3/10/10 1 TelCove and Verizon Contract Extensions


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

3/10/10 1 TelCove and Verizon Contract Extensions

  1. 1. TelCove and Verizon Contract Extensions Charles Strubel, Jr. Director of Commonwealth Telecommunications <ul><li>Commonwealth of Pennsylvania </li></ul><ul><li>Office for Information Technology </li></ul>
  2. 2. TelCove and Verizon Contract Extensions <ul><li>1. TelCove Contract Extension </li></ul><ul><ul><li>a. Background and Rationale </li></ul></ul><ul><ul><li>b. TelCove Extension Decision Criteria </li></ul></ul><ul><ul><ul><li>Financial Options </li></ul></ul></ul><ul><ul><ul><li>Service Reliability </li></ul></ul></ul><ul><ul><ul><li>Corporate Viability </li></ul></ul></ul><ul><ul><ul><li>New Technologies </li></ul></ul></ul><ul><ul><li>c. TelCove Extension Highlights </li></ul></ul><ul><li>2. Verizon Extension Highlights </li></ul>
  3. 3. <ul><li>TelCove Savings to the Commonwealth: Approximately $32 million </li></ul><ul><li>Agency Direct Benefits: </li></ul><ul><ul><li>Immediate reductions in long distance </li></ul></ul><ul><ul><li>Better service order and trouble ticket Service Level Agreements </li></ul></ul><ul><ul><li>NT1 ownership at end of contract </li></ul></ul><ul><ul><li>Reduced TSP rates and </li></ul></ul><ul><ul><li>Participation in VoIP and wireless technologies </li></ul></ul>TelCove Extension Summary
  4. 4. TelCove Extension Highlights - Summary <ul><li>Current </li></ul><ul><li>Commonwealth / TelCove has been a Positive Relationship </li></ul><ul><li>82% Satisfactory Rating. Issues primarily at remote sites, </li></ul><ul><li>now covered by SLAs </li></ul><ul><li>Commitment to Quality Services (Help desk calls down by 1/3 in past year) </li></ul><ul><li>Reliable Services – Voice and data troubles below pre-transition levels </li></ul><ul><li>Guaranteed best pricing statement from TelCove </li></ul><ul><li>Bandwidth availability unimaginable 7 years ago </li></ul><ul><li>Future </li></ul><ul><li>Expand the reach of the network through enhanced services & new </li></ul><ul><li>technologies </li></ul><ul><li>Continue with low pricing and add new services at mutually agreed upon pricing </li></ul><ul><li>Continued commitment to quality </li></ul>
  5. 5. <ul><li>Provide the Commonwealth with an opportunity to build a strategic </li></ul><ul><li>infrastructure plan to maximize the opportunity to evaluate new </li></ul><ul><li>technologies </li></ul><ul><li>Given the uncertainty in the regulatory environment with respect to </li></ul><ul><li>UNE rates, this extension will afford the Commonwealth protection </li></ul><ul><li>from access cost increases </li></ul><ul><li>Keep the Commonwealth moving forward with technology </li></ul><ul><li>Continue to provide cost effective, quality telecommunications </li></ul><ul><li>services </li></ul>TelCove: Background and Rationale
  6. 6. <ul><li>Through a benchmarking analysis conducted against </li></ul><ul><li>telecommunications carriers’ usage rates from two similar-sized </li></ul><ul><li>states, it was determined that the Commonwealth’s current rates are </li></ul><ul><li>very low in comparison to the market </li></ul><ul><li>Type 1 building status committed to significant enhancements to </li></ul><ul><li>the public network infrastructure (Two or three buildings per month) </li></ul><ul><li>Provide the Commonwealth with a perpetual license for the ISS, the </li></ul><ul><li>ordering and invoicing system at the expiration/termination of the </li></ul><ul><li>Contract extension </li></ul>TelCove: Background and Rationale
  7. 7. TelCove Criteria # 1: Financial Options <ul><li>Considered the Total Cost of Ownership for 3 options: </li></ul><ul><ul><li>Status quo – current contract rates extended out to 2008 </li></ul></ul><ul><ul><ul><li>Issue RFP in 2005 with the risks of higher contract rates and transition costs during economic downturn. </li></ul></ul></ul><ul><ul><li>2. Extension – 5-year extension through 2011 with TelCove </li></ul></ul><ul><li>Compared to status quo and (3) new contract, the extension is preferable: </li></ul><ul><ul><li>5-year extension offer versus 2 year extension = $ 1.89M / yr. savings </li></ul></ul><ul><ul><li>5-year extension offer verses new contract = $ 4.78M / yr. Savings </li></ul></ul><ul><li>Final Agreement: 5-year extension expiring on February 18, 2011 </li></ul>
  8. 8. TelCove Criteria # 2: Service Reliability <ul><ul><li>Customer Satisfaction Survey – June 30, 2004: </li></ul></ul><ul><ul><li>81.5 % satisfaction rate reported from 33 state agencies </li></ul></ul><ul><ul><li>Type 4 and 5 issues (Remote sites) Primary Concern </li></ul></ul><ul><ul><ul><ul><li>Customer Service/Installations – </li></ul></ul></ul></ul><ul><ul><ul><ul><li>issues with installations and poor service </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Quality – Future Decline in customer satisfaction addressed in extension through better SLAs </li></ul></ul></ul></ul><ul><ul><li>Agencies without remote offices are satisfied </li></ul></ul>
  9. 9. TelCove and Verizon Contract Extensions <ul><ul><li>Trouble Ticket History March 2004 February 2005 </li></ul></ul><ul><ul><li>Data Actual Troubles 76 48 </li></ul></ul><ul><ul><li>Non-Data (Voice, video, access) 645 264 </li></ul></ul><ul><ul><li>(Does not include administrative trouble tickets, </li></ul></ul><ul><ul><li>such as password resets, billing and service order queries) </li></ul></ul><ul><ul><li>Service Order History March 2004 February 2005 </li></ul></ul><ul><ul><li>Total Orders Issued 1959 1689 </li></ul></ul><ul><ul><li>% completed within standard interval 86.8% 96.3% </li></ul></ul><ul><ul><li>TelCove Service Level Agreements (SLAs) Since July, 2003 </li></ul></ul><ul><ul><li>$ 63,115 in credits have been provided to agencies and the enterprise for missed intervals & outages </li></ul></ul>TelCove Criteria # 2: Service Reliability
  10. 10. TelCove Criteria # 3: Corporate Viability <ul><li>Bay Harbour Management L.C. is the current investor that controls TelCove. Committed to providing cash infusions if needed. </li></ul><ul><li>Commonwealth accounts for approximately 20% of TelCove’s business (An asset and a challenge). </li></ul><ul><ul><li>Asset as we were able to secure concessions probably not possible from a larger competitors. </li></ul></ul><ul><ul><li>A challenge and a potential asset: </li></ul></ul><ul><ul><ul><li>Should TelCove be sold or should Bay Harbour initiate a Incentive Stock Option (ISO), Commonwealth contract could become a valuable component of the change. </li></ul></ul></ul><ul><ul><ul><li>Commonwealth has the option to continue with TelCove or successor to 2011 or continue with TelCove until new contractor is awarded the business – both under the current terms and conditions of this contract </li></ul></ul></ul>
  11. 11. TelCove Criteria # 4: New Technologies <ul><li>Voice Over IP (VOIP): </li></ul><ul><ul><li>Product Development Group is in the final stages of creating a VOIP offering. Hardware selection scheduled for 2 nd quarter 2005 </li></ul></ul><ul><ul><li>Internal product training began in October, 2004 </li></ul></ul><ul><ul><li>Extensive facilities-based SONET network provides ideal backbone for customer and network-based VOIP solutions </li></ul></ul><ul><ul><li>Benefits include </li></ul></ul><ul><ul><ul><li>reduced access costs and some long distance usage reductions </li></ul></ul></ul><ul><ul><ul><li>expanded disaster recovery capability, </li></ul></ul></ul><ul><ul><ul><li>advanced features </li></ul></ul></ul><ul><li>LMDS / Wireless Last Mile : TelCove owns many wireless last mile licenses. Current TelCove contract includes LMDS offering </li></ul>
  12. 12. TelCove Extension - Specifics <ul><li>Service Level Agreements (SLAs): </li></ul><ul><ul><li>Voice and Data Services – Penalties apply if more than 2 outages occur in a calendar month and are higher than previous SLA penalties. </li></ul></ul><ul><ul><li>Trouble Tickets Time to Restore Service – Penalty amounts have increased based upon the time to restore service </li></ul></ul><ul><ul><li>Service Order Completion – Stricter measurements apply to the completion of service orders in the established interval time </li></ul></ul><ul><ul><li>Chronic Problems – The frequency of troubles for which an issue is categorized as chronic has been decreased from 4 troubles to 3 troubles. </li></ul></ul>
  13. 13. TelCove Extension - Specifics <ul><li>Long Distance Discounts and Most favored rates guarantee provided </li></ul><ul><li>Discounts for Enterprise Services (To be determined) </li></ul><ul><li>The MARC is eliminated beginning February 19, 2009 </li></ul><ul><li>NT-1 Equipment: Upon termination of the agreement (for other than a termination for convenience, or upon insolvency) ownership of the </li></ul><ul><li>NT-1 equipment will automatically transfer to the Commonwealth </li></ul>
  14. 14. <ul><li>TSP: Telecommunications Service Priority, where available, will </li></ul><ul><li>be provided at 10% below the ILEC </li></ul><ul><li>Public Safety Site Investments: TelCove will provide enhanced </li></ul><ul><li>reliability to agreed upon selected public safety sites at no cost </li></ul><ul><li>to the Commonwealth </li></ul><ul><li>Volume Discounts: Monthly recurring charges from Cat 1 and 2 </li></ul><ul><li>agency billings once agreed upon revenue thresholds are reached </li></ul>TelCove Extension - Specifics
  15. 15. TelCove Extension - Specifics <ul><li>Perpetual license to the ISS system will be provided to the Commonwealth within 120 days of the extension amendment execution. </li></ul><ul><ul><li>The Commonwealth will receive all source code, object code, and documentation for ISS at the termination or expiration of the contract extension </li></ul></ul><ul><li>Technology Refresh: TelCove will fund a technology refresh for NOC equipment, and any equipment that supports services covered by a SLA </li></ul><ul><li>TelCove and the Commonwealth have mutually released each other from </li></ul><ul><li>any obligations regarding the Technology Research Facility </li></ul><ul><li>Enhanced/New Technology: TelCove agrees to work with the Commonwealth to develop agreeable pricing for new technology. TelCove will have 30 business days to provide its proposal to the Commonwealth </li></ul>
  16. 16. TelCove Extension - Specifics <ul><li>Within 180 days, the Commonwealth and Telcove will: </li></ul><ul><li>Conduct Voice Over IP (VOIP) Pilot: </li></ul><ul><ul><li>Define a group of users to roll out a VOIP pilot to evaluate the benefits of the product. </li></ul></ul><ul><ul><ul><li>This pilot program will run for a period of 6 months at no additional cost to the Commonwealth, and will encompass 3 to 4 locations and up to 500 users </li></ul></ul></ul><ul><li>Wireless Technology Trial: </li></ul><ul><ul><li>Define locations for the implementation of fixed wireless on a pilot basis. </li></ul></ul><ul><ul><ul><li>The pilot program will run for a period of 6 months at no additional cost to the Commonwealth </li></ul></ul></ul>
  17. 17. Verizon Extension Highlights
  18. 18. Verizon Extension Highlights Option 3: Extension of Current MAN Contract with Addition of Managed Device Packages <ul><ul><li>New contract term to 12/31/08, effective upon signature </li></ul></ul><ul><ul><li>Enhanced 2-hour on-site maintenance in Harrisburg w/ OA provided spares </li></ul></ul><ul><ul><li>24x7 Monitoring and Management of OA MAN devices </li></ul></ul><ul><ul><li>Single Level 2 Configuration Management rate of $154/device/month, regardless of device type </li></ul></ul><ul><ul><ul><li>Potential for incremental device rate reduction to OA with addition of DOH, L&I, and/or LCB managed services </li></ul></ul></ul>
  19. 19. Verizon Extension Highlights OA MAN Sites <ul><ul><li>No termination liability on maintenance and monitoring services </li></ul></ul><ul><ul><li>Managed device package for OA MAN DS3 site = $946.74/month </li></ul></ul><ul><ul><ul><li>Previous typical agency monthly recurring rate = $1,250.00/month </li></ul></ul></ul><ul><ul><li>Includes Cisco 3845 w/ DS3 interface, installation, maintenance, and management services </li></ul></ul>
  20. 20. Verizon Extension Highlights Remote Sites <ul><ul><li>Managed device package for agency remote site = $450.40/month </li></ul></ul><ul><ul><ul><li>Previous typical agency monthly recurring rate = $569.00/month </li></ul></ul></ul><ul><ul><li>Includes Cisco 2821 w/ DS1 interface, installation, maintenance, and management services </li></ul></ul><ul><ul><li>Agencies may elect maintenance and management packaged services with a contract term between 12 and 36 months. </li></ul></ul>
  21. 21. Verizon Extension Highlights <ul><ul><li>No CPE termination liability assessed with </li></ul></ul><ul><ul><li>< 5% device disconnects over the contract term </li></ul></ul><ul><ul><li>Annual OA Contract Savings = </li></ul></ul><ul><ul><li>$117,167/Year ($351,501 over 3 years) </li></ul></ul>
  22. 22. Verizon Solution Benefits to OA <ul><li>Meets OA’s Requested Objectives </li></ul><ul><ul><li>Provides immediate monthly savings to OA </li></ul></ul><ul><ul><li>Provides single classification/rate for MAN managed devices </li></ul></ul><ul><ul><li>New contract term to 12/31/08 </li></ul></ul><ul><ul><li>No termination liability on maintenance </li></ul></ul><ul><ul><li>and management services </li></ul></ul><ul><li>Provides managed device packages for future OA MAN adds </li></ul><ul><li>Provides alternative managed device packages </li></ul><ul><li>for agency remote locations </li></ul>
  23. 23. Verizon Maintenance Contract Comparison for a 3-Year Term 18 % $ 11,489.42 $ 14,089.53 PSP/CLEAN 21 % $ 41,176.00 $ 51,807.00 DPW/POSNet 27 % $ 8,648.40 $ 11,898.87 DCNR 30 % $ 40,811.81 $ 58,701.00 PennDOT 27 % $ 5,551.43 $ 7,645.00 Revenue Projected % Savings Proposed Estimated Monthly Billing Current Monthly Billing Agency
  24. 24. <ul><li>To obtain Copies of this Presentation </li></ul><ul><li>http:// www.keycomm.state.pa.us/keycomm/site/default.asp </li></ul>