HomeMy WebLinkAbout07/20/1993, C-5 - STATUS REPORT ON CABLE FRANCHISE NEGOTIATIONS WITH SONIC CABLE TELEVISION IIVIIIIGI►II�IIIIIIIIII�I�IIU ".! c MEETING DATE:
I►i��� ci or san suis o�ispo 7-20-93
COUNCIL AGENDA REPORT ITEM NUMBE
FROM: Ken Hampian, Assistant City Administrative Officer
Prepared By: Deb Hossli, Administrative Analyst-Vj 4(
SUBJECT: Status Report on Cable Franchise Negotiations with Sonic Cable Television
CAO RECOMMENDATIONS: (1) Receive and file status report and, (2) by motion,
approve and authorize the Mayor to execute a 60 day extension to the City's franchise
agreement with Sonic Cable Television.
DISCUSSION:
Background
In January of this year, the City Council adopted a listing of cable franchise renewal
objectives for the upcoming franchise renewal proceedings with Sonic Cable Television.
The objectives were developed after a year long information gathering process that
involved a series of technical studies and public meetings to identify the community's
cable needs and desires. The objectives were established.for the purpose of providing
staff with agreed upon parameters to pursue negotiations with the cable operator. The
major objectives adopted by the City Council at that time included:
■ A cable system upgrade from its present 36 channel capacity to 78 to 80 channel
capacity so that the City can keep pace with technology over the term of the
franchise agreement.
■ Adequate channel capacity and equipment funding to support public, government,
and educational (PEG) uses of the cable system.
■ Effective and enforceable customer services standards to insure that cable
subscribers receive timely, efficient service from the cable system.
■ Effective enforcement capabilities to insure that all provisions of the new cable
franchise are met throughout the term of the agreement.
■ An increase in the franchise fee from 4% to 5%.
■ A discount rate for senior citizens with limited incomes.
■ A franchise term commensurate with the level of financial commitment from the
cable operator.
■ Rate regulation capabilities so that the City can take advantage of rate regulation
authority provided by the new cable legislation.
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NMI iIn COUNCIL AGENDA REPORT
Upon Council approval of the franchise renewal objectives, the City's negotiating team
(the City's cable advisor, the Assistant City Administrative Officer, the City Attorney, and
the CAO's Administrative Analyst) began meeting with representatives of Sonic Cable to
draft a new franchise agreement. The City and Sonic have met several times over the
past six months to review and discuss each franchise objective. Based on the current
status of discussions, however, we will not be in the position to conclude negotiations
prior to the current franchise's scheduled expiration of July 31, 1993. As a result, staff
has prepared this report to provide the City Council with an update on the status of: the
negotiation process; the major issues still to be resolved; and a time-table for when we
anticipate presenting a draft franchise to the City Council for consideration (this involves
a request to extend the existing franchise by 60 days).
Status of Negotiations
Below us a summary of Sonic's current proposal and staff's position in response to each
of the major franchise objectives adopted by the City Council.
■ Cable System Upgrade
o Sonic's Current Proposal
Sonic has tentatively agreed to upgrade the cable system to accommodate 70
channels within four years of the execution of a new franchise agreement.
o Staff Position on Proposal
Staff is satisfied of the scale of Sonic's proposed upgrade (to 70 channels). Sonic
and staff have yet, however, to reach agreement on the timeframe or the type of
technology that will be used for the upgrade. It is staffs position that the upgrade
should take place within two years from the date of the franchise execution. This
is comparable to what Falcon Cable has agreed to provide the County in their
recently adopted franchise agreement and will help to insure that our residents
receive cable service comparable to that of county residents. It is also staffs
position that fiber optics should be incorporated into the "core"of the cable system
upgrade (Falcon has agreed to a similar arrangement with the County). Given the
role that fiber optics is expected to play in the future uses of the cable and other
information systems, staff feels that it is important that Sonic commit to using some
level of this technology in the upgrade. Sonic, however, feels that the technology
ultimately selected for the upgrade should be their decision and not dictated by the
City.
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COUNCIL AGENDA REPORT
■ PEG Access
o Sonic's Current Proposal
Sonic has tentatively agreed to provide one channel for PEG access uses upon
completion of the cable system upgrade to 70 channels, and up to a total of three.
channels once the initial channel is fully utilized (which is defined as 18 hours per .
day of un-duplicated video programming). In addition, Sonic has tentatively agreed
to provide $0.14 cents per subscriber per month beginning September 1, 1993 for
PEG access equipment and facilities (which equates to approximately $23,500
annually). Sonic has also tentatively agreed to provide the City with a one-time
advance of $50,000 to fund for PEG access equipment and facility costs in
September of 1994.
o Staff Position on Proposal
Staff is basically supportive of the concept behind Sonic's PEG access proposal;
however, timing and funding levels are still at issue. With respect to timing, it is
staff's position that .Sonic should provide one PEG access channel within six
months of the execution of a new franchise (with the ability to access two
additional channels once the system upgrade is completed and the existing
channel is in use at least 8 hours per day with un-duplicated video programming).
With respect to funding commitments for PEG access, it is staff's position that
Sonic should provide $100,000 for PEG access equipment and facilities within six
months of the execution of a new franchise and an additional $250,000 three years
into the franchise. Sonic should also be required to provide the City with $0.14 per
month per subscriber (with an inflator proportionate to any increases in the basic
service rates). According to the City's cable advisor, a PEG access funding
commitment of this level is consistent with what cable operators of similar size
have agreed to.
■ Customer Service Standards
I
o Sonic's Current Proposal
Sonic has agreed to adhere to the customer service standards established in the
City's recently adopted Cable Ordinance in the franchise agreement. Customer
service standards refer to such items as quickly the cable company must respond
to system outages, what circumstances merit reimbursement, how quickly a cable
company must answer the phone, etc. An excerpt from the Cable Ordinance that
sets out the City's customer service standards has been attached (See Attachment
1).
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Gii% COUNCIL AGENDA REPORT
o Staff Position on Proposal
Staff is satisfied with Sonic's proposal.
■ Franchise Enforcement Capabilities
o Sonic's Current Proposal
Sonic has tentatively agreed to provide the City with a letter of credit in the amount
of $15,000 to use as a security fund throughout the term of the franchise (from
which the City can assess penalties for any franchise violations) and $200,000 to
guarantee the upgrade of the cable system. Sonic has also agreed to adhere to
the framework of the franchise enforcement provisions contained in the City's
recently adopted Cable Ordinance.
o Staff Position on Proposal
Staff is satisfied with Sonic's proposal.
■ Franchise Fee
o Sonic's Current Proposal
Sonic has tentatively agreed to increase the franchise fee from 4% to 5% which
represents the maximum the City can assess under Federal Law. Sonic has also
tentatively agreed to reimburse the City nearly $25,000 for franchise fee under-
payments over the last three years. In addition, Sonic will calculate franchise fees
in accordance with the City's Cable Ordinance.
o Staff Position on Proposal
I
Staff is satisfied with Sonic's proposal.
■ Discount Rate for Seniors
o Sonic's Current Proposal
Sonic is not willing to provide a discount to qualified senior citizens.
o Staffs Position on Proposal
Staff continues to pursue a 5% discount for seniors with limited incomes (Falcon
has agreed to a similar arrangement with the County). Staff fully recognizes that
Sonic is not bound by law to provide a discount of this nature. However, given the
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COUNCIL AGENDA REPORT
dependence that many home-bound seniors have on cable television, staff feels
that this objective should continue to be pursued.
■ Franchise Term
o Sonic's Current Proposal
Sonic has proposed a fifteen year franchise agreement term.
o Staffs Position on Proposal
Staff will not be in the position to develop a recommendation for the franchise term
until the negotiations have progressed further. Based on the current status of
negotiations, however, it is clear that staff cannot recommend a 15 year term.
■ Rate Regulation
Staff will not be in the position to provide the City Council with specific information
on what the Federal Government's recent rate regulation legislation will mean to
the City until fall of this year. Due to staffing constraints, the Federal
Communications Commission (FCC) extended the time-table for rate regulation to
take effect to October 1, 1993. As such, October 1, 1993 represents the first date
that the City can even apply for rate regulation authority. The FCC then has thirty
days to approve our application. Once this is complete, the City can then start the
rate regulation process with the cable company.
Next Step
In summary, it is staffs opinion that the negotiations, while proceeding slowly, are still
productive. As a result, staff is requesting a 60 day extension to the franchise agreement
(to September 30, 1993) to conclude negotiations. During this period, we will focus our
efforts on resolving the major issues identified in this report: (1) the timing and
technology used for the upgrade; (2) the financial commitments for PEG access; (3)
senior discount; and (4) franchise term length.
While staff is reasonably confident that we will be able to favorably resolve these issues
with Sonic by September 30, 1993, it is still important to emphasize the negotiations are
just that - negotiations. Cable law still largely favors cable operators. The only
meaningful "hammer" the City holds is the term length. Therefore, if staff is not able to
achieve reasonable concessions with the cable company over these issues, it is likely that
a short franchise term will be recommended. Conversely, if staff is able to reach
agreement with the cable company over these issues, a longer franchise term will be
recommended.
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COUNCIL AGENDA REPORT
FISCAL IMPACT:
The City will be reimbursed by the cable operator for all costs associated with using
Telecommunications Management Corporation (the City's cable advisor) for the franchise
renewal process; resulting in no out-of-pocket costs to the City.
ATTACHMENTS:
Franchise Agreement Extension
1 - Customer Service Standards
EXTENSION OF FRANCHISE AGREEMENT.
This Agreement is made and entered into this _ day of , 1993, by
and between the City of San Luis Obispo, a duly authorized municipal corporation (the
"City") and Sonic Cable Leasing Corporation, an Alaska corporation ("Sonic").
WHEREAS, Sonic has operated a cable television system ("System") in the City
pursuant to a franchise agreement ("Franchise Agreement") entered into between the City
and Sonic Cable TV, a California corporation, by Ordinance No. 790, passed December 19,
1978, and effective retroactively April 1, 1978, and transferred to Sonic Cable Leasing
Corporation by Resolution No. 6728, dated December 5, 1989; and
WHEREAS, the franchise under which Sonic has operated its System expires on July
31, 1993; and
WHEREAS, Sonic has requested that its franchise be renewed by the City; and
WHEREAS, the City has determined that the public interest would be served by
negotiating a renewal of the franchise to Sonic; and
WHEREAS, Sonic and the city are in the process of negotiating and drafting a
renewal franchise agreement; and
WHEREAS, the City has determined that the public interest would be served by
granting to Sonic and extension of the franchise to and including September 30, 1993,
pending finalization of the renewal franchise agreement.
NOW, THEREFORE, the City and Sonic do hereby agree as follows:
1. The City hereby grants to Sonic an extension of the franchise to and including
September 30, 1993, pending finalization of the renewal franchise agreement.
2. Except as otherwise provided herein, all terms and conditions set forth in the
Franchise Agreement shall remain in full force and effect.
3. It is mutually agreed by the City and Sonic that when a renewal franchise agreement
is reached and entered into by the City Council of San Luis Obispo and Sonic, the .
term of this Extension shall immediately expire.
Page 2
Sonic Agreement
SONIC CABLE LEASING CORPORATION
By:
Steve Burrell, General Manager
CITY OF SAN LUIS OBISPO
By:
Peg Pinard, Mayor
ATTEST:
By:
Diane Gladwell, City Clerk
APPROVED AS TO FORM:
<�3 A1Uf4 A -
ff . J rge 9, C' Attorney
\dh\sonic.agr
Section 1. 16 Minimum Consumer Protection and Service
Standards
A. Except as otherwise provided in the Franchise
Agreement, Grantee shall maintain a local office or offices
to provide the necessary facilities,• equipment and personnel
to comply with the following consumer protection and service
standards under normal conditions of operation:
(1) Sufficient toll-free telephone line capacity
during normal business hours, and excepting unusual events
such as system outages, to assure that a minimum of ninety-
five percent (950) of all calls will. be answered before the
fourth (4th) ring and ninety percent (90%) of all callers
for service will not be required to wait more than thirty
(30) seconds, after the call pickup and the conclusion of
any automated telephone response procedures before being
connected to a service representative.
(2) Emergency telephone line capacity on a .
twenty-four (24) hour basis, including weekends and
holidays.
(3) A local business and service office open
during normal business hours and at least some period weekly
on evenings and/or weekends, and adequately staffed to
accept subscriber payments and respond to service requests
and complaints.
Attachment 1
(4) An emergency system maintenance and repair
staff, capable of responding to and repairing major system
malfunction on a twenty-four (24) hour per day basis.
(5) An installation staff, capable of installing
service to any subscriber within seven (7) working days
after receipt of a request, in all areas where trunk and
feeder cable have been activated.
(6) At the subscriber's request, Grantee shall
schedule, within a specified four (4) hour time period, all
appointments with subscribers for installation of service.
B. Grantee shall render efficient service, make
repairs promptly, and interrupt service only for good cause
and for the shortest time possible. Scheduled
interruptions, insofar. as possible, shall be preceded by
notice and shall occur during a'period of minimum use of the
cable system, preferably between midnight and six A.M.
(6:00 A.M. ) .
C. The Grantee shall maintain a repair force of
technicians normally capable of responding to subscriber
requests for service within the following time frames:
(1) For a system outage: Within two (2) hours,
including weekends, of receiving subscriber calls or
requests for service which by number identify a system
outage of sound or picture of one (1) or more channels,
28 �"�
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affecting at least ten percent (10%) of the subscribers of
the system.
(2) For an isolated outage: Within twenty-four
(24) hours, including weekends, of receiving requests for
service identifying an isolated outage of sound or picture
for one (1) or more channels that affects three (3) or more
subscribers. On weekends, an outage affecting fewer than
three (3) subscribers shall result in a service call no
later than the following Monday morning.
(3) For inferior signal quality: Within forty-
eight (48) hours, including weekends, of receiving a request
for service identifying a problem concerning picture or
sound quality.
Grantee shall be deemed to have responded to a request
for service under the provisions of this Section when a
technician arrives at the service location and begins work
on the problem. In the case of a subscriber not being home
when the technician arrives, the technician shall leave
written notification of arrival. Three (3) successive
subscriber failures to be present at an . appointed time shall
excuse Grantee of the duty to respond.
Grantee shall not charge for the repair or replacement
of defective equipment provided by Grantee to subscribers,
except when the damage resulted from the subscriber's
willful or deliberate act.
29
y
D. Unless excused, Grantee shall determine the nature
of the problem within forty-eight (48) hours of beginning
work and resolve all cable system related problems within
five (5) business days unless technically infeasible.
E: Upon request, Grantee shall provide appropriate
credits to subscribers whose service has been materially
interrupted due to cable system problems.
F. Upon five (5) days notice, Grantee shall establish
its compliance, on an average monthly basis, with any or all
of the standards required above. Grantee shall provide
sufficient documentation to permit Grantor to verify the
compliance.
G. A repeated and verifiable pattern of non-
compliance with the consumer protection standards of A-E
above, after Grantee's receipt of due notice and an
opportunity to cure, may be deemed a material breach of the
franchise agreement.
H. Grantee shall establish written procedures for
receiving, acting upon and resolving subscriber complaints
without intervention by the Grantor. The written procedures
shall prescribe the manner in which a subscriber may submit
a complaint either orally or in writing specifying the
subscriber's grounds for dissatisfaction. Grantee shall
file a copy of these procedures with Grantor.
30 ���
I. Following prior written notice to Grantee, Grantor
shall have the right to review Grantee's response to
subscriber complaints in order to determine Grantee's
compliance with the franchise requirements, subject to the
subscriber's right to privacy.
J. It shall be the right of all subscribers to
continue receiving service insofar as their financial and
other obligations to the Grantee are honored. In the event
.that the Grantee elects to rebuild, modify, or sell the
system, or the Grantor gives notice of intent to terminate
or not to renew the franchise, the Grantee shall act so as
to ensure that all subscribers receive service so long as
the franchise remains in force.
In the event of a change of control of Grantee, or in
the event a new operator acquires the system, the original
Grantee shall cooperate in all reasonable respects with the
Grantor, new Grantee or operator in maintaining continuity
of service to all subscribers. During such period, Grantee
shall be entitled to the revenues for any period during
which it operates the system.
K. In the event Grantee fails to operate the system
for seven (7) consecutive days without prior approval or
subsequent excuse of the Grantor, the Grantor may, at its
sole option, operate the system or designate an operator
until such time as Grantee restores service under conditions
31 �.cJ
acceptable to the Grantor or a permanent operator is
selected. If the Grantor should fulfill this obligation for
the Grantee, then during such period as the Grantor fulfills
such obligation, the Grantor shall be entitled to collect
all revenues from the system, and the Grantee shall
indemnify the Grantor against any damages Grantor may suffer
as a result of such failure.
L. All officers, agents or employees of Grantee who,
in the normal course of work require entry onto subscribers '
premises shall carry a photo-identification card in a form
approved by Grantor. Grantee shall account for all
identification cards at all times. Every vehicle of the
Grantee utilized for field maintenance shall be clearly
identified.
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Section 1. 17 Additional Service Standards
Additional service standards and standards governing
consumer protection and response by Grantee to subscriber
complaints not otherwise provided for in this Chapter may be
established in the franchise agreement, 'and Grantee shall
comply with such standards in the operations of the cable
television system. A verified and continuing pattern of
noncompliance may be deemed a material breach of the
franchise, provided that Grantee shall receive due process,
including written notification, an opportunity to be heard
and an opportunity to cure, prior to any sanction being
imposed.
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