lease.This allows customers to connect multiple locations potentially on one
network or to add service redundancy.
2. Strand lease prices vary depending on distance&routes available between locations
a. Note: The length of strand miles has been rounded to two decimal places
i. (2)Fiber strands x strand miles; $180/mile
ii. (4)Fiber ports costs=$50/port
3. Contract for service terms,duration and conditions is agreed upon by customer and city,
with city council approval.
4. Length of service term promotions are applicable; See section 6 of"Special Conditions"
below.
SERVICES
1. 7 X 24 Toll-free Customer Care Technical Support-(800)949-0103
2. 7 X 24 Network monitoring from Network Operation Center(NOC)
3. Bandwidth utilization reports: upon request,Customer will receive a report that
graphically shows bandwidth usage in and out of
the customer's location.
4. Static IP addresses(/30)is provided to the customer at no charge.
5. Domain Registration
i. Domain Name Reverse DNS Lookup
SPECIAL CONDITIONS
1. COV will provide Customer Provision Equipment device to the Customer's site.
a. The optical link will be terminated/connected in the customer's facility on a COV
owned and managed termination device(Customer Provisioning Equipment)that
presents a 10/100 Meg Ethernet port/handoff to the customer. Fiber Optic type
handoff is available upon request for Dark Fiber connections(SC or LC single
mode fiber).
2. COV does not provide any additional LAN/WAN devices such as routers,firewalls or
servers to its business customers.
Rate Schedule No.DIA
Rev.2 Date 11.01.20
2 of 3
Resolution No.2020-35
Page 9 of 14
3. The Customer is responsible for the configuration,operation,and maintenance of its own
LAN/WAN device(s).
4. Customers are responsible for their own web/device anti-virus protection.
5. The network is provided with a /30 static IP addresses.
a. Addition static IP block/ranges are available per customer request at an
additional monthly charge rate; pricing is as follows:
Cost Addresses Hosts Netmask Amount of Class C
+$0 /30 4 2 255.255.255.252 1/64
+$90 /29 8 6 255.255.255.248 1/32
+$ 190 /28 16 17 255.255.255.240 1/16
*Additional monthly charge rates are added to the services rate schedule monthly cost.
6. Once initial contract term expires,the service will continue as a month to month at the
standard applicable rate for the service plan/tier.
7. Customer is responsible for remaining contract balance if cancellation is requested prior
to initial contract terms end.
CUSTOMER RESPONSIBILITIES
1. At its own expense,prepare its site to comply with COV installation and maintenance
specifications(internal building conduits,construction or building alterations to
accommodate service install). Site visits will be completed with customer by COV
project coordinator prior to scheduling installation to determine potential customer
responsible accommodations.
2. Install,maintain,and pay for cabling that connects the Service to equipment that is not
provided by COV.
3. Maintain equipment space and associated facilities,conduits and rights-of-way for COV
staff,as well as safe places to work,and insure such facilities against fire,theft,
vandalism and other casualty.
4. Be responsible for all damages to COV-provided equipment located on Customer's
premises,excluding reasonable wear and tear and damages caused by COV.
Rate Schedule No. DIA
Rev.2 Date 11.01.20
3 of 3
Resolution No.2020-35
Page 10 of 14
EXHIBIT B
Resolution No.2020-35
Page 11 of 14
CITY OF VERNON
Pit•
1 1c VERNON PUBLIC UTILITIES
Z
FIBER OPTIC DIVISION
Residential Internet
APPLICABILITY
Applicable to all Residential Internet Access provided by the City of Vernon.
TERRITORY
Within the city limits of the City of Vernon.
RATES
Monthly Recurring Charges
RATE SCHEDULE Bandwidth I Year Term
DIA-20 20 Mbps $35.7710.65
Non-recurring Charges
RATE Installation—One-time Aid-in-
SCHEDULE Bandwidth Construction Charges
DIA-2 20 Mbps $100
SERVICES
-1,7 X 24 Toll-free Customer Care Technical Support-(800)949-0103
1.
2-7 X 24 Network monitoring from Network Operation Center(NOC)
1
3. Bandwidth utilization reports are available upon request,that graphically shows
bandwidth usage in and out of the customer's location.
4. Static IP addresses with up-tea/30 static IP is provided to the customer at no charge.
Rate Schedule No. DIA
Rev. 1 Date 04.16.19
I oft
Resolution No.2020-35
Page 12 of 14
-4 a.Additional static IP's or extended IP range is not a%ailable for residential
customers.
5. Domain Registration
i. Domain Name Reverse DNS Lookup
SPECIAL CONDITIONS
1. Installation time and date will be scheduled with the tenant,upon their availability to
allow for COV staff and contractor access.
2. Service installation may begin up to 14 days after application submittal date
a. -EA minimum of 1 week is needed for design, scheduling,planning and
potential construction if needed)
3. The optical link will be terminated in the customer's facility on a COV owned and
managed termination device(Customer Pi isioninu Equipment)that presents a
10/100 Meg Ethernetport to the customer.
4. COV will provide a Customer Pro\isioninu Equipment device to the Customer's site.
I-
3 .COV will provide a standard Netgear router upon initial service installation. Any
router upgrades or configurations(including wifi extenders,etc.)of customers own
router is the customer/tenantstenant's responsibility.
4:6.The network is provided with static IP addresses,please ask for the details.
r?.Fiber optic division will work with COV Public Works to accommodate location and
modifications for cable entry into locations as best as possible.
CUSTOMER RESPONSIBILITIES
1. Install,maintain,and pay for cabling that connects the Service to equipment that is not
provided by COV,or make request for building accommodation's to COV Public Works.
2. Maintain equipment space and associated facilities,conduits and rights-of-way as safe
places to work,and insure such facilities against fire,theft,vandalism and other casualty.
3. Be responsible for all damages to COV-provided equipment located on Customer's
premises,excluding reasonable wear and tear and damages caused by COV.
a—Tenants are responsible for network and interne security software.
4.
5. One-time construction fee applies to each location,relocation or reconnection after a
previous disconnection request.
676.The Customer is responsible for the configuration. operation. and maintenance of its own
LAN/WAN device(s).
Rate Schedule No.DIA
Rev. I Date 04.16.19
2of2
Resolution No.2020-35
Page 13 of 14
CITY OF VERNON
VERNON PUBLIC UTILITIES
FIBER OPTIC DIVISION
trot `' Residential Internet
APPLICABILITY
Applicable to all Residential Internet Access provided by the City of Vernon.
TERRITORY
Within the city limits of the City of Vernon.
RATES
Monthly Recurring Charges
RATE SCHEDULE Bandwidth I Year Term
DIA-20 20 Mbps $35.77
Non-recurring Charges
RATE Installation—One-time Aid-in-
SCHEDULE Bandwidth Construction Charges
DIA-2 20 Mbps $100
SERVICES
1. 7 X 24 Toll-free Customer Care Technical Support-(800)949-0103
2. 7 X 24 Network monitoring from Network Operation Center(NOC)
3. Bandwidth utilization reports are available upon request. Report graphically shows
bandwidth usage in and out of the customer's location.
4. Static IP addresses with a/30 static IP is provided to the customer at no charge.
a. Additional static In or extended IP range is not available for residential
customers.
5. Domain Registration
i. Domain Name Reverse DNS Lookup
Rate Schedule No. DIA
Rev.2 Date 11.01.20
1 of2
Resolution No.2020-35
Page 14 of 14
SPECIAL CONDITIONS
1. Installation time and date will be scheduled with the tenant,upon their availability to
allow for COV staff and contractor access.
2. Service installation may begin up to 14 days after application submittal date
a. A minimum of 1 week is needed for design,scheduling,planning and
potential construction,if needed
3. The optical link will be terminated in the customer's facility on a COV owned and
managed termination device(Customer Provisioning Equipment)that presents a
10/100 Meg Ethernet port to the customer.
4. COV will provide Customer Provisioning Equipment device to the Customer's site.
5. COV will provide a standard Netgear router upon initial service installation.Any
router upgrades or configurations(including wifi extenders,etc.)of customers own
router is the customer/tenant's responsibility.
6. The network is provided with static IP addresses,please ask for the details.
7. Fiber optic division will work with COV Public Works to accommodate location and
modifications for cable entry into locations as best as possible.
CUSTOMER RESPONSIBILITIES
1. Install,maintain,and pay for cabling that connects the Service to equipment that is not
provided by COV,or make request for building accommodation's to COV Public Works.
2. Maintain equipment space and associated facilities,conduits,and rights-of-way as safe
places to work,and insure such facilities are safe against fire,theft,vandalism and other
casualties.
3. Be responsible for all damages to COV-provided equipment located on Customer's
premises,excluding reasonable wear and tear and damages caused by COV.
4. Tenants are responsible for network and interne security software.
5. One-time construction fee applies to each location,relocation or reconnection after a
previous disconnection request.
6. The Customer is responsible for the configuration,operation,and maintenance of its own
LAN/WAN device(s).
Rate Schedule No.DIA
Rev.2 Date 11.01.20
2 of 2
STAFF REPORT
City Council Agenda Item Report
Agenda Item No. COV-338-2020
Submitted by: Jessica Balandran
Submitting Department: Public Utilities
Meeting Date: October 20, 2020
SUBJECT
Proposed Modification to Reduce Fiber Optic Rates
Recommendation:
Adopt Resolution No. 2020-35 adopting revised fiber optic rate schedules.
Background:
The Vernon Public Utilities (VPU) Fiber Optic Division is responsible for the design, construction,
installation, and maintenance of the City's network communication connections using the fiber optic
cabling system and infrastructure. As a result, VPU is responsible for providing and delivering
high-speed, dedicated intemet access to City of Vernon (City) businesses and residents via secure and
dedicated intemet access (DIA), or point-to-point dark fiber optic services.
The original purpose of the City's Fiber Optic System Network (Network) and intemet service was to
supply City owned facilities with internet service and eventual upgrades to communications and
technology. These services allowed for the introduction of SCADA systems and other advanced
technology to control City facilities, equipment, and communications remotely. The Network is now
heavily relied upon as a communication bridge to monitor and remotely operate the Citys utility services,
traffic signals, and other facilities. Overtime, as the Network proved reliable, the City determined that
VPU should make it available to the City customer base. The City then began offering dedicated intemet
circuits to customers, including individual internet services or dark fiber networks.
In addition to fiber connectivity for City systems, there are 64 customers, which include 18 residential
customers, 14 dark fiber customers, and 32 business customers. VPU offers dedicated business class
internet service with speeds of 1, 2, 5, 10, 20, 50, and 100 megabits per second (Mbps) and a standard
20Mbps for residential class. Internet customers are given symmetrical single mode fiber optic circuits,
resulting in each VPU customer receiving the same upload and download speeds. This is different than
other carriers who provide non-symmetrical circuits, usually with much slower upload speeds compared
to the download speeds. Additionally, if available, dark fiber can be leased in sections to customers to
have secure network connections with multiple facilities or locations around the City.
The current service rates for customers have not been adjusted since the Network services were first
offered to customers. These rates are no longer competitive in the current marketplace. Many City
business customers may select an internet service from a different carrier based on lower prices. For
that reason, VPU has conducted a Rate Restructure Study(Study) (Attachment 2) to establish more
competitive rates, as seen in the current marketplace, to become a more viable option for businesses
and residents within the City. The Study examined all current expenses for the Network and reviewed
costs over the past five years while tracking expenses based on the current operating model, repairs and
maintenance, and capital improvements. The Study compared revenues of the Network, based on
customer billing of all residential, business, and dark fiber customers. Results showed that revenues
exceeded expenditures by more than a 42% margin. The effectiveness of potential new rates was
examined and reviewed to ensure that Internet service would be more competitive with other intemet
providers while maintaining profitability.
The Study reviewed the new VPU Fiber Optic Division's Five-Year Plan, which includes costs for labor,
maintenance, and infrastructure improvements and projects revenues based on a new rate structure. The
Study concluded that the Fiber Division can remain profitable with the new proposed rates over the next
five years. The newly proposed rates would lower residential rates by 12% and reduce the rates for
business customers from 33%-65% depending on service speed.
The Study was completed on September 16, 2020, and included the recommended revised Network
rates. Consistent with the Fiber Optic Rate Restructure Study, staff proposes that the Fiber Optic Rate
Schedule be revised and reduced. Pursuant to Government Code Section 54354.5, the public hearing
notice and proposed ordinance was posted on the City Hall posting board and City website on October
1, 2020 and published in the Los Angeles Wave on October 1 and 8, 2020 (Attachment 3).
Fiscal Impact:
tithe proposed Resolution is adopted, the proposed Fiber Optic rates will change on November 1, 2020.
As concluded by the Study, VPU expenditures for the Network will be balanced by the projected revenue
due to the revised rates for the current fiscal year, as well as, the following years, as part of the VPU
Fiber Optic Division's Five-Year Plan.
Attachments:
1. Resolution No. 2020-35 Fiber Rates
2. Fiber Optic Rate Restructure Study
3. Notice of Public Hearing for Proposed Modification to Reduce Fiber Optic Rates
SUPPORTING DOCUMENTATION
CALIFORNIA NEWSPAPER SERVICE BUREAU
DAILY JOURNAL CORPORATION
Mailing Address r 915 E FIRST ST,LOS ANGELES, CA 90012
Telephone(800)788-7840/Fax (800)464-2839
Visit us @ www.LegalAdstore.com
LISA POPE
CITY OF VERNON CITY CLERK
4305 SANTA FE AVE
VERNON, CA 90058 PRE# 3403300
NOTICE OF CITY COUNCIL PUBLIC HEARING
The City Council of the City of Vernon will
conduct a public hearing,which you may attend.
at Vernon City Hail.City Council Chamber.4305
Santa Fe Avenue. Vernon. CA 90058. on
COPY O F NOTICE Tuesday October as 2 2020 at be a.m.(to as
soon thereafter as the matter can be heard),to
Consider adoption of a resolution approving
revised fiber optic rate schedules.
The proposed resolution wit be available for
public review at Vernon City Hall,4305 Santa Fe
Notice Type: GPN GOUT PUBLIC NOTICE Avenue,Vernon,CA 90058 beginning October 1
or by contacting the City Clerk at
Ad Description 5 r erk@ i vernon.ca.us or 323-583-8811,ext
Notice of Public Hearing-Revised Fiber Optic Rate Schedules Please send your comments or questions to
Abraham Alemu,Public Utilities General Manager
City of Vernon
4To the right is a copyof the noticeyou sent to us forpublication in the (3 35 Santa Fe Avenue,Vernon,CA 900580
g (323) 583-8811 Ext. 250 or
HUNTINGTON PARK BULLETIN.Please read this notice carefully and call us AA iemuKfti.vemon.ca_us
with any corrections.The Proof of Publication will be filed with the County During the heanng. any person interested,
Clerk,if required,and mailed to you after the last date below.Publication inducing all persons owning property in the local
agency,may appear and be heard as to whether
date(s)for this notice is(are): the proposed rates and charges are
discriminatory or excessive. or will not be
10/01/2020, 10/08/2020 sufficient under Government Code Section
54515.or will not comply with any other provision
of this chapter,or will not be sufficient under the
provisions or covenants of any outstanding
revenue bonds of the local agency payable from
the revenues of the enterprise,or on any other
matter relating to said proposed resolution or
ordinance or the rates or charges proposed
An invoice will be sent after the last date of publication If you prepaid this therein.
order in full,you will not receive an invoice. If you challenge the adoption of the
adoption/approval of the resolution revising the
fiber optic rate schedules,you may be limited to
raising only those issues you or someone else
raised at the hearing described in this notice or in
written correspondence delivered to the City of
Vernon at,or prior to,the meeting.
In compliance with the Americans with Disabilities
Act (ADA), if you need special assistance to
participate in the meeting. please contact the
Office of the City Clerk at(323) 583-8811 ext.
546.
The hearing may be continued, adjourned, or
cancelled and rescheduled to a stated time and
place without further notice of a public hearing.
✓
Lisa Pope,City Clerk
10/1.10/8/20
PRE-3403300S
HUNTINGTON PARK BULLETIN
III I II II II II IlIlilIfihlIllUlMhl
* A 0 0 0 0 0 5 5 2 8 2 9 2 *
4 OF vZ4
/i 4305 Santa Fe Avenue
City of Vernon 0c,,,,� �. . Vernon, CA 90058
glp� (323) 583-8811
11
NOTICE OF CITY COUNCIL PUBLIC HEARING
The City Council of the City of Vernon will conduct a public hearing,which you may attend, at Vernon City Hall,City
Council Chamber,4305 Santa Fe Avenue,Vernon,CA 90058,on Tuesday,October 20,2020,at 9:00 a.m.(or as soon
thereafter as the matter can be heard),to:
Consider adoption of a resolution approving revised fiber optic rate schedules.
The proposed resolution will be available for public review at Vernon City Hall, 4305 Santa Fe Avenue, Vernon, CA
90058 beginning October 1 or by contacting the City Clerk at CityClerk@ci.vernon.ca.us or 323-583-8811,ext.546.
Please send your comments or questions to:
Abraham Alemu,Public Utilities General Manager
City of Vernon
4305 Santa Fe Avenue,Vernon,CA 90058
(323)583-8811 Ext.250 or AAlemu@ci.vernon.ca.us
During the hearing,any person interested, including all persons owning property in the local agency,may appear and be
heard as to whether the proposed rates and charges are discriminatory or excessive, or will not be sufficient under
Government Code Section 54515, or will not comply with any other provision of this chapter,or will not be sufficient
under the provisions or covenants of any outstanding revenue bonds of the local agency payable from the revenues of the
enterprise,or on any other matter relating to said proposed resolution or ordinance or the rates or charges proposed therein.
If you challenge the adoption of the adoption/approval of the resolution revising the fiber optic rate schedules, you
may be limited to raising only those issues you or someone else raised at the hearing described in this notice or in written
correspondence delivered to the City of Vernon at,or prior to,the meeting.
In compliance with the Americans with Disabilities Act (ADA), if you need special assistance to participate in the
meeting,please contact the Office of the City Clerk at(323)583-8811 ext. 546.
The hearing may be continued, adjourned, or cancelled and rescheduled to a stated time and place without further
notice of a public hearing.
C A9C-
Lisa Pope,City Clerk
Posted: October 1,2020
Published:October 1 and October 8,2020
4\j\jCJ 14
.VP
1 7'41 1 , -% 4,
<,c ls.
Fiber Optic System
Rate Restructure Study
September 2020
TABLE OF CONTENTS
Background 3
Why VPU Internet Services 4
Operating Expenses 5
Annual Expense Breakdown 5
Customer Summary 6
Business 6
Dark Fiber 8
Residential 9
Revenue Comparison 10
Billing Revenue Break Down by Service 10
Historical Expense and Revenue Comparison 10
Rate Restructure 11
Billing Revenue Break Down by Service for Proposed New Rate Structure 12
RATES 13
Proposed 5 Year Financial Plan 14
Capital Infrastructure Planned Improvements 14
Residential Rate Pricing VS. Business Rate Pricing 15
Conclusion 16
2
BACKGROUND
Vernon Public Utilities (VPU) is responsible for providing and delivering high-speed dedicated
internet access to both businesses and residents. This is done via secure and dedicated internet
access (DIA) and/or point-to-point dark fiber optic services to businesses and residents in the City
of Vernon (COV). Internet customers are given symmetrical single mode fiber optic circuits,
meaning that each VPU customer receives the same upload and download speeds, while other
carriers provide non-symmetrical circuits, usually with much slower upload speeds compared to the
download speeds. Dark fiber customers lease sections of available COV fiber optic backbone to
have secure network connections to/with multiple facilities or locations around the city. The Fiber
Optic Division is responsible for the design, construction, installation and maintenance of the City's
facilities area network communication connections with the use of the fiber optic cabling system
and infrastructure.
Over the years, Vernon's fiber optics backbone network has been constructed across and around
the City. Most of the network was installed in the 1990's and early 2000's. Only a few areas within
the city limits have limited accessibility to the fiber optic backbone. Supplying service in such areas
is not impossible, but circuits would need to be extended and constructed in some cases upon a
customer's signed service request.
Early on the primary purpose for Fiber optic network and internet source was to supply the city
owned facilities with internet and eventual upgrades for communications and technology. This
eventually allowed for the introduction of SCADA systems and technology to be installed and
advancement in the operational ability and remotely control city facilities, equipment and
communications. The fiber optic network is now used heavily as a communication bridge for
monitoring and remotely operating the city's electric, water, natural gas, traffic signals and more.
In addition to the city provided services and added capabilities, with the backbone system running
throughout the city, it was eventually determined to open up the fiber optic network to the
customer base and provide an internet service option to customers. The city began offering
dedicated internet circuits to customers, including dark fiber networks or individual internet
services. Dark fiber was a way for the city to utilize existing infrastructure not being utilized in the
288 and 96 count fibers throughout the city, allowing for customer to apply for one internet service
into a main location; then lease fiber optic strands and have designated routes between multiple
buildings a business may have or own. Thus, giving them interconnectivity between their different
locations within the city limits on a private/protected network. For example, large industrial
customers with multiple buildings throughout the City have dark fiber loops between their
multiple/different locations, allowing them to all run on the same network and communications
systems.
Currently the City's Fiber system can be summarized as shown below:
• (64) Total Customers
• (18) Residential Customers, (14) Dark Fiber, (32) Business
• Dedicated Internet speeds offered: 1, 2, 5, 10, 20, 50, 100Mbps
• All internet provided is premium dedicated business class service
• Provides connectivity for SCADA, Utility infrastructure and operations controls
3
Why VPU Internet Services
VPU offers a faster more reliable network service. VPU service line is a fiber optic cable while other
providers use copper cable in many service areas, which is slower and less reliable. VPU offers
faster response times from local staff, with high quality customer service as a focus. Vernon offers
over 98% reliability for service signal. See below report from Fujitsu, our network monitoring
services provider:
Availability Statistics
AVAILABILITY
Toda, 100.000%
Yesterday 100.000%
Last 7 Days 100.000%
Last 30 Days 99 918%
Trl.s Month 100.000 y:
Las:MorKh 99919%
'n s Year 99 351%
Our 20Mbps is a business class line while other providers use a residential service. Our 20Mbps is
comparable to 100-200Mbps shared internet service. VPU offers a dedicated service line while
other provides offer a shared service. A shared internet connection means that all bandwidth is split
among all users and devices. A dedicated internet connection is a connection that is dedicated to
one user. There is no sharing bandwidth among users and devices; each user has their own portion
of bandwidth dedicated solely to themselves.
Dedicated Shared
*Bandwidth not
guaranteed
-uitomer A
° a o !
4
OPERATING EXPENSES
Vernon Public Utilities currently has two sources of incoming internet/fiber, one feed from
Broadband and the other feed coming from Century Link (Level 3). VPU also has a current contract
with Fujitsu for equipment services and maintenance.
A summary of current contracts and vendors is shown below:
Fiber Optic Vendor Contracts
Vendor Start Expiration Eden# Contract Services
Value
Broadband 3/1/2019 2/28/2022 LP-0451 $130,000 Upstream Internet Access Service
Level Agreement
Century Link 9/25/2018 9/24/2021 LP-0435 $150,000 Upstream Internet Access Service
(Level 3) Level Agreement
Equipment Services Agreement for
Fujitsu Network Fiber Optic system and maintenance
11/7/2017 11/6/2020 LP-0370 $350,000
Communications support for devices and sites
indicated on agreement
Fujitsu Network 11/21/2018 n/a LP-0443 $20,000
Network Connection Equipment
Communications with service
Annual Expense Breakdown
In addition to current contracts, fiber optics annual expenses also include labor, maintenance, and
infrastructure improvements. A breakdown of operating expenses over the last four years are
shown below:
Expense 2016 2017 2018 2019
Broadband & Century Link $96,606.98 $105,900.02 $111,050.99 $95,236.78
Fujitsu Network Communications $123,255.13 $90,398.32 $90,907.00 $90,907.00
Labor and Operating Charges $89,125.99 $77,083.46 $130,595.35 $154,191.60
Repairs and Maintenance $567.00 $5,603.05 $0.00 $10,610.55
Capital Overlay- Infrastructure
Improvements $59,803.96 $8,343.73 $26,860.05 $57,760.58
Total $369,359.06 $287,328.58 $359,413.39 $408,706.51
5
CUSTOMER SUMMARY
Business
Current pricing structure and services for business customers are:
Monthly Recurring Charges
RATE
SCHEDULE Bandwidth 1 Year Term
DIA-1 1 Mbps $255
DIA-2 2 Mbps $415
DIA-5 5 Mbps $775
DIA-10 10 Mbps $975
DIA-20 20 Mbps $1,725
DIA-50 50 Mbps $2,300
DIA-100 100 Mbps $2,900
Non-recurring Charges
RATE Bandwidth Installation—One-time Aid-in- CPE* -One-time
SCHEDULE Construction Charges Charge (Waived)
DIA-2 2 Mbps 50% $975
DIA-5 5 Mbps 50% $975
DIA-10 10 Mbps TBD $975
DIA-20 20 Mbps TBD $975
DIA-50 50 Mbps TBD $975
*CPE= Customer Provisioning Equipment
6
A list of current business customers and revue generated from customer billing is summarized
below:
BUISNESS INTERNET CUSTOMERS
Company Name Service Address Speed Monthly Fee Annually
1 Business Customer On File 100 $2,900.00 _ $34,800.00
2 Business Customer On File 50 $2,300.00 $27,600.00
3 Business Customer On File 50 $2,300.00 $27,600.00
4 Business Customer On File ' 10 $975.00 $11,700.00
5 Business Customer On File _ 50 $2,300.00 $27,600.00
6 Business Customer On File 100 $2,900.00 $34,800.00
7 _Business Customer On File 50 $2,300.00 $27,600.00
8 Business Customer On File 20 $1,725.00 $20,700.00
9 Business Customer On File 50 $2,300.00 $27,600.00
10 Business Customer On File 10 $975.00 $11,700.00
11 Business Customer On File 10 $975.00 $11,700.00
12 Business Customer On File 10 $975.00 $11,700.00
13 Business Customer On File 10 $975.00 $11,700.00
14 Business Customer On File 10 $975.00 $11,700.00
15 Business Customer On File 5 $775.00 $9,300.00
16 Business Customer On File 5 $775.00 $9,300.00
17 Business Customer On File 5 $775.00 $9,300.00
18 Business Customer On File 5 $775.00 $9,300.00
19 Business Customer On File 2 $415.00 $4,980.00
20 Business Customer On File 2 $415.00 $4,980.00
21 Business Customer On File 2 $415.00 $4,980.00
22 Business Customer On File 2 $415.00 $4,980.00
23 Business Customer On File 2 $415.00 $4,980.00
24 Business Customer On File 1 $255.00 $3,060.00
25 Business Customer On File 1 $255.00 $3,060.00
26 Business Customer On File 1 $255.00 $3,060.00
27 Business Customer On File 20 $1,725.00 $20,700.00
28 Business Customer On File 2 $415.00 $4,980.00
29 Business Customer On File 5 $775.00 $9,300.00
30 Business Customer On File 5 $775.00 $9,300.00
31 Business Customer On File 1 $150.00 $1,800.00
32 Business Customer On File 50 $1,900.00 $22,800.00
$36,555.00 $438,660.00
7
Dark Fiber
Dark fiber customers enter into individual agreements with the City and billing is based off of
number and length of fiber circuits utilized to provide service. A list of current dark fiber customers
and revue generated from customer billing is summarized below:
DARK FIBER CUSTOMERS
Customer Name Service Address Annual Fee
1 Business Customer On File $8,923.20
2 Business Customer On File $12,811.20
3 Business Customer On File $10,262.40
4 Business Customer On File $17,184.00
5 Business Customer On File $9,600.00
6 Business Customer On File $6,074.40
7 Business Customer On File $4,560.00
8 Business Customer On File $15,792.00
9 Business Customer On File $7,368.00
10 Business Customer On File $52,200.00
11 Business Customer On File $4,800.00
12 Business Customer On File $9,720.00
13 Business Customer On File $10,800.00
14 Business Customer On File $2,400.00
$172,495.20
8
Residential
Current pricing structure and services for Residential Customers are:
Monthly Recurring
Charges
RATE SCHEDULE Bandwidth 1 Year Term
•
DIA-20 20 Mbps $40.65
Non-recurring Charges
RATE SCHEDULE Bandwidth Installation-One-time Aid-in-
Construction Charges
DIA-2 20 Mbps $100
A list of current residential customers and revue generated from customer billing is summarized
below:
RESIDENTIAL INTERNET CUSTOMERS
Customer Service Address Monthly Fee Annual Total
1 Residential Customer On File $40.65 $487.80
2 Residential Customer On File $40.65 $487.80
3 Residential Customer On File $40.65 $487.80
4 Residential Customer On File $40.65 $487.80
5 Residential Customer On File $40.65 $487.80
6 Residential Customer On File $40.65 $487.80
7 Residential Customer On File $40.65 $487.80
8 Residential Customer On File $40.65 $487.80
9 Residential Customer On File $40.65 $487.80
10 Residential Customer On File $40.65 $487.80
11 Residential Customer On File $40.65 $487.80
12 Residential Customer On File $40.65 $487.80
13 Residential Customer On File $40.65 $487.80
14 Residential Customer On File $40.65 $487.80
15 Residential Customer On File $40.65 $487.80
16 Residential Customer On File $40.65 $487.80
17 Residential Customer On File $40.65 $487.80
18 Residential Customer On File $40.65 $487.80
$569.10 $8,780.40
Council Member(s) Reimbursement -$203.25
$8,577.15
9
Revenue Comparison
The below summary shows a monthly and annual breakdown of the calculated revenue by
customer type. This is calculated by monthly fee in accordance to the service size of the individual
customers. Dark Fiber customers pay a quarterly fee in addition to the monthly fees.
#of Customers Monthly Revenue Quarterly Revenue Annual Total
BUISNESS INTERNET
CUSTOMERS 32 $ 36,555.00 $ 439,920.00
DARK FIBER $
CUSTOMERS 14 $ 7,714.60 23,143.80 $ 172,495.20
RESIDENTIAL INTERNET
CUSTOMERS 18 $ 569.10 $ 8,577.15
64 $ 39,098.70 $ 620,992.35
Billing Revenue Break Down by Service
Number of Customers Speed/Service Yearly Revenue
18 Residential $8,577.15
14 Dark Fiber $172,495.20
2 100 Mbps $69,600.00
6 50 Mbps $160,800.00
2 20 Mbps $41,400.00
6 10 Mbps $70,200.00
6 5 Mbps $55,800.00
6 2 Mbps $29,880.00
4 1 Mbps $12,240.00
Total 64 $620,992.35
Historical Expense and Revenue Comparison
The below summary shows a comparison of expenses to revenues over the last 5 years. The table
shows that revenues typically come in about 58% higher than expenses. Conclusion can be made
that the rates can be significantly reduced, to become more competitive, and the fiber system can
remain profitable.
Expenses Revenues
2016 $369,359.06 $487,230.20
2017 $287,328.58 $483,128.27
2018 $359,413.39 $638,873.45
2019 $408,706.51 $650,954.47
Est. 2020 $423,084.00 $673,084.00
10
RATE RESTRUCTURE
To become more competitive with other internet service providers, and to provide a more
economical rate for our customers a new rate structure is being proposed. This rate structure will
focus the biggest reductions in the business class rate, particularly in the 5-20Mbps rate, which is
currently the most popular rate and used by small-medium size business customers. The 5-20Mbps
plans are also the plans that receive the most inquiries for potential new customers from customer
service. We will also remove the option to provide service at 1 and 2 Mbps as these speeds are now
obsolete. Existing 1 and 2 Mbps customers will be grandfathered in at existing rate or will have the
opportunity to move up to a new rate. Dark fiber rates will remain the same as they are individually
calculated on a per customer basis due to type and length of fiber service. Residential rates will be
lowered 12% for a new flat rate of$35.77 and all residential speeds will be provided at 20 Mbps.
The new residential rate of$35.77 is lower than AT&T base rate of$39.99 offered in similar areas.
The table below shows the current Fiber business rates based on speed and the number of
customers in orange. The blue column shows the rates of our competitor AT&T, and the green
column is the proposed new rate for business customers. It should be noted when comparing AT&T
and VPU services, the speed is not always a good indicator as AT&T speeds are shared across other
customers while VPU services are dedicated services. Also, VPU services are fed with fiber optic
lines while AT&T uses lower quality copper cable for some services. This results in faster and more
reliable service for the VPU customer even if the service speeds are labeled as the same.
The goal of this restructure was to get rates as close to the AT&T rates but still maintain an average
annual revenue of at least $450,000 to support ongoing operations and capital expenses, assuming
the same number of customers. The rate of 100Mbps is reduced by only a small margin of 4% as
this rate is difficult to compete with AT&T, and this speed is typically used by large customers that
opt to pay the cost for the added benefit of the more reliable VPU service. The rates for 50Mbps
though 5 Mbps all receive reductions of 33% all the way up to 65% percent to become more
competitive. Two new rates have been added at 35Mbps and 75Mbps to a bridge between rates
for business customers that want to upgrade but cannot commit to the full next tier.
#of VPU
Speed Current Proposed o
(Mbps) Customers VPU AT&T VPU / Reduction
100 2 $2,900 $1,160 $2,800 4%
75 - - n/a $2,100 n/a
50 6 $2,300 $887 $1,550 33%
35 - - n/a $1,250 n/a
20 2 $1,725 $639 $600 65%
10 6 - $975 $614 $490 50%
5 5 $775 $310 $275 65%
11
Billing Revenue Break Down by Service for Proposed New Rate Structure
Number of Customers Speed /Service Yearly Revenue
18 Residential $7,547.89
14 Dark Fiber $172,495.20
2 100 Mbps $67,200.00
6 50 Mbps $111,600.00
2 20 Mbps $14,400.00
6 10 Mbps $35,280.00
6 5 Mbps $19,800.00
6 2 Mbps $29,880.00
4 1 Mbps $12,240.00
Total 64 $458,203.09
• Average Annual Revenue under current rate structure $ 620,992.35
• Average Annual Revenue under this Proposed rate structure $458,203.09
• Proposed revenue adjustment -26.2%
• Assumes no change in the number of customers annually
• Annual revenue will still be more that average annual expenses
• Rates to be reevaluated every 3 years to coincide with Vendor contract cycles
12
The proposed business rate structure will be reflected in the rate sheets as follows:
RATES
Monthly Recurring Charges
RATE SCHEDULE Bandwidth 1 Year Term
(Mbps)
DIA-5 5 Mbps $275
DIA-10 10 Mbps $490
DIA-20 20 Mbps $600
DIA-35 35 Mbps $1250
DIA-50 50 Mbps $1550
DIA-75 75 Mbps $2,100
DIA-100 100 Mbps $2,800
Non-recurring Charges*
RATE Installation—One-time Aid- Customer Provisioning
Bandwidth
SCHEDULE in-Construction Charges Equipment: One-time Charge
DIA-5 5 Mbps TBD $975
DIA-10 10 Mbps TBD $975
DIA-20 20 Mbps TBD $975
DIA-35 35 Mbps TBD $975
DIA-50 50 Mbps TBD $975
DIA-75 75 Mbps TBD $975
DIA-100 100 Mbps TBD $975
*Non-recurring charges are waived with initial sign up of(1) year or more. If electing to
begin on a month-to-month contract, construction fees and CPE install charge may apply.
Construction charges will be determined by cost to install, construction costs vary pending
location of service.
13
PROPOSED 5 YEAR FINANCIAL PLAN
Expense 2021 2022 2023 2024 2025
Broadband & Century Link $102,000.00 $105,060.00 $108,211.80 $111,458.15 $114,801.90
Fujitsu Network Communications $91,000.00 $92,820.00 $95,604.60 $98,472.74 $101,426.92
Labor and Operating Charges $125,000.00 $128,750.00 $132,612.50 $136,590.88 $140,688.60
Repairs and Maintenance $5,000.00 $5,150.00 $5,304.50 $5,463.64 $5,627.54
Capital Overlay - Infrastructure
Improvements $58,000.00 $106,000.00 $108,000.00 $103,000.00 $75,000.00
Total $381,000.00 $437,780.00 $449,733.40 $454,985.40 $437,544.96
VS. Projected revenue from New
Rate Structure $458,203.09 $458,203.09 $458,203.09 $458,203.09 $458,203.09
Note:assumes no growth in number of customers
Net position $77,203.09 $20,423.09 $8,469.69 $3,217.69 $20,658.13
17% 4% 2% 1% 5%
Capital Infrastructure Planned Improvements
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
City Hall - 390 Cisco Back up $27,000.00
Leonis Transformer Upgrades $10,000.00
CPE equipment - RAD unit replacements $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00
New Patch Panels $25,000.00 $25,000.00
PW Residential Upgrades $23,000.00
Fruitland House remodel $1,000.00
Splice Enclosure Replacements $8,000.00 $8,000.00 $8,000.00
Cable Replacements $25,000.00 $25,000.00
Malburg Way Expansion Upgrades $30,000.00 $30,000.00
Fiber Strand Tracking Software $30,000.00
Distribution System /Scada Equipment $25,000.00 $50,000.00
Capital Total $58,000.00 $106,000.00 $108,000.00 $103,000.00 $75,000.00
Note: reimbursable projects, including water projects and new customers are not included
14
RESIDENTIAL RATE PRICING VS. BUSINESS RATE PRICING
The biggest difference between our Residential and Business rate pricing is based on requirements
for infrastructure. Business customers utilize and consume more of our infrastructure in regards to
fiber strand footage. Customer circuit length can vary from 1000's of feet to 15,000 feet depending
on geographic location at path. The average installation cost for new business customer is between
$5,000-$12,000. This is due to new distribution cable & service drop delivery. This includes 12 or 24
count fiber cable from the nearest overhead splice enclosure, new customer patch panel, necessary
circuit terminations and splicing. Most business customers sign up to a minimum one-year term,
thus avoiding upfront constructions costs. In these cases, VPU will take 1-3 years to recoup
construction costs.
Majority of the time, residential customers do not require upfront construction. This makes
installations much easier and quicker. Residential customers do not get the industrial style
Customer Provisioning Equipment, they get a smaller unit and a router. Typical residential
installations require about 1-2 hours of labor, and a router averaging a cost of$150-$300.
Typical installation costs are shown below:
Business Customers
Customer Name Address Work Order Cost
New Business Customer On File $8,884.50
New Business Customer On File $7,172.83
New Business Customer On File $11,882.58
Residential Customers
Customer Name Address Work Order Cost
New Residential Customer On File $263.30
New Residential Customer On File $230.64
15
CONCLUSION
The proposed rate restructure will keep rates closer and become more competitive with AT&T while
still maintaining an annual average revenue to keep the Fiber system profitable. This will provide
added value to existing customers and become a more viable option for new customers creating an
opportunity for customer growth. Once new rates are effective, VPU can promote the service as
new customers come into the City and make sure existing electric, gas, and water customers are
aware of new rate options. The rate sheets have been adjusted on the following pages along with
new polices and conditions for customer services.
The table above shows the Fiber Optic Division 5-year plan for expenses and compares to the
annual revenue from the new rate restructure. Again, this is based on no new customers added,
but still shows that the Fiber division will still remain profitable under the new rate schedule.
16