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�4�� ��.,.. �- - - � , _ _ � � � Memo To: Mayor and Council Neal Beets, City Manager From: Chris Miller, Finance Direct�� � Date: January23,2006 Re: Update on Potential Changes in Local Cable Television Regulation Date: O1/23/06 Item: 2.e Cable TV Regulation Introduction As the Council is probably aware, over the past year there has been an increasing amount of discussion regarding the future of cable television regulation. Across the country, both the federal and some state governments have either passed new legislation or have pending legislation that potentially changes the regulatory role of local governments. In addition, we've seen some policy shifts by the Federal Communications Commission (FCC) which regulates the cable television industry. While there are many changes being observed, perhaps the most applicable to the City of Roseville (and all other local governments) is the definition of 'cable television'. While traditional cable companies such as Comcast and Time Warner continue to provide cable television services, other companies such as Qwest, Verizon, and SBC are moving from their traditional roots of providing telephone service to also providing cable television. These new market entrants (i.e. Qwest), are lobbying hard to preserve their business classification as a telephone company, thereby keeping them exempt from most local franchising requirements. This obviously does not sit well with Comcast and other traditional cable companies which are subject to local franchising requirements. Companies subject to local franchising requirements must pay the local government up to 5% of gross revenues derived from cable television services. Clearly the company that has to pay these franchise fees is at a competitive disadvantage to one that does not — hence the brewing conflict. While its way too early to predict which way all of this will go, there are some potential impacts that could effect the City. Potential Impacts On one end of the spectrum, we could see federal and state legislation that would require all cable tv providers to be subject to local franchising requirements. In this instance, Comcast, and other potential providers such as Qwest, would all pay franchise fees to the City. This would result in the City capturing much higher revenue streams to support its Communications function. 3