This is a detailed breakdown of the EarthLink – San Francisco proposed muni WiFi contract.
This is the longest post I have ever done on Muniwireless, but I think it may also be one of the most important ones on this site. I have spent the better part of a rainy Amsterdam afternoon and evening reading through 48 pages of dense legalese and writing my comments.
This analysis is very interesting for anyone who cares about citywide Wi-Fi, but especially for municipal officials, city council members, mayors, lawyers, service providers, community activists and prospective customers of EarthLink’s service in SF. You need to know what they will be doing with your personal information. I invite people to post their comments below. Let us know if you’ve found other disturbing provisions or disagree with my interpretation of the contractual terms.
If my analysis is harsh in some parts, it is not meant to be a criticism of EarthLink or the SF folks who negotiated the contract, or their consultants. I know everyone has worked very hard to get this done and every contract is a give and take. The hard parts are yet to come: getting the Board of Supervisors and the Public Utilities Commission (PUC) to approve it, building the network and getting people to use it. I applaud San Francisco for their effort to get free basic wireless Internet access throughout the city. It’s a wonderful start.
Attention cities and counties: please do NOT copy the provisions in this contract and apply them to your situation. I know many of you copied the SF RFP. The terms in this contract are specific to San Francisco’s needs and to its own special brand of politics.
Download the contract from here, print it and follow the analysis below.
We’re not done yet
Nearly every press outlet carried news of the SF-EarthLink contract and from reading them, you’d think it’s a done deal. Not so fast. The contract has to be approved by the Board of Supervisors and the Public Utilities Commission (PUC). The Board has criticized the mayor and the Department of Telecommunications and Information Services (DTIS) for pushing this deal through, and not looking hard enough at alternatives, such as a city-owned network.
Indeed, this may not go through at all. Under section 6.2, if the Board and the PUC do not approve this contract within 180 days after its execution, EarthLink can pull out of its obligations, unless the failure of the Board or PUC to approve it was caused by EarthLink or some event of Force Majeure (defined in 14.3).
The city can terminate the contract without the network even going up if EarthLink does not accomplish “Final Network Acceptance” (defined in 5.1.12) 18 months after “Network Implementation Authorizations” (defined in 6.5). Several things have to happen before EarthLink gets these Network Implementation Authorizations (I am naming just a few below):
- the city must obtain approvals from PG&E (the electric utility) to enable the PUC to provide electricity to the wireless nodes on light poles (see 6.3.4);
- EarthLink must enter into an agreement with PG&E for the use of PG&E light poles and electricity (6.5.2).
Why am I picking out these particular clauses? Because electricity utilities have been blocking other cities’ efforts to set up citywide Wi-Fi. This may not be a problem for EarthLink in SF if there are not that many PG&E poles or if PG&E decides to play nice.
Network Services (Section 11)
EarthLink must offer at a minimum five kinds of service:
(1) Premium service: fee-based, term is one month or more, 1 Mbps “minimum average” symmetrical service. This means some will have slower than 1 Mbps service. The good thing is that when you sign up, you go to a capture portal that shows the other service providers on the network, so you don’t have to sign up with EarthLink. You can choose. Verizon and AT&T could even offer service on this network. Very good for open access.
(2) Occasional Use service: for temporary users, less than one month, again the “minimum average” 1 Mbps symmetrical service.
(3) Digital Inclusion Product: 3200 lucky households, to be nominated by the city, can get 1 Mbps (minimum average) access for $12.95 per month. EarthLink will make CPE available to these households but for a price which the city will pay, whichever is less: $100 per unit or the cost of CPE plus fulfillment.
(4) Roaming Service (defined in 1.77): access service with a minimum average symmetric throughput of 1 Mbps which is temporarily extended to subscribers of a service provider.
(5) Basic Service: “minimum average” symmetric throughput of 300 Kbps best efforts only (this isn’t very good at all) for all 16 years of the contract (if it lasts that long). But in all likelihood it won’t stay at 300 Kbps because EarthLink is required to raise the speed every year to the greater of: (a) 300 Kbps or 15% of the “advertised speed” of the “Best Selling Wireless Broadband Product” defined in 1.11 as the Access Service having the largest number of combined wholesale and retail Subscribers for the six-month period for which data are available immediately preceding the date on which the calculation is made, using the same data EarthLink uses to determine the number of Subscribers for its products. So at least the free service will keep up with the service most in demand by users.
EarthLink’s payments to San Francisco (Section 4)
EarthLink is paying the city a right of way (ROW) fee every quarter equal to 5 percent of “Gross Access Revenues”, defined in 1.36 as total revenues received by EarthLink (minus taxes) from providing retail and wholesale access, not just on plain old Internet access but also VOIP services and advertising.
EarthLink will make an upfront non-refundable prepayment of $600,000 (similar to the Minneapolis deal with Minneapolis ISP, US Internet) with a maximum amount to be accrued and applied as a credit against ROW fees owed by EarthLink each quarter — up to $18,750 per quarter until the $600,000 is used up (32 installments — 8 years). $600,000 is 5 percent of $12 million.
EarthLink will pay the $600,000 in three installments: (a) $200,000 within 15 days from the Effective Date, i.e. after the Board and PUC approve the contract; (b) $200,000 within 15 days of Proof of Concept Acceptance (defined in 5.1.6); and (c) $200,000 within 15 days of Final Network Acceptance (defined in 5.1.12).
So EarthLink stands to lose $200,00 if they never get beyond the Proof of Concept Acceptance if, for instance, the city failed to get approvals from PG&E to enable the PUC to provide electricity. EarthLink will have lost $400,000 if after Proof of Concept Acceptance, EarthLink fails to enter into an agreement with PG&E.
Another wrinkle: the $600,000 prepayment can be reduced by $6000 for every $1 that the pole fee is below $99.48 (on the date of PUC approval of the contract), but the prepayment fee can never be reduced below $300,000. The example provided in the contract (4.1.4) says: if the pole fee at the time of PUC approval is $89.48 ($10 below $99.48), EarthLink pays $60,000 less ($10 x $6000) in ROW prepayment fees.
Network Implementation (Section 5): here comes neighborhood politics
The city requires EarthLink to set up a proof of concept: a limited implementation of 2 square miles or more to be agreed upon by the parties, together with the acceptance test criteria (outdoor and indoor coverage up to 40 feet, throughput, availability, reliability).
This is where the politics come in: which neighborhood gets to go first? The city has to make sure it’s in a neighborhood where people will be “breaking” the network, i.e. using it intensively, pushing the network’s bandwidth, reliability and latency limits. Otherwise, the city will be giving EarthLink an easy time.
Suggestions for neighborhoods? Post your comments below.
What about network upgrades? EarthLink is required to update the network with “industry standard technology” whatever that means, but this obligation does not apply during the last 18 months of a Term. Upgrades must be similar to upgrades performed in comparable cities where EarthLink has a Wi-Fi network.
Term of the contract (Section 7)
The contract’s initial term begins on the Effective Date (when the Board and PUC approve it) and ends 4 years after satisfaction of Network Implementation Authorizations (defined in 6.5). The contract renews automatically at the end of the initial term for three 4-year terms (additional 12 years). This is in essence a 16-year contract.
If it is not renewed, the contract continues for an additional 18-month period (Transition Period), presumably to allow EarthLink and the city to find another service provider.
Service Level Agreement ( Section 8 )
It’s nice to see the city negotiate a service level agreement with EarthLink that covers outdoor/indoor coverage, availability, throughput, and latency. But the clause does not have any teeth because section 8 says “failure of the network to satisfy the SLAs shall not be a Termination Default.” EarthLink will have to make reports on the service level criteria, which we hope will be made public.
Where a service level agreement will have any teeth is between EarthLink and a service provider who is going to deliver Internet access using the EarthLink network (one of EarthLink’s wholesale customers). Assume Verizon or Comcast decides to buy wholesale access from EarthLink to bring VOIP and wireless Internet access to their customers. I am certain their agreement with EarthLink will have stricter performance criteria than these, including termination clauses if certain levels of service are not met.
Network Policies (Section 9): net neutrality, limitations on wholesale access and other creepy clauses
I am happy to see that the contract requires EarthLink to open up its network to other service providers. Section 9.1 says EarthLink must offer other service providers wholesale “access” within 30 days after satisfaction of the Network Implementation Authorizations (defined in 6.5).
Exactly what type of wholesale “access service” does EarthLink have to offer to other service providers? Only the type of access that EarthLink itself offers to the public. So if you, a service provider, have more advance products than EarthLink, this contract does not require EarthLink to offer you wholesale access to the San Francisco network.
Moreover, this openness does not apply to Digital Inclusion Products, Occasional Use Products and Basic Service:
9.1.1. Wholesale Access Required. Beginning no later than thirty (30) days after satisfaction of the Network Implementation Authorizations, EarthLink shall offer to any Service Providers wholesale access to any Access Service of the Network that EarthLink offers to the public (except for Digital Inclusion products, Occasional Use products, and Basic Service) on nondiscriminatory terms and conditions.
Digital Inclusion Products refer to the $12.95 per month 1 Mbps service that 3200 low-income households in SF will be getting. Occasional Use products refer to Internet access for less than one month — so hourly or weekly subscriptions. Basic Service refers to the free 300 Kbps service.
So, this means that if T-Mobile wants to offer one-hour or one-day wireless broadband service via EarthLink’s network, the contract does not require EarthLink to provide T-Mobile with wholesale access to offer this type of service. EarthLink could do it, but it is NOT REQUIRED to do so. I am assuming that EarthLink thinks the “occasional use” market is so lucrative that it wants to have it all to itself. Not surprising given that EarthLink is also spending a lot of money to build the network. But we cannot call it a true open wholesale access network.
The contract does not specify what level of wholesale access fees EarthLink can charge. If they charge a lot of money on a wholesale basis, then those service providers cannot offer competitive Internet access or other type of service (VOIP) to end users.
Now for the creepy part. There is a non-discrimination clause in 9.2.1 which starts out very well. But watch out for the terms “subject to”, “lawful”, “legal” and “harm the Network”:
9.2.1. Non-Discrimination Required. EarthLink “will promote the open and interconnected nature of the public Internet and the neutral and non-discriminatory treatment of consumers in the following respects:
18.104.22.168 By allowing users to run applications and use services of their choice, subject to the needs of law enforcement.
22.214.171.124. By allowing users to access the lawful Internet content of their choice.
126.96.36.199. By allowing users to connect their choice of legal devices that do not harm the Network.
188.8.131.52. By fostering competition among broadband providers, application and service providers and content providers.
What does “subject to the needs of law enforcement” mean? If the police tell EarthLink to block you from using a particular application (say, VOIP) or a service (www.relakks.com, a Swedish service that allows you to surf the Internet anonymously), simply because it fits law enforcement’s “needs” as they see fit, EarthLink can simply do so without violating this contract. There is NO requirement for EarthLink to seek a court order requiring the police to PROVE that the police are indeed entitled to have EarthLink block you from using that application or service.
Here’s another one: EarthLink can block you for accessing Internet content if they deem it to be “unlawful”. What exactly is that? And how do you know what’s lawful or unlawful? Do you keep up with federal and state court cases?
Finally, EarthLink can block you from connecting the device of your choice if they think it’s “illegal” and “does not harm the network”. What does harming the network mean? If you upload and download a lot, is that harming the network? Maybe. Then they can just disconnect your home PC or your Wi-Fi enabled gaming device. What is illegal? A device approved for use in Japan which you bought on your shopping trip in Tokyo, but is not approved by the FCC? Technically illegal, isn’t it?
At the end of Section 9, it says the parties shall encourage similarly-situated providers of broadband services to abide by these principles. A bad idea when it comes to the vague clauses I point out above.
Privacy (Section 10): even creepier
I am quoting the full clause 10.3.1.1 (with my emphasis in bold) because you should read it carefully (and out loud):
10.3.1.1 Sharing of Protected Personal Information. EarthLink will not share Protected Personal Information with any person or entity without the voluntary, affirmative consent of the user, subject to the following exceptions:
a. EarthLink may share Protected Personal Information with EarthLink’s Third Party Suppliers to deliver or promote EarthLink’s services, provided that users may opt out of receiving marketing communications from EarthLink or EarthLink’s Third Party Suppliers using Protected Personal Information obtained from use of any EarthLink Fee Service.
b. EarthLink may share Protected Personal Information with Third Party Suppliers for purposes of processing payments, collections, and order fulfillment and service delivery.
c. EarthLink may share Protected Personal Information with law enforcement in accordance with Section 10.3.1.2.
d. EarthLink may share Protected Personal Information with other persons or entities in connection with civil legal proceedings in accordance with Section 10.3.1.3.
e. EarthLink may share Protected Personal Information with entities that jointly promote EarthLink’s service to their customers, provided that users may opt out of receiving marketing communications from such entities or EarthLink using Protected Personal Information obtained from use of any Fee Service.
This is what it means to me:
(1) EarthLink will not share your Protected Personal Information except with “Third Party Suppliers” (defined in 1.87) but you have to opt out. Who are Third Party Suppliers? The definition is very broad: Vendors or partners that provide products or services to EarthLink or the Subscribers of Fee Services on behalf of EarthLink. These can include anyone who advertises on the EarthLink network or anyone indeed who provides products and services to any Fee Subscriber on the EarthLink network.
(2) The opt out is only for “marketing communications” whatever that means, from EarthLink or Third Party Suppliers. What about opting out of having your information used for purposes other than marketing communications? The contract is silent. It means the third party suppliers and EarthLink can still use your personal info for other purposes, just not to send you marketing pitches.
(3) They can share it with Third Party Suppliers for the purpose of processing payments, collections, order fulfillment and service delivery.
(4) They can share your personal information in connection with civil legal proceedings and with law enforcement agencies.
(5) They can share it with companies that jointly promote the EarthLink service to their customers. But your opt-out is limited to opting out of receiving marketing communications, not opting out of these people using your information for other purposes.
Let’s take number 5. Assume you are already an EarthLink Fee Subscriber on the San Francisco network. Clearly, you don’t need to receive any marketing communications from third parties, say the local supermarket or a credit card company, who are promoting EarthLink’s service in SF. So why would EarthLink share your personal info with the local supermarket and the credit card company? Even if you opt-out of receiving such useless pitches, you’re not safe. Because you’ve opted out only from receiving the marketing pitches. You have not opted out of these EarthLink partners using your info for other purposes. You can’t even tell EarthLink NOT to share your personal info with these parties in the first place!
The clauses that deal with EarthLink providing your personal information for the purposes of criminal investigations and national security (10.3.1.2) and civil proceedings (10.3.1.3.) are troublesome. EarthLink can disclose your personal info, without prior notice to you, to law enforcement if EarthLink believes in “good faith” (whatever that means) that giving away your private into will satisfy the legal process, help them investigate potential violations of terms of service, or protect against imminent harm to the rights, property and safety of EarthLink and its users.
What about the use of Location Information, defined as information that enables a Service Provider or a third party to identify the physical location of a device connected to the Network? You can opt out of EarthLink’s use of Location Information but you have to be an EarthLink Fee Subscriber. No protection for those who get free access (you will have to rely on the firm providing the Basic Service). Even if you opt out, EarthLink can still provide your Location Information to law enforcement or to civil proceedings that involve you (10.3.1.4).
For those of you who opt for the free service, the provider (perhaps Google but they are not mentioned anywhere in the contract) can disclose your personal information to law enforcement and in connection with civil proceedings (similar to those outlined above). With regard to other types of opting out, EarthLink leaves it up to the Basic Service provider.
Future Products (section 11.8)
This is interesting: by the time of the Final Network Acceptance, EarthLink will offer point-to-point fixed wireless 3 Mbps service (but it’s on a best efforts basis, which to me is meaningless). What could this be? WiMAX?
Future Municipal Network Services (section 11.9)
The city will consider EarthLink if it wants wireless service for city departments but there’s nothing definite in the contract. Unlike Minneapolis, which has an agreement with US Internet for municipal use of the network, San Francisco decided not to negotiate this right now. It would have been great to see the city commit to using wireless broadband to enable its employees to work more efficiently, e.g. for public safety, inspection, parks and maintenance, etc. This is a large part of the value of a citywide Wi-Fi network.
Assignment (Section 12)
EarthLink has to get the city’s approval if it wants to assign its obligations under the contract, except if someone buys EarthLink or the division running the SF network. The assignee must agree to assume all of EarthLink’s obligations, in particular the open access requirements.
Termination Default (Section 14.5)
The city can terminate the agreement if EarthLink:
- fails to accomplish Final Network Acceptance within 18 months after Network Implementation Authorizations;
- does not pay the right of way fees;
- abandons Basic Service (the free service) for 15 days consecutively (with some exceptions like Force Majeure).
There are many other provisions in the contract that deserve your attention but I am stopping here.
I welcome your comments especially if you have other interpretations of the contract’s clauses. Feel free to disagree with my reading of the contract.