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HomeMy WebLinkAbout10815As revised 9/11/06 RESOLUTION NO. 10815 A RESOLUTION ADOPTING FINDINGS OF THE ASCERTAINMENT PHASE CONCERNING RENEWAL OF THE CABLE TELEVISION FRANCHISE BEING OPERATED BY COMCAST OF COLORADO IV, LLC, INCLUDING IDENTIFICATION OF THE CITY OF PUEBLO'S FUTURE CABLE - RELATED COMMUNITY NEEDS AND INTERESTS AND REVIEW OF THE CABLE OPERATOR'S PAST PERFORMANCE, ADOPTING MINIMUM REQUIREMENTS FOR A CABLE TELEVISION FRANCHISE RENEWAL PROPOSAL, AND REQUESTING SUBMISSION OF A RENEWAL PROPOSAL MEETING SUCH MINIMUM REQUIREMENTS WHEREAS, in accordance with Section 626 of the Cable Communications Policy Act of 1984 ( "Cable Act "), 47 USC §546, the City Council of Pueblo had initiated commencement of the Ascertainment Phase concerning renewal of the existing cable franchise being operated by Comcast of Colorado IV, LLC ( "Comcast ") by adoption of Resolution No. 10114 of the City Council which was duly adopted on April 26, 2004; and WHEREAS, pursuant to said Resolution and public notice, the City Council conducted a public hearing thereon on July 26, 2004; and WHEREAS, public comment had been solicited by the City during the Ascertain -ment Phase to identify the City of Pueblo's future cable - related needs and interests and review Comcast's performance under the existing franchise including comment upon the following matters: (a) the duration of the franchise term; (b) public, educational and governmental access channels, studios and equipment; (c) desired system rebuild and upgrades; (d) expanded channel capacity; (e) consumer complaints and issues; (f) customer service; (g) terms set forth in take- it -or- leave -it subscriber agreements; (h) rates for installation, reconnection, bad checks, changes in level of service, additional outlets, and remote control devices; (i) telephone responsiveness to outages, billing problems or other customer issues; Q) customer rights; (k) implementation of an institutional network; (1) service area and expansion thereof; (m) construction deadlines for system upgrades; (n) line extension policies; (o) free service to public entities in the public interest; (p) leased access channels; (q) franchise fees payable to City; (r) removal of obsolete facilities, (s) ownership of cable in dwellings; (t) easement and right of way usage; (u) impact on public rights -of -way; (v) construction requirements, excavation permits, excavation fees and notice of construction to residents; (w) undergrounding of cable wires and facilities; (x) construction timetable for rebuilds and upgrades; (y) maintenance of local offices; (z) relocation of system or portions thereof; (aa) emergency notification; (bb) termination of franchise; (cc) "favored nation" provisions for benefit of City of Pueblo and its residents; (dd) emergency uses of cable system; (ee) as -built drawings and recordkeeping; (ff) pole and conduit sharing provisions; and any other matter pertinent to a cable television franchise which is or may be appropriate for a renewal franchise, regardless of whether the matter is addressed in the current franchise; and WHEREAS, the City also conducted a public survey regarding cable television needs and Comcast's performance which was published in the Pueblo Chieftain on May 2, 2006 in approximately 40,000 newspapers, and which was also made available on the City's internet website, www.pueblo.us and WHEREAS, additional information concerning the matter has been received by Council during several open public meetings of the Council; and WHEREAS, the City Council has carefully considered the record in this matter, including the testimony presented at the public hearings and public meetings, comments filed with the City Clerk, the survey results, and the statements of City staff concerning the matter; and WHEREAS, the City Council hereby takes administrative notice of the existing franchise terms and the relevant files and records of the City Clerk and City Manager concerning the franchise and the Ascertainment Phase; and, WHEREAS, Council hereby further supplements the record in this matter by incorporating into the record for this proceeding, by reference, all of the franchises entered into or renewed by Comcast and its affiliates during the past three (3) calendar years, as evidence of what Comcast and its affiliates have recently agreed to elsewhere in the country; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1 Based upon the foregoing and all of the information received and considered by Council, Council makes and adopts the following findings of fact and conclusions regarding cable - related community needs and interests and the performance of the cable operator under the existing cable franchise: A. Cable Operator - Existing Franchise and Performance 1. The existing cable franchise was granted to TCI Cablevision of Colorado, Inc. ( "TCI ") by vote of the electors at an election held on November 2, 1993 wherein the electors approved Ordinance No. 5809. The initial term of the franchise was for three years, commencing January 1, 1994, with one automatic renewal for 10 years provided that during the initial term, TCI undertook and completed certain cable system upgrades and made available and operational the public, educational and governmental access channels ( "PEG Channels ") required by the franchise. 2. The City and TCI acted in a manner to indicate that the automatic renewal became effective and the existing franchise thus expires at 12:00 o'clock a.m. on January 1, 2007. 3. After the grant of the franchise to TCI, changes of control in TCI and its successors occurred, with the franchise eventually coming to be operated by Comcast of Colorado IV, LLC (hereafter referred to as "Comcast "). Comcast is an affiliate subsidiary of the national cable television provider Comcast Corporation, a Pennsylvania corporation, which claims to be the largest broadband cable provider in the United States with 21.7 million customers altogether. Operation of the franchise by Comcast was authorized by the City pursuant to the terms of a Partial Release and Settlement Agreement entered into on December 12, 2002 (the "Settlement Agreement "). 4. The existing franchise terms are set forth in Ordinance No. 5809, as modified by a Memorandum of Understanding entered into on December 13, 1993, and the Settlement Agreement. Together, the three instruments, and the rights and obligations thereunder, may be referred to as the "franchise." -11- 5. For purposes of determining the performance of Comcast under the franchise, the Council believes it is appropriate and fair only to consider Comcast's performance occurring after December 12, 2002, and Council will not consider, nor hold against Comcast, any prior non- compliance with the franchise, if any. 5.5 Comcast Corporation, in its latest SEC Form 10Q claims assets of over $103 Billion, of which "Franchise Rights" makes up almost half of that value. The Council agrees with Comcast's recognition of the value of franchise rights and finds that franchise rights have substantial value and franchise holders owe a concomitant duty to fairly serve the public interest and compensate the public for the grant of such rights. 6. Council has not received sufficient information upon which to conclude that Comcast has not complied with the material terms of the franchise. While Comcast's performance of the franchise terms and payment of required franchise fees remain subject to audit, adjustment and correction under the terms of the franchise and law, for purposes of this proceeding under §626 of the Cable Act, the Council will assume as fact that Comcast has substantially complied with the material terms of the existing franchise and applicable law. 7. While Comcast appears to have had, in the past, the financial, legal and technical ability to operate the cable system within the City, it has offered no evidence during the Ascertainment Phase that it will retain these abilities upon renewal, nor has independent evidence yet been presented to Council upon this issue. 8. Comcast provides to its subscribers, usually when they begin receiving cable service and annually thereafter, a notice setting forth the company's policies and practices, terms for service, payment, changes in services and charges, termination of service, disclaimers of warranties, provisions for handling of customer complaints and mandatory designation of forums for resolution of disputes and claims. These notices and their contents essentially set forth the terms under which subscribers of Comcast receive cable services, and are referred to herein as the "Subscriber Agreements." 9. Council finds that, although the franchise is non - exclusive, Comcast holds a de- facto monopoly for cable television services within the corporate boundaries of the City of Pueblo. Council further finds that off - the -air reception of local broadcast stations has been poor in some areas of the City, particularly in areas south of the Arkansas River. 10. Council finds and concludes that, as a franchisee enjoying special use of the streets and rights of way not generally available to the public at large, Comcast owes certain responsibilities to serve the public fairly and in a non - discriminatory manner, and that it must operate in the public interest. 11. Council finds that the Subscriber Agreements are not negotiated, but are essentially "take it or leave it" contracts, frequently referred to as "adhesion contracts." If a subscriber wants to receive cable service, he or she is stuck with these terms. 12. Council finds and concludes that some provisions seen in cable television subscriber agreements around the country, whether contained in Comcast's recent Subscriber Agreements or not, are unconscionable or otherwise not in the public interest. These provisions generally include the following: a. Mandatory arbitration of subscriber complaints and disputes without the voluntary written consent of the subscriber which is not a condition of receiving service; -12- b. Requiring deposits for service based upon customer credit reports or ratings; C. Terms that allow change in service rates and charges without at least 30 days notice to the subscriber. d. Assessment of late fees when payment is required in advance of service and the payment is received before the commencement date for the service period; litigation; e. Prohibition of, or required waiver of, subscriber rights to pursue class action f. Providing credit for service outages only to subscribers who complain or contact the franchisee instead of all known affected subscribers. g. Charging subscribers for services for periods when the franchisee has reason to know the service is not functional for such subscribers; and h. Requirements for subscribers to keep judgments, arbitration decisions or settlements secret with respect to claims, suits or arbitrations which are decided or settled favorably for subscribers. 13. With respect to programming, there appears to be wide divergence of public opinion regarding the channel offerings by Comcast, and the City Council hereby determines that it should refrain from directing the content of programming. Nevertheless, Council finds that so- called high definition programming, or HDTV, typically available from off -air broadcast sources and other providers in ATSC 720p" and "1080i" formats, is increasingly available and desired by the public. Moreover, a majority of local broadcast stations presently broadcast, during part of their broadcast day, in high definition. Council finds that Comcast has made efforts to increase HDTV channel availability, but that additional HDTV channels, and system bandwidth for carriage of such channels, will be needed in Pueblo in the future. 14. Council finds that the public overwhelmingly believes Comcast's cable service is too expensive. Council further finds that, to the extent authorized by law, ala carte pricing should be offered to Pueblo subscribers as a means to contain costs and the renewal franchise should contain provisions to allow ala carte pricing when, and to the extent, allowed by federal law. B. Future Cable - Related Community Needs and Interests 15. With the growing importance of HDTV, Council finds that the cable system infrastructure must be capable of higher bandwidth than exists today. Council finds that many communities' cable systems have 860 MHz design capacity at present, and that the industry will reportedly migrate to systems delivering gigabit or greater bandwidth in the next few years. Consequently, Council determines that the community will need a cable system capable of 860 MHz bandwidth within 24 months of January 1, 2007 (that is, January 1, 2009) and 1 Gbps capability within 36 months after that (that is, January 1, 2012). Council determines that, in accordance with law, the specific transmission technologies are best left to the cable operators, provided the system meets these performance benchmarks or their functional equivalent, as well as FCC technical requirements. 16. Council finds that the community will need a cable system capable of providing not less than 110 standard definition channels and an additional 25 HDTV channels. -13- 17. Council finds that with the rapidly growing importance of HDTV, the basic tier of cable service must in the future include an option for subscribers to receive the high definition version of each local television broadcast station for which the City, or any part thereof, falls within either the Grade A or Grade B contour of said station. The cable provider should furnish converter boxes or set top boxes, as well as so- called cable cards, at the option of subscribers, in order to render such broadcast stations receivable on all televisions manufactured on or after March 1, 2007. While Council believes such boxes or cards should preferably be provided to subscribers without additional charge, Council recognizes that a nominal charge may be required by the cable operator in order to recover or amortize equipment costs for such boxes and cards, provided that such charges are reasonable and comply with FCC rules and decisions. 18. The existing franchise provides for 3 initial PEG channels and an additional 3 PEG channels, or six total, when sufficient demand for the 3 additional PEG channels is present. Council finds that demand for PEG programming and channel capacity has increased substantially in recent years and that the trend is likely to continue. Consequently, Council finds that the community will need a cable system providing for the existing 3 PEG channels and an additional 3 PEG channels as demand grows, as in the current franchise. 19. Council finds that for PEG channels to function better, fulfill Congressional goals for PEG programming, and to meet local needs and desires, financial support of PEG channels should be provided by the operator and subscribers, provided that surcharges should not be made back to subscribers which exceed fifty cents (50¢) per month per subscriber account or one percent (1 %) of the aggregate of individual subscriber charges, whichever is less. 20. Council finds that sound quality on the government access channels has been poor and needs to be improved. 21. Council finds that the community has the need for, and the cable operator should provide, equipment for a new, state of the art studio to be located within the City, which is capable of originating digital programming in standard and high definition formats. 22. Council finds that the cable operator must make efforts to render cable television service more affordable for subscribers. 23. Council finds that, because of the rate of technological change anticipated to occur with telecommunications in general and specifically with cable television, and due to the potential for regulatory changes, the term of a renewal franchise must be relatively short to serve the needs of the community. Consequently, Council finds that the initial term of the renewal franchise should be no longer than 5 years, provided, however, that an option to extend the term for up to an additional 5 years may be appropriate if (a) the extension is necessary for the operator to finance substantial system upgrades which are described in detail in the franchise, and (b) such upgrades are completed before the expiration of the initial 5 -year term. 24. Council determines that it is appropriate that the minimum customer service standards set forth in 47 C.F.R. §76.309(c) should be included verbatim or by reference, in any franchise renewal. Additionally, for the benefit and protection of residents, Council finds that it is within Council's authority to require, either by franchise terms applied to all cable television franchisees or by duly enacted ordinance, and pursuant to 47 C.F.R. §76.309(b)(3) and (4), that Subscriber Agreements not be permitted to contain provisions which are unconscionable or not in the public interest. Council specifically finds and determines that terms of Subscriber Agreements described in subparagraphs 12(a) through 12(h) above need to be prohibited for the protection and benefit of cable subscribers in Pueblo, and that, as in other cities, adoption of a subscriber "Bill of Rights" is appropriate. -14- 25. Council finds: An emergency alert system is necessary on the cable television system, and that the development of same must operate across all analogue, digital and HDTV channels. With respect to HDTV channels, the display of emergency alerts must be accomplished without downgrading HDTV programming to standard definition, nor changing 16x9 format programing to 4x3 formats. The City must be provided with system headend access sufficient for City law enforcement and emergency service providers to issue the alert warnings through the City's dispatch center facilities, wherever same are located or relocated. 26. Council finds that Pueblo should be entitled to have cable television franchise terms at least as favorable as the cable provider has accepted in any other city in the United States; consequently, a "favored nation" provision for the benefit of the City should be included in any franchise renewal, and a like provision concerning the subscriber 'Bill of Rights" included for the benefit of subscribers. 27. Council finds that it is necessary that the privacy of subscribers be protected by franchise terms prohibiting sale or disclosure of subscriber information. 28. Council finds that to enforce franchise terms included for the benefit of subscribers, penalty or liquidated damage charges payable to the City or subscribers is appropriate. 29. Council finds that detailed recordkeeping by the cable operator is needed in the areas of customer service, system plans and "as built' drawings, outages, service calls, repairs and maintenance, and other franchise operations. 30. Council finds that remedies for franchise violations by the cable operator are needed and should provide a range of remedies, including imposition of liquidated damages per day or per incident, payments to subscribers for breaches or to compensate subscribers for violations, cancellation of the franchise for serious violations, and legal and equitable relief from courts of competent jurisdiction. 31. Council finds and determines that franchise fees should continue to be paid at the current percentage of gross revenues during the term of any cable television franchise renewal. 32. Council finds and determines that the terms of any cable television franchise renewal must fully preserve the City's present and future rights to exercise its police powers, particularly in areas affecting health and welfare, zoning, land use and the use of public streets and rights of way. 33. Council finds and determines that the cable television franchise should contain required insurance and indemnity provisions similar to other franchises granted in Pueblo, Colorado. 34. Council finds that the management of streets and other public rights of way has become even more difficult due to the proliferation of non - vehicular uses. Council finds that in order for the City to effectively manage the rights of way, the cable television franchisee must be required to furnish a complete survey of its cable system in the City, together with "as built' maps. 35. In order for the City to properly manage rights of way for the benefit of the public, every franchise for cable television must require the franchisee to (a) comply with all street excavation requirements of the City, (b) restore street and right of way surfaces after each disturbance, and (c) relocate, at its own expense, its wires, conduits, cables and appurtenances as directed by the City's Director of Public Works. -15- 36. To the extent presently or in the future authorized by law, the renewal franchise should afford subscribers the right to ala carte selection of channels for purchase. 37. To effectively manage the rights of way and minimize inconvenience to the public, the franchisee should permit the City, without charge, to overlash its telecommunications cables used for government services and functions upon the franchisee's lines and cables, and to use available unused conduit space of franchisee for like purposes. 38. Many cable television franchisees provide an Institutional Network ( "I- Net ") for governmental use, and the City's Director of Information Technology reported that an I -Net could be beneficial for the City. Council therefore finds that provision of an I -Net should be required in any renewal franchise to meet the future needs of the City. 39. The needs of the community require that service availability be provided in all geographical areas of the City, without line extension charges, at non - discriminatory rates for residential customers. 40. Except as may be inconsistent with the foregoing, the terms of the existing franchise should continue in any renewal franchise. 41. Council finds that, to the extent any evidence or comments received during the ascertainment phase are inconsistent or could be subject to differing interpretations, the comments or interpretations which support the findings set forth herein are found to be more credible and serve as the basis for those findings of Council, and the comments or interpretations which are inconsistent therewith are hereby found less credible or persuasive or are otherwise rejected. 42. Council finds that the future cable - related needs and interests of the City require a franchise substantially in the form attached hereto as Exhibit "A." SECTION 2 Council hereby adopts as minimum requirements for a cable television franchise renewal proposal those requirements stated in Section 1 of this Resolution and the terms and conditions set forth in detail in Exhibit "A" attached hereto. SECTION 3. Council hereby requests that Comcast submit a renewal proposed meeting all of the minimum requirements set forth in Section 2 of this Resolution and Exhibit "A" attached hereto, which Council deems necessary to meet the future cable related needs of the franchise area. INTRODUCED September 11, 2006 BY Randy Thurston Councilperson APPROVED: President of Cit Council ATTESTED BY: CITY CLERK -16-