20-08 OrdinanceRECORD OF ORDINANCES
Dayton Legal Blank, Ina _ Form No. 30043 ~
Ordinance No.
20-08
Passed , 20
AN ORDINANCE AUTHORIZING THE CITY MANAGER
TO ENTER INTO AN AMENDED AGREEMENT WITH DHB
NETWORKS, LTD. FOR THE PURPOSE OF ENGINEERING,
DEPLOYING, MAINTAINING AND OPERATING AN
EXPANDED CITY-WIDE WIFI NETWORK
WHEREAS, the City of Dublin ("City") determined that the Dublink system should be
expanded to a City-wide WiFi Network; and
WHEREAS, the City entered into previous agreements with DHB Networks Ltd.
("DHB") in order to allow DHB to locate WiFi infrastructure in the Right-of--Way and on
certain City-owned Municipal Facilities in certain areas of the City; and
WHEREAS, in furtherance of those agreements and to make the WiFi System more
robust to serve Dublin better, the City wishes to enter into an Amended Agreement as
described in "Exhibit A" and engage DHB for the purpose of engineering, deploying,
maintaining and operating the expanded Dublink WiFi system in the City.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of Dublin, State
of Ohio, of the elected members concurring that:
Section 1. The City Manager is hereby authorized to enter into an Amended Agreement
with DHB Networks Ltd. for the purpose of engineering, deploying, maintaining and
operating the expanded Dublink WiFi system in the City and to execute all necessary
documents associated therewith.
Section 2. This Ordinance shall take effect and be in force from and after the earliest
date permitted by law.
Passed this /.~ day of , 2008
Mayor -Presiding Officer
ATTEST:
Clerk of Council
D
CITY OF llUBLIN
Office of the City Manager
5200 Emerald Parkway • Dublin, OH 43017
Phone: 614-410-4400 • Fax: 614-410-4490
TO: Members of the Dublin City Council
FROM: Jane S. Brautigam, City Manager
DATE: April 3, 2008
Memo
INITIATED BY: Dana L. McDaniel, Deputy City Manager/Director of Economic Development
RE: Ordinance 20-08, Phase II City-wide Wi-Fi Deployment
Background
Ordinance 20-08 authorizes the City Manager to enter into an amended agreement (Enclosure 1)
with DHB, the City's Wi-Fi provider, to acquire assets, engineer, deploy, maintain and operate a
Wi-Fi system for the balance of the City not currently covered (Phase II deployment, 16 square
miles). DHB presents a unique opportunity to secure certain Wi-Fi "access points" (APs) at a
substantially reduced cost. These assets are currently available through a leasing company with
whom DHB has a relationship. DHB is willing to restructure its previous proposal for Phase II
deployment by incorporating these APs at the reduced cost into their overall proposal.
APs (capital cost)
Over the past couple of years, several private companies and cities around the USA have
attempted to deploy Wi-Fi systems. In many of these cases, the financial models on which they
based their deployments proved to be unsound. As a result, assets, such as APs, were purchased
or leased, but never actually deployed. Based on the successful "anchor/tenant" financial model
DHB and the City of Dublin have undertaken, DHB has advanced this model with three other
cities, Farmers Branch, Texas; Longmont, Colorado; and Gahanna, Ohio. As a result of its
partnerships in Texas and Colorado, DHB has gained access to 400 APs and associated
equipment now available at the reduced cost. These APs have never been deployed, are
physically stored in a warehouse, are compatible with those APs currently deployed in Dublin
and still under warranty.
A comparison of prices for APs and associated equipment of the same type and quantity are
available at the following price points for the equipment necessary to build out the rest of the
City:
1. Market price for AP only: $3,999 ea X 400 APs = $1,599,600 (associated equipment not
included)
2. State bid price for AP only: $2,799 ea X 400 APs = $1,119,600 (associated equipment
not included}
3. DHB's proposed price for AP and associated equipment: $1,550 ea X 400 =
$620,000 (plus $60,000 for the cost to carry the money over afive-year period)
Staff views the opportunity to secure these assets as being similar to the opportunity the City
took advantage of in purchasing optical fiber and extending DubLink throughout Central Ohio.
After the "telecom bubble burst" in the late 90s, the City was able to take advantage of
Memo to Council re Ord. 20-08 -Amended DHB WiFi Agreement
Apri13, 2008
Page 2 of 4
substantially reduced cost for in-place conduit and optical fibers. Staff views the Wi-Fi industry
to have experienced a similar "bust." The bust was the result of inadequate financial models by
both cities and private companies. The result is a surplus of equipment available at a
substantially reduced cost. It is not clear if this is a widespread phenomenon. Therefore, staff
views this opportunity as a one-time opportunity that the City should act on quickly.
Operations (operational cost)
DHB proposes to engineer, deploy, maintain and operate the City-wide Wi-Fi network (existing
4 square mile area plus additional 16 square mile area) based on a five-year "anchor/tenant"
agreement, the same as the existing agreement. The City would pay $8,500/mos over afive-year
period or $510,000. At the end of this five-year period, DHB will continue to operate the system
at no cost for an additional five years. Additional cost will only be incurred for technology
upgrades or expansions of the system.
Cost per square mile cast
By comparison, all costs considered, the City of Dublin's cost per square mile to deploy Phase I
was $100,000/square mile. In 2007, DHB proposed to deploy the City of Dublin Phase II for the
same cost of $100,000/square mile. The City of Gahanna will soon approve aCity-wide Wi-Fi
deployment at a cost of $120,000/square mile. With DHB's willingness to pass on savings to
Dublin, as outlined above, this proposal would cost the City $74,375/square mile for the
remaining 16 square miles of the City.
City Use
Same as the existing system, the City will retain for its use 25% of the Wi-Fi bandwidth. With
City-wide deployment, staff anticipates that additional uses will now be made available, but not
necessarily limited to, the following:
• Outdoor pools connected to City's network
• Water tower security connection
• Parks security systems
• Camera deployments
• Snow trucks connectivity for live feeds to update truck status (instead of cellular)
• Traffic light control
• Dublin Arts building connectivity for security system
• Police cruiser video uploads
• Wireless phones for mobile staff (voice over internet protocol}
• GIS data collection
Private Use
As a result of the deployment, residents and businesses will have access on a subscription basis
for $24.95 per month. Other rate breakdowns (i.e. hourly, daily) may also be made available.
DHB will continue to market its Wi-Fi service under the Airwirz brand. It is important to keep in
mind that Wi-Fi is predominately an outdoor system and does not achieve significant penetration
into buildings without additional devices, much like a "router" in your home that converts one's
cable internet to wireless internet. Such devices can be purchased between $75 and $100.
Airwirz will be a member of BOINGO and IPASS. This will enable Airwirz subscribers to
Memo to Council re Ord. 20-08 -Amended DHB WiFi Agreement
Apri13, 2008
Page 3 of 4
access other Wi-Fi systems globally when traveling. Conversely, BOINGO and IPASS members
of other systems will be able to access Airwirz when in Dublin or other Airwirz service areas.
Deployment Schedule
Staff anticipates the deployment of the additional 16 square miles to be done in four phases at 3
months per phase. The following highlights the activities per phase:
Phase I. 90 days
1. Plaiuling and engineering - 45 days
2. Establish Root access on all water towers (5 - 10 access points) - 15 days
3. Execute Building /Roof Access Contract with key structures- 30 days
Phase II. 90 days
1. Establish root access on key structures (20 - 30 access points) - 60 days
2. Facilitate outside plant deployment on select AEP poles (250 - 300 access points} - 60
days (parallel w/schools)
3. Complete Citywide RF coverage survey to calculate coverage voids - 30 days
Phase III. 90 days
1. Determine additional residential area access point placement requirements - 30 days
2. Develop acommunication /implementation plan for supporting organizations - 30 days
3. Determine and resolve challenges to fill in coverage holes (5 - 10 access points) - 30
days
Phase IV. 90 days
1. Execute final stages of residential area deployment (50 - 75 access points) -document
field coverage issues - 30 days
2. Employ a final beta test group to gather network statistics to optimize network - 30 days
3. Review test results and determine any additional action that may be required - 30 days
RECOMMENDATION
Staff recommends City Council pass Ordinance No. 20-08 and pursue the Phase II, City-wide
Wi-Fi deployment. The following explains the necessary adjustments to the Capital and
Operating Budgets, as well as, rej~enues to the City.
Capital budget. The APs need to be secured immediately. Currently, the 2008-2012
Capital Improvements Budget has $655,000 for telecommunications projects. Staff
recommends the City pay DHB $620,000 from its Capital Improvements budget in the
following annual payments: $124,000 in 2008; $124,000 in 2009; $124,000 in 2010;
$124,000 in 2011; and $124,000 in 2012 for a total of $620,000. A "cost of carry"
Memo to Council re Ord. 20-08 -Amended DHB WiFi Agreement
Apri13, 2008
Page 4 of 4
amount will be added to each annual payment, beginning in 2009, as mutually agreed
upon between the City of Dublin and DHB.
2. Operating budget. Currently, the City of Dublin pays DHB $6,041.66 per month for
operations expenses. As a result of the amended agreement, the City will pay DHB, as
operating expenses (which includes engineering, deployment, maintenance and
operations), an amount of $8,500 per month for a period of five (5) years. Execution of
monthly payments will begin the month of the effective date of the amended agreement.
From the effective date of the amended agreement through November 31, 2008, the City
will pay an additional $2,458.34 per month above the $6041.66 currently being paid for a
total of $8,500. Commencing December 1, 2008, the City will pay $8500 per month for
the remainder of the five-year period. At the conclusion of the payment schedule, DHB
agrees to continue to provide service to Dublin for an additional five year period with no
further payment from the City, unless the City requires or requests additional services,
bandwidth, applications or makes other requests in addition to the previously contracted
for service lej~el.
3. Revenues to the City. DHB will agree to pay back the City $350,000 from profits
received when DHB has achieved more than 5% of the market share. The metrics for this
payback shall be mutually determined by the City of Dublin and DHB.
Please address any questions you may have to Dana McDaniel, 410-4619, Greg Dunn 462-2339,
or myself.
Enc. 1
FIRST AMENDMENT TO PURCHASE AGREEMENT FOR WI-FI SERVICES AND
VIRTUAL PRIVATE NETWORK
Between
DHB Networks Ltd.
and
The City of Dublin, Ohio
Dated , 208
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FIRST AMENDMENT TO WI-FI VIRTUAL PRIVATE NETWORK
SERVICE AGREEMENT
This is an Amendment ("Amendment"} to The Purchase Agreement for Wi-Fi Service
and Private Network Between DHB Network Ltd. ("DHB") and the City of Dublin, Ohio
("City") dated March 17, 2006 ("Agreement"). The purpose of the Amendment is to expand the
service area of the Wi-Fi system, to extend the Terrn of the Agreement, and to set forth new
payments to DHB for the expanded service. This Amendment only amends the sections
referenced below and all other sections, provisions, exhibits and attachments shall remain in full
force and effect.
The Agreement shall be amended as follows:
III. Term
The Agreement shall terminate March 17, 2018.
IV. Service
The Service provided by DHB as described in Exhibit B of the Agreement, shall be
available throughout the corporate limits of the City of Dublin as in existence at the date of this
Amendment. This Amendment is predicated upon DHB delivering ubiquitous Wi-Fi service in
the City, at the Service Levels defined in the Agreement.
VI. PaymentslDefaultlTermination/Liquidated Damage
Payment.
(A) In addition to monies previously paid to DHB pursuant to the Agreement, City shall pay
DHB as follows:
(1) One Hundred Twenty-Four Thousand and 00/100 Dollars ($124,000) within thirty
(30) days of the execution of this Amendment.
(2) One Hundred Twenty-Four Thousand and 00/100 Dollars ($124,000) on or before
March 31, 2009.
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(3) One Hundred Twenty-Four Thousand and 00/100 Dollars ($124,000) on or before
March 31, 2010.
(4) One Hundred Twenty-Four Thousand and 00/100 Dollars ($124,000) on or before
March 31, 2011.
(5) One Hundred Twenty-Four Thousand and 00/100 Dollars ($124,000) on or before
March 31, 2012.
The total payment to DHB amounts to Six Hundred Twenty Thousand Seven and 001/00
Dollars ($620,000.00).
(B) In addition to the above payments, City shall remit compensation to DHB for the
additional operating expenses incurred by DHB for the expanded service. The total monthly
amount of compensation to DHB for operating expenses shall total Eight Thousand Five
Hundred Dollars and No Cents ($8,500.00) for five years with payments being made as follows:
(1) City shall remit to DHB Two Thousand Four Hundred Fifty-Eight Dollars and
Thirty-Four Cents ($2,458.34) along with the original Six Thousand Forty-One Dollars and No
Cents ($6,041.00) as contemplated within the Agreement, to DHB per month beginning within
thirty days of the execution of this Amendment through November 31, 2008.
(2) After November 31, 2008, City shall remit Eight Thousand Five Hundred Dollars
and No Cents ($8,500.00) to DHB per month on or before the end of each month for the
remaining Term.
XI. Security
DHB and City agree that the Amendment shall not be effective until such time as DHB
and City agree to a security arrangement, whereby City shall be able to take possession of all of
the DHB wireless access points and ancillary equipment in the event of Default. The security
agreement may include, but not be limited to, all UCC documentation to secure the Equipment.
The security arrangement may include a guarantee to a third party, whereby the City guarantees
payment to the third party on behalf of DHB, provided however that in the event of default City
takes possession of all of the Wi-Fi equipment, access points and ancillary equipment detailed in
the security arrangement agreement. The guarantee shall be drafted so that in no event shall City
be required to pay a total amount in excess of Six Hundred Twenty Thousand Seven and 001/00
Dollars ($620,000.00) to the third party or DHB. The security agreement shall be subject to the
approval of the City Manager, to which said approval shall be in her sole judgment.
If a security arrangement as described above cannot be agreed upon by the parties, this
Amendment shall be considered null and void.
XII. Payment to City
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DHB agrees to pay City, Three Hundred Fifty Thousand and 00/100 Dollars
($350,000.00) in the event that:
(1) DHB has obtained more than a five percent (5%) market share of broadband
service.
(2) DHB is profitable in Dublin.
The rnetrics for determining XII (1) and (2) above shall be mutually agreed upon between
City and DHB. In addition, the payment schedule for the Three Hundred Fifty Thousand and
00/100 Dollars ($350,000.00) payment set forth above shall also be mutually agreed upon by
DHB and City under a separate document signed by DHB and City.
[REST OF PAGE LEFT INTENTIONALLY BLANK]
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IN YVITNESS YYHERE~F, the parties hereto have caused this Amendment to the
Agreement to be duly executed as of the date first above written.
CITY: City of Dublin, an Ohio Municipal DHB: DHB Networks Ltd.
Corporation
By:
Print Name:
Date:
By:
Print Name:
Date
APPRO~jED AS TO FORM:
CITY OF DUBLIN LAW DIRECTOR
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