[Council Communication]  [Attachments]

Council Communication

Title:	Charter Cable Television Franchise Renewal
Dept:	Legal Department
Date:	November 18, 2003
Submitted By:	Paul Nolte
Approved By: ...........................	Gino Grimaldi, City Administrator

Synopsis:	The attached franchise with Falcon Cable Systems Company II, L.P., dba Charter Communications, comprehensively addresses the terms and conditions of Charter's right to use the public rights of way within the city. The franchise addresses the fees to be charged, requirements for public, educational and governmental (PEG) access requirements, and complete terms for any violation or transfer of the franchise. The franchise is granted for five years retroactive to June 1, 2003. Charter is required to pay 5% of its gross revenue, the maximum permitted under federal law. PEG access fees (fees that help pay for the public, educational and governmental programming conducted by RVTV) are increased from $0.60 to $.075 per subscriber plus a one-time contribution from Charter of $50,000.
Recommendation:	Approve the franchise agreement and authorize the mayor to sign on behalf of the city.
Fiscal Impact:	The increase in PEG access fees will generate an additional $5,760 annually for a total of $28,800 in annual fees for RVTV. The PEG access fees and the $50,000 one time grant are required to be used for capital support for PEG access. The $50,000 is to be used to purchase PEG access equipment and facilities for the City's council chambers
Background:	The city's first cable franchise was entered into in May 1983 with McCaw Communications for 20 years. The McCaw franchise was transferred to Cooke CableVision in February 1987, which was then transferred to TCI in 1990, then to Falcon Cable in July 1998. The City consented to a transfer of control of Falcon Cable to Charter Communications Holding Company, LLC in October 1999. The new franchise with Charter is based on the franchise negotiated with AFN CATV in 1999. At the time that franchise was approved, it was intended that the franchise be the model for future cable franchises. There are, however, some differences in the Charter franchise: The more significant differences include 1) The definition of gross revenue excludes "launch fees" (fees paid by programmers to encourage the cable system to carry new programming) and PEG access fees collected by Charter from Charter's customers. Charter has never included these fees in gross revenue and the amount involved is minimal (less than $1,500 for PEG access and less than that for launch fees out of a total of an estimated $50,000 per year in franchise fees). 2) Language was added in paragraph 3.6 to restrict the city's access to customer names should the city audit Charter for compliance with the franchise. Because the city is a competitor, Charter was concerned that the city would use such audit information to the city's advantage in soliciting customers. As now written Charter will hire a certified public accountant to review the records and report to the city the result of the audit without disclosing customer names. 3) The AFN franchise does not include a grant to the city for PEG access. Charter's franchise requires Charter pay a $50,000 grant. Paragraph 8.7.2 of the Charter franchise states, however, that the city "shall endeavor to require a similar financial contribution, or an equivalent benefit for PEG Access, from Ashland Fiber Network Cable Television (AFN) upon the renewal of AFN's cable franchise." AFN's franchise expires in June 2004.
Attachments:	• The cable franchise agreement to be approved.

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