Board seeks to extend pact with network provider

By MIKE ANTHONY

Executive Editor

The Mehlville Board of Education recently voted to direct the administration to seek a contract extension with the district’s network provider — Charter Communications.

Board members voted 6-1 Nov. 17 to have the administration pursue the contract extension for at least a two-year term. Board member Ron Fedorchak was opposed.

The Board of Education voted in November 2001 to enter into a 10-year lease with Charter for a managed fiber network that provides 1 gigabyte of connectivity to 14 district buildings or campuses. The district’s technology consultant at the time, Elert & Associates, had recommended Mehlville pursue the lease with Charter at an annual cost of roughly $229,550.

The contract with Charter was one of the first major technology projects under the Proposition P districtwide building improvement program that was approved by voters in November 2000. That contract will expire in July.

“In order to qualify for (a) 50-percent discount on services through the E-Rate Program, we must post our intent for these services in the coming weeks on the Universal Service Fund website,” according to information provided to the board by Director of Information Technology Services Steven Lee.

Lee also wrote, “The district has an option to extend the contract at (a) nearly 65-percent discount for two years at a monthly fee of $7,000 per month.”

Superintendent Eric Knost told the board Nov. 17, “… Our current contract with Charter expires in July … To be quite honest with you, as far as policy’s concerned, this is not something that typically would have to come through the board. I thought it was very appropriate to bring it through the board for a number of reasons …,” including the district’s “spirit of trying to be very transparent and help people understand why we make some of the decisions we do, sometimes involving thousands of dollars or tens of thousands of dollars …”

Of Charter, he said, “… They ran fiber through this whole district. But they own that fiber. We don’t own it. Other companies don’t own it and we’re in a situation now where we have the opportunity for a two-year extension with Charter and their costs are about to reduce drastically because they recouped basically over the last number of years their cost to run and have that fiber in place … We currently spend $19,129 a month on our Charter bill as the network provider …

“It would seem to a lay person that obviously if you’re nearing the end of a contract, you’re going to bid that out, correct? That would be the assumption. Here’s an example, though, where we have an opportunity. We already know that other companies won’t touch that and what I mean by that is because in order for them to touch it they either have to come in and lease Charter’s fiber or they have to run their own fiber, which means their expenses are going to be great,” Knost said.

“Charter is proposing a two-year extension for us where we’re going to go from paying $19,129 per month all the way down to $7,000 per month. Nobody can touch that, but to be a good steward, I told Steven (Lee) that we’re going to bid it anyway …”

But Knost told the board that the complexity of preparing the bid specifications would require the hiring of a consultant at a cost of $3,500.

“… Some of our bids that we prepare the specs, we have the knowledge inside to prepare those specs,” he said. “We don’t have the knowledge to prepare specs for somebody to come in and hang and run and put a certain tension on wire hanging from pole to pole and things like that. We don’t have that knowledge. So we had to get a price for help to prepare bid specs …

“We’re looking at a cost of $3,500 to prepare bid specs because our interest would be to look like — we want to look like the good stewards that we are, but we also already know the result … The other companies have told us we can’t touch it. We’re not going to …”

The bottom line, Knost said, is the district would realize tens of thousands of dollars in savings through Charter’s proposal and “it doesn’t make a whole lot of sense in our mind to go out for a bid. And so what we’re asking for tonight is for you to consider that and potentially to give us the ability to tack on the two years with Charter at the very reduced rate of $7,000 per month …”

Board President Venki Palamand asked, “… Did we pay anything to Charter back in 2001 to actually lay the fiber or was it essentially a 10-year contract at $19,000-plus a month?”

Lee replied, “… It was an arrangement where we didn’t have an initial outlay. We didn’t pay a dollar until the services were up and going and the fact was after 30 days that they were implemented before we paid a dollar on it. So it put the district in a fair position where we could afford such a project and at the time, to give you a little background, it was a new entry into the market for Charter and they were very aggressive in wanting to get a big school district under their belt to then shop it to other school districts.

“So everybody we talked to and everybody I’ve talked to since said we really got a good deal in the market at the time. And just the contract we have, I think Charter got tired of our attorney and myself and our consultant beating them up and … finally agreed to the extension option, which now we feel like is a big benefit to us at this time.”

Lee said he had letters from three or four other companies confirming they couldn’t be competitive with Charter’s proposal.

Palamand later asked, “This supports Internet for how many connections …”

Lee said, “Right now, we have 5,000-plus stations on our network, which is going to grow in exponential numbers as we look at some of the new technologies, including our pilot program.”

Palamand said, “And it can handle all of the fiber optics that are currently in place …”

Lee said, “Absolutely. We can take our current network and take it a hundred-fold from where it is now. The fiber will support it and the nice thing about our network is the way it’s designed and laid out. It is solely ours. There’s nobody else on it. The only other person that can see into it is Charter. They’ve got one link in. They can monitor it …”

Board member Rich Franz said, “So you said the system is 10 years old. Is Charter responsible for upgrades as the system ages or would we have to — or should we plan on taking some of that savings and putting it into upgrades?”

Lee said, “… Per the contract, they are responsible for all maintenance and upgrades of the equipment. They’re not obligated to — to put it in kind of easy terms, they’re not obligated to move us from a Chevrolet to a Cadillac or a Porsche. They just have to keep it running at the committed information rate we currently have …”

Fedorchak later said, “… You said there were three companies that provided you letters that said it’s not feasible for them to do it. Can you provide those for us? I’m not really comfortable with committing to five years with Charter …”

Lee said, “… A little background — they have performed excellent … I don’t know if it’s correct for me to throw those names out in open session.”

Knost said, “… Probably not at this point in time. I would caution (you) to not do that … I’d be glad to talk to you in private.”

Lee later said, “I can assure you they’re the major providers in town. Other area school districts are provided by these companies … I had an entrepreneur contact me about running fiber. I had him give me a bid, too. So it was a budgetary bid … I do have the letters and can provide them to Dr. Knost …”

Knost said, “But really right now, we would bring anything beyond two years back to you. We’re tonight just asking for the ability to negotiate that two-year extension.”

Fedorchak said, “… Even a two-year extension, you’re committing to …”

Knost said that commitment would total $168,000.

Fedorchak said, “Well, again you’re also committing to Charter for another two years and the technology becomes more ingrained and you’re entrenching an incumbent that may not necessarily be the best. It may not be the most cost effective …”

Board member Tom Diehl’s motion to direct the administration to pursue the contract extension with Charter was seconded by board member Mark Stoner and approved 6-1. Fedorchak was opposed.