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HomeMy WebLinkAbout02/16/2010, B 2 - DIGITAL INFRASTRUCTURE AND VIDEO COMPETITION ACT ORDINANCE council °a ,(o ,o agenda Report " 8a CITY O F SAN LUIS O B I S P O FROM: J. Christine Dietrick, City Attorney SUBJECT: Digital Infrastructure and Video Competition Act Ordinance RECOMMENDATION Introduce an ordinance amending Chapter 5.72 of the San Luis Obispo Municipal Code relating to cable television franchises. DISCUSSION In 1995, the City of San Luis Obispo entered into a 15-year Franchise Agreement with Charter Communications (previously Sonic Cable Television) for the operation of a cable television system in the City. That agreement expires April 1, 2010. The Franchise Agreement was negotiated pursuant to the City's cable television franchise ordinance. Pursuant to the Agreement, Charter Cable pays the City a franchise fee of five percent of gross revenues, and maintains a PEG (public, education, government) Access account, into which Charter pays an annual amount equal to 1% of Charter's annual gross revenues, for the purchase of capital equipment for local PEG Access broadcasting purposes. The City has also received free cable and I-net services to public buildings from Charter pursuant to the franchise agreement and Charter has provided studio space for and part-time staff support of public access production ("non-cash benefits"). On January 1, 2007, the California Digital Infrastructure and Video Competition Act (Cal. Pub. Util. Code §§ 5800 et seq., "DIVCA") took effect. However, because the City and Charter had an existing franchise that remained valid under DIVCA until its expiration, the City's franchise did not become immediately subject to the Act. DNCA gives the California Public Utilities Commission sole authority to grant statewide franchises to companies providing video service, both for new entrants into the market and incumbent cable television providers. The enactment of DIVCA has substantially limited the authority with which cities may regulate video service providers and preempts most local regulation of video service providers that have received a state franchise to provide such services. Charter Cable has received its state franchise and the City's franchise with Charter will become subject to the state provisions in April of this year, upon expiration of the current franchise term. DIVCA does afford the City the ability to retain revenue for PEG purposes (CPUC Section 5870); collect franchise fees (CPUC Section 5860); assess penalties for violations of customer service standards (CPUC Section 5900) and impose restrictions on the use of City right-of-way (CPUC Section 5885). However, in order to secure these rights under state law, itisnecessary to adopt a local ordinance consistent with DIVCA. Even with adoption of the appropriate ordinance, the City loses authority, upon the expiration of its current franchise, to require Charter's continued provision of free cable and I=net services, studio space or staff support of �, 02 I � Digital Infrastructure and Video Competition Act Ordinance Page 2 public access productions. If the City wishes to continue cable service to some or all of its existing buildings, it will be necessary to establish a business account with Charter and negotiate the scope and pricing of those services. .The City's Charter representative conveyed that the studio space currently utilized by the City's public access contractor and the Charter staff person who coordinates use of that space are provided pursuant to a separate County franchise agreement, which does not expire until 2015. Thus, it appears that there is opportunity for the City to maintain its use of the facility at least until the expiration of the County franchise. In order to comply with the state franchise requirements and to secure its franchise funding as permitted by DIVCA,staff recommends adoption of the proposed ordinance. The ordinance will implement the City's authority in relation to: franchise fees; funding for PEG access; carriage of the City's four PEG access channels, and interconnections; the authority to examine Charter's records; penalties for violation of federal customer service standards; activation of the emergency alert system; and notice to the City of any new state franchise applications impacting service to the area and of amendments to existing state franchises. FISCAL IMPACT There will be some fiscal impact on-the City if the City elects to continue cable services to public buildings. However, the City's Charter representative was not able to provide an estimate of the service costs to.the City at this time, as the cost will depend on the nature and extent of services the City opts to retain. ALTERNATIVES Council could opt not to adopt the ordinance. This option is not recommended as it would result in the loss of the City's franchise and PEG access fees from Charter. ATTACHMENT Ordinance G:\Agenda-Ordinances-Resol\Cable Franchise\CAR.DIVCA.Ord.2010.2.16.dot as - a ATTACHMENT ORDINANCE NO. (2010 Series) AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO REPEALING AND REPLACING EXISTING CHAPTER 5.72 OF THE MUNICIPAL WITH NEW SECTION 5.72 RELATING TO VIDEO SERVICE PROVIDERS BE IT ORDAINED by the Council of the City of San Luis Obispo as follows: SECTION 1. Title 5, Chapter 5.72 ("Cable Television Franchises") of the San Luis Obispo Municipal Code is repealed and replaced with new Chapter 5.72 to read as follows: Chapter 5.72 PROVISIONS APPLICABLE TO HOLDERS OF STATE VIDEO FRANCHISES 5.72.010 Fee for Support of Local Cable Usage. A fee paid to the .City is hereby established for the support of public, educational, and governmental access facilities and activities within the City. Unless a higher percentage is authorized by applicable state or federal law, this fee shall be one percent (1%) of a state video holder's gross revenues, as defined in California Public Utilities Code section 5860. This fee shall be remitted quarterly to the City Treasurer and must be received not later than 45 days after the end of the preceding quarter: The fee payment shall be accompanied by a. summary that explains the basis for the calculation of the.support fee for local cable usage. 5.72.020 Franchise Fee. A state video franchise holder operating in the City shall pay to the City a franchise fee that is equal to five percent (5%) of the gross revenues of that state video franchise holder. The term "gross revenues" shall be defined as set for thein Public Utilities Code section 5860. This fee shall be remitted quarterly to the City Treasurer and must be received not later than 45 days after the end of the preceding calendar quarter. The fee payment shall be accompanied by a summary that explains the basis for the calculation of the franchise fee. Unless construed otherwise by applicable law, the phrase "summary that explains the basis for the calculations," as used herein and above in paragraph A, means the identification of the sources of revenue upon which the fee is based. 5.72.030 Authority to Examine Records. Not more than once annually, the appropriate City department may examine the business records of a holder of a state video franchise to ensure compliance with all applicable statutes and regulations related to the computation and payment of franchise fees. 5.72.040 Customer service Penalties Under State Video Franchises. A. The holder of a state video franchise shall comply with all applicable state and federal customer service and protection standards pertaining to the provision of video service. B. The City Manager or his or her designee shall monitor a state video franchise holder's O $a- 3 ATTACHMENT Ordinance No. (20 10 Series) Page 2 compliance with state and federal customer service and protection standards. The City will provide to the state video franchise holder written notice of any material breaches of applicable customer service and protection standards, and will allow the state video franchise holder 30 days from receipt of the notice to remedy the specified material breach. Material breaches not remedied within the 30-day time period will be subject to the following monetary penalties to be imposed by the City in accordance with state law: 1. For the first occurrence of a violation, a monetary penalty of $500 shall be imposed for each day the violation remains in effect, not to exceed $1,500 for each violation. 2. For a second violation of the same nature within twelve months, a monetary penalty of $1,000 shall be imposed for each day the violation remains in effect, not to exceed $3,000 for each violation. 3. for a third or further violation of the same nature within twelve months, a monetary penalty of $2,500 shall be imposed for each day the violation remains in effect, not to exceed $7,500 for each violation. C. A state video franchise holder may appeal a monetary penalty assessed by the City. Such appeal must be filed no later than 60 days after the date of mailing of notification of the penalty or the right to appeal shall be deemed waived. After relevant evidence and testimony is received, and staff reports are submitted, the City Council will vote to either uphold or vacate the monetary penalty. The City Council's decision on the imposition of a monetary penalty shall be final,. 5.72.050 City Response to State Video Franchise Applications. A. Applicants for state video franchises within the boundaries of the City must concurrently provide to the City complete copies of any application or amendments to applications filed with the California Public Utilities Commission. One complete copy must be provided to the City Manager. B. The City will provide any appropriate comments to the California Public Utilities Commission regarding an application or an amendment to an application for a state video franchise. 5.72.060 Public,Educational or Governmental (PEG) Channel Capacity. A. A state video franchise holder that uses the public rights-of-way shall designate sufficient capacity on its network to enable the carriage of at least four PEG access channels. B. PEG access channels shall be for the exclusive use of the City or its designees to provide public, educational, or governmental programming. C. Advertising, underwriting, or sponsorship recognition may be carried on the PEG access channels for the purpose of funding PEG-related activities. D. The PEG access channels shall be carried on the basic service tier and shall be of similar quality and functionality to that offered by commercial channels on the lowest cost tier of service unless the signal is provided to the video service provider at a lower quality or with less functionality, as provided in subsection (g)(3) of section 5870 of the California Public Utilities Code. E. To the extent feasible, the PEG access channels shall not be separated numerically from other channels carried on the basic service tire, and the channel numbers for the PEG access ATTACHMENT Ordinance No. (2010 Series) Page 3 channels shall be the same channel numbers used by the incumbent cable operator unless prohibited by federal law. F. After the initial designation of PEG access channel numbers, the channel numbers shall not be changed without the prior written consent of the City, unless the change is required by federal law. G. Each PEG access channel shall be capable of carrying a National television System Committee television signal, as provided in Public Utilities Code section 5870b. 5.72.070 Interconnection. Where technically feasible, a state video franchise holder and an incumbent cable operator shall negotiate in good faith to interconnect their networks for the purpose of providing PEG access channel programming. Interconnection may be accomplished by direct cable, microwave link, satellite, or other reasonable method of connection. State video franchise holders and incumbent cable operators shall provide interconnection of the PEG access channels on reasonable terms and conditions and may not withhold the interconnection. If a state video franchise holder and an incumbent cable operator cannot reach a mutually acceptable interconnection agreement, the City may require the incumbent cable operator to allow the state video franchise holder to interconnect its network with the incumbent's network at a technically feasible point on the holder's network as identified by the holder. If no technically feasible point for interconnection is available, the state video franchise holder shall make an interconnection available to the channel originator and shall provide the facilities necessary for the interconnection. The cost of any interconnection shall be borne by the state video franchise holder requesting the interconnection unless otherwise agreed to by the parties. 5.72.080 Emergency Alert System And Emergency Overrides. A state video franchise holder must comply with the Emergency Alert System requirements of the Federal Communications Commission in order that emergency messages may be distributed over the holder's network. SECTION 2. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in The Tribune, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage. �a-5 Ordinance No. ATTACHMENT (2010 Series) Page 4 INTRODUCED on the 16th day of February 2010, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the day of 2010, on the following vote: AYES: NOES: ABSENT: Mayor David F. Romero ATTEST: Elaina Cano City Clerk APPROVED AS TO FORM: JL,,-�Ity stine Dietrick Attorney Ba -�