1a KMC Agreement
CITY OF
CHANHASSEN
City Ctnltr Drivt, PO Box /47
an"""en, Min7ll1Of455317
Pho7ll612.937.1900
;enmú Fax 612.937.5739
~7Ilmng Fax 612.937.9152
lie Safety Fax 612.934.2524
·b www.ci.ehanhll!Jen.mn.us
.L-
MEMORANDUM
TO:
Mayor
City Council
Todd Gerhard, t, Assistant City M~n ~
Bruce Dejong, Finance Director -
Richard Rice, MIS Coordinator
,
April 25, 2000
FROM:
DATE:
SUBJECT:
KMC Agreement Discussion
The voice and data telecommunications market is currently in a state of flux. A
variety of new technologies such as fiber optic cable, coaxial cable (like cable
TV), and wireless or radio based networks are being implemented around the
Twin Cities metro area to compete v,rith the existing copper wire telephone
network. City ofChanhassen staff have been asked to evaluate a proposal by
KMC Telecom to provide voice and data service to the city. This will connect
City Hall, Public Works, and the Recreation Center with fiber optic cable for data
transmission and connect City Hall to KMC's network for telephone service.
The KMC proposal allows for a 15% reduction in phone charges compared to the
existing US West r~e structure. KMC will also provide the fiber and equipment
to connect three buildings for a fee of $6,000, which was negotiated down from
the initial proposal of $65,000.
The current cost of our data communications between buildings is about $10,600
per year as is shown on the attached charts. By accepting the KMC proposal we
.canJ;iliminatethatanmu,1 cost and speed I!P the data transfer rates substantially.
To hook up the data network inside our buildings after KMC runs the outside '
connections, we need about $6,500 in additional equipment. The net effect is that
the city makes a $12,500 one-time payment to save $10,600 annually.
We are also guaranteed to save at least 15% compared to US West rates for our
telephone bills. That currently amounts to about $600 savings per month ($7,200
annually). KMC began providing that discount when they were appointed as our
agent last year in anticiþation of the city signing this agreement.
CitIJ o(Chanha.f.fP.t!. A t1'7'ttlllinu rnmmutl;f'IIlIIitJ, rlMtI 'l1bÞC /I1111/i"l {rh"n/r 11 rl",rmi"fT A(llI",tll1lm thr;,,;nfT IJlJri"prr,r AnA ¡?I'm''';!;J! lInrb( A m'Mf 11111'"' tn /i." WilT , n"rl nllt..,
KMC Agreement Discussion
April 25, 2000
Page 2
The question before the City Council comes down to this - is the KMC agreement
in the best interest of the city at this time? The possibility that a cheaper
competitor for phone service will come at some time during the five-year period is
undoubtedly correct. However, the total package should be examined. '
The costs can be evaluated in the following manner:
Potential
Existing Proposed 25% Savings
US West KMC vs. US West
Data $10,600 $0 $7,950
Voice 48,000 40,800 36,000
Total $58,600 $40,800 $43,950
Five-Year Cost $293,000 $204,000 $219,750
Installation 0 12,500 ??
Five-Year Total $293,000 $216,500 $219,750
City staff has been unable to find another currently available competitor that can
provide the same level of data communication between the city buildings. Even if
a competitor could be found for a 25% savings, the KMC proposal is better for the
city over the full five-year agreement.
The potential hookup of phone lines to Public Works and the Recreation Center is
not contemplated in this analysis, but Voice over IP (IntemetProtocol) is the
newest technology in that market. Each phone would use about 25 KB of
bandwidth, requiring about 400 KB in total. This would use about 25% of a T -1 .
(1,544 KB), which is probably the fastest speed available fì:om US West for a
reasonable cost, or 0.4% of the I GB (1,000,000 KB) available from KMC.
Clearly there is more capacity to do this over the KMC connection than other
available options.
We will be attending the meeting to discuss this analysis with the City Council
and provide further information.
attachments
CITY OF
CHANHASSEN
}ty Center Drive, PO Box 147
mhassen, Minnesolil 55317
Phone 612.937.1900
'eneral Fax 612,937.5739
ineering Fax 612.937.9152
iie Sajèty Fax 612.934.2524
b www.ci.chanhassen.mn.us
MEMORANDUM
TO:
Scott Botcher, City Manager
Todd Gerhardt, Assistant City ManageW
April 27, 2000
FROM:
DATE:
SUBJ:
Updated KMC Agreement
Attached please find the proposed updated Agreement with KMC for Local and
Long Distance Services. The Agreement outlines KMC's commitment to the City
to provide fiber installation and local and long distance services in exchange for
an exclusive 5-year contract and a $6,000 fee.
g:\user\scotlb\capilal plan I.doc!
;itv ofCbauhasseu, A l[I'owinf eommunitv witb clefl/1 lakes, auafin'sehools, a ehamÚI1!! downtowu, ¡briviuf businesses, and beauti{ùl parks, A freat place to live, work. and piAy,
November 24,1999
Mr. Scott A. Botcher, City Manager
City of Chanhassen
690 City Center Drive
Chanhassen, MN 55317
Re: Agreement with KMC for Local and Long Distance Services
Dear Mr. Botcher:
This Agreement outlines KMC Telecom's commitment to the City ofChanhassen
in providing a fiber installation by KMC and the conversion of the City of
Chanhassen's local and long distance services.
KMC will provide the following to the City of Chanhassen in exchange for an
exclusive five-year Term Plan Agreement for Local and Long Distance Services
utilized by all city locations and a one-time fee of $6,000:
1. The fiber laterals containing four fiber sttands from the KMC backbone to
the KMC demarcation point inside the building to the following three
locations: City Hall, Public Works, and Recreation Center under the
following conditions:
a. Allow KMC to utilize existing conduit to enter the City Hall
facility.
b. City of Chanhassen will ttench and restore the ground itself in
order to allow KMC to lay cable to the Public Works facility.
c. Allow KMC to trench and restore the ground up to the Recreation
Center facility.
d. Allow KMC to utilize existing conduit into the Recreation Center
facility.
2. The electtonics at City Hall used to connect to the KMC network that
will deliver long distance and local services.
Agreement with KMC
November 24, 1999
Page 2
3. KMC wiJI maintain a discount of 15% off US West current pricing for the duration of the
agreement on both local and long distance services.
4. KMC wiJI maintain the backbone of the city network pursuant to Article 15 of the
Encroachment Agreement (voluntary contributions). Lateral portions of the city network
wiJI fall under the same Article 15 Encroachment Agreement with one exception-if the
city were to terminate the relationship with KMC, lateral maintenance would be biJIed on
a time and material basis not to exceed $50 hour, or if the city decides to maintain the
lateral lines themselves.
5. KMC wiJI allow the City ofChanhassen to terminate this Letter of Understanding for
cause if written notice specifying the cause for termination and requesting correction
within 60 days is given to KMC and such cause is not corrected within such 60-day
period. Cause is any material breach of the terms of this Agreement.
6. On an annual basis, the City may provide KMC a market price and technology analysis of
comparable services. If it is determined that technology and/or the effective market rates
have sufficiently changed by 5% or greater, KMC wiJI enter into good faith negotiations
with the City to revise the terms of the agreement.
KMC Telecom, Inc.
City of Chanhassen
Name
Name
Title
Date
Title
Date
Attachments:
Encroach Agreement
Building Entry Agreements
Letter of Agency
KMC Contract
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