OLA#: 016-03G

LEGISLATIVE ANALYST REPORT

TO: Honorable Members of the Board of Supervisors

FROM: Office of the Legislative Analyst

DATE: June 9, 2003

SUBJECT:Employee Suggestion No. 31 & 229: City Cell Phone Management

EMPLOYEE SUGGESTION

The employee suggests that the City pursue more economical contracts with its cellular telephone providers. The employee also suggests that individual City departments should be required to pool their cell phones and make them available to employees on an as needed basis only.

EXECUTIVE SUMMARY

According to the Department of Telecommunications and Information Services (DTIS), within the past year, it renegotiated the City's contract with AT&T Wireless and is in the process of renegotiating the City's contract with Nextel Communications. DTIS advises that through multi-state volume buying (described below), both contracts will represent the best possible rates on cellular telephone services for the City.

Moreover, DTIS advised the Legislative Analyst that in theory cell phone pooling would save the City money as the number of cell phones and their associated costs (equipment and lines) are reduced in each department. However, as of the writing of this report, DTIS could not provide the Legislative Analyst with an estimate of potential cost-savings resulting from cell phone pooling in San Francisco.

DTIS also believes that the Board of Supervisors should encourage City departments to select cell phone plans that best match their employees' usage. Also, departments should be required to monitor cell phone use as usage may change over time and thus necessitate changes in cell phone plans. The Legislative Analyst concurs with both these recommendations.

ANALYSIS & RECOMMENDATIONS

DTIS negotiates the City's contracts for cellular telephone services and provides a centralized method for billing City departments for those services. Each department is responsible for approving, issuing and monitoring cell phone use by their employees.

Currently, DTIS maintains two separate contracts with AT&T Wireless and Nextel Communications. DTIS estimates that across approximately 60 departments, there are a total of 5,057 cell phones in use, including 4,497 AT&T cell phones and 590 Nextel cell phones. A small minority of departments have agreements with other vendors for cellular telephone services. DTIS provided the OLA with a list of all of the vendors as well as the number of cell phones in each department.

The employee suggests that the City should pursue a more economical contract with its cell phone providers. According to DTIS, within the past year, it renegotiated the City's contract with AT&T Wireless and is in the process of renegotiating the City's contract with Nextel Communications. DTIS advises that through multi-state volume buying, both contracts will represent the best possible rates on cellular telephone services for the City.

According to DTIS, the City's contract with AT&T Wireless is made available by the Western States Contracting Alliance (WSCA). The primary purpose of WSCA is to establish cooperative multi-state contracts where participating states (as a group) achieve economies of scale by purchasing products and services. WSCA agreements are available to all government entities within WSCA states including cities, counties, school districts and universities. DTIS advised the Legislative Analyst that since DTIS renegotiated the City's contract with AT&T Wireless the City has reduced its overall costs by 10-15%.

DTIS states that the City's contract with Nextel is not a WSCA agreement in California. However, DTIS is currently negotiating with Nextel to make the City's contract with Nextel available through WCSA in order for the City to take advantage of multi-state volume buying. DTIS estimates that this move will reduce the City's overall costs with Nextel by 30%.

The employee also suggests that rather than assigning cell phones to individual employees, City departments should pool cell phones and make them available on an as needed basis only. The employee draws a comparison between cell phone pooling and the City CarShare program, where cars are available to members on a "per-use basis" only. Under CarShare, individual members pay based on how much they drive. Under cell phone sharing, DTIS would continue to bill the department as a whole for its employees' cell phone usage.

According to DTIS, in theory cell phone pooling would save the City money as the number of cell phones and their associated costs (equipment and lines) are reduced in each department. However, as of the writing of this report, DTIS could not provide the Legislative Analyst with an estimate of potential cost-savings resulting from cell phone pooling in San Francisco.

Notably, DTIS believes that a reduced number of cell phones may require the City to purchase more expensive cell phone plans in order to accommodate the increased usage of those phones. According to DTIS, without further analysis, it cannot determine whether the cost-savings generated from cell phone pooling will outweigh the additional costs of upgraded cell phone plans.

It is important to note that cell phone pooling has its disadvantages too. DTIS points out that cell phone pooling would not accommodate those City employees (e.g., public safety, public health, social workers, department heads) who must have access to a cell phone at all times. In addition, cell phone pooling would make it difficult for employees to receive incoming calls. That is, if an employee makes a cell phone call in the field, he/she might not be able to be reached once the cell phone is returned.

To address these issues, if the City wishes to pursue cell phone pooling, it should allow department heads to assign cell phones to individual employees if necessary. In addition, employees participating in a cell phone pool should be advised to release their office phone numbers as well as their cell phone numbers in order to receive incoming calls. This would of course be an inconvenience, but one mitigated by the potential cost savings associated with cell phone pooling.

In addition to cell-phone pooling, DTIS advised the Legislative Analyst that departments should be required to accept the recommendations of its recent rate optimization study of cell phone users. The goal of this study was to determine the appropriate AT&T cell phone plan for each City employee based upon his/her usage.

In addition, departments should be required to monitor cell phone use as usage may change over time and thus necessitate changes in cell phone plans. The Legislative Analyst concurs with both these recommendations.