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HomeMy WebLinkAbout05705ORDINANCE NO. 5705 AN ORDINANCE GRANTING TO TCI CABLEVISION OF COLORADO, INC. A NONEXCLUSIVE FRANCHISE AND RIGHT TO CONSTRUCT, INSTALL, OPERATE, PROVIDE AND MAINTAIN A CABLE TELEVISION SYSTEM WITHIN THE CITY AND A NON - EXCLUSIVE RIGHT TO MAKE REASONABLE USE OF STREETS, ROADS, ALLEYS, BRIDGES, VIADUCTS, PUBLIC EASEMENTS AND OTHER PUBLIC PLACES WITHIN THE CITY AS MAY BE NECESSARY TO CARRY OUT THE TERMS OF THIS ORDINANCE BE IT ORDAINED BY THE PEOPLE OF PUEBLO, that: CABLE TELEVISION FRANCHISE TABLE OF CONTENTS Page ARTICLE I PURPOSES .............................. 1 ARTICLE II DEFINITIONS ........................... 2 ARTICLE III GRANT OF FRANCHISE .................... 6 ARTICLE IV SCOPE OF FRANCHISE .................... 8 ARTICLE V RIGHT OF CITY TO REGULATE ............. 9 ARTICLE VI FRANCHISE FEES ........................ 9 1 . Purpose and Amount of Fee ..................... 9 2. Period of Limitation .......................... 10 3. Contract Obligation ........................... 10 4 . Refund for Overpayment ........................ 11 5. Interest on Delinquent Payments ............... 11 ARTICLE VII GROSS REVENUE CALCULATIONS............ 11 ARTICLE VIII CERTIFICATION OF FRANCHISE FEE PAYMENTS .......................... 12 ARTICLE IX AUDITING AND FINANCIAL RECORDS........ 12 ARTICLE X USE OF STREETS LIMITED ................ 13 ARTICLE XI USE OF UTILITY POLES .................. 13 ARTICLE XII NOTICES ............................... 14 ARTICLE XIII AUTHORITY ............................. 14 ARTICLE XIV POLICE POWERS NOT LIMITED ............. 15 ARTICLE XV COMMUNICATIONS WITH REGULATORY AGENCIES .............................. 15 -i- Page ARTICLE XVI TERM OF FRANCHISE ..................... 16 ARTICLE XVII RENEGOTIATION OF FRANCHISE TERMS FOR PURPOSE OF AMENDMENT .............. 16 ARTICLE XXIII AVAILABILITY OF SERVICE ............... 16 ARTICLE XIX SERVICE OFFERINGS ..................... 18 ARTICLE XX OBSCENE AND UNPROTECTED BROADCASTS.... 19 ARTICLE XXI SYSTEM CAPABILITY AND STANDARDS....... 19 1. General Capability ............................ 19 2. Emergency Override Capability ................. 20 3. Plans and Specifications ...................... 21 4. Technical Standards ........................... 21 5. Service to the Hearing Impaired ............... 23 ARTICLE XXII PUBLIC, EDUCATIONAL AND GOVERNMENTAL ACCESS . ............................... 23 ARTICLE XXIII AVAILABILITY OF ACCESS FACILITIES..... 26 ARTICLE XXIV SUPPORT FOR USE OF ACCESS ............. 27 ARTICLE XXV LOCAL OFFICE AND SERVICE .............. 27 ARTICLE XXVI COMPLAINT PROCEDURE ................... 27 ARTICLE XXVII FREE DISTRIBUTION SERVICES............ 28 ARTICLE XXVIII VIOLATIONS BY FRANCHISEE .............. 29 ARTICLE XXIX USE OF STREETS - MINIMUM INTERFERENCE... 30 ARTICLE XXX PROVISION OF SERVICE, LOCATION, CONSTRUCTION, AND MAINTENANCE OF FACILITIES ............................ 31 1. City Review of Construction and Design........ 31 2. Excavation and Construction ................... 31 -ii- Page 3. Installation and Maintenance of Franchisee Facilities ......................... 32 4. Obligations Regarding Facilities .............. 33 5. Compliance with City Requirements ............. 33 6. Noninterference with Public Works ............. 34 7 . City Regulation ............................... 34 ARTICLE XXXI PERMITS AND APPROVALS ................. 35 ARTICLE XXXII RESTORATION OF STREETS AND PRIVATE PROPERTY .............................. 36 ARTICLE XXXIII ERECTION OF POLES ..................... 37 ARTICLE XXXIV UNDERGROUNDING ........................ 38 ARTICLE XXXV RELOCATION ............................ 39 ARTICLE XXXVI TREE TRIMMING ......................... 40 ARTICLE XXXVII MOVEMENT OF BUILDINGS ................. 40 ARTICLE XXXVIII REMOVAL ............................... 41 ARTICLE XXXIX ENFORCEMENT ........................... 43 ARTICLE XL SYSTEM OWNERSHIP ...................... 44 ARTICLE XLI NONDISCRIMINATORY SERVICES............ 45 ARTICLE XLII SUBSCRIBER ANTENNAS ................... 45 ARTICLE XLIII ANTICOMPETITIVE PRACTICES ............. 45 ARTICLE XLIV MAINTENANCE AND REPAIR ................ 46 ARTICLE XLV PRIVACY ............................... 46 ARTICLE XLVI AFFIRMATIVE ACTION .................... 50 ARTICLE XLVII GUARANTEE AND INSURANCE ............... 51 ARTICLE XLVIII INDEMNIFICATION BY FRANCHISEE......... 52 -iii- Page ARTICLE XLIX TRANSFER AND TERMINATION .............. 53 1 . Transfer of System ............................ 53 2. Transfer of Franchise ......................... 53 3 . Transfer Fee ... ............................... 54 4 . Void Transfers . ............................... 54 5. Termination of Franchise ...................... 54 6. Commencement of Termination Proceedings....... 55 7 . Conduct of Hearing ............................ 56 8. Alternative Remedies .......................... 56 9 . Nonenforcement . ............................... 57 10. Purchase of System by City .................... 57 ARTICLE L MISCELLANEOUS PROVISIONS .............. 58 1. Use of Franchisee Right -of- Way ................ 58 2. Joint Use of Franchisee Facilities............ 58 3. Reimbursement of Election Costs ............... 59 4 . Severability ... ............................... 59 5 . Filing ....... ............................... 60 6. Supersedes Previous Franchises ................ 60 7. Effective Date . ............................... 60 8. Franchisee Approval ........................... 60 -iv- CABLE TELEVISION FRANCHISE ARTICLE I DiTDDnQG'Q The purposes of this Franchise include, but are not limited to, the promotion of the general welfare of the citizens of the City of Pueblo by: 1. Conferring a right for the nonexclusive provision of Cable Television Services within the City by TCI Cablevision of Colorado, Inc. ( "Franchisee "); 2. Establishing through the Franchise a regulatory framework for the administration of the Franchise in order to insure that the potential recreational, technical, educational, social, economic and other advantages of cable television will in fact inure to the benefit of the City and its citizens; 3. To provide through the Franchise for the equal and nondiscriminatory provision of cable television services by Franchisee throughout the City; 4. To insure that Franchisee has the requisite legal, financial, and technical qualifications to construct, operate, and maintain the Cable Television System; 5. To regulate the operations of Franchisee for the purposes of protecting and promoting the public health, peace, safety, and convenience. -1- The provisions of this Franchise shall not be deemed to confer any right upon Franchisee except as expressly provided herein. ARTICLE II DEFINITIONS As used in this Franchise, the following terms, phrases, and words shall be ascribed the following meanings, unless the context indicates otherwise. The word "shall" is mandatory, and the word "may" is permissive. Words not defined herein shall be given their common and ordinary meanings, consistent with the context in which such words are used and the purposes of this Franchise. 1. "Basic Cable Service" shall mean any service tier which includes the retransmission of local television broadcast signals. 2. "City" shall mean the municipal corporation designated as the City of Pueblo, a home rule city of the State of Colorado and including territory that currently is, or may in the future be, included within the boundaries of the City of Pueblo. 3. "Cable Service" or "Cable Television Service" shall mean (a) the one -way transmission to subscribers of (i) video programming, or (ii) other programming service, and (b) subscriber interaction, if any, which is required for the selection of such video programming or other programming service. -2- 4. "Cable Television System" shall mean a facility consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment or other communications equipment that is designed to provide Cable Service. 5. "CCPA" or "Cable Act" shall mean the Cable Communications Policy Act of 1984, as amended (47 U.S.C. 521, et seq. 6. "Council" or "City Council" means the legislative body of the City of Pueblo. 7. "Facilities" means all physical components of the Franchisee which are located within the City and are reasonably necessary, useful or convenient to provide cable television services within the territorial boundaries of the City. 8. "FCC" shall mean Federal Communications Commission or successor governmental entity. 9. "Franchise Area" shall mean all areas for which the Franchisee is authorized to serve within the municipal limits of the City of Pueblo, as said boundaries currently exist, and in the future may be increased or decreased. 10. "Gross Revenues" shall mean all cash, credits, property of any kind or nature or other consideration received directly or indirectly by the Franchisee, its affiliates, subsidiaries, parents, and any other person or entity in which Franchisee has a financial interest or which has a financial --3- interest in the Franchisee, arising from or attributable to operation of the Cable Television System in the City of Pueblo and any of the facilities used in the operation thereof. "Gross Revenues" shall include, valued at market price levels, the value of any goods, services, or other remuneration in nonmonetary form received by the Franchisee or others in consideration for performance by the Franchisee or others described above of any advertising or other service in connection with the Cable Television System. "Gross Revenues" shall not include (1) any taxes on services furnished by the Franchisee which are imposed directly upon any subscriber or user by the United States, State of Colorado or local agency and collected by the Franchisee on behalf of the government; (2) revenue received directly from the Franchisee by an affiliate, subsidiary or parent of the Franchisee or any other person or entity in which the Franchisee has a financial interest or which has a financial interest in the Franchisee, when the revenue received has already been included in reported Gross Revenues under this Franchise; and (3) revenue received by such an affiliate, subsidiary, parent, person or entity when the revenue received is from the sale of national advertising shown on programs distributed on a national basis by the affiliate, subsidiary, parent, person or entity. 11. "Guarantor" shall mean Telecommunications, Inc., a Delaware corporation. 12. "Leased Access" shall mean the use on a fee -for- service basis of the Cable Television System by business enterprises (whether profit, nonprofit or governmental) to render services to the citizens of the City. 13. "Franchisee" shall mean TCI Cablevision of Colorado, Inc., its successors and assigns operating in the City of Pueblo. 14. "Premium Service" means a single stand alone service for which a separate charge is made. 15. "Public Easements" means easements available for use under this Franchise as permitted by the City. 16. "Public Places" means alleys, viaducts, bridges, roads, lanes, streets and public easements in the City. 17. "Service Area" shall mean the geographic area within the territorial boundaries of the City of Pueblo, as said boundaries currently exist, and in the future may be increased or decreased. 18. "Streets" shall mean the surface of and the space above and below any street, road, highway, freeway, avenue, boulevard, road, lane, utility right -of -way or any other easement which now or hereafter exists for the provision of public or quasi - public services to residential or commercial properties, and in which the City is expressly or impliedly authorized or empowered to permit use for the installation and operation of a Cable Television System. As used in this Franchise, the word -5- "street" or "streets" shall include public easements and public places. 19. "Subscriber" shall mean a lawful recipient of service from the Cable Television System. 20. "System" shall mean the Cable Television System. 21. "User" shall mean a party utilizing one or more channels of the Cable Television System for purposes of production or transmission of material to subscribers, as contrasted with receipt thereof in a subscriber capacity. 22. "Dwelling Units" shall mean residential living facilities as distinguished from temporary lodging facilities such as hotel and motel rooms and dormitories, and includes, but is not limited to, single family residential units and individual apartments, condominium units, mobile homes within mobile home parks, and other multiple family residential units. ARTICLE III GRANT OF FRANCHISE 1. The City hereby grants to the Franchisee, for the period specified in, and subject to the conditions, terms and provisions contained in this Franchise, a nonexclusive right to construct, operate, provide, repair and maintain a Cable Television System within the City, to and for the benefit of the City and residents of the City. Subject to the conditions, terms and provisions contained in this Franchise, the City also hereby grants to the Franchisee a nonexclusive right to acquire, construct, install, locate, maintain, operate and extend into, within and through the City all facilities reasonably necessary to the operation, construction, repair and maintenance of a Cable Television System and a nonexclusive right to make reasonable use of the streets, public easements and other public places as may be necessary to carry out the terms of this Franchise, subject to the City's prior right to usage for municipal purposes and subject to City's exercise of lawful police powers, including, but not limited to, zoning, subdivision, permit and building code requirements. These rights shall extend to all areas of the City as it is now constituted, and to additional areas as the City may increase in size by annexation or otherwise. 2. Exclusions. a. The right to use and occupy said public streets, alleys, viaducts, bridges, roads and public places for the purposes set forth herein is not, and shall not be deemed to be, an exclusive franchise, and the City reserves the right to make or grant a similar use of public streets and other public places to any other person, firm or corporation. b. The City retains the following rights in regard to this Franchise: (1) To repeal the franchise for substantial misuse, substantial non -use or failure of Franchisee to substantially comply with the provisions hereof; -7- (2) To require proper and adequate extension of plant, facilities and service; (3) To require the maintenance of plant, facilities and services at the highest practicable standard of efficiency; (4) To establish reasonable standards of service and quality of products and to prevent discrimination in service or rates; (5) To require continuous and nondiscriminatory service to residents in accordance with the terms of this Franchise throughout the entire period hereof. (6) To use, control and regulate the use of city streets, public easements and other public places and the space above and beneath them. (7) To impose such other necessary regulations for the safety, welfare and accommodation of the public as required by Section 16 -7 of the Pueblo City Charter. ARTICLE IV SCOPE OF FRANCHISE This Franchise confers only the right to provide Cable Television Services as defined in Article II of this franchise. Nothing contained herein shall be deemed to authorize the Franchisee to provide any service or to engage in any business other than the provision of Cable Television Service. ARTICLE V RIGHT OF CITY TO REGULATE Nothing contained herein shall be construed to limit the power of the City to regulate the service, rates and charges of the Franchisee to the extent allowed by law. ARTICLE VI FRANCHISE FEES 1. Purpose and Amount of Fee For the use of the streets and for the purposes of providing revenue with which to defray the costs of regulation arising out of issuance of the Franchise and for promoting, assisting and financing public, educational, and governmental access programming, Franchisee shall pay franchise fees in the amount prescribed hereinafter. No portion of said franchise fees shall be considered reimbursement to the City of its expenses incurred in negotiating this Franchise. During the term of Franchise, Franchisee shall pay to the City an amount equal to five percent (5 %) per year of the Franchisee's annual Gross Revenue. The billings of the Franchisee's subscribers shall not include any separate or itemized notation of the franchise fee. Said fees shall be paid quarterly, without deduction or offset, no later than forty -five days after the close of each quarter. Not later than the date of each payment, Franchisee shall file with the Director of Finance and with the City Clerk, a written statement certified by an officer of Franchisee which identifies in detail the sources and amounts of gross revenues received by Franchisee during the quarter for which payment is made. The payment herein specified shall not exempt the Franchisee from any lawful taxation upon its property including but not limited to, sales and use taxes. No acceptance of any payment shall be construed as an accord that the amount paid is, in fact, the correct amount, nor shall such acceptance of payment be construed as a release of any claim which the City may have for further or additional sums payable under the provisions of this Franchise or any ordinance of the City. 2. Period of Limitation The period of limitation for recovery of any franchise fee payable to City under this Franchise shall be six years from the date on which payment by Franchisee is due. 3. Contract Obligation This Franchise constitutes a valid and binding contract between Franchisee and the City. In the event that the franchise fee, or any financial obligation of Franchisee to the City specified in this Franchise is declared illegal, unconstitutional or void for any reason by any court or other proper authority, fees previously paid under the terms of this Franchise shall be deemed paid pursuant to contract between the City and Franchisee and Franchisee shall not attempt to recoup any franchise fees previously paid pursuant to the terms of this Franchise. -10- 4. Refund for Overpayment The period of limitation for recovery of any overpayment made by the Franchisee to the City shall be twenty -eight (28) months from the date on which the overpayment was made. The City may request reasonable installment payments for said overpayment which request shall not be unreasonably denied. To the extent the City refunds any overpayment, those overpaid funds shall, within sixty (60) days of the refund date, be returned to the subscribers who have been charged and have paid improper amounts of franchise fees. In instances in which the appropriate subscriber cannot be located, that portion of the refund will escheat to the City. 5. Interest on Delinquent Payments Any franchise fees which remain unpaid after the dates specified in this Article shall be delinquent and shall thereafter accrue interest at the rate of one and one -half percent (1 -1/2 %) per month until paid. ARTICLE VII GROSS REVENUE CALCULATIONS For purposes of the gross revenue calculation required by Article II above, the phrase "arising from or attributable to operation of the cable television system" shall include: 1. Any activity, product or service which generates revenue of any type whatsoever and which is offered to the subscribers of the system by means of the system; 2. Any activity, product or service which is revenue -11- producing and is offered to the subscribers of the system by any medium other than the system including but not limited to direct mail and home delivery, if the system's subscriber list or any portion thereof is utilized for purposes of solicitation; 3. Any activity, product or service in the production or provision of which any of the assets of the system are used, including but not limited to poles, stanchions, cable, wire, production facilities, and administrative facilities. ARTICLE VIII CERTIFICATION OF FRANCHISE FEE PAYMENTS Not less than annually, Franchisee shall provide the City Council with a gross receipts examination by an independent certified public accountant certifying the accuracy of the franchise fee payments paid within the preceding twelve (12) months pursuant to Article VI above. Said certification shall be consistent with the definition of "gross receipts" set forth in this Franchise and shall be prepared in accordance with generally accepted accounting standards as established by the Financial Accounting Standards Board (FASB). ARTICLE IX AUDITING AND FINANCIAL RECORDS During the term of Franchise, the City may, not more frequently than once each year, conduct an audit of the books, records and accounts of the Franchisee for the purpose of determining whether the Franchisee has paid franchise fees in the -12- amounts prescribed by Article VI above. The audit may be conducted by the City or by an independent certified public accounting firm retained by the City. If a discrepancy exceeding three percent (3 %) in payment of the franchise fee is discovered by the audit, the cost of the audit shall be paid by the Franchisee. The party conducting the audit shall prepare a written report containing its findings. The report shall be filed with the City Director of Finance and mailed to Franchisee. Franchisee shall make available for inspection by authorized representatives of the City at reasonable times and upon reasonable advance notice, its books, accounts, and all other financial records necessary to enforcement of the provisions of the Franchise. ARTICLE X USE OF STREETS LIMITED Streets within the City shall not be occupied by or used by Franchisee except under provisions of this Franchise and as otherwise available for use by the general public. ARTICLE XI USE OF UTILITY POLES This Franchise shall not be deemed expressly or impliedly to authorize the Franchisee to utilize poles owned by any public or private utility which are located within the streets, without the express consent of the utility, including City. -13- ARTICLE XII NOTICES All notices and other writings authorized or required by the provisions of this Franchise to be mailed shall be deemed to have been given and served when deposited in the United States Mail, postage prepaid, and addressed as follows: City: Director of Public Works City of Pueblo 211 East "D" Street Pueblo, Colorado 81003 with a copy to: City Manager City of Pueblo 1 City Hall Place Pueblo, Colorado 81003 Franchisee: TCI Cablevision of Colorado, Inc. 620 West 9th Street Pueblo, Colorado 81003 with a copy to: TCI Cablevision of Colorado, Inc. Attention: Legal Department P.O. Box 5630 Denver, Colorado 80217 Any notice or other writing authorized or required by the provisions of this Chapter to be "filed" shall be deemed "filed" when received in the business office of the party with whom such notice or writing is authorized or required to be "filed." ARTICLE XIII A rTmunn T my It is declared that the provisions of this Franchise are enacted pursuant to the authority conferred by the Pueblo City -14- Charter, Article XX of the Colorado Constitution, Federal law, including the Cable Act and pursuant to the police powers conferred by Article XX, Section 6 of the Colorado Constitution and C.R.S. § 31 -15 -401 for the promotion and protection of the peace, health, safety, and general welfare of the citizens of the City. ARTICLE XIV POLICE POWERS NOT LIMITED All ordinances of general application, including zoning and other land use ordinances, building, electrical, plumbing and mechanical codes, now in existence or hereafter enacted by the City shall be fully applicable to the exercise of this Franchise, and Franchisee shall comply therewith. In the event of a conflict between the provisions of this Franchise and the provisions of such an Ordinance, the provisions of the Ordinance shall prevail. ARTICLE XV COMMUNICATIONS WITH REGULATORY AGENCIES Copies of all petitions, applications, communications, and reports submitted by Franchisee to the FCC or any other Federal or State regulatory commission or agency having jurisdiction in respect to any matters which may impact the City's rights or obligations with regard to this franchise, shall be mailed simultaneously to the City Clerk. Copies of responses or any other communications from the regulatory agencies to -15- Franchisee in regard to such matters likewise shall be mailed immediately on receipt to said Clerk. ARTICLE XVI TERM OF FRANCHISE The term of this Franchise shall be twenty (20) years. ARTICLE XVII RENEGOTIATION OF FRANCHISE TERMS FOR PURPOSE OF AMENDMENT During the calendar years 2000 and 2006 the City and Franchisee shall, upon notice of either, negotiate in good faith changes in the terms of this Franchise as related to Service Offerings, Availability of Access Facilities, Public, Educational and Government Access, and System Capability and Standards. By mutual consent other terms of the Franchise may be subject to negotiation pursuant to this Article. Any changes to the Franchise which result from the procedure set forth in this Article shall be considered an amendment of the Franchise, but shall not be considered a renewal of the Franchise. Failure of the parties to negotiate in good faith shall constitute substantial violation of the terms of this Franchise. ARTICLE XVIII AVAILABILITY OF SERVICE 1. Franchisee shall make available equal and nondiscriminatory cable television service, subject only to a reasonable construction schedule established by Franchisee with consent of the City, to all dwelling units within the service -16- I R VI area established by this Franchise including all annexations. As annexations occur, Franchisee will file a construction plan which details the plans for provision of service to the annexed area. Such plans must be filed within thirty (30) days of annexation and are subject to City approval. Notwithstanding the provisions of this Article, Franchisee shall be under no obligation to provide cable service to the inhabitants of apartments, condominiums or other multiple - family residential units to which Franchisee is denied access by the owner or manager thereof. 2. Franchisee shall be excused from making cable television services available to a particular dwelling unit within the Service Area if that dwelling unit is situated at least three hundred (300) feet from another dwelling unit and making service available to the dwelling unit would require an aerial or underground extension of cable in excess of three hundred (300) feet from an otherwise existing aerial or underground trunk cable. The sole purpose of this exception is to relieve Franchisee from providing service to a dwelling unit under circumstances wherein extension of the Cable Television System would constitute an excessive burden, and occupants of a dwelling unit within the area would be deprived of services as a result of the relief. Franchisee shall not be entitled to relief under this Section unless it shows that it would not be reasonable to locate cable in such a manner as to be within the distance limitation prescribed by this Section. -17- 111111 !11111111 � ARTICLE XIX SERVICE OFFERINGS 1. Franchisee shall at a minimum offer the following programming as part of its Basic Cable Service: Four Denver rebroadcast channels, all Colorado Springs over the air channels, all Pueblo over the air channels and news, sports, children's programming, music video, country /western, cultural, super stations, general interest, audio background music and local access programming on no less than twenty -five channels. 2. The over the air channels set forth herein shall be offered until retransmission fees are required to be paid for such channels. In the event retransmission fees are required, if Franchisee reaches agreement with the owners of the originating channels regarding retransmission fees it shall offer the over the air channels as part of its Basic Cable Service. 3. If nonduplication restrictions on rebroadcast channels are enforced to such extent that Franchisee in its reasonable business judgment determines that a particular rebroadcast channel has insufficient value to justify offering said channel, it may replace said channel with such reasonable programming as it determines. 4. The Franchisee may not provide any premium service for which the subscriber is charged unless the subscriber consents to the charge. For the purpose of this Franchise consent is a positive act. Consent is not obtained if a subscriber is charged for a premium service unless he informs the Franchisee that he does not want the service. Franchisee retains the right to rearrange the levels of service or add programming to the existing levels of service, and increase or reduce the charge for such, except to the extent restricted by this franchise, state or federal law or lawful city ordinances pursuant to Article V of this Franchise. ARTICLE XX OBSCENE AND UNPROTECTED BROADCASTS Franchisee shall not broadcast material which is obscene or otherwise unprotected by the Constitution of the United States. Upon the request of a subscriber, the Franchisee shall provide (by sale or lease) a device by which the subscriber can prohibit viewing of a particular cable service during periods selected by that subscriber. ARTICLE XXI SYSTE CAPABILITY AND STANDARDS 1. General Capability The Cable Television System shall, at minimum: a. Relay to subscriber terminals those broadcast signals required by the FCC; b. Distribute in color all television signals which it receives in color; -19- ,.,a EM11, I. 1 u �, C. Make available at reasonable charge upon request by any subscribers who receive channels showing premium services and pay per view events, a lockout device which prevents the unauthorized viewing of such channels; d. Make available to subscribers at reasonable charge, upon request, an RF switch (an A -B switch) permitting conversion from cable to antenna reception; and e. Have a present, activated capacity of four hundred fifty (450) megahertz throughout the majority of the system, but not less than three hundred thirty (330) megahertz, in any location within the Franchise Area. f. Within five (5) years of the effective date of this Franchise, Franchisee will complete a system -wide construction program utilizing installation of a fiber -optic backbone system with a then - present capacity of five hundred fifty (550) megahertz throughout the system capable of accommodating 75 video channels expandable to 150 channels using digital fiber compression. Activation of additional channels shall be consistent with community needs and available programming. 2. Emergency Override Capability In case of an emergency or disaster, the Franchisee shall, upon request of City, make available its facilities for City to provide emergency information and instructions during the emergency or disaster period. City shall hold Franchisee, its employees, officers and -20- 0 assigns harmless from any claims arising out of the emergency use of its facilities by City, including but not limited to, reasonable attorneys' fees and costs. 3. Plans and Specifications Franchisee shall provide to City detailed plans for the Cable Television System and for any future extensions of said System. The primary purpose of providing said plans relates to the location of facilities. All construction relating to the Cable Television System shall be performed by Franchisee in compliance with said plans submitted to and approved by the City. Upon completion, the applicant shall file "as- built" plans with the City showing the detailed location of all underground cable plant. 4. Technical Stand ards. Franchisee shall construct, install and maintain its Cable Television System in a manner consistent and in compliance with all applicable laws, ordinances, construction standards, governmental requirements, and technical standards equivalent to those established by the FCC. Franchisee shall provide to the City Council, upon request, written reports of annual proof of performance tests conducted pursuant to the FCC standards and requirements. a. Franchisee shall at all times comply with the National Electrical Safety Code (National Bureau of Standards); National Electrical Code (National Bureau of Fire Underwriters); Applicable FCC and other Federal, State and local regulations; and lawful codes and ordinances of the City. -21- p ip 111 H INIIi� b. The Cable Television System shall not endanger or interfere with the health or safety of persons or property within the City where Franchisee may have equipment located. C. All working facilities, conditions, and procedures used or occurring during construction of the Cable Television System shall comply with the standards of the Occupational Safety and Health Administration. d. Construction, installation, repair and maintenance of the Cable Television System shall be performed in an orderly and workmanlike manner and in close coordination with public and private utilities serving the City. All construction, installation, repair and maintenance shall follow accepted construction procedures and practices. e. All cable wires shall be installed, where possible, parallel with electric and telephone lines, and multiple cable configurations shall be arranged in parallel and bundled with due respect for engineering considerations. f. Any antenna structure used in the Cable Television System shall comply with construction, marking and lighting of antennae structures required by the United States Department of Transportation and any requirements promulgated by the State of Colorado. g. RF radiation shall be measured adjacent to any proposed or existing aeronautical navigation or communication radio sites to prove no interference to air navigational reception. -22- 5. Service to the Hearing Impaired The Franchisee shall offer service suitable to meet the needs of the hearing impaired. In meeting this obligation, Franchisee shall provide information to subscribers regarding availability and installation of equipment which facilitates reception of basic cable service and expanded basic service by hearing impaired individuals. If after receiving information from Franchisee regarding availability and installation of equipment, subscriber desires that Franchisee provide and /or install same, Franchisee shall do so for a reasonable charge. ARTICLE XXII PUBLIC, EDUCATIONAL AND GOVERNMENTAL ACCESS 1. Beginning January 1, 1992, one channel shall be specially designated a public, educational and governmental ( "PEG ") access channel. The PEG access channel shall be for use by appropriate educational institutions, the public and the City of Pueblo. The PEG channel shall be under the supervision of Franchisee or its designee, which shall be responsible for the coordination of all programming on the channel. For purposes of this Article, Franchisee's designee shall be a nonprofit entity or the designee of nonprofit entities subject to approval by the City Manager. The City of Pueblo shall have the right to use the channel at any time it determines in its sole discretion that an emergency exists such that immediate use of the channel for City purposes is appropriate. -23- ppil 2. Beginning January 1, 1992, access by tape insertion will be provided at Franchisee's headquarters for the purpose of accommodating PEG needs on the single channel available for PEG access. 3. By September 1, 1992 Franchisee or its designee shall, in conjunction with appropriate educational institutions, establish reasonable rules and procedures designed to promote utilization of PEG access programming. These rules and procedures are subject to approval of the City Manager, which approval shall not be unreasonably withheld. Franchisee shall cablecast such public, educational and governmental access programming as shall be provided to the Franchisee pursuant to this Article. 4. Beginning no later than September 1, 1992, Franchisee will provide and make available one (1) location for origination of PEG access programming by microwave. This requirement is subject only to good faith efforts to meet technical and licensing requirements for microwave transmissions, assuming the availability of appropriate line -of- sight. 5. No later than December 31, 1996, there will be one designated public channel, one designated educational channel and one designated governmental channel. In addition, whenever a designated PEG access channel is in use for access purposes with first -run programming during fifty percent (50 %) of the hours between 10:00 a.m. and 10:00 p.m. during any consecutive ten (10) -24- week period and there is a demand for use of an additional channel for the same purpose, Franchisee shall, within ninety (90) days following a request by the City Manager, provide a new specially designated access channel for the same purpose. In no event will the provisions of this Article require Franchisee to make available more than a maximum of six (6) PEG channels. It is the intent of City and Franchisee that PEG access will directly correlate to community needs and available support. If an additional channel in excess of the three (3) initial PEG channels is designated for PEG access, but after one (1) year, said channel is not programmed at least twenty -five percent (25 %) of the hours between 10:00 a.m. and 10:00 p.m. with first -run programming, it will revert back to Franchisee's use until such time as the need for an additional channel is demonstrated as set forth in this Article. 6. By December 31, 1996, Franchisee will make available facilities at two (2) different locations for originating PEG programming. Franchisee will provide the hard- wire drop from the agreed upon PEG sites to Franchisee's head end. 7. Use of facilities for public, educational and governmental access to the cable television system pursuant to this Article shall be made without rental or any other charge except reasonable damage deposits. -25- ARTICLE XXIII AVAILABILITY OF ACCESS FACILITIES Consistent with the provisions of Article XXII, use of facilities for public, educational and governmental access to the Cable Television System pursuant to Article XXII above shall be made available by Franchisee, without rental, or any other charge whatsoever, except reasonable damage deposits, for use at reasonable times consistent with community needs in connection with the production of public, educational and /or governmental access programming cablecast upon the Cable Television System. In complying with this Article, Franchisee may make suitable arrangements with any third party. Said arrangements, however, will not excuse Franchisee from its duties under this Article. The Franchisee and /or the appropriate designees shall allow all persons and entities desiring to cablecast public, educational and /or governmental access programming to produce programming upon and electronically interface directly with Cable Television System of Franchisee so as to effectively cablecast PEG access programming. However, Franchisee and /or the appropriate designees shall establish rules and procedures subject to reasonable approval of the City Manager, designed to promote utilization of PEG access programming. Franchisee shall accept and cablecast such PEG programming upon the Cable Television System as shall be provided to the Franchisee by appropriate persons and entities pursuant to the rules and procedures described in this Article. -26- ARTICLE XXIV SUPPORT FOR USE OF ACCESS Nothing contained in this Franchise shall be construed to limit the authority of the Franchisee to make payments in support of the use of public, educational and /or governmental channels. However, such payments are expressly not a requirement of this Franchise and shall in no event be considered in the calculation of franchise fees pursuant to Article VI herein. ARTICLE XXV LOCA OFFICE AND SERVICE Franchisee shall maintain a local business office or representative, located within the Service Area, which subscribers may telephone during regular business hours without incurring added message or toll charges so that CATV maintenance service shall be promptly available. In addition, provisions shall be made by Franchisee for receiving and responding to service calls at all other times. Service calls will be responded to within two business days. ARTICLE XXVI COMPLAINT PROCEDURE The Franchisee shall establish a procedure for the prompt investigation and resolution of all complaints received from subscribers within the Franchise Area. The Franchisee will inform City and all subscribers of its complaint procedure, including telephone numbers for registering such complaints and -27- request that customers make all complaints to the Franchisee before directing such complaints to the City. The Franchisee shall document the nature and resolution of all complaints and shall retain such documentation for a period of two (2) years from the date of the complaint. If and when a customer complaint cannot be resolved, the Franchisee shall respond in writing to the customer explaining the reasons why a resolution cannot be reached. ARTICLE XXVII FREE DISTRIBUTION SERVICES Franchisee shall install, operate, and maintain, free of charges and liens, facilities for reception of its cable televi- sion distribution services through one basic cable service outlet at each of the following upon request: 1. At each public college, university, or community college, and each public elementary and secondary school within the City that is located within three hundred (300) feet of Franchisee's system. 2. At each public television station that is located within 300 feet of Franchisee's system. 3. At each public senior citizen center. 4. At the City Hall and any fire station located within the corporate bounds of the City. 5. At the public library within the City. OEM 6. Any of the foregoing may request the installation of one or more additional outlets, and the same shall be installed by Franchisee at a charge equal to the time and material costs thereof. In no event, however, shall Franchisee charge a monthly service fee to said establishments, regardless of the number of outlets installed. 7. Franchisee shall be responsible for the maintenance or replacement of all transmission facilities between the head end of Franchisee's system and the interior of each facility described in this Article. 8. Franchisee shall, at its sole expense, provide and install necessary receiving equipment which will reasonably enable public television station KTSC to transmit signals from its campus to the head end of the Cable Television System. 9. Franchisee shall, at the request of public television station KTSC implement nonduplication procedures for programs of KRMA -TV (Denver) or other similar distant public educational television systems. 10. The outlets required by this Article shall not be used to distribute or sell basic cable service. ARTICLE XXVIII VIOLATIONS BY FRANCHISEE Violation by Franchisee of any of the provisions of this Franchise caused primarily by circumstances beyond the control of the Franchisee shall constitute good and sufficient excuse and -29- justification for such violations and will preclude the Franchisee from being in breach of the Franchise. Examples of circumstances beyond the control of Franchisee which excuse the Franchisee from a violation and being in breach of the provisions of this Franchise, when such violations are caused thereby, include the following: strikes; acts of public enemies; orders by military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; fires; floods; civil disturbances; explosions; and partial or entire failure of utilities. Franchisee shall not be excused from any violation of the provisions of this Franchise except for causes which are beyond the control of the Franchisee and which have not been materially contributed to or aggravated by acts or omissions by the Franchisee. ARTICLE XXIX USE OF STREETS - MINIMUM INTERFERENCE Cable Television System, including wires and appurtenances, shall be located and installed and maintained so that none of the facilities endanger the lives or safety of persons, or unreasonably interfere with any improvements the City or the State of Colorado may deem proper to make, or unnecessarily hinder or obstruct the free use of the streets or other public property. All transmission and distribution structures, lines and equipment erected or installed by Franchisee within the City shall be so located as to cause -30- ' 1 minimum interference with the rights and reasonable convenience of property owners who adjoin any of the streets or other public property. ARTICLE XXX PROVISION OF SERVICE, LOCATION, CONSTRUCTION, AND MAINTENANCE OF FACILITIES 1. City Review of Construction and Design Except in emergency circumstances, prior to construction of any facilities or any plant, building, or similar structure within the City, Franchisee shall furnish to the City the plans for such facilities. In addition, Franchisee shall assess and certify to City (1) that all applicable laws including building and zoning codes are complied with, (2) that aesthetic and good planning principles have been incorporated and (3) that adverse impact on the environment has been minimized. 2. Excavation and Construction All construction, excavation, maintenance and repair work done by Franchisee shall be done in a timely and expeditious manner which minimizes the inconvenience to the City, the general public and individuals. Franchisee shall be liable for any damage to the City caused by Franchisee's failing to act timely. All such construction, excavation, maintenance and repair work done by Franchisee shall comply with all applicable codes of the City and the State of Colorado, and the Franchisee shall be responsible for obtaining all applicable permits and licenses. All public and private -31- CJNJNI EJ'II I L property disturbed by Franchisee's construction or excavation activities shall be promptly restored by Franchisee at its expense to substantially its former condition subject to inspection by the City Director of Public Works or other designated City official and compliance by Franchisee with reasonable remedial action required by said official pursuant to the inspection. Franchisee shall comply with the City Director of Public Works' requests for reasonable and prompt action to remedy all damage to private property adjacent to streets or dedicated easements caused by Franchisee during excavation or construction work. All such remedial work shall be performed at Franchisee's expense. 3. Installation and Maintenance of Franchisee Facilities The installation, maintenance, renovation and replacement of any facilities by the Franchisee shall be subject to permitting (and fees related thereto), inspection and approval of location and timing by the official City representative. Such regulation shall include, but not be limited to the following matters: location of facilities in the streets, alleys and dedicated easements; disturbance and reconstruction of pavement, sidewalks and surface of streets, alleys, dedicated easements and driveways. All Franchisee facilities shall be installed so as to cause a minimal amount of interference with such property. Franchisee's facilities shall not interfere with any water mains, sewer mains, municipal telecommunication facilities (except a -32- municipal cable television system) or any other municipal or authorized public use of the City's streets and rights -of -way. Franchisee shall erect and maintain its facilities in such a way so as to minimize interference with trees and other natural features and vegetation. Franchisee shall keep in good working order all facilities constructed, erected or used within the City. The Franchisee and all subcontractors shall comply with all local regulations and ordinances. 4. Obligations Regarding Facilities The Franchisee shall install, repair, renovate and replace its facilities with due diligence in a good and workmanlike manner and the Franchisee's facilities will be of sufficient quality and durability to provide adequate and efficient Cable Television Service to the City and its residents. Franchisee shall have the duty to maintain, install, repair, renovate and replace all lines, wires, cables, and other facilities up to the customer premises at no charge or expense to the customer. Nothing herein shall be construed to provide rights to third parties nor shall it excuse any individual from liability caused by negligent or intentional actions. 5. Compliance with City Requirements Franchisee shall comply with all City requirements regarding curb and pavement cuts, excavating, digging, construction of overhead facilities, placement of poles, stanchions and other similar facilities and related construction activities. Prior to -33- commencement of each fiscal year, Franchisee shall provide City preliminary plans for capital construction. The City's purpose in receiving said plans is for use in planning City projects and to coordinate with Franchisee's construction projects. It is understood that Franchisee shall not be bound to any construction projections contained in these budgets. Except for emergencies, all installations will be coordinated with the City's municipal planning and street improvement programs. 6. Noninterference with Public Works. Franchisee's facilities shall not unreasonably interfere with City facilities or other municipal use of streets and rights -of -way, including but not limited to telecommunication facilities (except a municipal cable television system) traffic signal lights, water mains, sewer mains; nor shall Franchisee's facilities unreasonably interfere in any way with facilities, property and uses of special districts and other municipal franchisees. All such facilities shall be installed on both City and private property so as to cause a minimal amount of interference with same. 7. City Regulation The City expressly reserves its right and duty to adopt, from time to time, in addition to the provisions herein contained, such charter provisions, ordinances and rules and regulations as may be deemed necessary by the City to protect the health, safety and welfare of its citizens and their property. -34- ARTICLE XXXI PERMITS AND APPROVALS Before occupying, working upon or otherwise utilizing any street, public place or public easement, Franchisee shall apply for and obtain any permit, license, authorization or other approval required by ordinances in force within the City, pay any fees and post any security required by such ordinances, to the extent they are generally applicable, and in the course of constructing, installing, replacing, maintaining and repairing the Cable Television System, shall comply with all applicable requirements of such ordinances and any terms or conditions of encroachment permits, licenses, authorizations or approvals issued thereunder. The City shall be authorized to establish generally applicable special fees payable by Franchisee and other businesses to defray the costs incurred by the Department of Public Works of the City in supervising and regulating the installation, maintenance, repair or replacement of the Cable Television System within the streets of the City. For the purpose of promoting safety, reducing inconvenience to the public, and insuring adequate restoration and repair of the streets, the Director of Public Works shall be authorized to issue regulations regarding the conditions under which Franchisee shall use the City streets pursuant to the provisions of this Franchise, and Franchisee and its officers, employees, -35- contractors and subcontractors shall comply with any and all such regulations. Payments made pursuant to the provisions of this Article shall not be considered franchise fees and shall be in addition to the payment of franchise fees as required by Article VI of this Franchise. ARTICLE XXXII RESTORATION OF STREETS AND PRIVATE PROPERTY All disturbance by Franchisee of pavement, sidewalk, driveways, landscaping or other surfacing of streets shall be repaired or replaced by Franchisee, at its sole cost, in a manner approved by the Director of Public Works and in compliance with the terms of this Franchise and applicable ordinances of the City, and restored to a condition as good as the condition that existed before the disturbance occurred. Failure of Franchisee to substantially restore disturbed property within the public rights -of -way or easements to City's approval will entitle City to make the necessary restoration at the Franchisee's sole expense. To the extent practicable, Franchisee shall accommodate the desires of any property owner respecting location within easements or rights -of -way traversing private land of above ground boxes or appurtenances constituting a part of the Cable Television System. Any disturbance of landscaping, fencing or other improvements upon private property, including private -36- property traversed by easements or rights -of -way utilized by Franchisee, shall be promptly repaired or restored (including replacement of such valuables as shrubbery and fencing) to the reasonable satisfaction of the property owner as soon as practicable at the sole expense of the Franchisee. Franchisee shall contact the occupants of all private property in advance of entering such property for the purpose of construction or initial installation of elements of the system within easements or rights -of -way traversing such property. ARTICLE XXXIII ERECTION OF POLES This Franchise shall not be deemed to expressly or impliedly authorize the Franchisee to construct or install poles or wire - holding structures within streets for the purpose of placing cables, wires, lines or otherwise, without the written consent of the City. Such consent shall be given upon such terms and conditions as the City in its sole discretion may prescribe, which shall include a requirement that the Franchisee perform all tree trimming required to maintain the poles clear of obstructions at the direction of City but at Franchisee's sole expense. With respect to any poles or wire - holding structures which Franchisee is authorized to construct and install within streets, public places and public easements, a public utility or public utility district serving the City may, if denied the -37- privilege of utilizing such poles or wire - holding structures by the Franchisee, apply for such permission to the City Council. If the City Council finds that such use would enhance the public convenience and would not unduly interfere with the Franchisee's operations, the City Council may authorize such use subject to such terms and conditions as it deems appropriate, including reasonable payments to Franchisee. ARTICLE XXXIV UNDERGROUNDING Except as hereinafter provided, in all areas of the City where the cables, wires and other like facilities of a public utility are placed underground, Franchisee shall construct and install its cables, wires and other facilities underground at its sole expense. Amplifier boxes and pedestal mounted terminal boxes may be placed above ground if required by existing technology, but said amplifier boxes and terminal boxes shall be of such size and design and shall be so located as not to be unsightly or unsafe. With respect to any cables, wires and other like facilities constructed and installed by Franchisee above ground, the Franchisee shall, at its sole expense, reconstruct and reinstall such cables, wires or other facilities underground pursuant to any project under which the cables, wires or other facilities of a public utility or public utility district are required to be placed underground within an area. ARTICLE XXXV RELOCATION If during the term of this Franchise the City, a public utility, a public utility district, a public water company or water district, a public sanitation district, a public drainage district or any other similar special district, elects to alter, repair, realign, abandon, improve, vacate, reroute or change the grade of any street or to replace, repair, install, maintain, or otherwise alter any above ground or underground cable, wire, conduit, pipe, line, pole, wire - holding structure, structure, or other facility utilized for the provision of utility or other services or transportation of drainage, sewage or other liquids or gases, the Franchisee shall, except as otherwise provided, at its sole expense, remove or relocate its poles, wires, cables, underground conduits, manholes and any other facilities which it has installed. Upon request of City, as a part of the relocation of facilities, Franchisee shall underground all overhead wires, cables and other like facilities. If such removal or relocation is required within a subdivision in which all utility lines, including those for the Cable Television System, were installed at the same time, the entities relocating their facilities may decide among themselves who is to bear the cost of relocation; provided that the City shall not be liable to Franchisee for such costs. Regardless of who bears the costs, Franchisee shall take action to remove or relocate at such reasonable time or times as MIM 014111 111 1 1111 I are directed by the agency or company undertaking the work. Reasonable advance written notice shall be mailed to the Franchisee advising the Franchisee of the date or dates removal or relocation is to be undertaken. ARTICLE XXXVI TREE TRIMMING Franchisee, its officers, employees, contractors, subcontractors or others acting pursuant to its direction, shall not remove or trim any tree or portion thereof (either above, at or below ground level) which is located within a street without the prior written approval of the Director of Public Works of the City. Such approval may be given or withheld upon such reasonable terms and conditions as the Director of Public Works deems appropriate. Franchisee shall be responsible for and shall indemnify, defend and hold harmless the City and its officers and employees from and against any and all claims, liability, judgments, damages or losses arising out of or resulting from the removal, trimming, mutilation of or any injury to any tree or trees caused by the Franchisee or its officers, employees, contractors or subcontractors. ARTICLE XXXVII MOVEMENT OF BUILDINGS Franchisee shall, upon request by any person holding a building moving permit, license or other approval issued by the City or State, temporarily remove, raise or lower its wires to .I permit the moving of buildings. The expense of such removal, raising or lowering shall be paid by the person requesting same, and Franchisee shall be authorized to require such payment in advance. Franchisee shall be given not less than two (2) business days oral or written notice to arrange for such temporary wire changes. If the request to raise or lower wires to permit the moving of buildings is made by the City for a municipal purpose, the removal, raising or lowering shall be at the sole expense of the Franchisee. ARTICLE XXXVIII Upon expiration and nonrenewal or termination of this Franchise pursuant to state or federal law, if neither City nor another cable system operator purchases the Cable Television System, Franchisee may, and upon request of City shall, remove from the streets any underground cable which has been installed in such a manner that it can be removed without trenching or other opening of the streets. The Franchisee shall not remove any underground cable or conduit which requires trenching or other opening of the streets except as hereinafter provided. The Franchisee shall remove, at its sole cost and expense, any underground cable or conduit by trenching or opening of the streets as ordered by the City Council based upon a determination, in the sole discretion of the Council, that removal is required in order to eliminate or prevent a hazardous -41- condition. Any order by the City Council to remove cable or conduit shall be mailed to the Franchisee not later than thirty (30) calendar days following the date of expiration of the Franchise. Franchisee shall file written notice with the City Clerk not later than thirty (30) calendar days following the date of the expiration or termination of the Franchise of its intention to remove cable and a schedule for removal by location. The schedule and timing of removal shall be subject to approval and regulation by the Director of Public Works of the City. Removal shall be completed not later than twelve (12) months following the date of expiration of the Franchise. Poles, underground cable, conduit and other facilities in the streets which is not removed shall be deemed abandoned and title thereto shall be vested in the City. Upon expiration and nonrenewal or termination of Franchise subject to applicable federal or state law, and if neither the City nor another cable system operator purchases the System, the Franchisee, at its sole expense, shall, unless relieved of the obligation by the City, remove from the streets all above ground elements of the Cable Television System, including but not limited to amplifier boxes, pedestal mounted terminal boxes, and cable attached to or suspended from poles, which are not purchased by the City or its assignee. The Franchisee shall apply for and obtain such permits, licenses, authorizations or other approvals and pay such fees and -42- deposit such security as required by applicable ordinance of the City, shall conduct and complete the work of removal in compliance with all such applicable ordinances, and shall restore the streets to the same condition they were in before the work of removal commenced. The work of removal shall be completed not later than one (1) year following the date of expiration of the Franchise. ARTICLE XXXIX ENFORCEMENT Upon a determination that the Franchisee has committed an act or omission in violation of any of the provisions of this Franchise, the City Manager shall be authorized to mail written notice of the exact nature of the violation to the Franchisee. Not later than thirty (30) calendar days following the mailing of such notice, if the violation has not been cured Franchisee shall be authorized to file an appeal with the City Clerk. Franchisee shall also file a copy of such notice in the office of the City Manager. The City Council shall hear the appeal and the City and Franchisee shall be authorized to present oral and documentary evidence regarding the alleged violation. Formal rules of evidence shall not be applicable. If no appeal is filed and the Franchisee has failed to cure within thirty (30) calendar days following mailing of the notice, or if an appeal is filed and denied and if within ten (10) calendar days following mailing to the Franchisee of the -43- order denying the appeal the Franchisee has failed to correct the violation, City may take corrective action directly or through an outside entity. In such event, the Franchisee shall be liable for the full amount of any charges made for such corrective action, including salary and benefit costs of any public employees assigned to take such corrective action, and the costs of material, supplies and goods utilized in taking such corrective action. The provisions of this Article shall not be construed in such a way as to relieve the Franchisee from liability for any damages which may arise out of and be proximately caused by a breach by the Franchisee of any of the provisions of this Franchise. ARTICLE XL SYSTEM OWNERSHIP Legal and equitable title to the Cable Television System, as between City and Franchisee, shall be vested in the Franchisee. ARTICLE XLI NONDISCRIMINATORY SERVICES Services provided by Franchisee through its Cable Television System within the Franchise Area shall be offered upon nondiscriminatory terms to subscribers and users, and shall not differ based upon geographical location, income levels, or the racial or ethnic composition of any areas within the service -44- territory. The provisions of this Article shall not prohibit Franchisee from offering services in rate tiers or upon a promotional, bulk sales or "test marketing" basis. ARTICLE XLII SUBSCRIBER ANTENNAS Franchisee shall not remove or offer to remove any potential or existing subscriber antenna, or provide any inducement for removal as a condition respecting the provision of service. ARTICLE XLIII ANTICOMPETITIVE PRACTICES This Franchise shall not be deemed expressly or impliedly to authorize the Franchisee to utilize its Cable Television System to provide any service in such a manner as to unlawfully damage any business competitor or other third party or violate any statutes or regulations of the United States or State of Colorado. Nor shall the Franchisee, by act or omission, engage in any anticompetitive practice in violation of any statutes or regulations of the United States or State of Colorado. The provisions of this Article shall not confer any rights upon third parties. ARTICLE XLIV MAINTENANCE AND REPAIR During the term of Franchise, the Franchisee shall maintain its Cable Television System in good condition, render -45- efficient service, make repairs promptly, and interrupt service only for good cause and for the shortest practicable time. ARTICLE XLV PRIVACY Franchisee and its officers, agents, employees, contractors and subcontractors, shall respect, refrain from invading, and will take affirmative action to prevent violation of the privacy of subscribers served by the Cable Television System and others. 1. Subscriber data, including names, addresses and phone numbers, shall not be distributed and used by the Franchisee for other than the normal conduct of business activities. Reasonable protection shall be provided by the Franchisee to avoid access thereto by outside parties and to protect the right of privacy of subscribers. 2. Access to subscriber data required for providing two way transmission, including but not limited to automatic alarm systems, shall be limited to those personnel of the Franchisee or agencies required for the provision of the service. Reasonable protection shall be provided by the Franchisee to avoid access thereto by outside parties and to protect the right of privacy of subscribers and as otherwise provided by the Cable Act. 3. Neither the Franchisee nor any other person, agency, or entity shall tap, or arrange for the tapping or -11 monitoring of any cable, line, signal input device, or subscriber outlet or receiver for any purpose whatsoever, except that the Franchisee may conduct tests of the functioning of the system where necessary in order to ensure proper maintenance of the system and to collect performance data for agencies regulating the quality of signals, and the Franchisee may conduct system- wide or individually addressed "sweeps" for the sole purpose of verifying system integrity (including individual security system integrity), controlling return path transmissions, billing for pay services, or collecting aggregate data on viewing patterns by channel. "Tapping" shall mean observing a communications signal exchange where the observer is neither of the communicating parties, whether the exchange is observed by visual, aural or electronic means, for any purpose whatsoever. The provision of interactive services shall not be construed to be "tapping" or "monitoring" under this subparagraph. 4. The Franchisee shall not place in any private residence or in any institution any equipment capable of two -way communications without the written consent of the subscriber, and shall not utilize the two -way communications capability of the system for subscriber surveillance of any kind without the written consent of the subscriber, specifying how the collected data will be used and by whom. Tenants who occupy premises connected to the system shall be deemed to be subscribers within the meaning of this subparagraph regardless of who actually pays -47- for the service. The written consents referenced in this subparagraph shall be, and shall show on their face that they are, revocable by the subscriber at any time by written communication mailed by the subscriber to Franchisee. No penalty shall be invoked for a subscriber's failure to provide a written consent or for his or her revocation thereof, and all written consents shall so state on their face. The Franchisee shall not make such written consent a condition precedent to receipt by a subscriber of noninteractive service. The provisions of this subparagraph shall not be deemed to require consent as a condition precedent to system -wide or individually addressed "sweeps" for the sole purpose of verifying system integrity, controlling return -path transmissions, billing for pay services, or collecting aggregate data on viewing patterns by channel. 5. No cable, line, wire, amplifier, converter, or other piece of equipment associated with the Cable Television System shall be attached to any residence or other property of a citizen without first securing the written permission of the owner or tenant of the property. If such permission is later revoked, and the subscriber, owner or tenant requests, the Franchisee shall, at its sole expense, remove forthwith all of the equipment and promptly perform all repair work in a workmanlike manner and shall be responsible for reasonable repairs to residences or other property caused by the installation. ZIMIC 6. Franchisee or any officer, agent or employee thereof shall not sell, or otherwise make available, lists of the names and addresses of its subscribers, or any list which identifies, by name or otherwise, individual subscriber viewing habits, to any person, agency, or entity for any purpose whatsoever; except that the Franchisee shall, upon request, provide lists of names and addresses of its subscribers to authorized representatives of the City when the City Council deems such information necessary for performance of the regulatory functions of the City Council. Names and addresses of subscribers within the possession of the City shall not be subject to public inspection or review. 7. Franchisee may release the number of subscribers but only as a total number and as a percentage of the potential subscribers within the service area. When indicating the number of subscribers viewing a particular channel, Franchisee shall indicate only the total number of subscribers viewing during the relevant time and the percentage of all subscribers which they represent, but not the identity of any specific subscriber. 8. The Franchisee shall supervise and monitor all polls in which responses are received through the Cable Television System, and shall adopt and enforce measures which ensure that personally identifiable information concerning a subscriber, including his or her viewing habits and responses to the inquiry or inquiries, is not used by any third party, including the party sponsoring the poll except to compile and present nonpersonally identifiable information. 9. Franchisee shall not tabulate any test results, nor permit the use by the system of such tabulation, which would reveal the commercial product preferences or opinions of individual subscribers, members of their families or their invitees, Companies or employees, without advance written authorization by the subscriber. ARTICLE XLVI AFFIRMATIVE ACTION Franchisee shall not discriminate in employment or selection of contractors or subcontractors on the basis of race, color, religion, national origin, age, marital status or gender. Franchisee shall comply with the Equal Employment Opportunity Regulations promulgated by the FCC, and all applicable Federal and State statutes and regulations and ordinances of the City. ARTICLE XLVII GUARANTEE AND INSURANCE 1. Guarantee Franchisee shall at all times during the term of this Franchise maintain in full force and effect a corporate surety bond issued by a qualified bonding company in the amount of $500,000, effective for the entire term of the franchise, except as otherwise agreed by the City. In the event Franchisee shall fail to comply with any one or more of the -50- provisions of the Franchise, whether or not the Franchise is terminated, there shall be recoverable under the corporate surety bond any damages suffered by the City as a result thereof, including but not limited to, the full amount of any liquidated damages, delinquent franchise fees, compensation and costs of repairing or completing the Cable Television System, and the cost of removal or abandonment of property and repair of streets and other public or private improvements. Said corporate surety bond shall not operate as a limitation upon the recovery of damages suffered by the City, nor shall it limit the ability of City to recover damages from any proper party. In lieu of a surety bond, Franchisee may substitute a "Guarantee in Lieu of Bond" executed by TCI, Inc., a Delaware corporation, in substantially the form set forth in Attachment A hereto. Neither the provisions of this section nor any damages recovered thereunder shall be construed to excuse faithful performance by the Franchisee or to limit the liability of Franchisee under the Franchise for damages, either to the full amount of the corporate surety bond or otherwise. Said corporate surety bond shall contain a provision which prohibits cancellation by the bonding company during the term of the Franchise without substitution of a comparable surety bond acceptable to the City. -51- 2. Insurance Requirements Franchisee shall maintain in full force and effect, at its own cost and expense, during the term of the Franchise, Comprehensive General Liability Insurance in the amount of $1,000,000 combined single limit for bodily injury, property damage and contractual liability. Said insurance shall designate the City as an additional insured. Such insurance shall be noncancellable except upon thirty (30) days prior written notice to City. ARTICLE XLVIII INDEMNIFICATION BY FRANCHISEE The Franchisee shall construct, maintain and operate its plant, equipment, structures and other facilities in a manner which provides reasonable protection against injury or damage to persons or property. Franchisee shall save the City harmless and indemnify the City from and against all claims, demands, liability, judgments and loss whatsoever in nature, and reimburse the City for all its reasonable expenses, including attorney and expert witness fees, arising out of or resulting directly or indirectly from the operations of the Franchisee within the City and the securing of and the exercise by Franchisee of the franchise rights granted herein, including any third -party claims, administrative hearings and litigation. None of the City expenses reimbursed by the Franchisee under this Article shall be surcharged to the City or its residents. -52- Within ten (10) days after receipt of the same by the City Attorney, the City will provide notice to Franchisee of the pendency of any claim or action against the City arising out of the exercise by the Franchisee of its franchise rights. Franchisee will be permitted, at its own expense, to appear and defend or to assist in defense of such claim. ARTICLE XLIX TRANSFER AND TERMINATION 1. Transfer of System No material part or element of the Cable Television System shall be voluntarily or involuntarily sold, transferred, assigned, leased or sublet for any purpose whatsoever, without the prior written consent of the City, which consent shall not be unreasonably withheld. This Franchise shall terminate upon any such sale, transfer, assignment, lease or subletting of the System without consent of the City. 2. Transfer of Franchise This Franchise shall not, either in whole or in part, be sold, transferred, assigned, leased or sublet other than to an affiliate for any purpose whatsoever; nor shall title thereto, either legal or equitable, or any right or interest therein, pass to or vest in any party without the prior written consent of the City and payment of the Transfer Fee as set forth hereinafter; except, however, no such consent shall be required for a transfer in trust by mortgage, by other hypothecation, or any assignment of any rights, title or interest of Franchisee in the Cable Television System in order to secure repayment of indebtedness. -53- 3. Transfer Fee In order that the City may share in the value this Franchise adds to Franchisee's operations, any such sale, transfer, assignment, or lease by the Franchisee of rights under this Franchise, requiring consent of the City shall require the transferee promptly to pay to the City a transfer fee. The transfer fee shall be in an amount equal to $15,000 for each remaining year of the franchise term, but not less than $50,000. The charging or collection of the transfer fee shall be conclusively deemed reasonable. The transfer fee shall be paid within thirty (30) days after the date of sale, transfer, assignment, or lease. Such transfer fee shall not be recovered from the City or from the City residents or property owners through rates of customers in Pueblo or by surcharge of residents by the transferee or Franchisee. 4. Void Transfers Any sale, transfer, assignment, lease or sublease of whatever kind or nature made in violation of the provisions of this Article shall be void. 5. Termination of Franchise The following material breaches of the obligations of Franchisee under the Franchise shall constitute nonexclusive grounds for termination of Franchise by the City: a. Cumulative unexcused delay in excess of thirty (30) calendar days in completion of the Cable Television System in accordance with the construction schedule submitted pursuant to the provision of this Franchise; -54- b. Any violation of subparagraph 1 of this Article; C. The failure to make any payments required by Article VI hereof; d. Failure of Franchisee to expand and upgrade the Cable Television System as required by Article XXI (1)(f). e. Any other act or omission by the Franchisee which materially violates the terms, conditions or requirements of this Franchise and which act or omission is not corrected or remedied within thirty (30) calendar days following mailing to the Franchisee of written notice of the violation. 6. Commencement of Termination Proceedings. The City Council shall not determine that this Franchise shall be terminated upon any ground set forth in this Franchise until a hearing has been conducted upon the matter. Written notice of the time, date and place of the hearing shall be mailed to the Franchisee and the Franchisee's guarantor not later than thirty (30) days prior to hearing. The notice shall state the reason(s) for the hearing, describe the basis for termination, and identify specifically the terms, conditions or requirements with respect to which the breach has occurred. The hearing shall be conducted by the City Council. The costs incurred by the parties for attorneys' fees, expert witness fees and other expenses shall be borne solely by the party incurring the costs. -55- 7. Conduct of Hearing Franchisee and City shall be entitled to the compulsory attendance of witnesses at the hearing through exercise of the City Council's subpoena powers. All witnesses testifying at the termination hearing shall be sworn. Witnesses shall be subject to direct and cross - examination. However, formal rules of evidence applicable to the trial of civil or criminal proceedings in the trial courts of this State shall not be applicable to the hearing. The provisions of the Administrative Procedure Act shall not be applicable to such hearing. The hearing may be continued from time to time. If the decision by the City Council is that the Franchise shall be terminated, the Council shall adopt a resolution which terminates the Franchise and includes the City Council's decision. The effective date of termination shall be the date prescribed by the City Council in its sole discretion but not earlier than thirty (30) days after the date of the resolution. 8. Alternative Remedies No provision of this Chapter shall be deemed to bar the City or Franchisee from seeking or obtaining judicial relief from a violation of any provision of this Franchise or any ordinance, order, rule, regulation, requirement or directive of the City. Neither the existence of other remedies identified in this Franchise nor the exercise thereof shall be deemed to bar or otherwise limit the right of the City or Franchisee to recover monetary damages for violation -56- of the Franchise, or judicial enforcement of any obligations thereunder by means of specific performance, injunctive relief or mandate, or any other judicial remedy at law or in equity. 9. Nonenforcement. Neither Franchisee nor City shall be relieved of any obligation to comply with any of the provi- sions of this Franchise or any ordinance, order, rule, regula- tion, requirement or directive promulgated by the City by reason of any failure of the City or Franchisee, respectively, or the officers or employees of either to enforce prompt compliance. 10. Purchase of System by City In the alternative, and subject to Federal or state law, in the event of termination of the Franchise either through nonrenewal, surrender, or forfeiture, the City, at its election and, upon the payment to Franchisee of a price pursuant to 47 U.S.C. § 547(b)(1) or other applicable provisions of state or federal law, may purchase the Cable Television System. The above price shall not include, and the Franchisee shall not receive, any payment or compensation for the valuation of any right or privilege under this Franchise. In the event of dispute, the matter of purchase price for the System shall be submitted to a panel of three (3) competent appraisers, one appointed by the City, one appointed by the Franchisee, and one appointed jointly by the City and the Franchisee, for binding arbitration. -57- ARTICLE L MISCELLANEOUS PROVISIONS 1. Use of Franchisee Right -of -Way The Franchisee will permit the City use of right -of -way which it now, or in the future, owns or has an interest in within the City for the purposes set forth in and pursuant to the provisions of the Colorado Park and Open Space Act of 1984, C.R.S. § 29 -7.5 -101, et seq. provided that the Franchisee shall not be required to make such an offer in any circumstances where such offer would interfere with the Franchisee's use of the right -of -way. If the Franchisee's offer of use is accepted by the City, then any improvements deemed appropriate by the City and consistent with the purpose of the Park and Open Space Act of 1984 shall be made by the City at its expense. 2. Joint Use of Franchisee Facilities. The Franchisee shall permit use of Franchisee facilities by entities providing services for the convenience and necessity of the City and its residents. Such use shall be permitted under the following conditions: a. Such grantees shall not be in competition with the Franchisee. b. Such grantees shall obtain the permission of the City and pay to the City and Franchisee appropriate fees, if any. Q:f C C. Such joint use shall not unreasonably inter- fere with the Franchisee's use of the facilities. d. Said use shall not create a safety hazard. e. The Franchisee shall assume no liability nor shall it be put to any additional expense in connection therewith. 3. Reimbursement of Election Costs City election costs incurred in the granting of this Franchise or any renewal thereof, including publication costs, shall be reimbursed to the City by Franchisee. The parties agree that such costs are incurred, and the Franchisee's obligation arises, at the time the City incurs said costs. 4. Severability It is the intent of the parties hereto that all provisions and sections of this Franchise be liberally construed to protect and preserve the peace, health, safety and welfare of the inhabitants of the City and should any provision or section of this Franchise be held unconstitutional, invalid or otherwise unenforceable, such holding shall not be construed as affecting the validity of any of the remaining provisions or sections, it being the intent that they shall stand, notwithstanding the invalidity or unenforceability of any particular provision or section hereof. 5. Filing When not otherwise prescribed herein, all matters herein required to be filed with the City shall be filed with the City Manager. -59- 6. Supersedes Previous Franchises This Franchise supersedes any previous agreements, licenses, permits or franchises between the parties as to future rights and remedies thereunder, but not those existing as of December 31, 1991. 7. Effective Date This Franchise will become effective on January 1, 1992 upon the majority vote in favor thereof by the qualified registered electors of the City voting thereon at the general municipal election to be held on Tuesday, the 5th day of November, 1991. 8. Franchisee Approval Franchise shall file with the City Clerk its written approval of this Franchise and of all of its terms and provisions at least ten (10) days prior to the general municipal election. Franchisee shall file with the City Clerk its written ratification thereof within twenty (20) days after the approval of this Franchise by the qualified registered electors of the City at said general municipal election. The acceptance and ratification shall be in form and content approved by the City Attorney. If Franchisee shall fail to timely file its written acceptance or ratification as herein provided, this Franchise shall be and become null and void. CERTIFICATION Marian D. Mead, City Clerk of the City of Pueblo, hereby certifies that Ordinance No. 5705 was disapproved by the qualified registered electors of the City at the general municipal election held November 5, 1991 by vote of 7814 in favor of the Ordinance and 8041 against the Ordinance. .1 Dated this 8 th day of November, 1991. [S E A Ll JBWbhxl009 City lerk -61- % %crr rakit): , ctoir, ton into twit orr(m. CITY LERK'S FICE �N/ TO Cablevision of Colorado, Inc. mr $M 11 RECEIVED FILED BY: Z, CIT LE �K'`.s' ..� May 4, 1992 OFFICE ,w MAY 4 199,20- £- Mr. Thomas E. Jagger, City Attorney ,\ ?I,I ��. City of Pueblo P.O. Box 1427 Pueblo, CO 81.002 Dear Mr. Jagger: I want to take this opportunity to thank all involved in the completion of negotiations regarding the renewal of the Company's franchise in Pueblo, Colorado. We believe that the document is a fair compromise of the many issues that have been the subject of spirited debate for some time. More importantly, we believe that the franchise meets the community needs and interests. We look forward to working with you and other City officials in the future in bringing quality cable television to the citizens of Pueblo. The last step in the process of the renewal, from the City's point of view, is an election. We take this opportunity to continue to clarify our position that the Company has a valid and current franchise, and that we have commenced renewal proceedings; however, our views regarding the election process remain unchanged and we reserve our rights relating to it, including the undertaking of a more formal renewal proceeding under the Cable Communications Policy Act of 1984 and other applicable law. We are confident, however, that the election will show strong support for the Company and its continued operations within the City of Pueblo. Again, we want to thank you for your efforts in the recent negotiations. If you have any questions, please do not hesitate to call me. S TCI rLEVIT OF 40 , INC. Jo p R. Stackhouse ArEa Manager cc: Scott Higel Charles Hembree Brian Shirk City Government JRS;tic 1 1 . GUARANTEE IN LIEU OF BOND THIS AGREEMENT is made this day of . 199_, between Guarantor, Franchising Authority and Company (for the purpose of this Agreement. the terms "Guarantor ". "Franchising Authority and "Company" have the meanings ascribed to them below). WITNESSETH WHEREAS. the Franchising Authority has granted a franchise to the Company pursuant to the Franchise Document (as defined below) to own, operate and maintain a cable television system ( "System "); and WHEREAS. Tele- Communications. Inc.. a Delaware corporation ( "Guarantor "). is the indirect parent company of the Company and has a substantial interest in the System and the conduct of the Company in complying with a Franchise Document. and any and all amendments thereof and any agreements related thereto. which Franchise Document Is hereby specifically referred to, incorporated herein, and made a part hereof; and WHEREAS. section /paragraph /article of the Franchise Document requires the Company, as principal, to furnish bond or bonds issued to cover the faithful performance of certain of the Company's obligations under the Franchise Document. NOW. THEREFORE, Guarantor hereby unconditionally guarantees the due and punctual performance of any and all obligations of Company contained in section /paragraph /article of the Franchise Document. This Agreement, unless terminated. substituted or canceled, as provided herein. shall remain in full force and effect for the duration of the term of the Franchise Document, or as expressly provided otherwise in the Franchise Document. Upon substitution of another Guarantor reasonably satisfactory to the Franchising Authority, this Agreement may be terminated, substituted or canceled upon thirty (30) days' prior written notice from Guarantor to the Franchising Authority and the Company. Such termination shall not affect liability incurred or accrued under this Agreement prior to the effective date of such termination or cancellation. Any notices given pursuant to this Agreement shall be addressed to the Guarantor and Franchisee at P.O. Box 5630, Denver, Colorado 80217, and to the Franchising Authority at No claim. suit or action u g y under this Agreement b reason of any default of the Company shall be brought against Guarantor unless asserted or commenced within six (6) months after the effective date of such termination or cancellation of the Agreement. IN WITNESS WHEREOF. the Company, Franchising Authority, and Guarantor have set their hands and seals on the day of 19 -• DEFINITIONS (The following terms are defined as indicated below) Franchising Authority: Company: Franchise Document(s): (describe ordinance. franchise, permit, etc. and date) GUARANTOR: TELE - COMMUNICATIONS INC. Don F. Fisher Senior Vice President /Treasurer tiTf COMPANY: BY: TITLE: 8 l p FRANCHISING AUTHORITY. BY: TITLE: ATTACHMENT A 355 Union Blvd., Suite 200 Lakewood, Colorado 80228 987 -9552 MCENTRALINC February 26, 1992 City of Pueblo Pueblo, Colorado Dear Sirs: The attached unaudited statement of operations of TCI Cablevision of Colorado, Inc., Pueblo, CO system, was reviewed by James A. Dotson, a Certified Public Accountant. The statement was prepared from the books and records of TCI Cablevision of Colorado, Inc., and it presents fairly the results of operations of the Pueblo, CO system for the year ended December 31, 1991. S' erely James A. Dotson, C.P.A. Vice President Controller JAD /kc Enc. An Equal Opportunity ��r�® Employer TCI CABLEVISION OF COLORADO, INC. Pueblo, CO System Financial Statements For the year ended December 31, 1991 (Unaudited) TCI CABLEVISION OF COLORADO, INC. Pueblo, CO System Statement of Operations For the year ended December 31, 1991 (Unaudited) REVENUE Basic service $5,015,168 Premium service 1,672,854 Rental income 414,860 Installation income 166,339 Other income 619,940 Total revenue 7,889,161 OPERATING COSTS AND EXPENSES Operating expenses 2,075,201 Selling, general and administrative expenses (Note 1) 2,114,918 Total operating costs and expenses 4,190,119 Net income before interest expense, taxes, depreciation and amortization $3,699,042 See accompanying notes to unaudited financial statements. TCI CABLEVISION OF COLORADO, INC. Pueblo, CO System Schedule of Operating, Selling, General and Administrative Expenses For the year ended December 31, 1991 (Unaudited) OPERATING EXPENSES: Programming costs - CATV $ 764,589 License fees - Pay TV 662,059 Technical salaries 521,447 Contract labor 113,456 Cablecasting costs 11,192 Freight 5,827 Maintenance and operating materials 45,961 Pole rental (Note 4) 53,647 Service power 38,452 Vehicle expense 45,714 Other rental (Note 4) 4,310 Converter maintenance and service 45,654 Equipment repair 10,129 Self insurance 2,003 Other operating expenses 1,496 Construction costs capitalized (250,735) Total Operating Expenses $2,075,201 SELLING, GENERAL & ADMINISTRATIVE EXPENSES: Office salaries $ 395,212 Office supplies 20,044 Bank service charges 23,151 Telephone 33,875 Utilities 8,705 Postage 76,667 Pay TV costs 24,223 Advertising salaries 42,468 Marketing salaries 101,150 Marketing costs and public relations 146,703 Employee benefits 50,730 Dues and subscriptions 9,456 Travel 13,496 Bad debt 108,865 Payroll and general taxes 169,570 Franchise fees 232,399 Copyright fees 192,291 Customer billing costs 78,217 Other general and administrative expenses 82,931 Division overhead (Note 2) 162,838 Administrative services paid to TCI (Note 2) 141,927 Total Selling, General & Admin. Expenses $2,114,918 TCI CABLEVISION OF COLORADO, INC. Pueblo, CO System Notes to Financial Statements (1) Summary of Significant Accounting Policies (a) Organization TCI Cablevision of Colorado, Inc. ( "TCI -CO") was organized to acquire, develop and operate cable television systems within the State of Colorado, including those of the cable television system located in Pueblo, Colorado and the adjacent county. TCI -CO is wholly owned by TCI Central, Inc. ( "TCI -C"), an indirect, wholly -owned subsidiary of Tele- Communications, Inc. ( "TCI"). The books and records of TCI are maintained in a manner consistent with its financing and internal operating needs. Accordingly, the books and records for all of TCI's cable television systems within the State of Colorado are combined since all such systems are owned by one corporation. However, within such books and records, the operations of certain systems (or groups of systems) are maintained separately in order to internally evaluate the results of such operations. TCI -C has periodic (i.e., quarterly and annual) reporting requirements with its lenders but "state subsidiaries" such as TCI -CO have no reporting requirements to outside organizations. As a result of the foregoing, a balance sheet has not been provided. The accompanying statement of operations was prepared, by necessity, without interest expense, taxes, depreciation or amortization, which would have required using estimates and allocations of amounts relating to TCI -CO. Such financial statements are restricted to the internal use of the City of Pueblo, Colorado only. Due to the aforementioned, the accompanying financial statements do not purport to be indicative of the results of operations that would be reported for the cable television system in Pueblo, Colorado had its books and records been maintained separate and apart from other cable television systems owned by TCI -CO. These financial statements should be read in conjunction with the consolidated financial statements for TCI -C and subsidiaries (including TCI -CO). (continued) TCI CABLEVISION OF COLORADO, INC. Pueblo, CO System Notes to Financial Statements (b) Property and Equipment The books and records of all of TCI's cable television systems within the State of Colorado are combined since all such systems are owned by one corporation. On the books of TCI -CO, property and equipment is stated at cost, and depreciation is computed on a straight -line basis using estimated useful lives of 5 to 15 years for the cable distribution system and 3 to 40 years for support equipment and buildings. Repairs and maintenance are charged to operations, and renewals and additions are capitalized. At the time of ordinary retirements, sales, or other disposition of property, the original cost and cost of removal of such property are charged to accumulated depreciation, and salvage, if any, is credited thereto. Gains or losses are only recognized in connection with the sale of properties in their entirety. (c) Franchise Costs Franchise costs include the difference between the cost of acquiring cable television systems and amounts assigned to their tangible assets. Such amounts are being amortized on the books of TCI -CO on a straight -line basis over 40 years. Costs incurred by TCI -CO in obtaining franchises are being amortized on a straight -line basis over the life of the franchise. (2) Transactions with TCI TCI -CO has a management agreement with another subsidiary of TCI whereby such subsidiary's management provides administrative services and has assumed managerial responsibility for cable television systems operation and construction. As compensation for these services, TCI -CO pays a monthly calculated on a per subscriber basis and also pays overhead costs to TCI -C based on TCI -CO's proportionate share of subscribers. Allocation of such amounts relating to the cable television system located in Pueblo, Colorado in the amount of $304,765 are included in the accompanying financial statements. TCI -CO purchases certain pay television and other programming through another TCI subsidiary at TCI's cost. Charges for such programming relating to the cable television system located in Pueblo, Colorado were approximately $1,426,648 for the year ended December 31, 1991 and are included in operating expenses in the accompanying financial statements. (continued) TCI CABLEVISION OF COLORADO, INC. Pueblo, CO System Notes to Financial Statements (3) Income Taxes TCI -CO is included in the consolidated Federal income tax return of TCI. Income tax expense for TCI -CO is based on those items in the consolidated calculation applicable to TCI -CO. Intercompany tax allocation represents an apportionment of tax expense or benefit (other than deferred income taxes) among the subsidiaries of TCI in relation to their respective amounts of taxable earnings or losses. The cable television system in Pueblo, Colorado is not charged for its share of the consolidated tax liability recorded by TCI -CO. If taxes were recorded, net income in the accompanying statement of operations would be reduced. (4) Commitments and Contingencies The Pueblo, Colorado system has entered into pole rental agreements and uses certain equipment under lease arrangements. Rental expense under these arrangements is recorded in the accompanying statement of operations. Future minimum lease payments under noncancellable operating leases were not material. (5) Subscribers and Plant Miles The accompanying financial statements include the revenues and expenses related to operations in the City of Pueblo, as well as the adjacent county. The following is provided as supplementary information: City of Pueblo Pueblo County Total Equivalent Basic Subscribers as of December 31, 1991 22,489 2,130 24,619 Pay Units as of December 31, 1991 23,732 2,292 26,024 Plant Miles as of December 31, 1991 504.7 113.6 618.3