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HomeMy WebLinkAboutRes 00-66 and Ord 946 Cable TV Franchise Agreement with Time Warner Cable 43-OsC)3 f' Memorandum •• �: jades�/, 1 b - ti Cityof Palm Desert Ld $,-a,c.Wie Office of the Acting Assistant City Manager '•......... i973••.• •.....N To: Honorable Mayor& Members of the City Council From: Sheila R. Gilligan, Acting Assistant City Manager Subject: Request for: 1) Introduction of Ordinance Regulating Cable, Video, and Telecommunications Service Providers; 2) request for Approval of Three- Month Extension of the Cable Franchise Agreement with Time Warner; 3) request for direction to Richards, Watson, & Gershon to seek an extension to the final filing of Form 394. Date: May 25, 2000 Recommendation: 1. Waive further reading and pass Ordinance No. 946 to second reading. 2. Waive further reading and adopt Resolution No. 00-66P extending the expiration of the City's Cable Television Franchise Agreement with Time Warner from July 1, 2000, to September 30, 2000. 3. By Minute Motion, authorize Richards,Watson,and Gershon to request an extension to the filing deadline of the Form 394 dealing with the Time Warner/AOL merger. Discussion: The City of Palm Desert's cable franchise regulatory ordinance was adopted in October, 1984. Since then, both State and Federal regulations have significantly impacted this ordinance by eliminating many of the provisions for regulation. The Technology Committee has been working with both TMC, cable consultants, and most recently with Mr. Bill Rudell of Richards, Watson, & Gershon in creating a replacement ordinance which delineates current regulatory opportunities for the City. At its meeting of May 2, 2000, the Technology approved a final draft ordinance and recommended that it be forwarded to the City Council for introduction and subsequent adoption(Minutes attached). JNCIL✓ TION: APE. c ...._, DENIED._....... .A�_. RECr :.,iD OTHER...�.�_ ..._._ MEETIN^ DATE_. . :.. .. L YES: . p poP9u i � 0A-Gtie NOES: . ABS :„� .. VERIFIED BY:, +� Original on File with City C rk' s J�4 RESOLUTION NO. 00-66 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, EXTENDING THE EXPIRATION OF ITS CABLE TELEVISION FRANCHISE FROM JULY 1,2000,THROUGH SEPTEMBER 30,2000. WHEREAS, the cable television franchise granted to Time Warner Cable ("Time Warner") is scheduled to expire June 30,2000; and WHEREAS, the City and Time Warner have been in negotiations to renew that franchise in a manner consistent with federal law and beneficial to both parties; and WHEREAS, the City and Time Warner will need additional time to properly conclude negotiations; NOW THEREFORE, IT IS RESOLVED, that the City Council of the City of Palm Desert, California does hereby extend the expiration date of its cable television franchise from the current date of June 30, 2000, to no later than September 30, 2000, for the purpose of concluding negotiations for a renewal of such franchise to the mutual satisfaction of the parties; IT IS FURTHER RESOLVED, that neither the City nor Time Warner waive or alter any rights of renewal of the franchise that either party may have in law, including, but not limited to, 47 U.S.C. Section 546, nor shall either party be bound by any draft franchise renewal negotiation documents as a result of the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED at a regular meeting of the Palm Desert City Council,held this 25th day of May ,2000,by the following vote,to wit: AYES: NOES: ABSENT: ABSTAIN: BUFORD A. CRITES,MAYOR ATTEST: RACHELLE D.KLASSEN,ACTING CITY CLERK APPROVED AS TO FORM: DAVID J.ERWIN,CITY ATTORNEY RICHARDS, WATSON & GERSHON ATTORNEYS AT LAW RICHARD RICHARDS GLENN R.WATSON KAYSER O.SUME A PROFESSIONAL CORPORATION (1916-1988) HARRY L.GERSHON SAUL JAFFE MARK L.LAMKEN PETER M.THORSON THIRTY-EIGHTH FLOOR ERWIN E.ADLER JAMES L.MARKMAN DAROLD D.PIEPER CRAIG A STEELE 333 SOUTH HOPE STREET SAN FRANCISCO OFFICE . ALLEN E.RENNETT T.PETER PIERCE SUITE 960 STEVEN L.DORSEY JIM G.GRAYSON LOS ANGELES,CALIFORNIA 90071-1469 FORTY-FOUR MONTGOMERY STREET WILLIAM L.STRAUSZ SCOT.I.BARER (213)626-8484 MITCHELL E.ABBOTT BRENDA L.DIEDERICHS SAN FRANCISCO,CALIFORNIA 94104-4611 TIMOTHY L.NEUFELD AMY GREYSON FACSIMILE(213)626-0078 (415)421-8484 GREGORY W.STEPANICICH DEBORAH R.HAKMAN ROCHELLE BROWNE RUBIN D.WEINER FACSIMILE(415)421-8486 MICHAEL JENKINS WILLIAM P.CURLEY III WILLIAM B.RUDELL D.CRAIG FOX ORANGE COUNTY OFFICE QUINN M.BARROW LYNN I.IBARA NUMBER ONE CIVIC CENTER CIRCLE CAROL W.LYNCH JANET E.COLESON GREGORY M.KUNERT TERENCE R.BOGA BREA,CALIFORNIA 92821 THOMAS M.JIMBO LISA BOND May 3 , 2000 (714)990-0901 ROBERT C.CECCON ROXANNE M.DIAZ SAYRE WEAVER MARIBEL S.MEDINA FACSIMILE(714)990-6230 STEVEN H.KAUFMANN ERIKA M.FLEMING GARY E.GANS OLIVIA WAI-WEN SUAN OF COUNSEL JOHN J.HARRIS MANUEL VILLEGAS.Jr. KEVIN G.ENNIS ELANA A.LUBER WILLIAM K.KRAMER ROBIN D.HARRIS MATTHEW D.MITCHELL MICHAEL ESTRADA PAULA GUTIERREZ BAEZA LAURENCE S.WIENER GABRIEL FLORES 0594525 STEVEN R.ORR ALEXANDER ABBE OUR FILE NUMBER MICHAEL G.COLANTUONO JULIA C.HAFFNER B.TILDEN KIM JACOB SHAHBAZ P 6 4 01-010 3 0 SASKIA T.ASAMURA By Federal Express Ms . Sheila Gilligan Acting Assistant City Manager Palm Desert City Hall 73-510 Fred Waring Drive Palm Desert, California 92260 Re : Ordinance Regulating Cable, Video, and Telecommunications Service Providers (Final Draft) Dear Sheila: At its meeting on May 2 , 2000 , the City' s Technology Committee adopted a motion that recommended City Council approval of the proposed new Ordinance Regulating Cable, Video, and Telecommunications Service Providers . Ray Janes informed me that he would be out of the office until the middle of next week. Therefore, I am sending to you the final draft of the ordinance for review and further processing. The only changes that have been made are (i) the deletion of the words at the top of the first page that previously read "First Internal Discussion Draft dated April 14 , 2000 , " and (ii) the revisions to paragraph (A) of Section 14 . 01 . 180 on page 33 . Please call me if you have any questions or comments . Very truly yours, William B. Rudell c) - Special Counsel r- rrm rn WBR: syc s n 0594525 rn Enclosure Cn o rn CC : Ray Janes (w/o enc . ) -rnn o~ v n ►-_, rn � Honorable Mayor&Mem of the City Council "Proposed Cable Televisic__ _ _anchise and Request for Extension of Cable Franchise Agreement with Time Warner. May 25, 2000 ********************************************************************************** In September,the City Council approved an extension of the Franchise Agreement with then Media One to June 30,2000;Mr.Rudell is recommending that the City Council grant an additional 90-day extension to September 30, 2000, by adopting Resolution No. 00-66. This additional time is necessary to allow the Committee a better opportunity to review and expand the original "needs assessment" conducted by TMC and to negotiate with Time Warner for an agreement that will provide the best possible services for the residents of Palm Desert. We recognize that this matter has been significantly delayed over the last year,and staff is committed to working closely with the Technology Committee so that the new agreement can be presented to the City Council for consideration in advance of the September 30th extension date. Additionally, Mr. Rudell has filed a Form 394 relative to the recent merger of Time Warner and AOL. He has requested and been provided additional information from the cable company for response to this filing. However,there is a June 12th deadline for filing the final application,and Mr. Rudell will seek an extension unless the City Council directs otherwise. Mr.Rudell will be attending the City Council meeting and will be available to respond to questions. , CITY COUNCIL ACTION: SHEILA R. G IGAN APPROVED DENIED ACTING ASSISTANT CITY MANAGER' CEIVED OTHER MEETINGDATE S �� c`� Attachments (as noted) AYES: � Q,rt AJt A�O�x ,e12.13 ('Arco, NOES: ABSENT: 14-'2-- ABSTAIN: VERIFIED BY: 14, b Di� �ct Reviewed and Concur: Original on File with City4erk's Office CARLOS L. ORTEGA ACTING CITY MANAGER .. ,T, Minutes ,,, .c ,, ,,,/,.._ 3, , b .., -h z,\C of • ..AI-a °� . ��s°�p TechnologyCommittee 9qr a 3y°°� CALL TO ORDER The meeting was called to order by Chairman Roland Alden at 2:07 p.m., on Tuesday, May 2, 2000. ROLL CALL Members Present: Chairman Roland Alden, Committee Members Robert Rose, Spiro Stameson, Denise Welch, James Lewis Members Absent: None Also Present: Councilmember Robert A. Spiegel, Councilmember Richard S. Kelly, Acting Assistant City Manager Sheila Gilligan; Risk Manager Ken Weller; Management Analyst Ray Janes; Information Systems Manager Doug Van Gelder; visitor, Mr. Bill Rudell; and Recording Secretary Rachelle Klassen/Frankie Riddle ORAL COMMUNICATIONS Mrs. Gilligan noted Ms. Janet Underwood, Representative for Senior TV has been in contact with the City and would like to meet with Mr. Rudell. She stated that Ms. Underwood indicated that Time Warner was not providing them with access to senior programming as Media One provided. Mrs. Gilligan indicated that Ms. Underwood was not trying to sue, but would like to find out if this was something they can do, and if so, could it be incorporated into the Ordinance. Mrs. Gilligan thought this might fall under the needs assessment under public education. It was noted that Councilmember Richard S. Kelly was sitting in for Mayor Pro Tem Jim C. Ferguson, who was out-of-town. Mr. Janes noted that he had a list of Recommended Renewal Objectives. He noted the objectives related to items that Mr. Rudell discussed in his letters and thought it was a good summation of the major areas that should be covered in both the Franchise Renewal Agreement and Ordinance. He distributed copies to committee members. 03 07 00 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE CONSENT CALENDAR It was moved by Member Rose and carried by unanimous vote to continue the minutes of April, 2000, to the next meeting. CONSENT ITEMS HELD OVER NONE NEW BUSINESS NONE INFORMATIONAL ITEMS NONE CONTINUED BUSINESS A. PRESENTATION BY WILLIAM RUDELL FROM RICHARDS, WATSON & GERSHON RELATIVE TO CABLE FRANCHISE CONSULTING SERVICES 1. First Draft Cable Television Franchise Renewal Agreement: Mr. Janes addressed the Chairman and indicated that the Committee should jump right into Continued Business and make this a working session. He noted that the Committee needed to put together a good draft for the Cable Franchise Renewal Agreement. The Committee discussed page four (4), Section 1.9, Franchise Not Exclusive. Mr. Rudell wanted to further discuss this section and obtain Committee input. Chairman Alden indicated that the last sentence of this section was basically a promise to Time Warner. He wished to eliminate all wording after the word "occupy" and noted that the agreement with Time Warner does not need to reiterate federal law forcefully. Also, there could be case law that covers this language. He noted that by placing this type of language in the Franchise Renewal Agreement we were pretty much signing up for the term of the agreement, even if case law changes. 03/07/00 2 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Mr. Rudell suggested that a period be placed after the word "occupy"and eliminate the remaining wording and see what Time Warner does when negotiations commence. He indicated that this was generally something that cable operators usually want, but it did not need to be put on the table at the start. After discussion, the Committee agreed. Mr. Janes asked Mr. Rudell if that was all he needed from the Committee and confirmed that he would provide us with the amended Franchise Renewal Agreement for submission to City Council. Member Rose noted that some wording should be added addressing the issue of future property that may be annexed into Palm Desert. Mr. Rudell noted that this was addressed on page three (3), Section 1.5(b). Mr. Weller had additions for page seven (7), Section 2.4, insurance requirements. He distributed a document with additional language for the insurance provisions and a section addressing indemnification/hold harmless. Mr. Rudell stated he would be happy to include the standard insurance requirements into the Franchise Renewal Agreement. Mr. Weller also noted that he had some wording modifications with this section. Changes were as follows: Section 2.4(a)(1) -At the end of the first sentence, add "set in this agreement."; Section 2.4(a)(1)(C) - After the word "aggregate", strike the word "annual", and after the wording "combined single limit", add "per occurrence". Mr. Weller will provide Mr. Rudell with some umbrella insurance wording; Section 2.4(2) - After the wording "All required", strike the wording"Automobile Liability Insurance and", and, within the quoted material, after the wording "the City of Palm Desert", delete the word "is" and add the wording "its officers, officials and employees are." Page eight (8), Section 2.4(a)(6)(b) - After the wording "written insurance binders", add the wording "and appropriate policy endorsement". 03/07/00 3 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Mr. Weller noted that on page eight (8), Section 2.5(a) where it refers to an "undefined amount," it was hard to establish an amount and that it may be beneficial to input wording such as "provide a bond equal to the amount of construction" or something along that line. Mr. Rudell agreed and would look into modifying the language. Mr. Weller suggested items 1-7 on the insurance information sheet he submitted be included in Section 2.4 and that the Indemnity/Hold Harmless Agreement be added separately to the insurance information, but under its own section. Mr. Rudell noted that the Indemnity/Hold Harmless Agreement is included on page 34. Mr. Weller would prefer to use the wording he has submitted. Mr. Rudell had no problem with this. Chairman Alden asked for a vote. It was moved by Member Rose and seconded by Member Stameson that Section 1.9 of the First Draft Cable Television Franchise Renewal Agreement be amended to end with the word "occupy." Motion carried, Member Lewis voted Nay. It was moved by Member Rose and seconded by Member Stameson that Section 1.9 of the First Draft Cable Television Franchise Renewal Agreement be modified with regard to insurance modifications and addition of the Hold Harmless Agreement. Motion carried by unanimous vote. Member Rose asked what the next step was. Mr. Rudell indicated that he would like some direction from the Committee or City Council on what the City would like to get out of the Franchise Renewal Agreement, to either continue with what was currently being provided, or negotiate for additional benefits or a regional institutional network. What does the City want to negotiate for? Member Lewis asked Mr. Rudell if in the Franchise Renewal Agreement, he mirrored those items that were currently being provided under the existing Franchise Agreement. Mr. Rudell stated no. 03/07/00 4 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Member Lewis asked if there was a need for an extension. Mr. Rudell asked Mr. Janes if the extension expired in June. Mr. Janes indicated that it did. Mr. Rudell indicated that the Franchise Agreement should not expire in mid-stream and that his recommendation would be to extend the contract for three months, from June to September. It was moved by Member Rose and seconded by Member Stameson to recommend to City Council to extend the deadline for renewal from June 30 to September 30. Motion carried by unanimous vote. 2. First Draft Cable Television Regulatory Ordinance Mr. Rudell indicated that the Ordinance attempts to identify the video and telecommunication landscape as it exists today. As the landscape changes rapidly, it may necessitate some changes to the Ordinance. Article One addresses how the City wants to encourage competition and thus service the public, provide the highest quality services, exercise regulatory powers sparingly, and all the preamble information. Article Two addresses cable television systems that are particularly subject to franchises. Mr. Rudell had observed that this was an issue within numerous communities and was now on the books. The municipal codes have an ordinance that was drafted when small entrepreneurs were scrambling to get cable franchises in communities that did not have cable services. These ordinances are very similar to each other and go on to address the most detailed issues. General categories can be addressed in the Cable Television Franchise Ordinance or Franchise Agreement that are not specifically outlined in the municipal code. This streamlines the process. The regulatory process does have some detailed provisions concerning what type of information will be desired if a cable franchise is applied for by a new operator. Mr. Rudell noted that the City should obtain as much information as possible pertaining to the operator's record and what experience they had in other communities. 03 0- 00 5 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Page eight identifies the contents of the Franchise Agreement. Page nine pertains to the contents of the Cable Television Franchise Agreement and are identified in general terms. Typically a city would rely upon its consultant or attorney to flush these out and be aware of the types of provisions that provide the best protection to the city. Mr. Weller noted that currently Palm Desert had special nodes for its citizens. He asked if this issue had been addressed. These nodes provide for cable television shows that are for Palm Desert residents only. Mr. Rudell stated that this could not be placed in the Ordinance, but it could be made part of the Franchise Renewal Agreement. He noted that if there were special services that were currently being provided, the Agreement should attempt to retain those special services and/or facilities. Councilmember Kelly asked if the Ordinance gave the City control over street cuts where permits are required from the City. Mr. Rudell stated that yes it did, and would it be referenced in general in the Ordinance. When negotiating the Franchise Agreement or Franchise Renewal Agreement, it would then be folded into the City's requirements as they may then exist. He added that assistance from the Public Works Director/City Engineer should be included to identify any special requirements that should be met by the cable operator. Councilmember Kelly confirmed that Mr. Rudell would make sure this happens. Member Lewis indicated that page ten, item 10 addresses requirements relating to rights-of-way, and compliance with all building codes and permit requirements. Mr. Rudell noted that cities were concerned about above ground facilities such as pedestals, dog houses as they are called, and what regulatory power they have over this. As cable operators come in and perform upgrades, these dog houses suddenly appear in public service easements or public utility easements that were not anticipated. 03/07/00 6 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Chairman Alden noted that there should be some language in the Ordinance that basically says. "Nothing in this should be construed as the operator not having to file a permit to do construction in the street." He asked if it would be reasonable for the City to have ordinances regarding equipment in the utility easements, street cuts, construction in the rights-of-way, and that the franchisee would always be expected to abide by current City ordinances. Mr. Rudell noted that most cities have extensive regulatory provisions set forth in their municipal codes, wherein it P provides detailed provisions relating to excavation in the public right-of-way or encroachment into the public right-of- way, and the permits required. There is nothing that exempts the cable operator from having to comply with all the regulatory requirements of the City. The cable operator would be required to comply with the City's current permit requirement, as administered be the Public Works Department/City Engineer and/or other departments. Mr. Rudell indicated that the last part of this article addresses cable television systems and franchises having to do with consumer protection and service standards. General categories should be identified, as well as consumer protection standards, that are found both in federal and state laws. These standards can be fine-tuned and expanded, if necessary, to incorporate City standards for the franchise cable operators. Article Three addresses the new method of providing video services which is called OVS or Open Video Systems. It sets forth federal law and regulations that deal with this new type of competition (e.g. RCN and Western Integrated Networks). If nothing else, it enables City staff to photocopy pages 12-18 and send it to RCN, WIN or anyone else that wishes to deploy an OVS system within the City. These pages lay out the regulations. Operators are required to match what Time Warner was required to provide in terms of providing PEG access, channel capacity, facilities or include instruments that provide for a level playing field. Federal law requires competitive operators to match those requirements. 03/07/00 7 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Member Stameson asked Mr. Rudell to describe what OVS was and what they provide over and above Time Warner or another cable operator. Mr. Rudell indicated that it would be a competitive system. The OVS operator would go through the same negotiation process as Time Warner and they could provide video, data, and telephone services the same as Time Warner. Member Stameson did not understand why they have the fancy name OVS. Mr. Rudell indicated that when Congress crafted the 1996 Telecommunication Act they wanted to create competition, but knew that the incumbent cable operators had a monopoly. Telephone companies, prior to the 1996 Act, had an opportunity to get into the competition with the cable operators through something called video dial tone. Video dial tone was replaced by the concept of an open video system that was supposed to encourage telephone corporations to go into competition with cable operators to provide video service. The primary difference with the Open Video System is the demand for channel capacity and that two-thirds (2/3) of the channel capacity has to be allocated to unaffiliated programmers. Mr. Janes asked how likely is it that the City will get this type of service. Mr. Rudell indicated that they are starting to knock on doors, but rather than calling themselves an OVS they are prepared to enter into a cable television franchise agreement, whichever will get them to market fastest. Member Rose noticed an article in the paper the other day regarding the problem between Time Warner and Disney. He noted that Time Warner has the capability of using satellite and had, in some cases, distributed satellite dishes to enable customers to receive ABC. The question is, "If Time Warner decides to expand their satellite service, would the City benefit?" Mr. Rudell indicated that they would have to set up a parallel billing system and convince the City that they are exempt from the franchise fee because they are not using the public rights-of-way. However, there would be a need for ancillary equipment so that the subscriber could receive the signal off satellite, maybe through a converter box. 03/07/00 8 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Mr. Rudell noted that OVS operators are required to provide information to the City regarding who and what the entity is, what experience it has, how it is funded, and other information. In essence, it provides for parallel requirements to be imposed upon OVS operators similar to that required of Time Warner or the incumbent cable operator. Article Four gives a brief description of other types of video service providers and telecommunication service providers that are now in the marketplace. It identifies the limited regulatory authority that the City has over these service providers. It is primarily a registration requirement that was authorized under state law. The City will at least know who is providing services in their community. The City may ask questions relating to the operator's customer service standards and other information that is allowed under state law. It sets forth the penalties that can be imposed if the other video service provider(s) fail to comply with customer service standards. On page twenty-five there is a cross- reference relating to antennas that can be installed to receive video and telecommunication signals and further identifies the limited regulatory authority that the City has over telephone corporations. Chairman Alden asked what regulatory authority the City has. Mr. Rudell noted that basic regulatory authority relates to time, place and manner restrictions over the use of public rights-of-way. Franchise fees cannot be imposed upon telephone companies, they have been immune to this for years. He noted that the Ordinance identifies information that the City should request of a new entrant or newly certified telephone corporation that requests to excavate City streets to install fiberoptic cable. The City may want to ensure that the City Manager establishes criteria within which the streets can be accessed so as not to have continuous excavations of the streets. Articles Five outlines definitions that apply to terms within the Ordinance. Article Six addresses violations, misdemeanors, severability, etc. Mr. Rudell noted that this was basically an overview of the provisions of the Regulatory Ordinance. 03/07/00 9 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Member Rose asked if the Ordinance is the same ordinance used by other clients. Mr. Rudell indicated that it was, but it was tailored for each client's needs. Chairman Alden indicated that the Franchise Renewal Agreement really mirrors the Ordinance in lots of ways. Given this, he had a specific question to address, "Does the Ordinance not specifically request that Time Warner serve every home or any grantee?". He indicated that the OVS issue seems to be very clearly state that any competitor using any technology must meet the precise terms of service that Time Warner is providing. These two things taken together seem to make it very difficult for competition to come about using alternative technology or any competition to come about that was focused on serving only a subdivision or section of the City, not the entire community. The City needs to determine what it is obtaining for language that basically protects Time Warner's monopoly, and does the City want to give Time Warner this protection language or drive a hard bargain. If so, then all of the language becomes a bargaining chip. He noted that the Figure 6 document address some of these issues. Member Lewis does not believe that the bar should be reduced for a company like Time Warner who, especially recently, was very flippant in providing the customers with the services they want. Chairman Alden indicated that this is the dicey proposition. Credible competition is the best negotiating lever with Time Warner. If you raise the bar too high, then you freeze out the possibility of credible competition. Discussion commenced on whether or not the language was eliminating the possibility of credible competition. Member Lewis and Member Stameson did not feel that the bar was being raised too high to eliminate credible competition but rather to provide a level playing field. Member Lewis asked Mr. Rudell if the Franchise Agreement would freeze out competition. Mr. Rudell noted that OVS operators that insist upon an OVS Agreement as opposed to a Cable Franchise Agreement, understand that there are going to be 03/07/00 10 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE negotiations between the local franchise authority and their representatives as to how they meet the requirements that have been imposed upon the incumbent franchise cable operator. Rather than have a complete, duplicate set of public access channels they might be required to interconnect so that they can cablecast the public access stations. They could be required to make a financial contribution in lieu of duplicating the studio that already exists and is very seldom used. Incumbent cable operators will resist if you do not impose comparable obligations on competitive entrants and competitive operators understand this. Therefore, it is a matter of creating a level playing field. If they choose to enter into a Cable Franchise Agreement as opposed to an OVS Agreement, then that Franchise Agreement is going to look very similar to Time Warner's. Chairman Alden noted that both the OVS Agreement and Franchise Agreement will look very similar, and that the documents promise Time Warner that if we grant an OVS Agreement to another provider, the City promises to impose approximately the same burden on that provider. Mr. Rudell indicated that if you do not create a level playing field, then the City will be taken to court. Member Rose asked for clarification on the section "Telecommunication service provided by telephone corporation" (page 26), what is meant by "line" (i.e. what is to prevent the telephone company from replacing their twisted pair with fiberoptic cable). Mr. Rudell stated nothing, they have that right; however, they would need to come to the City and obtain an OVS Agreement or Franchise Agreement. Member Rose noted that they might be the only source (telephone company)citywide, including any annexed areas to Palm Desert, that might possibly be on a land based system that could actually go in and do this, other than the incumbent cable operator. Mr. Rudell indicated that it would be possible. RCN is now certified as a telephone corporation by the Public Utilities Commission and they are getting into the market by virtue of exercising their authority as a competitive local exchange carrier. They will get their fiberoptic cables either through 030"00 11 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Southern California Edison or by excavation of streets. They will provide telephone service while concurrently negotiating a franchise agreement or OVS agreement with the City. Once an agreement is in place they will flip the switch and those same lines will be used to deliver video. Member Lewis asked if competition is occurring. Mr Rudell noted that yes competition is occurring. Member Stameson asked if the other cities negotiating a franchise agreement are making sure that they are maintaining a level playing field. Mr. Rudell stated yes, however, it does not mean that they have to meet the exact same requirements, but rather look at burdens and benefits as a whole to determine if they are equivalent. Mr. Janes asked Mr. Rudell what else he needed from the Technology Committee to complete the final version of the Ordinance to move ahead with the negotiations. Mr. Rudell stated that someone was going to have to make a determination as to whether, in its current form, the proposed Ordinance addresses the concerns of the City, and whether it makes sense to replace the existing Cable Franchise Ordinance with one that is a little more broad and addresses cable, video and telecommunications. If the Ordinance addresses City concerns, then the next step would be to take it before the City Council. If other committees or commissions are involved in the review, then it needs to be brought before them as well. Councilmember Spiegel indicated that whatever this Committee recommends, it should consider the needs of Palm Desert's residents. There are not many controls that can be put into place anymore except for revenues. Member Rose questioned the Franchise Agreement with regard to what basic service was and what the cable company should provide. Mr. Rudell indicated that basic services were defined under federal law as the lowest tier of service that includes PEG access channels. 03 0- 00 12 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Member Rose asked if there was a way to include a provision that the operator must provide, under basic service, for the major networks within the Ordinance or Cable Franchise Agreement. Mr. Rudell indicated that the operator would include major network stations as customers would demand it or they would not subscribe, but to demand that they provide ABC, NBC or CBS is not possible. Councilmember Spiegel noted that if the residents have no control over their bill to the point where the cable operator provides more and more programs that the residents will never watch, then this would be an issue to address, if possible. Chairman Alden noted that since people have different needs, the City should look at what is the single best way to meet these needs, which is to provide many choices. Federal law preempts our right to control any of these issues. Therefore, it is not necessarily about meeting the needs of the citizens, but about a business petitioning the City to build a network within the City limits. Mr. Janes stated that Mr. Rudell has provided this. Chairman Alden indicated that the Ordinance very cleverly eliminates the possibility of any competitor competing with Time Warner. Mr. Janes noted that it is a non-exclusive Cable Franchise Agreement. Mr. Rudell disagrees. He also noted that the Franchise Agreement is non-exclusive and that if the economics are present then competitors are going to come in and play on the same playing field. The City has to establish some general principals that a cable operator using the public rights-of-way would have to comply with. Councilmember Kelly noted that there are several areas in the City that already have different cable companies. Basically, the City was getting an agreement along with the franchise fee. 03/07/00 13 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Chairman Alden noted that if there was more than one cable company in Palm Desert, then there was more than one franchise agreement outstanding. Councilmember Kelly indicated that these operators were in gated communities; therefore, not under City control. However, competitive cable operators can come in and obtain a franchise agreement the same as Time Warner, and may solicit door-to-door to establish a customer base. Mr. Rudell confirmed that an operator could come into Palm Desert and serve only a pocket of the community, but it would have to obtain authorization from City Council. Chairman Alden asked what Time Warner would do. Mr. Rudell noted that they would probably insist that the City comply with California law which requires a public hearing to address the competitive aspect or they could decide that they would not serve that segment of the community. Mr. Rudell stated that he would prepare the final draft and submit it to staff. He indicated that he would come back and make a presentation to the City Council, if they desire. Chairman Alden asked for a vote. It was moved by Member Lewis and seconded by Member Rose that the First Draft Cable Television Regulatory Ordinance be approved. Motion carried by unanimous vote of those members voting. It was stated that Chairman Alden was not able to vote. He may only break tie votes. 3. FCC Form 394 Mr. Rudell indicated that he has received and will transmit the responses of Time Warner's Counsel to the questions that were set forth in his letter to the Palm Desert City Council for Time Warner; however, there may be a time constraint due to the 120-day time period. He noted that an extension was needed or City Council needed to take action before the 120-day time period expires. This can be placed on the next agenda for discussion. 03/07/00 14 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Chairman Alden asked if the City's obligations are, to agree or disagree with the merger. Mr. Rudell indicated that the City's obligation was to take certain action within 120 days from the date that the City received FCC Form 394. He could not remember the exact date, but believed it was in February. If the recommendation is to deny the change of control, then compelling reasons as to why AOL Time Warner, Inc. (new entity to be created) does not have the legal, technical or financial capabilities to operate the franchise within the City. He believes this would be a difficult finding. If no option is taken within the 120 day time period and there is no extension to the 120 days, then the transaction is deemed approved under federal law. Chairman Roland indicated that if the City does not want to challenge this action it, in fact, does not need to do anything. Mr. Rudell confirmed this statement, but noted that the 120 days allows local franchise authorities to review compliance issues. If issues are identified (i.e. cable operator has not paid franchise fees, has not installed facilities that were to be installed as promised, or has not followed through with other compliance issues related to the Franchise Agreement), they can be brought to the forefront and addressed. The cable operator would then have to develop a remedial plan in connection with our "grant of consent" to the merger. Member Lewis asked, for clarification, if in Mr. Rudell's professional opinion, a City challenge would be fruitless. Mr. Rudell indicated that the City of Palm Desert or even Los Angeles was not going to stop the merger. He indicated that the City could withhold its consent and not approve the merger, then they would be in non-compliance with the existing Franchise Agreement and Cable Franchise Ordinance because they proceeded with the transaction without the City's consent. There would then be a non- compliance issue to deal with and the City may be successful in assessing some penalties. The City has leverage in terms of the franchise renewal. Once negotiations with Time Warner begin, that is where certain new benefits will be obtained, if any. 03/07/00 15 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE 4. Franchised Cable Television Operators Mrs. Gilligan noted that the "Franchise Cable Television Operators" was a letter sent from Mr. Rudell dealing with the FCC Form 394 issue. She gave a brief overview of the letter dated April 7, 2000. Mr. Rudell indicated that this issue deals with competition and it was an excerpt from Adelphia's filing with the Securities Exchange Commission that sets forth the narrative of how they perceive the competitive landscape at the present point and time. He thought this might be a point of interest as it came up at the last Technology Committee Meeting as an information item. Mr. Rudell noted that competition is out there and that in the Basin (i.e. Redono Beach, Los Angeles, Beverly Hills, Hermosa Beach) there are very aggressive well financed over builders (i.e. RCM Telecom Services of California) starting to come in and knock on doors. They are seeking authority to operate as an Open Video System (OVS) operator or to obtain a competitive franchise. They are willing to go either way, which ever will get them to market fastest. Councilmember Spiegel asked if other cable operators should be contacted prior to developing an agreement with Time Warner. Mr. Rudell indicated that this could be done concurrently, but that Time Warner cannot be displaced. The only option would be to encourage competitors to consider Palm Desert. Councilmember Kelly indicated that over-builders would create a tremendous inconvenience to customer(s) and suspected would consume a sufficient amount of staff time. He did not believe this would be the best alternative for the City. Mr. Rudell indicated that this would be a policy decision, not a legal issue. 5. Subdivision Map Act Mr. Rudell indicated that he sent over some information regarding what California law authorizes in terms of new subdivisions. Apparently there are no provisions in the municipal code that relates to this particular matter. This is an informational item. 03/07/00 16 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE B. REQUEST FOR APPROVAL RELATIVE TO THE NEEDS ASSESSMENT Mr. Rudell indicated that he would like some direction from the Committee or City Council regarding what it would like to negotiate for in the Franchise Renewal Agreement. He asked if the City wishes to continue with current benefits, negotiate for additional benefits, or negotiate for a regional institutional network. Member Rose requested guidance through some of the general areas where the City may have some leverage. Mr. Rudell indicated that other cities are maintaining the same level of public access channels or PEG access channels. It does not appear that the City has reached the point where it needs additional channel capacity, as indicated by the Needs Assessment. He thought the City might want to continue with a studio, continue to provide local origination programming, and/or cablecasting of Council meetings, etc. Councilmember Kelly indicated that the Cable Franchise Agreement should include televising the City Council meetings at no cost and other items of this nature. Mr. Rudell indicated that maybe there should be one additional meeting to discuss what the City wants from the cable operator, or distribute a copy of the draft Franchise Renewal Agreement to Time Warner advising them that the City is still considering amenity options, but would like to proceed with discussions on boiler plate issues. OLD BUSINESS NONE REPORT ON CITY COUNCIL ACTION NONE REPORTS AND REMARKS A. COMMITTEE CHAIR/MEMBERS Member Stameson requested a list of the Committee's e-mail addresses. 03/07/00 17 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE B. COUNCIL LIAISON C. STAFF a. Acting Assistant City Manager NONE b. Information Systems Manager NONE c. Management Analyst II Mr. Janes asked Mr. Rudell if he would like the Technology Committee to make comments on the Recommended Renewal Objectives (Figure 6). Mr. Rudell indicated that this would be helpful. Mr. Janes will submit comments to Mr. Rudell and place on the next agenda for discussion. PUBLIC HEARINGS NONE ADJOURNMENT There being no further business, Chairman Alden adjourned the meeting at 4:15 p.m. Respectfully submitted, Frankie Riddle 03 0" 00 18 3-ed3 %^r^ Memorandum ti City of Palm Desert 4,7 ••..;.4T a£y�4%;•• Office of the Acting Assistant City Manager To: Honorable Mayor&Members of the City Council From: Sheila R. Gilligan, Acting Assistant City Manager Subject: Request for: 1) Introduction of Ordinance Regulating Cable, Video, and Telecommunications Service Providers; 2) request for Approval of Three- Month Extension of the Cable Franchise Agreement with Time Warner; 3) request for direction to Richards, Watson, & Gershon to seek an extension to the final filing of Form 394. Date: May 25, 2000 Recommendation: 1. Waive further reading and pass Ordinance No. 946 to second reading. 2. Waive further reading and adopt Resolution No. 00-66P extending the expiration of the City's Cable Television Franchise Agreement with Time Warner from July 1, 2000, to September 30, 2000. 3. By Minute Motion,authorize Richards,Watson,and Gershon to request an extension to the filing deadline of the Form 394 dealing with the Time Warner/AOL merger. Discussion: The City of Palm Desert's cable franchise regulatory ordinance was adopted in October, 1984. Since then,both State and Federal regulations have significantly impacted this ordinance by eliminating many of the provisions for regulation. The Technology Committee has been working with both TMC, cable consultants, and most recently with Mr. Bill Rudell of Richards,Watson, &Gershon in creating a replacement ordinance which delineates current regulatory opportunities for the City. At its meeting of May 2, 2000,the Technology approved a final draft ordinance and recommended that it be forwarded to the City Council for introduction and subsequent adoption(Minutes attached). CIT• ..',1'...NCILI/ACTION: APE' DEN TED Irar J PECD OTHER _ 110..•••••• MEET Itirc DA'IE L YES: r)P AA tdAtt77:— NOES: ABs .77..1,14644441-. AMOS* VERIFIED BY: Original on File with City C rk's _ i RESOLUTION NO. 00-66 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA,EXTENDING THE EXPIRATION OF ITS CABLE TELEVISION FRANCHISE FROM JULY 1,2000,THROUGH SEPTEMBER 30,2000. WHEREAS, the cable television franchise granted to Time Warner Cable ("Time Warner") is scheduled to expire June 30,2000; and WHEREAS, the City and Time Warner have been in negotiations to renew that franchise in a manner consistent with federal law and beneficial to both parties; and WHEREAS, the City and Time Warner will need additional time to properly conclude negotiations; NOW THEREFORE, IT IS RESOLVED, that the City Council of the City of Palm Desert, California does hereby extend the expiration date of its cable television franchise from the current date of June 30, 2000, to no later than September 30, 2000, for the purpose of concluding negotiations for a renewal of such franchise to the mutual satisfaction of the parties; IT IS FURTHER RESOLVED,that neither the City nor Time Warner waive or alter any rights of renewal of the franchise that either party may have in law, including, but not limited to, 47 U.S.C. Section 546, nor shall either party be bound by any draft franchise renewal negotiation documents as a result of the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED at a regular meeting of the Palm Desert City Council,held this 25th day of May ,2000,by the following vote,to wit: AYES: NOES: ABSENT: ABSTAIN: BUFORD A.CRI TES,MAYOR ATTEST: RACHELLE D.KLASSEN,ACTING CITY CLERK APPROVED AS TO FORM: DAVID J. ERWIN,CITY ATTORNEY 8 RICHARDS, WATSON & GERSHON ATTORNEYS AT LAW RICHARD RICHARDS GLENN R.WATSON KAYSER O.SUME A PROFESSIONAL CORPORATION (1916-1988) HARRY L.GERSHON SAUL JAFFE THIRTY-EIGHTH FLOOR MARK L.LAMKEN PETER M.THORSON ERWIN E.ADLER JAMECRAIG L. TEELEMARKMAN 333 SOUTH HOPE STREET SAN FRANCISCO OFFICE DAROLD D.PIEPER CRAIG A.STEELE ALLEN E.RENNET T.PETER PIERCE SUITE 960 STEVEN L.DORSEY JIM G.GRAYSON LOS ANGELES,CALIFORNIA 90071-1469 WILLIAM L.STRAUSZ SCOTT I.BARER FORTY-FOUR MONTGOMERY STREET MITCHELL E.ABBOTT BRENDA L.DIEDERICHS (213)626-8484 SAN FRANCISCO,CALIFORNIA 94104-4611 TIMOTHY L.NEUFELD AMY GREYSON FACSIMILE(213)626-0078 (415)421-8484 GREGORY W.STEPANICICH DEBORAH R.HAKMAN ROCHELLE BROWNE RUBIN D.WEINER FACSIMILE(415)421-8486 MICHAEL JENKINS WILLIAM P.CURLEY III WILLIAM B.RUDELL D.CRAIG FOX ORANGE COUNTY OFFICE QUINN M.BARROW LYNN I.IBARA NUMBER ONE CIVIC CENTER CIRCLE CAROL W.LYNCH JANET E.COLESON GREGORY M.KUNERT TERENCE R.BOGA BREA,CALIFORNIA 92821 THOMAS M.JIMBO LISA BOND May 3 , 2000 (714)990-0901 ROBERT C.CECCON ROXANNE M.DIAZ FACSIMILE(714)990-6230 SAYRE WEAVER MARIBEL S.MEDINA STEVEN H.KAUFMANN ERIKA M.FLEMING GARY E.GANS OLIVIA WAI-WEN SUAN OF COUNSEL JOHN J.HARRIS MANUEL VILLEGAS.Jr. KEVIN G.ENNIS ELANA A.LUBER WILLIAM K KRAMER ROBIN D.HARRIS MATTHEW D.MITCHELL MICHAEL ESTRADA PAULA GUTIERREZ BAEZA LAURENCE S.WIENER GABRIEL FLORES 0594525 STEVEN R.ORR ALEXANDER ABBE OUR FILE NUMBER MICHAEL G.COLANTUONO JULIA C.HAFFNER B.TILDEN KIM JACOB SHAHBAZ P 6 4 01-010 3 0 SASKIA T.ASAMURA By Federal Express Ms . Sheila Gilligan Acting Assistant City Manager Palm Desert City Hall 73-510 Fred Waring Drive Palm Desert, California 92260 Re : Ordinance Regulating Cable, Video, and Telecommunications Service Providers (Final Draft) Dear Sheila : At its meeting on May 2 , 2000, the City' s Technology Committee adopted a motion that recommended City Council approval of the proposed new Ordinance Regulating Cable, Video, and Telecommunications Service Providers . Ray Janes informed me that he would be out of the office until the middle of next week. Therefore, I am sending to you the final draft of the ordinance for review and further processing. The only changes that have been made are (i) the deletion of the words at the top of the first page that previously read "First Internal Discussion Draft dated April 14 , 2000, " and (ii) the revisions to paragraph (A) of Section 14 . 01 . 180 on page 33 . Please call me if you have any questions or comments . Very j truly yours, Wittig.:. g, c) cp n William B. Rudell c) Special Counsel r rn WBR: syc _c n 0594525 Enclosure cn 0 3 rn m o cc : Ray Janes (w/o enc . ) m o C) m _� Honorable Mayor&Mem of the City Council "Proposed Cable Televisik__ _ _•anchise and Request for Extension of Cable Franchise Agreement with Time Warner. May 25, 2000 ********************************************************************************** In September,the City Council approved an extension of the Franchise Agreement with then Media One to June 30,2000;Mr.Rudell is recommending that the City Council grant an additional 90-day extension to September 30, 2000, by adopting Resolution No. 00-66. This additional time is necessary to allow the Committee a better opportunity to review and expand the original "needs assessment" conducted by TMC and to negotiate with Time Warner for an agreement that will provide the best possible services for the residents of Palm Desert. We recognize that this matter has been significantly delayed over the last year,and staff is committed to working closely with the Technology Committee so that the new agreement can be presented to the City Council for consideration in advance of the September 30th extension date. Additionally, Mr. Rudell has filed a Form 394 relative to the recent merger of Time Warner and AOL. He has requested and been provided additional information from the cable company for response to this filing. However,there is a June 12th deadline for filing the final application,and Mr. Rudell will seek an extension unless the City Council directs otherwise. Mr.Rudell will be attending the City Council meeting and will be available to respond to questions. 1 , CITY COUNCIL ACTION: SHEILA R. G IGAN APPROVED DENIED ACTING ASSISTANT CITY MANAGER RECEIVED OTHER ��"EETIN DATE 5 �� -d Attachments (as noted) AYES: -e c.??.kx16,7K 4121_3 (5u t& NOES: ABSENT: A/LIT2-)p—fa, ABSTAIN: VERIFIED BY: R-D —rt-b Reviewed and Concur: Original on File with City erk's Office L4!e�of CARLOS L. ORTEGA ACTING CITY MANAGER ,............. ..• , •• .�h, ,: ,......:i. � - Minutes :, :... %ill-?, !I ,,,,,,,, § Zi i ', -4,,,,,, �'$ .0 Technology Committee CALL TO ORDER The meeting was called to order by Chairman Roland Alden at 2:07 p.m., on Tuesday, May 2, 2000. ROLL CALL Members Present: Chairman Roland Alden, Committee Members Robert Rose, Spiro Stameson, Denise Welch, James Lewis Members Absent: None Also Present: Councilmember Robert A. Spiegel, Councilmember Richard S. Kelly, Acting Assistant City Manager Sheila Gilligan; Risk Manager Ken Weller; Management Analyst Ray Janes; Information Systems Manager Doug Van Gelder; visitor, Mr. Bill Rudell; and Recording Secretary Rachelle Klassen/Frankie Riddle ORAL COMMUNICATIONS Mrs. Gilligan noted Ms. Janet Underwood, Representative for Senior TV has been in contact with the City and would like to meet with Mr. Rudell. She stated that Ms. Underwood indicated that Time Warner was not providing them with access to senior programming as Media One provided. Mrs. Gilligan indicated that Ms. Underwood was not trying to sue, but would like to find out if this was something they can do, and if so, could it be incorporated into the Ordinance. Mrs. Gilligan thought this might fall under the needs assessment under public education. It was noted that Councilmember Richard S. Kelly was sitting in for Mayor Pro Tern Jim C. Ferguson, who was out-of-town. Mr. Janes noted that he had a list of Recommended Renewal Objectives. He noted the objectives related to items that Mr. Rudell discussed in his letters and thought it was a good summation of the major areas that should be covered in both the Franchise Renewal Agreement and Ordinance. He distributed copies to committee members. 03/07/00 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE CONSENT CALENDAR It was moved by Member Rose and carried by unanimous vote to continue the minutes of April, 2000, to the next meeting. CONSENT ITEMS HELD OVER NONE NEW BUSINESS NONE INFORMATIONAL ITEMS NONE CONTINUED BUSINESS A. PRESENTATION BY WILLIAM RUDELL FROM RICHARDS, WATSON & GERSHON RELATIVE TO CABLE FRANCHISE CONSULTING SERVICES 1. First Draft Cable Television Franchise Renewal Agreement: Mr. Janes addressed the Chairman and indicated that the Committee should jump right into Continued Business and make this a working session. He noted that the Committee needed to put together a good draft for the Cable Franchise Renewal Agreement. The Committee discussed page four (4), Section 1.9, Franchise Not Exclusive. Mr. Rudell wanted to further discuss this section and obtain Committee input. Chairman Alden indicated that the last sentence of this section was basically a promise to Time Warner. He wished to eliminate all wording after the word "occupy" and noted that the agreement with Time Warner does not need to reiterate federal law forcefully. Also, there could be case law that covers this language. He noted that by placing this type of language in the Franchise Renewal Agreement we were pretty much signing up for the term of the agreement, even if case law changes. 03/07/00 2 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Mr. Rudell suggested that a period be placed after the word "occupy"and eliminate the remaining wording and see what Time Warner does when negotiations commence. He indicated that this was generally something that cable operators usually want, but it did not need to be put on the table at the start. After discussion, the Committee agreed. Mr. Janes asked Mr. Rudell if that was all he needed from the Committee and confirmed that he would provide us with the amended Franchise Renewal Agreement for submission to City Council. Member Rose noted that some wording should be added addressing the issue of future property that may be annexed into Palm Desert. Mr. Rudell noted that this was addressed on page three (3), Section 1.5(b). Mr. Weller had additions for page seven (7), Section 2.4, insurance requirements. He distributed a document with additional language for the insurance provisions and a section addressing indemnification/hold harmless. Mr. Rudell stated he would be happy to include the standard insurance requirements into the Franchise Renewal Agreement. Mr. Weller also noted that he had some wording modifications with this section. Changes were as follows: Section 2.4(a)(1)-At the end of the first sentence, add "set in this agreement."; Section 2.4(a)(1)(C) - After the word "aggregate", strike the word"annual", and after the wording "combined single limit", add "per occurrence". Mr. Weller will provide Mr. Rudell with some umbrella insurance wording; Section 2.4(2) - After the wording "All required", strike the wording"Automobile Liability Insurance and",and, within the quoted material, after the wording "the City of Palm Desert", delete the word "is" and add the wording "its officers, officials and employees are." Page eight (8), Section 2.4(a)(6)(b) - After the wording "written insurance binders", add the wording "and appropriate policy endorsement". 03/07/00 3 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Mr. Weller noted that on page eight (8), Section 2.5(a) where it refers to an "undefined amount," it was hard to establish an amount and that it may be beneficial to input wording such as "provide a bond equal to the amount of construction" or something along that line. Mr. Rudell agreed and would look into modifying the language. Mr. Weller suggested items 1-7 on the insurance information sheet he submitted be included in Section 2.4 and that the Indemnity/Hold Harmless Agreement be added separately to the insurance information, but under its own section. Mr. Rudell noted that the Indemnity/Hold Harmless Agreement is included on page 34. Mr. Weller would prefer to use the wording he has submitted. Mr. Rudell had no problem with this. Chairman Alden asked for a vote. It was moved by Member Rose and seconded by Member Stameson that Section 1.9 of the First Draft Cable Television Franchise Renewal Agreement be amended to end with the word "occupy." Motion carried, Member Lewis voted Nay. It was moved by Member Rose and seconded by Member Stameson that Section 1.9 of the First Draft Cable Television Franchise Renewal Agreement be modified with regard to insurance modifications and addition of the Hold Harmless Agreement. Motion carried by unanimous vote. Member Rose asked what the next step was. Mr. Rudell indicated that he would like some direction from the Committee or City Council on what the City would like to get out of the Franchise Renewal Agreement, to either continue with what was currently being provided, or negotiate for additional benefits or a regional institutional network. What does the City want to negotiate for? Member Lewis asked Mr. Rudell if in the Franchise Renewal Agreement, he mirrored those items that were currently being provided under the existing Franchise Agreement. Mr. Rudell stated no. 03 0- 00 4 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Member Lewis asked if there was a need for an extension. Mr. Rudell asked Mr. Janes if the extension expired in June. Mr. Janes indicated that it did. Mr. Rudell indicated that the Franchise Agreement should not expire in mid-stream and that his recommendation would be to extend the contract for three months, from June to September. It was moved by Member Rose and seconded by Member Stameson to recommend to City Council to extend the deadline for renewal from June 30 to September 30. Motion carried by unanimous vote. 2. First Draft Cable Television Regulatory Ordinance Mr. Rudell indicated that the Ordinance attempts to identify the video and telecommunication landscape as it exists today. As the landscape changes rapidly, it may necessitate some changes to the Ordinance. Article One addresses how the City wants to encourage competition and thus service the public, provide the highest quality services, exercise regulatory powers sparingly, and all the preamble information. Article Two addresses cable television systems that are particularly subject to franchises. Mr. Rudell had observed that this was an issue within numerous communities and was now on the books. The municipal codes have an ordinance that was drafted when small entrepreneurs were scrambling to get cable franchises in communities that did not have cable services. These ordinances are very similar to each other and go on to address the most detailed issues. General categories can be addressed in the Cable Television Franchise Ordinance or Franchise Agreement that are not specifically outlined in the municipal code. This streamlines the process. The regulatory process does have some detailed provisions concerning what type of information will be desired if a cable franchise is applied for by a new operator. Mr. Rudell noted that the City should obtain as much information as possible pertaining to the operator's record and what experience they had in other communities. 03/07/00 5 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Page eight identifies the contents of the Franchise Agreement. Page nine pertains to the contents of the Cable Television Franchise Agreement and are identified in general terms. Typically a city would rely upon its consultant or attorney to flush these out and be aware of the types of provisions that provide the best protection to the city. Mr. Weller noted that currently Palm Desert had special nodes for its citizens. He asked if this issue had been addressed. These nodes provide for cable television shows that are for Palm Desert residents only. Mr. Rudell stated that this could not be placed in the Ordinance, but it could be made part of the Franchise Renewal Agreement. He noted that if there were special services that were currently being provided, the Agreement should attempt to retain those special services and/or facilities. Councilmember Kelly asked if the Ordinance gave the City control over street cuts where permits are required from the City. Mr. Rudell stated that yes it did, and would it be referenced in general in the Ordinance. When negotiating the Franchise Agreement or Franchise Renewal Agreement, it would then be folded into the City's requirements as they may then exist. He added that assistance from the Public Works Director/City Engineer should be included to identify any special requirements that should be met by the cable operator. Councilmember Kelly confirmed that Mr. Rudell would make sure this happens. Member Lewis indicated that page ten, item 10 addresses requirements relating to rights-of-way, and compliance with all building codes and permit requirements. Mr. Rudell noted that cities were concerned about above ground facilities such as pedestals, dog houses as they are called, and what regulatory power they have over this. As cable operators come in and perform upgrades, these dog houses suddenly appear in public service easements or public utility easements that were not anticipated. 03/07/00 6 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Chairman Alden noted that there should be some language in the Ordinance that basically says. "Nothing in this should be construed as the operator not having to file a permit to do construction in the street." He asked if it would be reasonable for the City to have ordinances regarding equipment in the utility easements, street cuts, construction in the rights-of-way, and that the franchisee would always be expected to abide by current City ordinances. Mr. Rudell noted that most cities have extensive regulatory provisions set forth in their municipal codes, wherein it provides detailed provisions relating to excavation in the public right-of-way or encroachment into the public right-of- way, and the permits required. There is nothing that exempts the cable operator from having to comply with all the regulatory requirements of the City. The cable operator would be required to comply with the City's current permit requirement, as administered be the Public Works Department/City Engineer and/or other departments. Mr. Rudell indicated that the last part of this article addresses cable television systems and franchises having to do with consumer protection and service standards. General categories should be identified, as well as consumer protection standards, that are found both in federal and state laws. These standards can be fine-tuned and expanded, if necessary, to incorporate City standards for the franchise cable operators. Article Three addresses the new method of providing video services which is called OVS or Open Video Systems. It sets forth federal law and regulations that deal with this new type of competition (e.g. RCN and Western Integrated Networks). If nothing else, it enables City staff to photocopy pages 12-18 and send it to RCN,WIN or anyone else that wishes to deploy an OVS system within the City. These pages lay out the regulations. Operators are required to match what Time Warner was required to provide in terms of providing PEG access, channel capacity, facilities or include instruments that provide for a level playing field. Federal law requires competitive operators to match those requirements. 03/07/00 7 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Member Stameson asked Mr. Rudell to describe what OVS was and what they provide over and above Time Warner or another cable operator. Mr. Rudell indicated that it would be a competitive system. The OVS operator would go through the same negotiation process as Time Warner and they could provide video, data, and telephone services the same as Time Warner. Member Stameson did not understand why they have the fancy name OVS. Mr. Rudell indicated that when Congress crafted the 1996 Telecommunication Act they wanted to create competition, but knew that the incumbent cable operators had a monopoly. Telephone companies, prior to the 1996 Act, had an opportunity to get into the competition with the cable operators through something called video dial tone. Video dial tone was replaced by the concept of an open video system that was supposed to encourage telephone corporations to go into competition with cable operators to provide video service. The primary difference with the Open Video System is the demand for channel capacity and that two-thirds (2/3) of the channel capacity has to be allocated to unaffiliated programmers. Mr. Janes asked how likely is it that the City will get this type of service. Mr. Rudell indicated that they are starting to knock on doors, but rather than calling themselves an OVS they are prepared to enter into a cable television franchise agreement, whichever will get them to market fastest. Member Rose noticed an article in the paper the other day regarding the problem between Time Warner and Disney. He noted that Time Warner has the capability of using satellite and had, in some cases, distributed satellite dishes to enable customers to receive ABC. The question is, "If Time Warner decides to expand their satellite service, would the City benefit?" Mr. Rudell indicated that they would have to set up a parallel billing system and convince the City that they are exempt from the franchise fee because they are not using the public rights-of-way. However, there would be a need for ancillary equipment so that the subscriber could receive the signal off satellite, maybe through a converter box. 03/07/00 8 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Mr. Rudell noted that OVS operators are required to provide information to the City regarding who and what the entity is, what experience it has, how it is funded, and other information. In essence, it provides for parallel requirements to be imposed upon OVS operators similar to that required of Time Warner or the incumbent cable operator. Article Four gives a brief description of other types of video service providers and telecommunication service providers that are now in the marketplace. It identifies the limited regulatory authority that the City has over these service providers. It is primarily a registration requirement that was authorized under state law. The City will at least know who is providing services in their community. The City may ask questions relating to the operator's customer service standards and other information that is allowed under state law. It sets forth the penalties that can be imposed if the other video service provider(s) fail to comply with customer service standards. On page twenty-five there is a cross- reference relating to antennas that can be installed to receive video and telecommunication signals and further identifies the limited regulatory authority that the City has over telephone corporations. Chairman Alden asked what regulatory authority the City has. Mr. Rudell noted that basic regulatory authority relates to time, place and manner restrictions over the use of public rights-of-way. Franchise fees cannot be imposed upon telephone companies, they have been immune to this for years. He noted that the Ordinance identifies information that the City should request of a new entrant or newly certified telephone corporation that requests to excavate City streets to install fiberoptic cable. The City may want to ensure that the City Manager establishes criteria within which the streets can be accessed so as not to have continuous excavations of the streets. Articles Five outlines definitions that apply to terms within the Ordinance. Article Six addresses violations, misdemeanors, severability, etc. Mr. Rudell noted that this was basically an overview of the provisions of the Regulatory Ordinance. 03 0-%00 9 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Member Rose asked if the Ordinance is the same ordinance used by other clients. Mr. Rudell indicated that it was, but it was tailored for each client's needs. Chairman Alden indicated that the Franchise Renewal Agreement really mirrors the Ordinance in lots of ways. Given this, he had a specific question to address, "Does the Ordinance not specifically request that Time Warner serve every home or any grantee?". He indicated that the OVS issue seems to be very clearly state that any competitor using any technology must meet the precise terms of service that Time Warner is providing. These two things taken together seem to make it very difficult for competition to come about using alternative technology or any competition to come about that was focused on serving only a subdivision or section of the City, not the entire community. The City needs to determine what it is obtaining for language that basically protects Time Warner's monopoly, and does the City want to give Time Warner this protection language or drive a hard bargain. If so, then all of the language becomes a bargaining chip. He noted that the Figure 6 document address some of these issues. Member Lewis does not believe that the bar should be reduced for a company like Time Warner who, especially recently, was very flippant in providing the customers with the services they want. Chairman Alden indicated that this is the dicey proposition. Credible competition is the best negotiating lever with Time Warner. If you raise the bar too high, then you freeze out the possibility of credible competition. Discussion commenced on whether or not the language was eliminating the possibility of credible competition. Member Lewis and Member Stameson did not feel that the bar was being raised too high to eliminate credible competition but rather to provide a level playing field. Member Lewis asked Mr. Rudell if the Franchise Agreement would freeze out competition. Mr. Rudell noted that OVS operators that insist upon an OVS Agreement as opposed to a Cable Franchise Agreement, understand that there are going to be 03 0-00 10 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE negotiations between the local franchise authority and their representatives as to how they meet the requirements that have been imposed upon the incumbent franchise cable operator. Rather than have a complete, duplicate set of public access channels they might be required to interconnect so that they can cablecast the public access stations. They could be required to make a financial contribution in lieu of duplicating the studio that already exists and is very seldom used. Incumbent cable operators will resist if you do not impose comparable obligations on competitive entrants and competitive operators understand this. Therefore, it is a matter of creating a level playing field. If they choose to enter into a Cable Franchise Agreement as opposed to an OVS Agreement, then that Franchise Agreement is going to look very similar to Time Warner's. Chairman Alden noted that both the OVS Agreement and Franchise Agreement will look very similar, and that the documents promise Time Warner that if we grant an OVS Agreement to another provider,the City promises to impose approximately the same burden on that provider. Mr. Rudell indicated that if you do not create a level playing field, then the City will be taken to court. Member Rose asked for clarification on the section "Telecommunication service provided by telephone corporation" (page 26), what is meant by "line" (i.e. what is to prevent the telephone company from replacing their twisted pair with fiberoptic cable). Mr. Rudell stated nothing, they have that right; however, they would need to come to the City and obtain an OVS Agreement or Franchise Agreement. Member Rose noted that they might be the only source (telephone company)citywide, including any annexed areas to Palm Desert, that might possibly be on a land based system that could actually go in and do this, other than the incumbent cable operator. Mr. Rudell indicated that it would be possible. RCN is now certified as a telephone corporation by the Public Utilities Commission and they are getting into the market by virtue of exercising their authority as a competitive local exchange carrier. They will get their fiberoptic cables either through 03/07/00 11 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Southern California Edison or by excavation of streets. They will provide telephone service while concurrently negotiating a franchise agreement or OVS agreement with the City. Once an agreement is in place they will flip the switch and those same lines will be used to deliver video. Member Lewis asked if competition is occurring. Mr Rudell noted that yes competition is occurring. Member Stameson asked if the other cities negotiating a franchise agreement are making sure that they are maintaining a level playing field. Mr. Rudell stated yes, however, it does not mean that they have to meet the exact same requirements, but rather look at burdens and benefits as a whole to determine if they are equivalent. Mr. Janes asked Mr. Rudell what else he needed from the Technology Committee to complete the final version of the Ordinance to move ahead with the negotiations. Mr. Rudell stated that someone was going to have to make a determination as to whether, in its current form, the proposed Ordinance addresses the concerns of the City, and whether it makes sense to replace the existing Cable Franchise Ordinance with one that is a little more broad and addresses cable, video and telecommunications. If the Ordinance addresses City concerns, then the next step would be to take it before the City Council. If other committees or commissions are involved in the review, then it needs to be brought before them as well. Councilmember Spiegel indicated that whatever this Committee recommends, it should consider the needs of Palm Desert's residents. There are not many controls that can be put into place anymore except for revenues. Member Rose questioned the Franchise Agreement with regard to what basic service was and what the cable company should provide. Mr. Rudell indicated that basic services were defined under federal law as the lowest tier of service that includes PEG access channels. 03/07/00 12 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Member Rose asked if there was a way to include a provision that the operator must provide, under basic service, for the major networks within the Ordinance or Cable Franchise Agreement. Mr. Rudell indicated that the operator would include major network stations as customers would demand it or they • would not subscribe, but to demand that they provide ABC, NBC or CBS is not possible. Councilmember Spiegel noted that if the residents have no control over their bill to the point where the cable operator provides more and more programs that the residents will never watch, then this would be an issue to address, if possible. Chairman Alden noted that since people have different needs, the City should look at what is the single best way to meet these needs, which is to provide many choices. Federal law preempts our right to control any of these issues. Therefore, it is not necessarily about meeting the needs of the citizens, but about a business petitioning the City to build a network within the City limits. Mr. Janes stated that Mr. Rudell has provided this. Chairman Alden indicated that the Ordinance very cleverly eliminates the possibility of any competitor competing with Time Warner. Mr. Janes noted that it is a non-exclusive Cable Franchise Agreement. Mr. Rudell disagrees. He also noted that the Franchise Agreement is non-exclusive and that if the economics are present then competitors are going to come in and play on the same playing field. The City has to establish some general principals that a cable operator using the public rights-of-way would have to comply with. Councilmember Kelly noted that there are several areas in the City that already have different cable companies. Basically, the City was getting an agreement along with the franchise fee. 03/07/00 13 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Chairman Alden noted that if there was more than one cable company in Palm Desert, then there was more than one franchise agreement outstanding. Councilmember Kelly indicated that these operators were in gated communities; therefore, not under City control. However, competitive cable operators can come in and obtain a franchise agreement the same as Time Warner, and may solicit door-to-door to establish a customer base. Mr. Rudell confirmed that an operator could come into Palm Desert and serve only a pocket of the community, but it would have to obtain authorization from City Council. Chairman Alden asked what Time Warner would do. Mr. Rudell noted that they would probably insist that the City comply with California law which requires a public hearing to address the competitive aspect or they could decide that they would not serve that segment of the community. Mr. Rudell stated that he would prepare the final draft and submit it to staff. He indicated that he would come back and make a presentation to the City Council, if they desire. Chairman Alden asked for a vote. It was moved by Member Lewis and seconded by Member Rose that the First Draft Cable Television Regulatory Ordinance be approved. Motion carried by unanimous vote of those members voting. It was stated that Chairman Alden was not able to vote. He may only break tie votes. 3. FCC Form 394 Mr. Rudell indicated that he has received and will transmit the responses of Time Warner's Counsel to the questions that were set forth in his letter to the Palm Desert City Council for Time Warner; however, there may be a time constraint due to the 120-day time period. He noted that an extension was needed or City Council needed to take action before the 120-day time period expires. This can be placed on the next agenda for discussion. 03/07/00 14 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE Chairman Alden asked if the City's obligations are,to agree or disagree with the merger. Mr. Rudell indicated that the City's obligation was to take certain action within 120 days from the date that the City received FCC Form 394. He could not remember the exact date, but believed it was in February. If the recommendation is to deny the change of control, then compelling reasons as to why AOL Time Warner, Inc. (new entity to be created) does not have the legal, technical or financial capabilities to operate the franchise within the City. He believes this would be a difficult finding. If no option is taken within the 120 day time period and there is no extension to the 120 days, then the transaction is deemed approved under federal law. Chairman Roland indicated that if the City does not want to challenge this action it, in fact, does not need to do anything. Mr. Rudell confirmed this statement, but noted that the 120 days allows local franchise authorities to review compliance issues. If issues are identified (i.e. cable operator has not paid franchise fees, has not installed facilities that were to be installed as promised, or has not followed through with other compliance issues related to the Franchise Agreement),they can be brought to the forefront and addressed. The cable operator would then have to develop a remedial plan in connection with our "grant of consent" to the merger. Member Lewis asked, for clarification, if in Mr. Rudell's professional opinion, a City challenge would be fruitless. Mr. Rudell indicated that the City of Palm Desert or even Los Angeles was not going to stop the merger. He indicated that the City could withhold its consent and not approve the merger, then they would be in non-compliance with the existing Franchise Agreement and Cable Franchise Ordinance because they proceeded with the transaction without the City's consent. There would then be a non- compliance issue to deal with and the City may be successful in assessing some penalties. The City has leverage in terms of the franchise renewal. Once negotiations with Time Warner begin, that is where certain new benefits will be obtained, if any. 03/07/00 15 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE 4. Franchised Cable Television Operators Mrs. Gilligan noted that the "Franchise Cable Television Operators" was a letter sent from Mr. Rudell dealing with the FCC Form 394 issue. She gave a brief overview of the letter dated April 7, 2000. Mr. Rudell indicated that this issue deals with competition and it was an excerpt from Adelphia's filing with the Securities Exchange Commission that sets forth the narrative of how they perceive the competitive landscape at the present point and time. He thought this might be a point of interest as it came up at the last Technology Committee Meeting as an information item. Mr. Rudell noted that competition is out there and that in the Basin (i.e. Redono Beach, Los Angeles, Beverly Hills, Hermosa Beach) there are very aggressive well financed over builders (i.e. RCM Telecom Services of California) starting to come in and knock on doors. They are seeking authority to operate as an Open Video System (OVS) operator or to obtain a competitive franchise. They are willing to go either way, which ever will get them to market fastest. Councilmember Spiegel asked if other cable operators should be contacted prior to developing an agreement with Time Warner. Mr. Rudell indicated that this could be done concurrently, but that Time Warner cannot be displaced. The only option would be to encourage competitors to consider Palm Desert. Councilmember Kelly indicated that over-builders would create a tremendous inconvenience to customer(s) and suspected would consume a sufficient amount of staff time. He did not believe this would be the best alternative for the City. Mr. Rudell indicated that this would be a policy decision, not a legal issue. 5. Subdivision Map Act Mr. Rudell indicated that he sent over some information regarding what California law authorizes in terms of new subdivisions. Apparently there are no provisions in the municipal code that relates to this particular matter. This is an informational item. 03/07/00 16 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE B. REQUEST FOR APPROVAL RELATIVE TO THE NEEDS ASSESSMENT Mr. Rudell indicated that he would like some direction from the Committee or City Council regarding what it would like to negotiate for in the Franchise Renewal Agreement. He asked if the City wishes to continue with current benefits, negotiate for additional benefits, or negotiate for a regional institutional network. Member Rose requested guidance through some of the general areas where the City may have some leverage. Mr. Rudell indicated that other cities are maintaining the same level of public access channels or PEG access channels. It does not appear that the City has reached the point where it needs additional channel capacity, as indicated by the Needs Assessment. He thought the City might want to continue with a studio, continue to provide local origination programming, and/or cablecasting of Council meetings, etc. Councilmember Kelly indicated that the Cable Franchise Agreement should include televising the City Council meetings at no cost and other items of this nature. Mr. Rudell indicated that maybe there should be one additional meeting to discuss what the City wants from the cable operator, or distribute a copy of the draft Franchise Renewal Agreement to Time Warner advising them that the City is still considering amenity options, but would like to proceed with discussions on boiler plate issues. OLD BUSINESS NONE REPORT ON CITY COUNCIL ACTION NONE REPORTS AND REMARKS A. COMMITTEE CHAIR/MEMBERS Member Stameson requested a list of the Committee's e-mail addresses. 03/07/00 17 MINUTES OF MAY 2, 2000 TECHNOLOGY COMMITTEE B. COUNCIL LIAISON C. STAFF a. Acting Assistant City Manager NONE b. Information Systems Manager NONE c. Management Analyst II Mr. Janes asked Mr. Rudell if he would like the Technology Committee to make comments on the Recommended Renewal Objectives (Figure 6). Mr. Rudell indicated that this would be helpful. Mr. Janes will submit comments to Mr. Rudell and place on the next agenda for discussion. PUBLIC HEARINGS NONE ADJOURNMENT There being no further business, Chairman Alden adjourned the meeting at 4:15 p.m. Respectfully espect ully submitted, Frankie Riddle 030-i00 18