HomeMy WebLinkAbout05/04/1992, 1 - STUDY SESSION ON SONIC CABLE TELEVISION FRANCHISE RENEWAL PROCESS MEETI G DATE:
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WowQip COUNCIL AGENDA REPORT ITEM NUMBER: j
FROM: Ken Hampian, Assistant City Administrative Officer
Prepared By: Deb Hossli, Administrative Analyst%<
SUBJECT: Study Session on Sonic Cable Television Franchise Renewal
Process
CAO RECOMMENDATION: Receive an oral report on the franchise
renewal process from Telecommunications Management Corporation and
provide staff with direction on the community input portion of the
renewal process.
DISCUSSION:
Background
As the City Council is aware, the City's franchise agreement with
Sonic Cable Television is scheduled to expire in April of 1993 .
Because of the complexity of the renewal proceedings, the Council
has secured the services of Telecommunications Management
Corporation (TMC) to assist staff with the process. The president
of TMC, Mr. Carl Pilnick, will be present at the May 4, 1992 study
session to review the timeframe and process for conducting the
franchise renewal (as noted below) ; explain how the Cable Policies
Act of 1984 will impact the renewal proceedings; provide an update
on current legislation affecting cable; and answer questions of the
Council regarding the process.
Renewal Schedule
Staff has developed the schedule listed below for the franchise
renewal process. Under this schedule, TMC will be responsible for i
the following activities within the timeframe listed below:
* conducting a technical and performance review of the cable
system by May of 1992;
* assessing public, educational, and governmental (PEG) access
needs and interests by June of 1992;
* assessing the cable system's ability to meet PEG access needs
identified by July of 1992;
* developing recommended franchise objectives by July of 1992;
* preparing a franchise agreement and ordinance and evaluating
cable company's franchise proposals by August of 1992;
* taking the lead in franchise negotiations expected to begin
in September of 1992 and conclude by November of 1992;
* preparing and assisting with final adoption of a franchise
agreement and ordinance by January of 1993 .
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A11MOZO COUNCIL AGENDA REPORT
Page 2
Staff and TMC are committed to concluding the renewal process in
as short a timeframe as possible and are confident that the
projected schedule is realistic. Should the negotiation process
become more complex than expected, however, the schedule will have
to be adjusted accordingly.
Community 'Innut
A very important component of the renewal process, assessing the
public's needs and concerns regarding cable, is scheduled to take
place in June of 1992 (as part of the PEG access assessment) . This
process is required in the Cable Policies Act and provides the
community with an opportunity to advise the Council of their public
access needs and their opinions on the quality and performance of
the current cable operator. Information gained from this process
will be used to assist the City with preparing franchise objectives
for the negotiation process.
Staff is recommending that public input be obtained through a "Town
Hall" type meeting in the City/County Library Community Room as
opposed to a formal Council meeting. Under this approach, the
Council would be invited to attend, but staff and TMC would
facilitate the meeting, respond to public questions and record
concerns. It is staff's feeling that a less formal setting would
encourage greater public participation. In addition, there will
be other opportunities for public discussion of the franchise
renewal process at later City Council meetings. However, this
hearing could be held at a formal City Council meeting, if so
desired.
It is important to add that our consultant's proposal initially
included an option to conduct a survey of residents to evaluate
customer satisfaction with the cable operator's performance (at a
cost of $15,000) . After discussing the advantages and
disadvantages of this type of survey with our consultant, however,
staff opted to forego the study. It was felt that adequate
customer satisfaction information could be obtained through a
thorough public meeting process making it unnecessary to spend an
additional $15,000 for the survey. If Council feels it is
necessary to conduct a survey, however, staff can be provided with
direction during the study session.
Countywide Efforts to Improve Cable Service
Concurrent with the City's franchise renewal proces, County Board
of Supervisors Chair, Mr. Bud Laurent, has convened a Countywide
Cable Committee of both staff and elected officials from all seven
cities to explore options for improving the current cable systems
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COUNCIL AGENDA REPORT
Page 3
and encouraging competition from alternative operators. The Mayor
and City staff have been participating in this effort. It is
expected that a report setting out specific goals and objectives
for this group will be available in the near future (staff will
provide Council a copy when available) . The City's cable
consultant has agreed to provide this Committee with technical
advice regarding their efforts during one of his visits to the
City.
FISCAL IMPACT:
The City has executed a contract with TMC for $31,900 ($50, 000 was
budgeted in the 1991-93 Financial Plan for consultant assistance
with the franchise renewal process) . It is important to note that
the City expects to seek full reimbursement from the cable company
for all consultant costs incurred during the renewal proceedings.
There will be no additional cost to the City for the session Mr.
Pilnick holds with the Countywide Cable Committee.
ATTACHMENTS:
TMC Proposal
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1. Letter oIf Transmittai 1
_ TELECOMMUNICATIONS MANAGEMENT CORP.
5757 Wilshire Boulevard Suite344 Los Angeles,California 90036 (213)931-2600
February 3, 1992
Ms. Deb Hossli
Administrative Analyst
City of San Luis Obispo
990 Palm Street
P.O. Box 8100
San Luis Obispo, CA 93403-8100
Dear Ms. Hossli :
Telecommunications Management Corp. (TMC) is pleased to submit this proposal to
provide cable television consultant services to the City of San Luis Obispo, as out-
lined in the City' s Request for Proposals., dated January 8, 1992.
TMC is exceptionally well qualified to provide the requested consultant support.
The following highlights of these qualifications may be noted:
(1) TMC has served approximately 250 local. governments in almost all areas
of cable television and telecommunications, over a period of almost
20 years.
(2) With specific respect to franchise renewals, TMC' s experience includes
support to over 40 communities since 1984, when the Federal Cable Commu-
nications Policy Act of 1984 (the Cable Act) became effective.
(3) TMC has recent and direct experience with communities, such as Watsonville
and Dixon, served by Sonic Cable TV. TMC also has experience with Sonic
in San Luis Obispo, having assisted the City in a rate increase analysis
in 1980.
(4) In all of the renewals noted above, the cable operator agreed to reimburse
City costs incurred during the refranchising process. (TMC generally
recommends that a requirement for reimbursement be incorporated into any
new cable television regulatory ordinance. )
In the enclosed Scope of Work and Task Description, TMC will perform all items
listed in the City's RFP, without exception.
Thank you for the opportunity to submit this proposal . We look forward to
your response.
Sincerely,
CARL PIL14ICK
President
Attachment i 7
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2. SUMMARY OF PROPOSAL
The highlights of Telecommunications Management Corp. 's proposal to provide cable
television consultant services to the City of San Luis Obispo are as follows:
(a) TMC has provided cable television consultant services to over 250
municipalities in the last 20 years, including over 130 in California.
More than 40 'of these assignments have been specifically related to
franchise renewals, under the procedures established by the Federal
Cable Act.
(b) TMC personnel are exceptionally well qualified in all areas pertinent
to refranchisement, including cable system technology,. operations,
regulatory and political environment, anticipated new .services and
technical features (such as fiber optics, high definition television,
digital compression and "user-friendly" characteristics") .
(c) Due to its broad experience, including negotiations with many cable
operators, TMC is very familiar with the strategies necessary to
.achieve the City's high-priority objectives.
(d) TMC, in its task descriptions, has incorporated all of the City's RFP
requirements into 6 tasks that can be. performed effectively within the
time schedules desired by the City. The output of these tasks will
provide the City with the comprehensive base of information necessary
to make appropriate refranchising decisions.
(e) TMC has quoted project costs on a firm, fixed-price basis, so that the
City is guaranteed a not-t4-exceed ceiling cost for all tasks.
(f) TMC believes that the best indication of its capability must come from
its clients, and urges the City to contact any or all of the references
listed.
3. DESCRIPTION OF CONSULTING FIRM
Telecommunications Management Corp. (TMC) is an independent consulting firm, founded
in 1972, with no ties either to cable system operators or equipment manufacturers. All
of TMC' s work in cable communications is for cities and counties, and public users of
communications services, such as universities and school systems, TMC maintains on staff
two full-time consultants, Mr. Carl Pilnick, TMC President, and Mr. Michael J. Friedman,
TMC Vice-President, Additional information on Mr. Pilnick and Mr. Friedman is provided
in Section 5 of this proposal
TMC's experience in assisting cities in all aspects of cities' relationship with
cable operators is unparalleled. TMC has provided consultant services to such major
cities as Baltimore, The District of Columbia, Minneapolis, Phoenix, Miami , Nashville,
New Orleans, Cincinnati , Jacksonville, Little Rock and Portland, among others, in
addition to approximately 250 smaller communities, including 130 in the State of
California.
TMC' s areas of consultant support have included almost all aspects of cable
television and communications:
(a) Provision of consultant s&.".'. °s and support for the intial franchise
award, reneveal and transfer ,..•___sses.
(b) Evaluation of franchise applications and proposals, in a comprehensive, r
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objective manner that appropriately weighs .and interrelates the many
complex factors involved, such as financial capability, system technical
design, public services, etc.
(c) Drafting recommended cable television ordinances and franchise agreements,
and participation in franchise negotiations.
(d) Technical evaluation of cable systems.
(e) Planning studies of new services that could be provided via cable systems,
and evaluating the costs and benefits of such services.
(f) Reviewing system construction operations and technical performance, and
planning for governmental and educational uses of cable system facilities.
4. RELEVANT EXPERIENCE
With specific respect to consultant services during franchise extension or renewals,
TMC has provided this type of support for the following communities:
Sunnyvale, CA 1982 Indio, CA 1982
Pinole, CA . 1982 Monrovia, CA 1982
Pismo Beach, CA 1982 Chico, CA 1983
Poway, CA 1983 Coronado, CA 1983
Springfield, IL 1983 Rancho Cucamonga, CA 1983, 1989-91
Livermore, CA (4 comm. ), 1984 Arcadia, CA 1984
Saginaw, MI 1985 Santa Cruz, CA (City/Co. ) 1985
Peoria, IL 1985 Alameda County, CA 1985
San Leandro, CA (3 comm. )1985-86 Orange County, CA 1985-86, 1989-91
Whittier, CA 1986, 1990-91 Salem, OR 1986
Culver City, CA 1986 San Pablo, CA 1987
Rohnert Park, CA 1987-89, 1990-91 Charleston, IL 1987
Palm Springs, CA 1987 Sonoma, CA 1987-89, 1990-91
Benicia, CA 1987-92 Santa Monica, CA 1987-90
Anne Arundel County, MD 1988-90 Westlake Village, CA 1988-90
Agoura Hills, CA 1988-90 Albany, CA 1988-89
E1 Segundo, CA 1988-91 Turlock, CA 1989-92
Rancho Mirage, CA 1989-92 San Mateo, CA (6 comm. ) 1989-91
Napa, CA 1990 Palmdale, CA 1990-92
St. Clair Shores, MI 1991-92 Fairfield, CA 1991-92
Sierra Vista, AZ 1991-92 Burbank/Glendale, CA 1991-92
Champaign/Urbana, IL 1992
All of the renewals listed above that occurred since 1985 were subject to either the
formal renewal procedures specified in the Cable Act, or the informal procedures permitted
by Section 626(h) of the Act. TMC is very familiar with the Act, and its impact on the
renewal process.
Submitted with this proposal are two samples of franchise ordinances and agreements
completed for cities iii California. These agreements are for the City of Napa and a six-
municipality consortium including San Mateo City, San Mateo County, San Carlos, Redwood
City, Belmont and Brisbane.
5. PERSONNEL
The personnel that will be assigned to this project, if TMC is selected, grill be
Carl Pilnick and Mr. Michael J. Friedman. Mr. Pilnick will be the principal consultant,
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and directly involved in all tasks, with support from Mr. Friedman as appropriate.
Mr. Pilnick is President and principal consultant of TMC, and has been responsibl-
for all consultant assignments since TMC's founding in 1972. His resume includes Bachr' • '
and Master's degrees in electronics engineering, and over 25 years of cable television
experience. He is a member of the Society of Cable Television Engineers.
In addition, Mr. Pilnick was a member of the Federal Communications Commission' s
Technical Advisory Committee, which advised the FCC on cable technology, standards and
practices. He is extremely familiar with cable system construction and operation, and with
the services that cable systems may not only offer today, but advanced services that may be
provided in the future. He also has extensive experience in franchise negotiations and
strategy, franchise renewals, cable system finances and operations.
Mr. Friedman has been an associate consultant with TMC for' the past 11 years, and
has participated in all TMC projects during that period. He holds Bachelor' s and Master' s
degrees in communications, and has been a featured speaker on franchise renewal and new
developments in cable television technology at seminars for the California League of Cities
and the National Association of Telecommunications Officers and Advisors.
If authorized, the survey for Task 2B will be subcontracted to ETROK under the
supervision of TMC and ETROK President, Mr. David 0. Korte. ETROK is a nationally recog-
nized firm specializing in providing local governments with statistically valid telephone
surveys relating to local satisfaction with cable television services. Mr. Korte has
over 19 years experience in cable television matters, 'and is a former vice president of
the Cable Television Information Center.
6. REFERENCES
Mr. Chauncy Berdan Mr. Michael P. Garvey Ms. Heather Stanton
Cable TV Coordinator City Manager Dir. of Parks and Rec.
Anne Arundel County (MD) City of San Carlos (CA) City of Napa (CA)
(410) 222-7798 (415) 593-8011 (707) 257-9529
Mr. Manny Ocampo Mr. Don Harrison Mr. Dallas Flicek
Asst. City Manager Asst. City Manager Asst. City Manager
City of Whittier (CA) City of E1 Segundo (CA) City of Palm Springs (CA)
(310) -945-8200 (310) 322-4670 (619) 323-8214
Mr. Patrick M. Pratt Mr. Robert A. Rizzo Mr. Steve Salomon
City Manager City Manager City Manager
City of Rancho Mirage City of Hesperia (CA) City of Watsonville (CA)
(619) 324-4511 (619) 947-1000 (408) 728-6011
Mr. Mark Wollenweber
City Manager
City of St. Clair Shores (MI)
(313) 445-5250
7. TECHNICAL APPROACH
A. Overall Approach
TNC' s overall approach to cable television franchising and refranchising can be
ized as follows :
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-- We work with municipalities to represent their priorities in cable tele-
vision, under the assumption that each community has some unique interests
and objectives.
-- We help to familiarize local representatives with cable television issues,
technologies, trends and new services.
-- We aim to achieve the maximum local regulatory ability and flexibility,
consistent with the restraints of Federal and State law.
-- We relate each client's priorities to public benefits achieved by other
municipalities, so that the client receives benefits equal or superior to
comparable communities.
We beleve that the approach, combined with the technical expertise of our principals,
has resulted in satisfied clients nationwide.
B. Scope of Services
Telecommunications Management Corp. (the Consultant), shall provide cable television
consultant services to the City of San Luis Obispo (the City) in support of the City' s
refranchising process. These services shall be fully responsive to the "Scope of Services"
described in the City's Request for Proposals. The following tasks shall incorporate all
City requirements.
° Task 1 -- Cable System Technical and Performance Review
Incor orates RFP Items B & E
The Consultant shall perform a technical and performance review and evaluation of
the cable system operated by Sonic Cable in San Luis Obispo. The evaluation shall
include, but not necessarily be limited to:
-- A review of the system design and operational capability, the age and
condition of major components and facilities, and its ability to be
upgraded.
-- A review of the system' s proof-of-performance tests and results, signal
quality tests, and a comparison with FCC technical standards.
-- A physical inspection of the system at selected critical locations.
-- A review of the system' s geographic areas of service and non-service.
-- A review of the system's consumer service, including billing and complaint
response practices, and the quality of service being provided.
-- A comparison of system capability and capacity with current and antici-
pated cable industry state-of-the-art.
-- Feasible scenarios, including costs and benefits, for system upgrading.
-- A review of the financial capacity and corporate structure of Sonic, and
Sonic's ability to finance any anticipated system modifications.
The end-item of Task 1 shall I.e a written evaluation rE port, including all data,
analyses and conclusions.
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° Task 2 -- Community Needs Assessment
Incorporates RFP Items A, C, D, & F)
The assessment of community needs shall consist of two major elements: (1 ) A
survey of the needs of encies and institutions (e.g. , government and education) ,
and ( y o residents of the City o tsefsT
Part A -- Assessment of Government and Educational Access Needs and Interests
(Incorporates RFP Items A., part of C, & D
The Consultant shall review and evaluate the needs assessment for Educational ,
Governmental and Public access as identified by the City, and update and expand this
information as required. The update and expansion shall include the following:
Direct meetings and interviews with cognizant City educational officials,
to ascertain priorities and interests in future uses of the cable system.
-- Review and evaluation of potential services of interest, including both
one-way and interactive video/data/voice applications.
-- Cost-effectiveness evaluation of major services of interest.
-- Recommendations as to cable system capability and upgrading necessary
to meet the perceived governmental and educational needs.
-- Estimated capital and annual operating expenses of meeting the perceived
needs.
The end-product of Part A shall be a written report containing all relevant data,
analyses, conclusions and recommendations. Subsequent to submission of the report, the
Consultant, upon request, shall participate in relevant briefings and meetings to review
the results and conclusions.
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Part B -- Survey of Residents OPTIONAL
Incor orates RFP Item C)'
As n option, the Co ultant shall deve p, perform and evaluat a community
needs/cus mer satisfaction urvey. The surve will include, but not ecessarily be
limited to, he following fea ures:
-- Design or a statistics confidence level o at least 95%.
-- Random sampling of surveys jects throughout a 1 areas of the City.
-- Inclusion of\both -di rect respo a and "open-ended' survey questions.
-- Pre-test of question ansponses rior to conductin the actual survey.
The end-product shall be written report roviding the survey methodology, codin ,
entry and analysis of results. Subsequent to su ission of the survFy report, the
Consultant, upon request, shall participate in relevant briefings, meetings and public �.
hearings , including "Town Hall" meetings for community input. \
Part C -- Ability to Meet Needs
Incorporates RFP. Items F & G)
Based on the results of Task 1 , 2A and 2B, the Consultant will assess the cable
system's ability to meet the identified current and future cable-related needs of the
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q4 community. The Consultant shall also examine:
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-- System ability to adapt to developing and future technologies.
� ' -- Possibility of multiple operators and/or other forms of multi-channel
service competition.
` -- The feasibility and design of an interactive institutional network
designed to service governmental , environmental and business users in
i, the City.
The end-item of this Task shall be a written report including all data, conclusions
and recommendations.
j: ° Task 3 -- Preparation of -Recommended Franchise Objectives
(Incorporates RFP Items H & I
i Based on the results of the previous tasks, the Consultant shall prepare a report fo
j the City's consideration, containing procedures consistent with Federal and State law, an
recommended minimum requirements and objectives for franchise renewal , in such areas as:
-- Regulatory terms and conditions.
-- System upgrade.
-- System capacity and capability, including "trigger" conditions for activation
I.. of advanced capability, such as two-way and institutional communications
capability.
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Public, Educational and Government (PEG) access facilities and channels.
Consumer protection standards and quality of service.
-- Provisions for enforcement of franchise commitments.
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-- Franchise. term and fee.
Task 4 -- reparation Prearation
Incorporates RFP Items J & Q
The Consultant shall provide the following additional assistance in preparation
for the franchise renewal negotiating process.
(a) Preparation of Cable Television Regulatory and Consumer Protection Ordinance
The Consultant shall review the City' s current cable television-related ordinance
and franchise documents, and submit a recommended new regulatory and consumer protection
ordinance draft for the City's consideration. The revised draft shall include, but
not necessarily be limited to, the following:
-- Compatibility with the Cable Act and other applicable Federal and State
laws and regulations.
-- Compatibility with the current status of cable television technology
and services.
-- Provision of regulatory flexibility, consumer service standards and franchise
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enforcement capability to the extent appropriate to protect the public
interest.
(b) Evaluation of Renewal Proposals)
The Consultant shall prepare any request for proposals for franchise renewal , and
submit to the City a written evaluation report of any renewal proposal submitted by Sonic.
The report shall indicate all aspects of the proposal that appear deficient, from
the point of view of the public interest, and shall provide recommendations as to options
to improve these deficiencies.
As an alternative, at the City' s option, the Consultant shall prepare a draft
franchise renewal agreement containing the City's desired objectives, if the City wishes
to utilize this approach rather than request a proposal from Sonic.
(c) Preparation of a Draft Franchise A reement
If not prepared as part of (b) above, the Consultant shall provide a draft franchise
renewal ageement containing the framework, terms and conditions considered in the City' s
best interests.
Task 5 -- Negotiation Support
CIncorporates RFP Item KI
( . If the determination to pursue franchise renewal is made, the Consultant shall
participate in all negotiations to the extent requested by the City. All negotiation
activities will be coordinated with the designated City representative.
Task 6 -- Ongoing Support
The Consultant shall provide ongoing support in connection with all aspects of the
renewal process, until a final franchise is executed. This support shall include, but
not be limited to, response to City requests and participation in relevant meetings and
briefings. At a minimum, this will include meetings and/or being in communication with
City representatives at least every two (2) weeks during the term of the consultation .
C. Schedule of Work
Task 1 -- Completed within 45 days after authorization to proceed.
Task 2A -- Completed within 45 days after authorization to proceed.
Task 2B -- Completed within 75 days after authorization to proceed.
Task 2C -- Completed within 75 days after authorization to proceed.
Task 3 -- Completed within 75 days after authorization to proceed.
Task 4 -- Completed within 90 days after authorization to proceed.
Task 5 -- As determined by negotiations.
Task 6 -- At the City' s convenience.
COPIESTO:
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Aoferience and kadership to serpe allgentrations.
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Clyde Hostetter
' RECEIVED
Media Specialist, California TO: O
48 Los Palos Drive 2.!2=-
San is bis o, CA 93401 From: Clyde Hostetter `D MAY 4 1992.
CITY COUNCIL �� O
I was informed by City staff about your Monday adjourned meeting on th rA
franchise too late to change arrangements for a business trip out of town. This note will
reflect comments that I might be making personally at the meeting.
I am writing in two capacities—first, as a long-time resident of San Luis Obispo; second,as
the state volunteer AARP macer responsible for media relations in the State of California.
As a resident, I would like to confirm my continuing interest in the cable franchise as
expressed in earlier letters and in conversation with City staff. As I stated in my letters, I
believe it would be useful to appoint a citizen group representing a cross-section of City
residents to provide community input during cable TV franchise negotiations. The work of
this group with City staff and the hired franchise consultant would be an effective way of
providing public input in the earlier stages of negotiations, with general public hearings
coming later after groundwork had been laid for public reaction to specific proposals.
As I have indicated in earlier correspondence, I believe that one member of such a group
could be a Cal Poly faculty or staff member with electronic expertise who could interpret
technical considerations to the other members of the group. The other members would
reflect the demographics of those most affected by cable TV.
One demographic segment certainly should be senior citizens.Many among that group have
limited mobility andlimited financial resources; and they must depend more upon cable TV
than most other members of the community for their contacts with the outside world.As any
cable-company officer would be quick to agree, the resources available through local
television stations are limited. The transmission of public-television programming is a
notable example of the public-utility function of cable.
In my second capacity as AARP Media Specialist for the State of California I would like to
add an additional note:
San Luis Obispo has won national recognition and acclaim for its leadership in banning .
smoking in public places. There is an opportunity for the Council to do the same in behalf
of all of the state's senior citizens by leading the way in proper local regulation of cable
television in the new national regulatory environment.
The San Luis Obispo franchise renewal will come at a time when new Federal regulations
will be causing communities and senior citizens everywhere to seek.a working example of
how a community can effectively regulate a utility which is so much a part of its citizens'
lives. I would like to be able to tell the state's 3 million AAUP members and the general
public—how San Luis Obispo's City Council once again led the way when the public welfare
VMS at stake. I .
American Association of Retired Persons 601 E Street,N.W., Washington,D.C. 20049 (202) 434-2277