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Executive Summary FRC’s Review of Comcast’s Formal Renewal Proposal © Front Range Consulting, Inc.Page 7 of credit requirement. Finally, it would be financially imprudent for the NSAC to not maintain approximately a six month reserve of it annual budget as set forth in non-profit guidelines. The ECG “recommendation” completely misunderstands the financial reserves that the NSAC has prudently incurred during this franchise term and using any of these funds would be detrimental to the NSAC on a going forward basis to purchase future expenditures. The result of this ill-advised recommendation by ECG to use these reserves for future expenditures would place the NSAC in an exposed financial position that could lead to the collapse if the NSAC unless that is the end result the Proposal is attempting to suggest. These reserves have been prudently incurred under the expiring franchise and memoranda of understanding and should not be used to offset future capital and operating support obligation. Most importantly, these funds are not Comcast funds but rather funds provided by subscribers and to be prudently used by the NSAC. Operating Support Payments From the very onset of the Proposal, it suggests that operational support contributions are unlawful.14 The FCC has made it very clear in 1999 that a cable operator is free to make voluntary operating payments as part of a franchise agreement. In the letter ruling issued on June 25, 1999, the FCC added the following modification and clarification: The legislative history explains that "Subsection 622(g)(2)(C) establishes a specific provision for PEG access in new franchises. In general, this section defines as a franchise fee only monetary payments made by the cable operator, and does not include as a "fee" any franchise requirements for the provision of services, facilities or equipment. As regards PEG access in new franchises, payment for capital costs required by the franchise to be made by the cable operator are not defined as fees under the provision. These requirements may be established by the franchising authority under Section 611(b) or Section 624(b)(1). In addition, any payments which a cable operator makes voluntarily relating to support of public, educational and governmental access and which are not required by the franchise would not be subject to the 5 percent franchise fee cap."See H.R. Rep. No. 98-934 at 65 (1984) reprinted in 1984 U.S.C.C.A.N. 4702;see also 1984 U.S.C.C.A.N. at 4753 (Colloquy between Rep. Wirth and Rep. Bliley). (Emphasis added). Based on the well documented needs and interests in the franchise area, the Proposal should have agreed to provide, at a minimum a voluntary payment, for the operational needs and interests identified in order to allow the NSCC to continue to provide the services that were confirmed by the Ascertainment Report. 14 See e.g., Proposal at 1.