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HomeMy WebLinkAboutVI (C) Discussion re: Proposed Transfer of Cable Television Franchise to Time Warner AGENDA 5-2-95 Item VI C "CENTER OF GOOD LIVING -PRIDE OF WEST ORANGE" Ocoee Vti�N�ZI.�1.11. 0 / COMMISSIONERS RUSTY JOHNSON V...._ ` CITY OF OCOEE PAUL W.FOSTER rt: O 150 N.LAKESHORE DRIVESCOTT A.GLASS 4) OCOEE,FLORIDA 34761-2258JIM GLEASON �� (407)656 2322 CITY MANAGER � Op GOO' ELLIS SHAPIRO STAFF REPORT TO: THE HONORABLE MAYOR AND BOARD OF CITY COMMISSIONERS FROM: JANET G. RESNIK, CAPITAL PROJECTS/CONCURRENCY ANALYST DATE: APRIL 26, 1995 SUBJECT: PROPOSED TRANSFER OF CABLE TELEVISION FRANCHISE TO TIME WARNER ISSUE Should the Honorable Mayor and Board of City Commissioners enter into negotiations with Time Warner to modify the existing cable television franchise agreement in conjunction with the proposed transfer of the franchise? BACKGROUND On March 30, 1995, the City received formal notification that Cablevision Industries Corporation (CVI) had reached an agreement to merge with Time Warner. Under the City' s current franchise agreement, this transfer of the franchise must be approved or denied by the City, and under the FCC Rules, approval or denial must be issued within 120 days of the notice of intent to transfer. (The 120 day timeframe expires July 28, 1995 . ) The formal transfer of a franchise grants an opportunity to revisit the franchise agreement and negotiate any modifications as the parties see fit . DISCUSSION The current franchise agreement was adopted in July 1984, well before the 1992 Cable Act which strengthened franchising authorities' abilities to protect subscribers . Much has changed in the cable television industry -- and in Ocoee -- since 1984 . Because of this, staff recommends that the City take advantage of the proposed transfer to revisit the franchise agreement. The City' s special cable television counsel will also be reviewing the information provided by Time Warner to make sure everything is in order before the City formally approves the transfer. Page 2 - Cable Staff Report There are several sections of the agreement which are important to address : - Requirements of the cable operator to serve newly-developed areas of the City. The language in the current franchise is somewhat vague as to when service will be provided to new subdivisions, and there are no enforcement mechanisms if service is not provided as required. The City should set specific requirements for service to new areas and specific penalties that the cable operator will be subject to if service is not provided as such. - The ability of the City to collect, at our option, the maximum franchise fee allowable by law. The current franchise fee in Ocoee is 3 percent . The FCC currently allows a maximum of 5 percent to be collected by franchise authorities . The City should provide itself with the ability to collect the maximum amount . - Customer Service Standards. The City has worked with CVI to build a much-improved customer service system than was in place 5 years ago; however, the 1992 Cable Act permits franchise authorities to implement specific customer service standards and specific enforcement mechanisms (fines and/or refunds) to ensure that customer service standards are met . The City should determine what customer service standards are imperative and include those in the franchise along with specific penalties if the standards are not met . There are other, less critical areas of the agreement that, if refined, would put the City in a better position to govern the franchise . Several definitions need to be added or amended; application fees for renewing or transferring the franchise need to be included to help the City recover staff and legal costs involved; the length of the franchise needs to be shortened; and any additional needs for service or equipment for schools and municipal buildings should be added to the agreement . Many of these proposed modifications to the agreement could have a financial impact to the people who subscribe to cable television; the cable operator has the right to pass the costs of many franchise requirements on to subscribers . The recommended changes listed above would provide a basis for better service and would not carry any great expense to the individual customer. They would also help the City recover some of the costs associated with administrating the franchise. Page 3 - Cable Staff Report Other, more expensive, things that the City could include as part of the transfer approval are financial and technical audits . A financial audit could be performed to ensure that CVI paid what was due over the years it held the franchise and a technical audit of the system could be performed to determine any capital needs the new cable operator may need to achieve or maintain a "state-of-the-art" system. Both of these audits would carry an added expense to both the customers and the City. Staff believes the costs would outweigh any benefits the City may derive from either a financial or technical audit and does not recommend pursuing them at this time; however the franchise agreement should be revised to give the City the authority to perform these audits at some time in the future if it elects to do so. RECOMMENDATION Staff respectfully recommends that the Honorable Mayor and Board of City Commissioners direct staff and special counsel to work with Time Warner representatives to prepare a draft revised franchise agreement to bring to the City Commission for review in conjunction with the formal review of the transfer.