HomeMy WebLinkAbout7A, Cable Franchise Agreement�
EN HILLS
Request for Councii Action
Prepared By: Patrick Klaers, City Adtninistrator Council Meetirig Date: February 14, 2011
Cable Francl�ise Agreement
Budgeted Amount: Actual Annouz�t: Funding Source:
NA NA NA
Recor�mendation:
Approve Resolution 2011-007 which reinforces the City's approval to have Not-�h �uburban
Communications Comnnissio� renegotiate the franchisa renewal on our behaIf.
Supportin� Documents:
1. Memorandum dated F�bruary I4, 2011, from Patrick Klaers.
2. Correspondence from NSCC Claair Da� Roe.
3. Cable franchise renewal fact sheet.
4, Cozxespondence from Comcast regarding the renewal process.
5. Resolution 2011-007.
�
EN HILLS
MEMORANDUM
DATE: February 14, 2011
TO: Honorable Mayo�- and City CounciImembers
FROM: Patr�ck HIaers, City Administrato
'� ��
SUBJECT: Cable Franck��se Agreement �._
Bacl��round
Attached is some mate�zal related to the cable television franchise renewal. �ncluded i� a
lett�r frorn NSCC Chair Dan Roe, a cable fraxachise ren�wal fact sheet, a brief letter from
Comcast regarding the renewaI process, and a resolution regarding the formal renewal
proceedings. This resalution rein%rces the City's approval to have NSCC renegotiate the
franchise renewal an our behalf.
Staffreca�azn.ends approval of the attached Resolution.
� - North
1 Suburban
Communications
Commission
January 14, 2011
0
in
�
��
o�
+- � ;
��
��
0
�X
L 6
O '+-.
v �,
��
��
m
U N
��
¢�
� �'
��
L�
��
��
�
U'� `_'
�o
��
L �
O N
Z�
h
r
.�
��
O U
� U
��
z
�� �.
� �'
0 0
U �
�
��
� M
o �-
�_ �n
a�
c� Z
'� �
��
�=
�N
0
U �
�•
c� �
� �,
L L
7 �
.r� �'
��
�i} S
�--
� Q
�
L O
O �
z�
N
Mayor Da�id Grant
1679 Chatham Avenue
Arden HiIIs,:MN 55112
Patrick Klaers, City Administrator
City of Arden Hikls
1245 W. Highway 96
Arden Hi[Is, MN 55�12
Dear Mayor Grant and Mr. Klaers:
North Suburbs
Last October, your city recei�ed a letter from lCathi Donnelly-Cohen, Director of
Go�ernment A#fairs for Comcast's Twin Cities cable systems, notifying you of the cable
company's intention to renew th� current cable tele�ision franchise. Your city's franchise
expires on October 1, 2013, but federal law requires this notification ta be sent to the lacal
franchising authority 34 to 36 months priorto expiration ofi the franchise.
To begin the franchise renewal process, which is techr�icafly a forrn af admir�istrative
litigation, tf�e N�rth Sufaurban Cammunications Commission (NSCC) requests that your city
adopt the attached resalu�ion delegating to the NSCC the respon5ibility for conducting the
renewal proceedings. Althoug� the N5CC Joint Powers Agreement already empowers the
Commissior� to act on each city's behalf in the franchise renewa� process, the commission
belie�es that adopting the resolution will forestall any arguments by the cable company to the
co ntrary.
Because, in order to start the franchise renewal proeess, the Commission and its staff
must soon begin the required e�aluation of Comcast's compliance with the current #ranchise
and the requir�d needs assessment, the comrr�ission asks that yac�r Gity council act
expeditiausiy to pass the resolution. The Gommission wou[d like to have all of the cities adapt
the resolution by the end of February if passible.
Because the commission understands that you and your �ity cauncil members will
probably ha�e questions about the franchi5e ren�wal process, aur staff �as prepared the
attached Fact Sheet that addresses sor�e af the questions that are more frequently asked. In
addition, our ExecutiVe Dire�tor, Coralie Wifson, is available to attend a city council meeting or
work sessian to review the proGess and respor�d to your council members' questians and/or
Arden Hilis �alcon Heighfis l.auclex�dale Lii-tie Ccu7ada Mounds �ew New Brigh#on North O�aks Roseviile Sfi. Anthony Shor�eview
Mayor Grant/Patrick KEaers
January 14, 2011 '
Page 2.
concerns. If possible, a mer�ber of the commission can attend aiong with Ms. Wilson. To make
arrangements, ar if yau ha�e any questions, feel free to call Ms. Wilson at 651-792-7500 or e-
mail her at cwilson�ctvlS.or�.
Thank yo� for your prompt attentior� to the Commission`s request.
Sincerely,
Dan Roe, Chair
North Suburban Cammunicatians Commission
Mayar, City of Raseville, MN
cc. Craig Wi�son
NORTH SUBURBAN CQMMUN1CATiONS COMMISSION
CABLE FRANCHISE RENEWAL FACT SHEET
What does the cable franchise renewal t�rocess in�oive?
The formal franchise renewal process is ane vf administrative litigation. The process itself is spelled out ir�
federal law in Settion 626 of the Cabie Comr�unications PolityAct of 1984 (the "Cable Act"), ar�d It is designed to
pratect the rights o�the incumE�ent tabEe provider while afso ensuring thai a cammunity's present and future
cab�e-refated needs and ir�terests are satisfied, taking cost into consideration. Formal franchise rer�ewal begins
with the cable provider notifying the franGFtising authority of its desire to renew its cable franchise agreement_
The franchisir�g authority then hegi�s by e�aluating the cable provider's performance under the existing franchise,
including the engineering of the cabfe sysiem, and by ascertaini�g t�e cable and communicatians needs of the
community. This typically in�ol�es hiring experienced engineering, legaf, financial and ascertainment consultants
ancE can take 6 to 12 months (or more) ta complete. The franc�ising autharity then may request tha# the cable
provider subrnit a proposal showing how it will meet the r�eecfs identified in the ascertainment. The formal
pracess also requires public input an the cable pro�iders past performan�e and or� the needs ascertainment
While fede�af taw also �ermits tf�e use of informal franchise renewal negotiations wi#h the cable pro�ider
at any time (inc�udir�g simultaneousfy with the farmai process}, a franchising authority rnust be prepared to follow
the requir�ments af the formal process because either side may choose to return ta that process at any tirne
during the renewal proceedings. Typically, the renewal proceedings afternate between the formal and in�ormal
processes several times.
Can we ne�otiate w_ith more than o�e cable pro�ider?
T�e fecEeral franchise renewal process is i�tencEed for the franchise af the incumbent cable provider.
None of the franchises of the NSCC member cities are excfusive, howe�er, so member cities may nEgotiate a new
franchise with anat�er cable pro�ider at any tirr�e. That ha�ing been said, cable system overbuifds are not
camrnon because the new pravider must invest a significant amouni of money in the canstruction af a network
with no customer income until the new system is built. In the meantime, the incumbent controls 60-65% o# the
market, and sateiiite providers ha�e most of the rest. O�erbuilding is a very difficult ancE expensi�e proposition
requiring very deep pocicets and iang-term commitment. in recent years, the anly pro�iders tha# have tried
o�erbuilding are #radi#ionaf telephane comPanies Verizon and AT&T, neither of which ha�e landline telephone
tompanies in Minnesata. Furthermore, both �ave halted all new construction in arderto cancentra�e on the
systems they ha�e already built. Meanwhile, Qwest has shawn no Credible interest in constructing an ad�anced
wireline network #hat can compete with Comcast's cable systern in the NSCC's member cities.
Can we s+mplv extend the existin� cable franc�ise?
i"his is a possibility, although the incumbent pro�ideF is not likely to want to do so. A typical goal of
providers in franchise renewal is ta eliminate and/or trim back obligations in the curren� �ranchise agreements,
including the Enstitutional IVetwork, the number of pubiic, educational and governrnent (PEG) access channels,
and the financial support af those channels. Nevertheless, the commission wi�l explore that option with tF�e
cornpany.
Wh should we have the NSCC and its staff handle our #ranchise renewal rather than doin it oursei�es?
Firs�, cable frar�chising and reRewai law is very complex, in�ol�ing the interplay betweer� federal, statE
and Iocal laws and regulations with 30-44 years of legal and legislative history. It also is constantly changing and
e�ol�ing. Secand, Comcast is the largest cable company in the LJnited States (if not the warld] and has a full-time
staff that does na�hing �aut cable franchise renewa! negotiatipns. As a resuit, the company's renewal staff and
attorneys are �ery knawfedgeahle about the iaw and how to use it to the company's advantage. Success o� the
local government's side depends or� having equally knowledgeable staff and ]egal counsef, devoting adequate
resources to the renewal process and rnaintaining a united front. Sharing the cost of the staff, as weli as the
cor�sultant expertise for the technical cort�pliance review and needs ascertainment, has aiways rr�ad� sense, but,
in these difficult economic times, it is e��n more irriportant. Further, ha�ir�g a number of cities {and their cable
subscribers) on the local goverr�ment side of the tabfe provides more le�erage against the attempts �y Comcast to
eliminate or diminish its franchise qb�igations.
Wh does Comcast need a cable franchise?
As a cabfe pro�tder, Comcast is required by 6o�h federai and state law to secure a Franchise from the locai
governme�t—typically a city, but the franthising au#hority can also be a coliection of cities or a county— in order
to �ravide cab�e televisiqn ser►rice using pubEic rights-of-way. This franchise a1[ows the cable pro�ider to build its
cable network in the public rights-of-way withaut having to n�gotiate with every property owner_ !n return for a
franchise to use the rights-of-way, which are scarce and �aiva6le pubfic property, the cabie provider pays a
franchise #ee, tapped by federallaw at 5% of gross re�enues, and usually has obligations to #�ravide channel
capacity and financial support for public, educationaf and ga�ernment access channeis and to pro�icie an
Institut�anal Network for local government use.
Wh should we 6other wi#h franchise fenewal when all televisian is mo�in ta the �ntern�t?
Although a IQt of �ideo, including many traditional television prograrr3s, is now avaiiable o�er the internet,
it wilf be many years 6efore all tele�ision programming currently distributed �ia cable and satellite pro�iders is
a�ailabl� ov�r the Intemet. In fact, there is same caRcern that th� lr�ternet as currently structured does not ha�e
enougf� capacity ta f�andie that �olume pf video programming. Further, to date, we are not seeing any of the
traditional programming networks abandon cable and satelNte distribution, and new pragramming networks --
inclucEing �he recentfy introduced Oprah Winfrey Network (OWN) — are still being developed and introduced for
cable and satelfite distributian. So, given the state of the industry, technoiagy and the market, focal franchisir�g
autharities and caE�le providers must wcr�c ;�rit� the laws and reg�iations that are currently ir� p�ace.
C,an a renewal request be der�ied?
Yes, bath legally and practicalfy. Although friost communities do eventuaEiy renew the incurnbent cabie
operatars #ranchise, se�era! comrnunities ha�e successfiully denied renewal. The Cable Act permits a cornrn�nity
ta deny renewal if past performance has beer� inadequate; or if tF�e incumbent operator is legally unqualified or is
unwiliing or unahle ta devvte the necessary technical skills and financial resaurces tn the community; or if the
opera�vr is unwilling to reasor�ably satisfy the future, Cable-related nee�ds and interes#s of the camr�unity
cansidering t�e cost of ineeting those needs and interests.
The ot�erator says e�erl+thinQ a loca!_franchisin� authoritV asks for will �e passed through to subscrihers in rates.
Is #hat true?
Not necessarily. tn rate regulated franchise ar�as {such as the NSCCs member cities}, an operator can pass
through increases in its external casts to subscribers. Some Franchise requirements, such as PEG and francF�ise fee
requirecnents, are external costs, but not all are. In addition, because ihe operator is only entitled ta pass through
tf�e increase in those costs, renewal fra�chisE requirerr�ents do not necessari�y result in rate increases, depending
in par# on what was required under the prior franchise, the length of the prior #ranchise, a�d the operator's
retau�ry schedul�.
January I7, 2011
�comcast�
Kathi �onne[ly-Cohen
Director of Governmen# Affairs
Twin Cities Regian
{65'i ) 493-5776
(65'E ) 493-5275
Sent Electronic and USPS
February 8, 2011
Ms. Car Wilson
North Suburban Communicatians Cornmission
2670 Arthur Street
Rose�ille, MN 55113
Dear Cor:
10 River Park Plaza
Sf. Pauf, MN 55107
We have re�i�w�d your letter af .iartuary 24, 20'[ 1, inquiring as to whether Comcast
would consider an extension of the current Fra�chise rather than proceeding with the
formal or informa[ process oUtEined in Section 626 of the Cable Commun�cations Poiicy
Act of 1984. In light of fihe significant changes in �echnology and reg�latory decisions
that have occurred in the last 12 years, Comcast believes it is in the best i�terest of
e�eryone, including aur customers and regulators to begin renewal discussions in a
timely manner.
We look #orward to working with you and the member cities in th� coming mont�s.
Sincerely,
,
��'-' --
Kathi Donnelly-Cohen
Director o� Government Affairs
Cc: Emmetf Coleman - Comcast
Steve Holmes - Comcast
�
EN HILLS
CITY 4F ARDEN HILLS
COUNTY �F RAMSEY
STATE OF MINNESOTA
RESOLUTION NO. 2011-007
A RESOLUTION CONCERNING THE COMMENCEMENT OF FORMAL RENEWAL
PROCEEDING� UNDER THE FEDERAL CABLE COMMUNICATION� POLICY ACT
OF �.984, AS AMENDED
WHEREAS, tk�e City of Arden Hills, Minnesota, (City) enacted an ordinance and
entered into a cable television frar�chise agreement (collectively, the "�ranchise") with
MediaOne North Central Communications Corp. ("MediaOne"), which becarne effecti�e
October 1, 1998, to pxovide cable television service within. the territoria.t limits of ihe City; and
WHEREAS, as a result o� several transfers of the Franchise, Comcast of Minnesota, Ync.
("Comcast") currentl� holds the Franchise; and
WHEREAS, the North Suburban Cable Commission (the "Commission") was arganized
by the City and the other member cities pursuant to Minn. Stat. § 471.59, as amended, for the
purposes of monitoring Comcast's performance, operations and activities, and coordinating,
administering and enforcing the City's Franchise and tl�e franchises granted by the
Commission's other member cities; and
WHEREAS, Section 626(a)(1} of the Cable Communications Policy Aci of 198�, as
amended (the "Cable Act"), 47 U.S.C. § 546(a){1), provides that i�a vvritten renewal request is
submitied by a cable operator during the 6-month period which begins wiih the 36ih month
before franchise expiration and ends with the 30tk� month priar to franchise expiration, a
franchiszng authority shall, within six rnonths of the request, commence fortnal renewal
proceedings io identify the fuhare cable-related community needs and interests, and to review the
performance of the cable operator under its franchise during the then c�rrent franchise term; and
WHEREAS, the Franchise is scheduled to expire on October 1, 2013, unless soaner
terminated or extended; and
WHEREA�, by letter dated Octo�er 11, 2010, from Comcast to the City, Corncast
invoked the far�al renewal procedures set forth in Section 626 of the Cable Act, 47 U.S.C.
§ 546; and
WHEREAS, the City is desirous of commencing the formal renewal proceedings
specified in Section 626(a){1) of the Cahle Act, �7 U.S.C. § 546(a){1) and, at the sa�xie time, of
pursuing the informal renewal process with Comcast pursuant to �ection 62b(h} of the Cable
Act, 47 U.S.C. § 546(h); and
WHEREAS, the City wish�s that the formal proceedings under Section 626{a) of the
Cable Act and the informal renewal process under Section 626{h) be managed and conducted by
the Commission, ar its designee(s); and
WHEREAS, the City intends to confirm the Commission's pre-existing auihority to take
any and aIl ste�s required or desired to comply with the franchise renewal and related
requirements of the Cable Act, Minnesota law and the Franchise in accordance with the broad
powers granted to the Coxzzmission by the Amended North Suburban Cable Commission ]oint
2
and Cooperative Agreement for the Administration of a Cable Communications �ystem, dated
June 1990 {the "Joint Powers Agreement"); and
WHEREAS, the Cor�mission is empowexed by 7oint Powers Agreernent to conduct the
Section 626(a) proceedings on the City's behalf arid to take such other steps and actions as are
needed oar required io carry outi the formal and informal franchise renewal processes; and
WHEREAS, the Commissio�, on behalf of the City, must provide tk�e public with notice
o�, and an opportunity to participate in, formal renewal proceedings under Section 626(a) of th�
Cable Act; and
WHEREAS, farrnal Section b26(a) proc�edings and the informal franchise rer�ewal
process may involve the collection and analysis of information from Comcast (and its affiliates
and subsidiaries), City agencies and departments, the Commission, the North Subu�rbs Access
Corporatian, the public and other interesied ,�arties, and may require one or more public
hearings.
NOW, THEREFORE, BE TT RESOLVED BY THE CITY COUNCIL OF THE
C�TY OF ARDEN H�LLS, MYNNESOTA, THAT:
Section 1. The City authorizes the Comrnission and its staff to comrner�ce formal
franchise renewal ascertainment and past perfoxmance proceedings under Section 626(a)(1) of
the Cable Act, 47 U.S.C. § 546{a){1}, concerning Comcast and the Franchise, on the City's
behalf, pursuant to the powers granted ta the Commission in the Joint Powers Agreement. Tl�ese
proceedi�gs, and all applicable procedures, tirnelines and deadlines set farth i� Section 62b(a}-
(g) of the Cable Act, 47 U.S.C. § 546(a)-(g}, may be tolled if Comcast and the Commission enter
into a lawFul and binding tolling agreement {"Standstill Agreement"}.
Section 2. The Commission, Con�nission staff andlor iheir designee(s) are
authorized to manage and conduct those �ormal franchise renewal proceedings specified in
626(a}(1) of the Cable Act, 47 U.S.C. § 546(a)(1), a�ad to take all steps and actions necessary or
desired to canduct such proceedings and to comply with applicable laws, regulations, orders and
decisions.
Section 3. The Commission, Commission staff and/or their designee(s), may explore
with Comcast the �assibility of pursuing the in�ormal renewal process under Section 626(�) of
the Cable Act, 47 U.S.C. § 546(h). If the Cornrnission and Comcasf decide �o utilize the
informal renewal process, the Commission, Commission staff and/or their designee(s) axe
authorized ta enter anto a Standstill Agreement, if appropriate or desired, fa perform past
performance anc� needs assessment reviews, io negotiate and communicate with Comcast
cancerning matters relating to the renewal andJor extension of the Franchise, and to talce all other
steps and actions necessaary or desired to engage in the informal renewal process and/or to
comply with applicable �aws, regulations, orders at�d decisions.
Section 4. The Cortunission, Com�nission staff and/or their designee(s) shall provide
the public with notice of, and an opportunity to participate in, proceedings conducted under
Section 626{a)(I) of ihe Cable Act, 47 U.S.C. § 546(a){1}, unless those proceedings are toiled
pursuant to a Standstill Agreement, in which case such notice and an oppartuniry to participate
4
will only be required if the Standstill Agreement ceases to be effective or if the Cable Act's
formal renewal pracess is re-activated in accordance with the Standstill Agreement.
Section 5. The Comnnassion, Comrriission staff andlor their designee(s} may establish
procedures and dates for the conduct o�' any hearings related to the Section 626(a) proceedings or
the informal franchise renewal process and may establish procedures and dates for ihe
submission of testimony and other information in connection with such proceedings and the
informal franchise renewal process.
Sectian. 6. The Coraunission, Commission staff and/or iheir designee{s) are
aut�orized to request and require Comcast and its affiliates and subsidiaries to subrnit such
information as may be deemed appropriate in connection with the Section 626{a) praceedings or
the informal rene�ral process under Section 626(h}, to the zx�axizxzum extent permitted by the
Franchise and applicable laws and regulations, �o gather such other inforxnation from other
persons or sources as may be deemed appropriate, and to take such further steps as may be
needed ar desired to Ensure t�ie City's, the Commission's, the North Suburbs Access
Corparatian's and the public's cable-�elated r�eeds and interests are satisfied and fully protected
cansistent with applicable law.
Section 7. The City reserves ali of its rights, remedies and defenses with respect to
determining wheiher or not to renew the Franchise, to the full extent permitted by Iaw. The
Mayor, City Council znembers and City employees shall not talce a stated position on the renewal
of the Franchise ar any Franchise renewal-related issues until the Commission mal�es a forxz�al
written recommendation to the City concerning �vhether renewal of the Franchise should be
approved or denied under the forrnal and/or in�ormal renewal processes.
Section 8. Nothing in ihis Resolution shall be construed to limit the powers of the
Commission under the 3oint Powers Agreement or to otherwise waive or limit the Commission's
authoriry, rights, remedies and defenses under applicable agreements, laws, regulations, arders
and dec�sions.
Section 9. The Commission shalI keep the City fully apprised of the staius and
pragress af the fornnal and informal renewal processes, as appropriate.
Section 10. This Resolution shall become effective immediately upon adoption.
ADOPTED BY THE CITY COUNCYL OF THE CITY OF ARDEN HILLS THIS 14th
DAY OF FESRUARY, 201.1..
:
ATTEST:
Patrick Klaers, City Admin.istrator
David Grant, Mayor
�