The URL can be used to link to this page

Home My WebLink AboutII. Discussion Re Cable Television LEIBOWITZ & ASSOCIATES, P.A. SUITE 1450 BRAULIO L. BAEZ SUNTRUST INTERNATIONAL CENTER TELEPHONE(305)530-1322 JOSEPH A. BELISLE ONE SOUTHEAST THIRD AVENUE TELECOPIER(305)530-9417 ILA L. ALLISON MIAMI, FLORIDA 33 131-1 7 15 E-MAIL Broadlaw@aol.com K K. HIFT K. MATTHEW L. LEIBOWITZ • May 12, 1999 VIA FACSIMILE 407-656-8504 Ms. Janet G. Shira Community Relations/Projects Director City of Ocoee 150 N. Lakeshore Drive Ocoee, FL 34761 RE: Cable Franchise Renewal Workshop Dear Janet: Enclosed please find materials outlining the cable franchise renewal process, for distribution to the commission at the May 20th, workshop. During the workshop I will provide more detailed discussion of the process and issues as they pertain to cable services in the City of Ocoee. Please do not hesitate to contact me should you have any questions. cerely, : •.ulio L. Baez encl. F:\1999\Ocoee\Lettecs\Shiva-OutstandingInvoices.0309.wpd CABLE TELEVISION FRANCHISING FOR THE NEXT CENTURY The Renewal Process The renewal of cable television franchises is governed by both Federal and State law. Federal law provides for both formal and informal cable television franchise renewal procedures. Renewal negotiations generally proceed along both the formal and informal tracks. In general, both parties will prefer to reach an agreement under the informal process while following the formal process as a safeguard to protect their respective rights. FEDERAL Formal Renewal Procedures — A formal cable television franchise renewal proceeding is a three step process that may be initiated by either the franchising authority or the cable operator during the six (6) month period commencing thirty-six (36) months prior to expiration of the franchise. Phase I — The first phase of the proceeding is a public inquiry into (a) future cable-related community needs and interests and (b) the performance of the cable operator under the existing franchise. The public must be given appropriate notice and an opportunity to participate in this inquiry. Phase II — The second phase of the formal franchise renewal process is a hearing on the cable operator's renewal proposal. This begins with the filing of the cable operator's franchise renewal proposal. The content of the franchise renewal proposal is whatever information the franchise authority requires, subject to the limitations of Section 624 of the Communications Act. Under this Section, a franchising authority may not regulate the services, facilities and equipment provided by a cable operator except to the extent the regulation is consistent with the Cable Act. For instance, a franchising authority may establish requirements for facilities and equipment but except for certain notice requirements cannot establish requirements for video programming or other information services. Further,while a franchising authority can only require the minimum technical standards established by the FCC, it may apply to the FCC to require more stringent standards. Section 624 also states that no franchising authority may prohibit,condition or restrict a cable system's use of any type of subscriber equipment or any transmission technology. A franchising authority can, however, require that a cable operator provide information in its franchise renewal proposal concerning the upgrading of the cable system. How To MANAGE TELECOM CONNECTIONS PAGE 2 During the four-month period commencing on the date that the cable operator's formal franchise renewal proposal is submitted, the franchising authority must (a),give public notice of the renewal proposal and either (b) renew the franchise or (c) issue a preliminary assessment that the franchise should not be renewed. Phase III — If the franchising authority adopts a preliminary assessment not to renew, it • must set the franchise proposal for hearing on the following issues: To determine whether— (A) the cable operator has substantially complied with the material terms of the existing franchise and with applicable law; (B) the quality of the operator's service,including signal quality,response to consumer complaints, and billing practices, but without regard to the mix, quality, or level of cable services or other services provided over the system, has been reasonable in light of community needs; (C) the operator has the financial, legal, and technical ability to provide the services, facilities, and equipment as set forth in the operator's proposal; and (D) the operator's proposal is reasonable to meet the future cable-related community needs and interests, taking into account the cost of meeting such needs and interests. The franchising authority must give public notice of the hearing. However, the only parties to the proceeding are the franchising authority and the cable operator. The hearing held after a preliminary assessment that a franchise should not be renewed is a full hearing, where the cable operator has notice, an opportunity to introduce evidence, the right to require the production of evidence (i.e., discovery), and the right to question witnesses. A transcript must be made of the proceedings. The franchising authority must issue a written- decision based upon the record stating the reasons for the decision. The decision must be served on the cable operator. In a formal cable television franchise renewal proceeding, denial of renewal may only be based on adverse findings on the four issues specified. With respect to issues A and B (compliance with franchise and quality of service) denial of renewal can only be predicated upon failures where the franchising authority has given the cable operator notice of the failure and an opportunity to cure. The franchising authority may also be stopped from denying renewal under issues A and B if it has otherwise waived its right to object to the cable operator's failures. LEIBOWITZ&ASSOCIATES,P.A. How To MANAGE TELECOM CONNECTIONS PAGE 3 The cable operator can appeal an adverse franchise renewal decision to the U.S. District Court after administrative review of the decision by the State is exhausted or after the time for State administrative review has lapsed. Informal Renewal Procedures — Under the informal procedure, cable operators are free to submit a proposal for franchise renewal at any time, even during the pendency of formal renewal proceedings. Franchising authorities have considerable freedom to respond to an informal proposal for franchise renewal. So long as the public is given notice and an opportunity to comment on the informal renewal proposal, the franchising authority can grant or deny the renewal for any non-arbitrary reasons. LEIBOWITZ&ASSOCIATES, P.A. HOW TO MANAGE TELECOM CONNECTIONS PAGE 4 The following chart sets forth the process for renewal negotiations that a local franchising authority may follow. :.:.;. CABLE TELEVISION FRANCHISE RENEWAL PROCESS : .......:. FORMAL:; INFORMAL:.. ACTIVI_TY`. RENEWAL: RENEWAL Review of present cable television ordinance, analysis of related materials, including relevant ordinances and franchise agreements including ✓ ✓ amendments, if any, and correspondence If indicated,retain accounting firm to perform financial audit If indicated, retain engineer to ✓ ✓ perform technical audit Meet with staff/officials/public to discuss past performance and future ✓ ✓ needs Prepare and issue a ✓ ✓ renewal questionnaire to cable operators Conduct public hearing to identify community needs and interests ✓ Optional Ascertainment Report to be adopted by local franchising authority and served on cable ✓ N/A operator Renewal Proposal to be submitted by operator ✓ N/A Franchise negotiations ✓ ✓ Review and compare renewal proposal with Ascertainment Report ✓ N/A Public Hearing to consider Renewal Proposal and to compare with the ✓ N/A Ascertainment Report Municipality to accept or reject proposals ✓ ✓ If accepted, adoption of revised ordinance and franchise ✓ ✓ If rejected, administrative hearing ✓ N/A LEIBOWITZ&ASSOCIATES,P.A. How To MANAGE TELECOM CONNECTIONS PAGE 5 The Sturgis Case On February 24, 1997, the City of Sturgis, Kentucky's decision to deny Union CATV's proposal for renewal of its cable television franchise was upheld by the United States Court of Appeals for the Sixth Circuit. Judge Cornelia G.Kennedy wrote the decision for the Court. The Court found that the Cable Act "provides for limited judicial review" of a franchising authority's identified cable-related community needs and interests and that the preponderance of the evidence supported the City's determination that Union's proposal for franchise renewal was not reasonable to meet those needs and interests. The decision supports the proposition that City officials, not the cable industry itself, are the best qualified to identify a community's future cable related needs and interests. Judge Kennedy stated that "it would be inappropriate for a federal court to second-guess the City in its identification of needs and interests." The Sixth Circuit found that the granting of a cable franchise is a legislative act traditionally entitled to considerable deference from the judiciary. The Court stated that "the City Council's knowledge of a community gives it an institutional advantage in identifying a community's cable needs and interests. A Court should defer to the franchising authority's identification of the community's needs and interests except to the extent necessary to weigh the needs and interests against the costs of implementing them." By reviewing the identified cable needs only insofar as necessary to weigh the needs against the costs,and by giving considerable deference to the franchising authority's identified cable needs and interests, the court preserved the "critical role" of the franchising authority in the franchise process. The Naperville Case The court in this case determined that a level-playing field under the Illinois Level Playing Field Statute is determined by examining franchises as a whole, rather than on a term by term basis, allowing.a franchise authority the ability to account for extrinsic circumstances that exist, at the time of the grant of a subsequent franchise. The City of Naperville's decision to deny the incumbent cable provider's request to modify its franchise will be reviewed "de novo" by the district court. LEIBOWITZ&ASSOCIATES, P.A. How To MANAGE TELECOM CONNECTIONS PAGE 6 Critical Issues in the Cable Television Franchise Renewal Process Renewals _ 1 a. County •v. City Jurisdiction - A "franchising authority" is defined as any governmental entity empowered by the Federal, State or local law to grant a franchise. Accordingly, under applicable state and federal law, both a City and a County can qualify as a local franchising authority. Issues can arise,however, over which entity has jurisdiction over a certain area. Further, issues arise as a result of annexation and from the creation of new cities. b. Scope of the Franchise - Notwithstanding advances in technology that have supported the proliferation of telecommunications services and in some cases the convergence of such services that may be offered by the same company offering cable television service, federal .law applies on a service by service basis. Accordingly,cable franchises granted pursuant to Title VI of the Communications Act should be limited in scope to cable television. Although provision of non- cable telecommunications services by a cable franchisee may not be prohibited, local jurisdictions should require the providers of such services to obtain applicable authorization prior to initiation of services. c. Internet Service - Local franchising authorities need to address internet services. What is permissible under a cable franchise? What is prohibited? d. Level Playing Field-Is a level playing field clause really as benign as cable operators claim? Why do incumbents attempt to negotiate this term? What does the Florida statute require? e. Term-How short is too short, how long is too long? f. Franchise Fee Payments - What does the law permit? How,shall local franchise authorities calculate gross revenues? Do we need to perform a financial audit? g. Rebuild.Requirements - Can local governments establish a specific technology, upgrade and rebuild requirements? Does the 1996 Act prohibit local authorities from requiring particular system design? 'What is meant by state of the art? LEIBOWITZ&ASSOCIATES,P.A. How To MANAGE TELECOM CONNECTIONS PAGE 7 h. Enhanced Customer Service-Local franchising authorities may have an opportunity to require more meaningful customer service standards than'those in existing franchises. Although FCC regulations provide for minimum guidelines, pursuant to federal law franchising authorities are permitted to adopt enhanced standards as well as enforcement mechanisms to ensure compliance on the part of the cable operator. PEG Requirements-Local authorities typically require cable operators to set aside subscriber network channels for public, educational and government use. With the advent of the digital world, however, questions arise concerning: (1) whether the community can control some of the new digital capacity for PEG purposes and use it to provide multiple channels of video and non-video information to subscribers' homes, and (2) will the type and amount of information provided via PEG channels be limited if the cable operator controls all of the digital capacity. j. Institutional networks-I-Net's can link schools, libraries and government facilities for video, voice and data communication. Can local authorities require cable operators to provide these services? Who should bear the cost? What are the critical elements of an I-Net? k. Transfer provisions - The transfer of a cable franchise may represent a local authority's most significant opportunity to review and enforce compliance with existing franchise provisions as well as to negotiate franchise modifications. Therefore, all franchises should incorporate provisions that maximize the local government's ability to exercise its authority in this regard. (See transfer section). LEIBOWITZ& ASSOCIATES,P.A. How To MANAGE TELECOM CONNECTIONS PAGE 8 Transfers of Cable Franchises Millions of cable subscribers have been affected by cable system sales and transfers between. cable companies. The volume and pace of such transfers has increased dramatically as a result of the 1996 Telecommunications Act. " The Act allows telephone companies as well as utility companies to enter the cable business. In addition, the Act eliminates the three year holding requirement. While many franchising authorities recognize the opportunities represented by renewals, many communities overlook the significance of a transfer, sale or assignment of the cable system. In fact, some franchising authorities fail to retain the right to approve or deny a transfer within the franchise agreement. In the past, local authorities frequently treated transfers, sales and assignments on a pro-forma basis. However,transfers represent a significant opportunity for local franchising authorities to modify current agreements. Transfers of cable operators have meaningful implications for the community, and failure to adequately evaluate these transactions may result in the local authority unknowingly waiving its rights, including but not limited to the right to deny a renewal. Thus, local franchising authorities should be vigilant in their oversight of transfer applications submitted by the cable operator. In considering any application for transfer,the local authority should diligently review the operator's performance under the existing franchise in order to avoid waiving of any non- compliance by the operator. The review should include, but not be limited to, fee payments, customer service, satisfaction of public, education and government access requirements,technical facilities and capabilities and compliance with outstanding orders of the local authority. As is the case with franchise renewals, transfers of cable system ownership are governed by federal law, as well as in some cases, state and local law. Under federal law, where the franchise agreement gives the local franchising authority the right to review a transfer, the cable operator must submit an FCC Form 394 and any other information specifically required by the franchise to support the transferee's legal, financial and technical qualifications. The local franchising authority must issue a decision to approve or deny the transfer within 120 days of receipt of the completed transfer application on Form 394. LEIBOWITZ&ASSOCIATES,P.A. HOW To MANAGE TELECOM CONNECTIONS PAGE 9 Critical Issues in the Transfer Process • When is a transfer a transfer? When is a reorganization or corporate streamlining a transfer? • Are there any deficiencies in the Seller's past and current performance; are there any noncompliance issues? • What are the buyer's financial,technical, legal and character qualifications? What/is its history with other cities? • Has the cable operator provided all information required by the franchise authority? • What are the limits imposed by the 1996 Telecommunications Act on cross ownership between cable operators and local exchange carriers, OVS operators and SMATV systems within the same region? Local franchise authorities should carefully review the corporate structure and interlocking corporate relationships prior to granting approval to any sale, assignment or transfer. • How long does the franchising authority have to act on the transfer request? • What modifications and updates in the current franchise agreement are desired by the franchising authority? • What effect, if any, does a transfer have on franchise renewal? LEIBOWITZ&ASSOCIATES,P.A. How To MANAGE TELECOM CONNECTIONS PAGE 10 How Do Internet Services Over the Cable System Affect Local Jurisdictions A. Definition of Internet Services • What is the scope of services that a cable franchise confers on a cable operator? • Can a cable services operator provide internet services via its cable system within its franchise area? • Does a franchising authority have the right to prohibit internet services provided by a cable operator within its franchise area? B. Gross Revenues Does revenue from internet services fall within the definition of gross revenues subject to franchise fees? C. FCC Staff Working Paper The FCC recently released a staff working paper analyzing the policy issues raised by the delivery of internet services over cable television systems. A FCC summary of the report is attached. D. Pending Federal Legislation In 1998, the Internet Tax Freedom Act created the Advisory Commission on Electronic Commerce to conduct a study of Internet related issues. Specifically excluded from the study is an examination of fees or charges imposed by the Federal Communications Commission or States related to the Communications Act of 1934 and the Telecommunications Act of 1996. The Act declared that the moratorium promulgated by the Act on Federal taxes with respect to the Internet and Internet access does not include any franchise fee or similar fee imposed by a State or local franchising authority, pursuant to Section 622 or 653 of the Communications Act of 1934 (47 USC § 542, 573) or any other fee related to obligations of telecommunications carriers under the Communications Act of 1934, as amended. LEIBOWITZ&ASSOCIATES, P.A. • c7hi AU A,nc•ril an Blvd David Sp nccr (bl,,,u/o. 17.32xIf) vice ,y()pennons Tr!4oi-2.95 I I4 and General ailc+na cr I•ir.\Jig I,67.5V22 TIME WARNlER COMMUNICATIC'NS VIA: FACSIMILE May 19, 1999 Mr. Ellis Shapiro City Manager. City of Ocoee • 150 Lakeshore Drive Ocoee,Pl 34761 Dear Mr. Shapiro: Enclosed please find tl'e Sample Area Prices as requested from Commissioner Anderson. if you have any questions, please do no hesitate to contact me. • Sincerely, w i)a,t/t/44" David Spencer Vice President of Opei.a.tions General Manager DS: agb Enclosure • • bRR-d EO/ZO-d 299-1 2265-199-1OP )anuadS P1AEO OM1410H 51:11 66, 61 AV • /TIME WARNER �``' COMMUNICATIONS • SCHEDULE OF PRICES 1061400 1002403 8817548 B81tG431 6708430 8716483 Effective January 1999 Orlando r Orange Co. Oviedo Ocoee Longwood Windermere gia cSer .S 7.60 8.06 5.45 0.45 - 0.10 8.05 BeekSen+lm(9S'T)_ .. ..............................................•• 3 22.37 22.82 22.55 22.55 23.45 23.46 Remote Service(each) - $ 0.51 0.51 0.51 0.51 0.51 0.61 Smart to Control ....$ 3.90 3.99 3.90 3.98 3.98 , 3.90 Small Box(each) .....:................................................ Convener Box(000h.man-addressable) $ 0.80 • 0.80 0.80 0.90 0.30 0.80 Converter Box(each.addressable)................. 9 3.98 3.98 s' 3.98 3.98 3-Be 5.98 ............. $ NC NC N/C NC • fill N1C AddiionalOutl t................. 149 1.49 """ "'"""" ................................ 1.49 1.49 1.40 1.40 TIMEguard Music Choice...... ......................... $ 2.95 2.95 2.95 2.95 2.95 2.85 PREMIUM SERVICES: : 10.95 10,95 10.95 10.95 1o.es 10,95 HBO• $ 10.96 10.95 10.95 10.95 10.95 10.95 Mhowdme(Includes The Movie Channe(}+-....,................. S 7.95 7.95 7.95 7.95 7.95 7.95 7.95 The rnsney cnannei* .......................... S 7.95 7.95 7.95 7.95 7.98 • $ 9.95 8.95 9.95 ame.95 6.95 Stare MOVl• $ 1.49 1.49 1.49 1.49 1.49 1-49 PREMIER TIER SERVICES: S 7.08 3.9e 3.9e 3.9fi 3.98 3.98 Premier Pak(includes the 8 Premier charmers!+............... ••'"'•.... $ 2.97 2.97 2.97 2.97 2.97 2.97 3 Channel Ale Carte $ 1.49 1.49 1.49 1.49 t.49 1.49 American Movie Classics(AMC)... ..................................Spe .$Gcl • 1.49 1.49 1.49 1.49 1.49 1.49 fCti•............... The Gott Channel•...................................••-.......... . . $ 1.90 1.09 1.09 1.99 1.99 1.99 The 141story Channel• $ 1.49 1.49 1.40 1.40 1,49 1. Tha Leamin9 Channel• ..................................................• $ 1.49 1.49 1.49 1,49 1.49 1.49 Tumor Glasslc Movies* ............................................. 5 1.49 1.49 1,49 1.49 1.49 1.49 WGN(Ind)Chicago S 1.49 1.40 1.40 1.49 1.49 1.49 S 1.49 1.49 1.49 1.49 1.49 1.40 HOME THEATER $ 3.95 3.95 3.95 3.95 3.95 3.96 Movies+ .•••••••....-•............'.""'ar.'Prked indhedua0y""'•"""»".....+......»..•. Special events end Other aptadal services 7' NEW VALUE PACKAGING $ 37.99. 37.99 34.99 34.99 37.99 37.99 ENT9RTAINMRNT PAK.......................i... (Basic.Standard.Premier Pek.1 Smart Box I iM I Remote)+ Premium Packages•available to customers wilt!Entertainment Pak (choice of HBO.Cinemax,Shewtime.The Maley Channel)+ 7.95 7.95 7.96 7.95 7.95 ' FRONT ROW PAK(I premium earvke)w/Mul lrnarr cc The Disney Channel+ S 7.95 .95 9.95 9.96 7.95 9.95 FRONT ROW PAK(I premium service)w/o el aloft ax or The Disney Channel+ 3 0.95 SMART CHOICE(2 premium services)WWI imax or The Disney Channel+ . $ 16.90 15.90 15.90 15.90 , 15.90 15.90 SMART CHOICE PAK(2 premium services),-' $ 18.95 19.95 18.05 15.95 15.95 16.95 MOVIE VALUE PAK(3 premium aeNicea)+ 5 19.95 10.e5 1 e.es 19.96 19.0b • 19.a5 FOUR STAR PAK(4 premium services)+ $ 24.95 24.95 24.95 24.96 24.95 24.95 INSTALLATION AND 3ERYICE CHARGt:S:II L1.,RANCHIBE8)Unwlted Home Inatafation-Primary Outlet...-................................... 5S 49 25 PrtHorns Inetella0on-Primary Outlet..... • Additional Outlet In telIatbNrel0Cate Outlet lie Pr,marY Installation $ 23.84 Additional Outlet Installation/relocate Outlet-..uparate Trip-..................................... S 32.46 Non-Cable Related Service Call.............................................................. .99 1 S - Add/Delete Addressable Services-Office Trl tuaction...... .5 40.07 Hourly Service Charge • OTHER FEES:(ALL FRANCHISES)9oeaon g t6.95 el Plan4.00 AdmIntetrative Fea For Delinquent Peyrrrem $ 5.95 • n 4.00 e NonS 2 uffictent Funds Fee........................ . 0.00 Collection Fee $ ie .00 Untetumed Smart Box $ 40.00 Unratumed Converter Box Fee-Non,Addrei sable 22.00 Unreturned R $emote Control..................... 22 • irafundebte Equipment Deposit(one smart h:x plus one additional box) 3 25.00.00 Refundable Equipment Deposit(for the third rind each eddltlaonat box) • 0.95 Sale of Home Drop Amplifier.............. ..................................................: S S 418.00 VCR l AB Switch Kit - S 0.95 VCR Controller................... ................................. ......................................• Fir Bypooa S 9.9... . No Monthly Charge(N/C) NOTE Franchise Fee and Sates Tax are addi d to customer statements pursuant to Federal.State end Local laws. Prices are sublet:I to change due to federal regulations. Franchise tees are charged at 5%of et►pllable billed services. V60-1 60/EO'd Z99-1 ' ZZ6S-199-10P laauadS Wit0 Vll:MONO Sl:ll 66, 61 AYR TIME 1NARINER COMMUNICATIONS Fax Cover Sheet Date: May 1 i1; 1999 To: Ellis Shapiro, City Manager From: David Spencer City of Ocoee Phone: 407 655-2322 ext. 121 Phone: (407) 532-8630 Fax: 407 655-8504 Fax: (407) 667-5922 Number of pages in';:luding cover sheet: 3 MESSAGE • 088-d E9/l9'd 299-1 226S-199-1DV JanadS P!hE0 3Ml;11Obd bl:ll 66, 6l AVYV