HomeMy WebLinkAbout4.13 CableSvsAgmt AT&TCITY CLERK FILE # 600-30 & 1050-30
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: December 19, 2000
SUBJECT:
Resolution Requiring AT&T Broadband and Intemet Services to
Continue Providing Cable Services Pending Negotiation of a New
Franchise Agreement.
Report Prepared by: Julie Carter, Assistant to the City Manager
ATTACHMENTS:
RECOMMENDATION:
Resolution Requiring AT&T Broadband and Internet Services to
Continue Providing Cable Services Pending Negotiation of a New
Franchise Agreement
'~dopt Resolution.
FINANCIAL STATEMENT: No fiscal impact.
DESCRIPTION: The 15-year cable television franchise agreement between the City of
Dublin and AT&T Broadband, expires December 31, 2000. The City has been engaged in franchise renewal
negotiations with AT&T over the past several months. In late-November, staff successfully concluded
negotiations with the cable operator on several important deal points, which are summarized in this report.
While both parties have agreed to the major deal points, draft contract language has yet to be submitted to
the City by AT&T representatives. As of the writing of this report, AT&T anticipated forwarding the
information to staff by December 15, 2000 for review and comment. This initial draft will likely require
review and input from the City Attomey's Office as well as the City's Telecommunications Consultant to
ensure conformance with various roles and regulations. Section 3.20.250(D) of the Dublin Municipal Code
provides that upon expiration of the franchise the City may require AT&T to continue to operate the
system for a period not to exceed twenty-four months from the date of expiration under the same terms
and conditions as specified in Chapter 3.20 of the Dublin Municipal Code and the franchise agreement.
Because there are no further City Council meetings scheduled prior to the expiration of the franchise
agreement and the time required for appropriate review of the documents will go beyond the expiration
date, the City Council will need to require AT&T to continue operation of the cable system from January
1, 2001 to March 31, 2001 under the same terms and conditions as specified in Chapter 3.20 of the
Municipal Code and the existing franchise agreement.
DISCUSSION
Franchise Renewal Process
The 15-year cable television franchise agreement between the City of Dublin and AT&T Broadband
(formerly TCI) expires on December 31, 2000: City of Dublin staff is coordinating franchise renewal efforts
with staff from the Cities of Livermore, Pleasanton, and San Ramon, who share the same cable system and
COPIES TO: 45_~
ITEM NO.
whose cable franchises are similar in scope and term. Joint pooling of the jurisdictions' expertise and
resources provide opportunities for reducing franchise renewal costs and maximizing the effectiveness of
negotiations.
The four Cities signed a consultant services agreement with Telecommunications Management Corporation
(TMC), to provide assistance with the franchise renewal process. TMC performed the following tasks in
advance of negotiations with AT&T. These are discussed below.
Update the Cities' Cable Television Ordinance & Franchise Agreement
TMC prepared a draft cable ordinance and franchise agreement that has been reviewed by each City's
legal staff, and has been forwarded to AT&T Broadband for comment. The revised ordinance includes
new regulatory and consumer protection provisions and is compatible with the Cable Television
Consumer Protection and Competition Act of 1992 and the Telecommunications Act of 1996. The
ordinance provides consumer service standards and franchise enforcement capabilities to protect the
public interest. The revised ordinance will be 'brought before each respective City Council at the same
time as the negotiated cable TV franchise (renewal) agreement.
Community Needs Assessment
The three components of this task included:
Telephone subscriber survey
Government and educational access needs assessment
Public meetings and/or workshops for each of the four Cities
In October 1999, a telephone survey of cable television subscribers in the four Cities was conducted by
ETROK, under a subcontract from TMC. Survey highlights indicated that almost 90% of Tri-Valley
subscribers are "very" or "somewhat" satisfied with the cable system's overall performance. The actual
survey and results were provided in an earlier update, and can be obtained from the City Manager's
Office.
In November 1999, City staff in conjunction with TMC conducted a series of public meetings in each City
to gain input from the general public as to cable needs and interests. TMC also assisted staff with
workshops focusing on local government, education, business, and community access to assess the needs
of the various groups. Although well publicized, community participation and attendance at these
workshops was minimal.
Franchise Fee Audit
The TMC audit of the franchise fees concluded that in general~ AT&T computed and paid franchise fees in
accordance with the Cities' franchise requirements, with the exception of an underpayment to the Cities in
1996 & 1997. Legal counsel advised the Cities that just $47,060 of the underpayment was recoverable,
and this amount has been paid by AT&T. AT&T has also agreed to pay the Cities the requested interest
on this amount, which is about $10,000. In addition, the Cities' franchise agreements require that the
cable operator reimburse the cost associated with any audit that discovers an underpayment of 2% or
more. AT&T has agreed to pay $10,000 towards consultant fees associated with the franchise fee audit.
Franchise Renewal Negotiations
The franchise negotiating parameters were discussed at a March 2, 2000 meeting of the Tri-Valley Cities
Cable Television Franchise Renewal Committee, an ad-hoc committee of elected officials from each
jurisdiction. Vice Mayor Janet Lockhart is the City's representative to the committee. The Committee has
been responsible for developing parameters for negotiations, evaluating altematives, and providing
direction to staff throughout the negotiation process. The Dublin City Council reviewed the franchise
renewal objectives at its April 4, 2000 meeting.
The past several months the Cities and TMC have been conducting negotiations with AT&T. The
resulting tentative agreement points shown in the section below reasonably meet the Cities' objectives. At
their two recent meetings, the Tri-Valley Cities Cable Television Franchise Renewal Committee concluded
that the objectives have been fairy met, and recommended the Cities move ahead with completing the
Franchise Renewal, as soon as the Cable Regulatory Ordinance and Franchise Agreement are finalized.
Tentative Agreement
The following list of issues itemizes the tentative agreement between AT&T and the Cities:
1o Franchise Term: 10 years.
2. AT&T will provide the Cities with a $1,000,000 capital grant ($250,000 per city) that includes:
$745,000 for equipment purchases ($186,250 per city)
$200,000 for contract services with AT&T to be used toward connecting designated
buildings ($50,000 per city)
$55,000 for Consultant fees (Cities' expenses)
City
The Cities will have the oppommity to use a portion of the $745,000 to assist Tri-Valley Community TV
(CTV-30) with the enormous expense of replacing aging equipment. In addition, each City will have the
oppommity to use these monies to equip their respective Council Chambers with communications
equipment in preparation for live broadcasting.
Costs associated with this grant would not be itemized on subscriber's bills, but would be recovered in
AT&T's rates over a period of years (time frame not yet finalized).
,
AT&T will provide an on-going grant of up to $0.50 per subscriber per month for the life of the
franchise. This grant money may be separately itemized on subscriber bills. With 67,000 current system
subscribers, this monetary support could yield $33,500/month or $402,000 annually. Ongoing funding
by the Cities of the Tri-Valley Community Television Corporation (CTV) has historically been allocated
from each City's General Fund. For example, in FY 2000/01, the Cities provided $359,000 to fund
critical capital equipment and a portion of CTV's operations budget. These subscriber-generated funds
will allow the Cities to offset current General Fund contributions to CTV, and could be used for any
capital expense for a cable-related purpose.
4. A franchise fee established at 5% of gross annual cable service revenues (same as current fee and
maximum permitted by law).
5. Two areas currently without cable service in the City of Livermore (Almond Circle & Trevarno Road)
would be connected. AT&T values this project at $300,000.
Schools, libraries and City buildings will be provided with free cable service (at least one outlet -
number per location has yet to be established). Schools and libraries will be provided with free high-
speed Intemet access. Discounts will be provided on additional outlets to these locations, and on all
outlets for City facilities.
7. AT&T will be required to install conduit? when trenches are open in new commercial development areas.
Three Educational & Government (EG) Access channels will be dedicated initially, with a fourth
channel available if certain levels of usage are achieved. Currently, channels 28, 29 and 30 are
considered PEG access, with channel 28 being shared with AT&T as a leased access channel. This
agreement would establish all three channels as dedicated EG access channels. AT&T public access
would be moved off the Cities' channel to enable more CTV-generated programming.
AT&T will provide a separate channel for Public Access broadcasting and provide support throughout
the life of the franchise. This is an estimated value of $1,500,000 (in 2000 dollars) over the life of the
franchise agreement.
10.
AT&T will provide fiber optic insertion points in each City and at CTV (for live coverage of City
Council meetings). The estimated cost of pulling fiber to these locations is $440,000, but will not be
capped should it exceed that amount.
Addition Information Regarding "Open Access"
It is important to note that requiring a cable company to provide "open access" to its high-speed cable
system to competitors, has been recently been ruled on by the U.S. Ninth Circuit Court of Appeals. The
ruling states that Intemet accesses over a cable system are NOT considered a cable service (and therefore
cities cannot regulate high-speed cable Intemet service under a cable or other franchise agreement). It is
possible that the U.S. Supreme Court will eventually rule on this issue. In the draft franchise agreement, the
Cities' reserve their ability to re-visit this issue when the current litigation is resolved.
RECOMMENDATION
Staff recommends that the City Council adopt by Resolution the requirement that AT&T Broadband and
Intemet Services continue providing cable services pending negotiation of a new franchise agreement.
RESOLUTION NO. - O0
A RESOLUTION OF THE CITY COUNCIL ·
OF THE CITY OF DUBLIN
REQUIRING AT&T BROADBAND AND INTERNET SERVICES TO CONTINUE PROVIDING
CABLE SERVICES PENDING NEGOTIATION OF A NEW FRANCHISE AGREEMENT.
WHEREAS, on October 28, 1985 the City of Dublin entered into an Agreement with Tele-Vue
Systems Inc. for the operation of cable television system; and
WHEREAS, on January 4, 1996, the City Council approved an resolution transferring control of
Tele-Vue Systems, Inc. from Viacom, Inc. to TCI Communications; and
WHEREAS, on January 5, 1999, the City Council approved a resolution transferring control of
Tele-Vue Systems, Inc. from TCI Communications, Inc. to AT&T Broadband; and
WHEREAS, on December 31, 2000, the 15-year Cable Television Franchise Agreement will
expire; and
WHEREAS, while both paxties have agreed to .the major deal points, draft contract language for a
new franchise agreement has yet to be submitted by AT&T representatives; and
WHEREAS, it is not possible to finalize and approve a new agreement prior to the expiration of
the existing franchise agreement; and
WHEREAS, Section 3.20.250(D) of the Dublin Municipal Code provides that upon expiration of
the franchise the City may require AT&T to continue to operate the system for a period not to exceed
twenty-four months from the date of expiration under the same terms and conditions as specified in
Chapter 3.20 of the Dublin Municipal Code and the franchise agreement
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does resolve
as follows:
1. The City Council of the City of Dublin does hereby require AT&T to continue operation of the
cable system from January 1, 2001 to March 31, 2001 under the same terms and conditions as
specified in Chapter 3.20 of the Municipal Code and the existing franchise agreement.
2. The City Manager is directed to continue negotiations to ~nalize a new franchise agreement with
AT&T during this time period.
3. This resolution shall become effective immediately upon its passage and adoption.
PASSED, APPROVED AND ADOPTED this 19th day of December, 2000.
AYES:
NOES:
ABSENT:
ABSTAIXxI:
ATTEST:
City Clerk
K2/G/12-19 -00/reso-CATV-extension. doc (Item ???)
Mayor
ATTACHMENT 1