Article X KMC TELECOM, INC.

Article X
KMC TELECOM, INC.

Sections:

Section 1. Findings.

Section 2. Definitions.

Section 3. Enforcement by city.

Section 4. Failure to enforce.

Section 5. Grant of telecommunications network franchise and acceptance of franchise.

Section 6. No recourse.

Section 7. Acceptance of power and authority of city.

Section 8. Term of franchise.

Section 9. Non-exclusive franchise.

Section 10. Amendments.

Section 11. Service of notice.

Section 12. Limitations upon franchise.

Section 13. Review of franchise.

Section 14. Reports and records of Telecom.

Section 15. Design of network.

Section 16. Customer service standards.

Section 17. Franchise fee.

Section 18. Service rates.

Section 19. Indemnification and insurance.

Section 20. Transfer, renewal, and revocation of franchise.

Section 21. Miscellaneous.

Section 22. [Effective date.]

Section 23. Transfer and assignment of franchise ordinance.

Section 1. Findings.

a. KMC Telecom Inc. (hereinafter referred to as Telecom) has submitted to the City of Topeka, Kansas (hereinafter referred to as City) an application for a franchise to operate a system of voice, video conferencing and data transmission services, specifically including the provision of competitive access (dedicated and/or special access) to long distance carriers and large and/or specialized corporate telecommunications users and specifically excluding cable television service as defined by state and federal law (hereinafter referred to as the Network).

b. Telecom’s qualifications have been considered and approved in a public proceeding.

c. Telecom’s plans for constructing, operating, and maintaining the Network have been considered and found to be adequate in a public proceeding.

d. The franchise granted herein is pursuant to K.S.A. 12-2001.

e. The franchise granted herein is non-exclusive. (Ord. 17062 § 1, 1-14-97.)

Section 2. Definitions.

For the purpose of this franchise, the following words and phrases shall have the meaning ascribed to them unless the context clearly requires otherwise. Words and phrases not otherwise defined shall be given their common and ordinary meaning.

“City network” shall mean that portion of Telecom’s network dedicated to the City’s sole use as more fully described in appendix 1 and incorporated by reference herein.

“Customer” shall mean any person, partnership or corporation lawfully receiving service from Telecom.

“Gross revenue” shall mean all revenue derived directly or indirectly by Telecom from or in connection with operation of its network within the City of Topeka, as well as any other revenue arising from network services which may from time to time be subject to the regulatory authority of the City.

“Service area” shall mean the geographical area within the City of Topeka to which Telecom shall extend its telecommunication network as set forth in Appendix 2 and incorporated by reference herein.

“Telecommunications network” or “network” shall mean the system of transmission services, described herein above and as more fully detailed in Appendix 2. (Ord. 17062 § 2, 1-14-97.)

Section 3. Enforcement by city.

The City shall have continuing regulatory jurisdiction and supervision over the operation and enforcement of this franchise, and may from time to time, adopt such reasonable rules and regulations as it may deem necessary for the conduct of the business contemplated herein. The continuing regulatory jurisdiction of the City may be delegated and exercised by such municipal board, agency or department, as may be determined by City, provided however, City may not delegate determination hereunder relating to penalties, fines, default, or termination. (Ord. 17062 § 3, 1-14-97.)

Section 4. Failure to enforce.

Telecom shall not be excused from complying with any of the terms and conditions of this franchise by any failure of the city upon one or more occasions to insist upon or to seek compliance with any of such terms and conditions. (Ord. 17062 § 4, 1-14-97.)

Section 5. Grant of telecommunications network franchise and acceptance of franchise.

Grant of Franchise. Telecom is hereby granted a non-exclusive franchise, subject to the terms and conditions of this ordinance.

Franchise Acceptance Procedures. Telecom shall have sixty (60) days from and after the passage and approval of this ordinance to file its written acceptance of this franchise ordinance with the city clerk and upon such filing, this franchise ordinance shall be considered as taking effect and being in force from and after the date of its passage and approval by the Council of the City of Topeka. (Ord. 17062 § 5, 1-14-97.)

Section 6. No recourse.

Telecom shall have no recourse and be awarded no monetary recovery whatsoever other than non-monetary declaratory or injunctive relief against the city for any loss, cost, expense or damage arising out of any provision or requirement of this franchise, nor from the city’s regulation under this franchise, nor from the city’s exercise of its authority to grant additional franchises. (Ord. 17062 § 6, 1-14-97.)

Section 7. Acceptance of power and authority of city.

Telecom expressly acknowledges by acceptance of this franchise that (1) it has relied upon its own investigation and understanding of the power and authority of the city to grant and enforce the franchise and that it has no objection to the exercise of city’s power and authority therein; (2) it has not been induced to accept this franchise arrangement by any understanding or promise or other statement whether verbal or written, by or on behalf of the city concerning any term or condition of the franchise that is not specifically included herein; (3) it has carefully read the terms and conditions contained herein and that Telecom is willing to and does accept all the obligations of such terms and conditions, of this franchise is unreasonable, arbitrary, invalid or void, subject to its rights herein; and (4) the matters contained in Telecom’s application for a franchise (on file with the city clerk’s office) and related written correspondence, and all subsequent applications or proposals for extensions or renewals of the franchise, and as stated in any and all of presentations to city, are incorporated into this franchise as though set out verbatim. (Ord. 17062 § 7, 1-14-97.)

Section 8. Term of franchise.

This franchise shall be in full force and effect, unless sooner terminated pursuant to the terms and conditions contained herein, for a period of ten (10) years from the effective date, and shall expire on March 30, 2007. Telecom shall have the option to request renegotiation of additional ten-year terms upon mutually-agreeable terms and conditions. (Ord. 17062 § 8, 1-14-97.)

Section 9. Non-exclusive franchise.

This franchise is non-exclusive. City reserves the right to grant additional franchises to any person at any time. (Ord. 17062 § 9, 1-14-97.)

Section 10. Amendments.

This franchise may be amended upon the mutual written consent of city and Telecom. (Ord. 17062 § 10, 1-14-97.)

Section 11. Service of notice.

Except as otherwise specifically provided herein, any notices required or permitted to be given under this franchise shall be deemed properly served when deposited with the United States Postal Service, postage paid, certified or registered mail, addressed to the party to receive same, or at such other address of which the party to receive the notice shall have designated in the franchise.

NOTICES TO THE CITY shall be addressed to all of the following:

City Clerk

City of Topeka

215 SE 7th Street, Room 166

Topeka, KS 66603

With Copy to:

City Attorney

City of Topeka

215 SE 7th Street, Room 353

Topeka, KS 66603

NOTICES TO GRANTEE shall be addressed to the following:

KMC Telecom Inc.

1545 Route 206

Suite 300

Bedminster, NJ 07921

(Ord. 17062 § 11, 1-14-97.)

Section 12. Limitations upon franchise.

A. Privileges must be specific. No privilege or exemption is granted or conferred by this franchise except as may be specifically prescribed.

B. No right of property. Any privilege claimed under this franchise in any street or public way shall be subordinate to any lawful occupancy or any subsequent exercise of city police power. The grant of franchise shall not impart to Telecom any fee title property rights in or on any public or private property to which Telecom does not otherwise have title. (Ord. 17062 § 12, 1-14-97.)

Section 13. Review of franchise.

The city shall initiate periodic review of Telecom’s franchise performance, plans and prospects. Such reviews may occur once every three years beginning on the first anniversary of the effective date of this franchise. The city may require Telecom to make available records, documents, and information for this purpose, and may inquire in particular whether Telecom is supplying a level and variety of services equivalent to those proposed by Telecom in its application and during the review process leading to the grant of this franchise and those being offered at any time in the industry in comparable market situations. Either city or Telecom may submit proposals for modifications of franchise obligations during such review, or at any other time during the term of the franchise.

Nothing herein shall be construed to prohibit the city and Telecom from engaging in a continuous review of the performance of Telecom, and city may initiate or Telecom request a public hearing on any issue related to compliance with the franchise or any permit related thereto. (Ord. 17062 § 13, 1-14-97.)

Section 14. Reports and records of Telecom.

A. Reports Required. Telecom shall file a report annually with the city clerk not later than three months after the end of each fiscal year to include, at a minimum, maps of the network and facilities locations and any other information reasonably requested by city, not otherwise protected by law. Such information requests by city may include, but are not limited to, the following information:

(1) An income statement identifying revenues, expenses and income applicable to operations under the franchise during the fiscal year or fraction thereof.

(2) A copy of the annual report(s) of Telecom, or such other annual report(s) of subsidiaries or divisions of Telecom which derive revenue from or in connection with the operations of the telecommunications network.

(3) A report on the network’s technical performance.

(4) A current list of all Telecom’s officers and directors of partners, if any, including addresses and telephone numbers.

(5) The names and both business and residential address and phone numbers of the network resident manager and engineer.

(6) Copies of all rules, regulations, policies and procedures promulgated by Telecom during the fiscal year in the conduct of business.

B. Private/Confidential Information. Telecom shall not be required to submit to city proprietary or confidential information to the extent such information is identified as proprietary or confidential information by law or regulation and thus protected. City shall maintain, to the extent legally possible, the confidentiality of any proprietary, confidential, or competitive information submitted by Telecom to city. (Ord. 17062 § 14, 1-14-97.)

Section 15. Design of network.

A. Telecommunications Network. Telecom shall construct, maintain, and operate a state-of-the-art, electronically redundant, self-healing, digital, synchronous optical (SONET based) network. The network shall be extended throughout the city’s business areas and such outlying areas as may contain significant corporate entities, all as is more fully described in Appendix 2, which is incorporated by reference. Telecom shall also indicate in Appendix 2, when its construction and installation will begin, when the Network will be operational, and when initial service is projected to begin. All information, maps, studies, and analysis in Appendix 2 relating to the Network shall be provided to City within 45 days of the effective date of this franchise. The construction, operation, and repair of Telecom’s network and city network shall be performed in an orderly and workmanlike manner. Telecom shall construct, operate, and maintain the networks in accordance with applicable federal, state and local laws and ordinances, including, but not limited to, building codes, zoning codes, and standard engineering specifications now or hereinafter in effect.

B. City Network. Telecom will provide as part of its network, the city network, for its own internal use. The city network shall consist of no less than eight optical fibers, and shall initially be extended to those negotiated sites identified by city and agreed to by Telecom, all as shall be more fully set forth in Appendix 1, which is incorporated by reference. The city network shall include all electronics necessary for activation, and the city network shall be activated simultaneously with the Telecommunications network. Telecom agrees to incorporate one additional city building on this network, at no cost to the city, for each five miles added to Telecom’s network, beyond the initial footprint. Further, city and Telecom shall identify the uses and services to be employed by city via the city network and city and Telecom shall agree to consider the city network’s design and engineering specifications. The city network will be engineered by Telecom to mutually-agreed to specifications by Telecom and city. Telecom shall guarantee that all such identified uses and services can be accommodated by the city network. At a date certain, Telecom, city attorney, city engineer, and information services director shall finalize the design, engineering and equipment specifications of the city network to ensure the provision to city of the identified services and uses. (Ord. 17062 § 15, 1-14-97.)

Section 16. Customer service standards.

Telecom shall render effective service, make repairs promptly and interrupt service only for good cause and for the shortest time possible. Such interruption, to the extent feasible, shall be preceded by reasonable notice, and shall occur during periods of minimum use of the network. The network shall be monitored by Telecom’s equipment and personnel 24 hours per day, 365 days per year.

Telecom is required, at a minimum, to provide the following:

(1) The delivery to all subscribers of signal and/or service quality equal to or better than the existing industry standard for a sign or service of that type.

(2) Operation on a 24 hours a day continuous operation basis.

The technical standards used in the operation of the network shall comply, at minimum, with any applicable technical standards promulgated by the FCC and any other applicable federal, state, or local laws, regulations, or technical standards which may currently or may subsequently concern any services which Telecom provides using its network.

Telecom will offer competitive local telephone services, including dedicated and switched access services, as reflected in its application. Telecom reserves the right during the franchise term to add new services, replace services, and otherwise modify its services, and Telecom agrees, at a minimum, to provide competitive access to long distance carriers and large and/or specialized corporate telecommunications Customers which services shall include high capacity voice, data, and video conference services and circuits. Telecom is specifically required to obtain and provide city with copies of all necessary state and federal certificates, and other authorizations, including necessary authorizations from the Kansas Public Service Commission and Federal Communications Commission, prior to providing any regulated services. (Ord. 17062 § 16, 1-14-97.)

Section 17. Franchise fee.

A. Basic Computation. Telecom shall pay, in addition to permit fee or costs associated with construction, operation or maintenance of the network, a non-discriminatory and competitively neutral franchise fee to the city in an amount equal to five percent of Telecom’s annual gross revenues.

B. Payment Due. Payments due the city under this provision shall be computed quarterly and shall be paid within 60 days of the end of each quarter. The payment period shall commence as of the effective date of this franchise. The city shall be furnished a statement with each payment, certified by a designated official of Telecom, reflecting the total amounts of quarterly gross revenue and the computations thereof, for the quarterly payment period covered by the payment.

C. No Waiver. No acceptance of any payment shall be construed as a release, waiver, or an accord and satisfaction of any claim the city may have for further or additional sums payable as a franchise fee under this franchise nor for the performance of any other obligation of Telecom. All amounts paid the city shall be subject to audit and recomputation by the city.

D. Interest. In the event that any payment is not made as required or recomputation results in additional fees owed in addition to violating this franchise, such amounts shall be subject to a 12 percent per annum interest charge. The interest percentage may be amended no more than once each year by the Council of the City of Topeka, consistent with increased costs for municipal facilities and supervision and applicable rules of other regulatory agencies.

E. Other Types. Nothing in this section shall be interpreted as supplanting or otherwise relieving Telecom of its liability for applicable permit fees, municipal property taxes, or other federal, state, county or local taxes. (Ord. 17062 § 17, 1-14-97.)

Section 18. Service rates.

The city may regulate rates for the provision of network services and equipment to the extent allowed under federal or state law(s), rules, or regulations. In all events, Telecom shall maintain rates in accordance with applicable local, state, and federal regulations. (Ord. 17062 § 18, 1-14-97.)

Section 19. Indemnification and insurance.

A. No Liability. City, its officers, board, committees, commissions, elected officials, employees, and agents shall not be liable for any loss or damage to any real or personal property of any person, or for any injury to or death of any person, or any other suit, claim or demand arising out of or in connection with the construction, operation, maintenance, repair, or removal of Telecom’s network, or any such suit, claim, or demand arising from the award of this franchise, or city’s authority related to such a grant.

B. Indemnification. By acceptance of this franchise and right, Telecom agrees that it shall indemnify, protect and hold harmless the City of Topeka and its officers, agents, and employees from any and all claims whatsoever, from liabilities, losses, costs, judgments, penalties, damages, and expenses, including attorneys’ fees, arising out of the installation, operation, or maintenance by Telecom of the fiber optic transmission system, or the failure to perform any of the obligations of this franchise and right, including but not limited to claims for injury or death to any person or persons, or damage to any property, as may be incurred by or asserted against the city, its officers, agents or employees, directly or indirectly, by the installation, operation, or maintenance by Telecom of the fiber optic transmission cable system with the City of Topeka.

C. City’s Right of Intervention. If the city otherwise has the right to intervene, Telecom expressly acknowledges and agrees, by acceptance of this franchise, not to oppose such intervention by the city in any suit or proceeding to which Telecom is a party related to the franchise.

D. Coverage. Telecom shall maintain liability insurance pursuant to and in amounts as detailed below. Such liability insurance shall be kept in full force and effect by Telecom during the existence of this franchise and all renewals and extensions thereof, and thereafter until after the removal of all lines, should such removal be required by the city or undertaken by Telecom. Any contractors of Telecom performing on behalf of Telecom pursuant to this franchise shall also be insured as required herein and name city as an additional insured.

E. Failure to Procure. Telecom acknowledges and agrees, by acceptance of this franchise, that failure to procure or maintain the required insurance shall constitute a material breach of this franchise and that the city may immediately suspend operations under the franchise, terminate the franchise, or, at its discretion, procure or renew such insurance to protect the city’s interests and be reimbursed by Telecom for all premiums paid in connection therewith. Telecom will be notified in writing and given a 30-day period to cure the infraction.

F. Insurance Amounts. Telecom shall maintain throughout the term of this franchise, workmen’s compensation insurance and liability insurance in the minimum amounts of:

(1) General liability insurance public liability including premises, produces and complete operations:

(a) Bodily injury liability $500,000.00 each person/$1,000,000.00 each occurrence.

(b) Property damage liability $1,000,00.00 each occurrence, or

(2) Comprehensive automobile liability insurance, including owned, non-owned and hire vehicles.

(a) Bodily injury liability $500,000.00 each person, $1,000,000.00 each occurrence.

(b) Property damage liability $1,000,000.00 each occurrence, or

G. General. Telecom agrees that with respect to the above-required insurance contracts, such contracts will contain the following required provisions:

(1) The city and its officers, agents, employees, board members and elected representative shall be named as additional insured (as the interests of each may appear) as to all applicable coverage.

(2) Contracts shall provide for 30 days notice to the city prior to cancellation, revocation, non-renewal, or material change.

H. Proof of Insurance. Telecom shall furnish proof to the city attorney that a satisfactory insurance policy has been obtained. A certificate of insurance, along with written evidence of payment of the required premiums, shall be filed and maintained with the city clerk. (Ord. 17062 § 19, 1-14-97.)

Section 20. Transfer, renewal, and revocation of franchise.

A. City’s Right to Revoke. City shall have the right to revoke and terminate this franchise and Telecom shall be obligated to remove its network, if it is determined that:

(1) Telecom has violated any material provisions of the franchise or otherwise defaults in the performance of any of its obligations there, and fails to correct or cure such default within 30 days after receipt of written notice from the City of such default; or

(2) Telecom has violated any orders or rulings of any regulatory body having jurisdiction over Telecom, including city, unless Telecom is lawfully contesting the legality or applicability of such order or ruling; or

(3) Telecom has practiced fraud or deceit upon the city or customer; or

(4) Telecom fails to begin or complete network construction as provided under this franchise; or

(5) Telecom fails to maintain insurance required under this franchise.

B. Sale or Transfer of Franchise.

(1) City Approval Required. No sale or transfer of Telecom, or assignment, lease, sale, or transfer of a franchise shall take place until the parties to the sale or transfer files a written request with city for its approval. Such approval will not be unreasonably withheld by city. This approval shall not be required where Telecom mortgages, pledges, or grants a security interest in its network to secure an indebtedness.

(2) Transferee Must Be Signatory. In no event shall a transfer or assignment of ownership or control be approved without the transferee acknowledging the obligations under this franchise, becoming a signatory to this franchise and assuming all rights and obligations hereunder and assuming all other rights and obligations of the transferor to the city.

(3) Franchise Renewal. Telecom may seek renewal of this franchise, and city shall review such request for renewal in accordance with the terms of this franchise and applicable law. (Ord. 17062 § 20, 1-14-97.)

Section 21. Miscellaneous.

A. Force Majeure. Prevention or delay of any performance under this franchise due to circumstances beyond the control of Telecom or city including weather, acts of God, strikes, and similar unforeseen circumstances, but not including economic hardship or inability to secure materials, shall not be deemed to be non-compliance with or a violation of this franchise.

B. Severability. If any section, subsection, sentence, clause, phrase or portion of this franchise ordinance is, for any reason, held invalid or unconstitutional by any court or administrative agency of competent jurisdiction, such portion shall be deemed a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions thereof. In such event, the parties mutually agree to make any amendments to this franchise ordinance other applicable agreements necessary to effectuate the intention of this franchise ordinance. In the event that such amendments are barred by any legal requirements governing any party, the parties shall use their best efforts to otherwise avoid prejudice to the respective parties’ interests, and to implement changes to effectuate the intent in entering into this franchise. (Ord. 17062 § 21, 1-14-97.)

Section 22. [Effective date.]

This ordinance shall take effect and be in force from and after its passage, approval and publication in the official city newspaper once a week for two consecutive weeks and upon expiration of 60 days from a date of its final passage unless a sufficient petition for a referendum is duly filed prior to the expiration of 60 days pursuant to K.S.A. 12-2001(b)(6) in which case the ordinance shall become effective if approved by a majority of the electors voting thereon. (Ord. 17062 § 22, 1-14-97.)

Section 23. Transfer and assignment of franchise ordinance.

(a) Pursuant to the Franchise Ordinance, consent and approval is hereby granted by the City for the transfer and assignment of the Franchise Ordinance by Telecom to Telecom II and the assumption of Telecom’s franchise obligations by Telecom II.

(b) Ordinance Affirmed. All other terms and provisions of the Franchise Ordinance shall continue in full force and effect and constitute the entire agreement between the City and the franchise holder.

(c) Effective Date. The transfer and assignment of the Franchise Ordinance shall be effective upon the closing of the transfer and assignment by Telecom to Telecom II of the telecommunications facilities within the City of Topeka. Telecom II shall notify the City of the transfer and assignment of the Franchise Ordinance within thirty (30) days of such closing, and provide therewith a copy of the Assignment and Assumption of Franchise by which the Franchise Ordinance was transferred and assigned by Telecom to Telecom II.

(d) This ordinance shall take effect and be in force from and after its passage, approval and publication in the official city newspaper. (Ord. 17350 § 1, 2-9-99.)