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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 �