HomeMy WebLinkAbout6.e. Amendment of Needs Assessment For Cable Television Service
EXECUTIVE SUMMARY
City Council Regular Meeting: May 20, 2015
AGENDA ITEM: Amendment of needs assessment for
cable television service AGENDA SECTION:
PREPARED BY: Alan Cox, Communications Coordinator AGENDA NO. 6.e.
ATTACHMENTS: Proposed resolution; packet from original
acceptance of needs assessment APPROVED BY: ddj
RECOMMENDED ACTION: Approval of resolution
At a work session on May 15, 2013, the City Council accepted a needs assessment report approved by the
Apple Valley-Farmington-Rosemount Cable Commission, laying out the cities’ positions in advance of
negotiations to renew the franchise of Charter Communications to provide cable television service in the
three communities. Despite the expiration of the original franchise agreement and Council approvals of an
extension, the company has not yet given a response to the issues identified in the needs assessment or to
the renewal terms proposed by the Commission.
Because of intervening events, the Commission is asking the City Councils of the three communities to
approve changes to the 2013 needs assessment that will be reflected in the Commission’s bargaining stance
should negotiations for a renewal begin.
The resolution covers four areas. The first concerns the Councils’ actions in July 2014 to approve a
relocation of the cities’ government access or “PEG” channels to conform to a new channel lineup desired
by Charter. The Commission contends that the company failed to comply with part of the agreement,
including a promise to carry advertising announcements notifying viewers of the channel changes.
The second issue relates to Charter’s request last year to approve a corporate restructuring related to the
merger of two other companies, Comcast and Time Warner. The merger plan would have involved the
spinoff of neighboring Comcast systems to be operated in tandem with Charter’s local systems. Although
the merger has since been canceled, the agreement approved by the Council in December 2014 included
conditions that still apply.
The third issue concerns the company’s switch to a digital distribution of its service at the time of last
summer’s channel changes. Charter’s franchise with the City requires the company to provide basic
television service to public buildings without charge. Because of the digital conversion, each television set
must have its own cable box to receive service. Charter has contended it has the right to charge the City a
monthly fee for each box. The Commission disagrees. During this dispute, Charter has repeatedly cut
service to City of Rosemount locations. The proposed resolution cites Charter’s lack of interest in
cooperation and clear communication as a priority to be addressed during renewal negotiations.
The fourth issue is related to an emerging trend in negotiations between Charter and other communities to
support the funding of government and local programming. In those negotiations, Charter has agreed to
move away from the system in which a fee is charged per cable television subscriber and to an
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arrangement in which the company pays a percentage of overall cable TV revenues. This arrangement
should lead to more stable financial support for the cities’ video production efforts.
By approving the proposed resolution, the Council conveys the importance of these issues that have
emerged during the lengthy process of reviewing and considering renewal of the Charter franchise. The
extended franchise now in effect runs until December 31, 2015. Company representatives indicated this
spring that their first response in the negotiations is still weeks away.
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CITY OF ROSEMOUNT.
RESOLUTION NO. 2015- ____
A RESOLUTION SUPPLEMENTING NEEDS ASSESSMENT
WHEREAS, Charter Cable Partners, LLC, l/k/a Charter Communications (“Charter”)
operates a Cable System within the City of Rosemount (“City”) pursuant to a franchise ordinance
issued by the City (“Franchise”);
WHEREAS, the City is a member of the Apple Valley, Farmington, Rosemount Cable
Commission (“Commission”);
WHEREAS, in 2011, Charter requested renewal of the Franchise originally set to expire
in mid-2014;
WHEREAS, Charter and the Commission, on behalf of the City, agreed to proceed with
“informal renewal” as contemplated by applicable federal law;
WHEREAS, by certified letter dated February 20, 2014, the Commission provided an
informal renewal proposal to Charter consisting of a Needs Ascertainment Report (“Report”)
identifying community cable-related needs and interests and certain past performance or
franchise non-compliance concerns, and a draft franchise including a list of the requested live
origination sites and free cable sites for the City;
WHEREAS, as of the date of this resolution, Charter has not provided a response to the
Report or proposed franchise;
WHEREAS, by letters dated March 14, 2014, Charter notified the Commission and its
member cities that the company intended to convert all its video channels to digital and, in
conjunction with this conversion, wished to relocate the PEG channels requiring the City’s
approval under the Franchise;
WHEREAS, in July, 2014, the City adopted a resolution conditionally consenting to the
requested PEG channel relocations;
WHEREAS, the conditions establish beneficial requirements related to Charter’s
provision of PEG channel capacity for the Commission and City’s use;
WHEREAS, also in conjunction with its all-digital conversion, Charter elected to
encrypt its basic tier of service requiring public institutional sites receiving free cable services
pursuant to the Franchise to install converter boxes;
WHEREAS, without agreement or meaningful advance communication, Charter began
invoicing converter box charges to public institutions entitled to free service;
WHEREAS, the Commission and its members have repeatedly disputed Charter’s
charges while simultaneously, on multiple occasions, and through a variety of company
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representatives including two different law firms, sought to discuss a cooperative resolution to
the disputed charges;
WHEREAS, the dispute remains unresolved, charges continue to be imposed, and
Charter is now periodically discontinuing free services to public institutional sites in violation of
the Franchise;
WHEREAS, Charter’s communications regarding this matter have been unclear,
inconsistent, and reflective of a lack of interest in cooperation, and Charter continues invoicing
varying, non-uniform charges for converters with little or no explanation of such varying
charges;
WHEREAS, after providing the Report and proposed franchise to Charter, the
Commission and City received an audit of Charter’s franchise fee and PEG fee payments
reflecting miscalculations and underpayments of amounts owed under the Franchise;
WHEREAS, in August, 2014, the City entered into a Settlement and Release Agreement
(“Settlement”) with Charter, and subsequently received payment of amounts due;
WHEREAS, the Settlement extended the Franchise to December 31, 2014;
WHEREAS, on or about August 29, 2014, Charter, on behalf of its ultimate corporate
parent, Charter Communications, Inc., filed an FCC Form 394 with the City seeking approval to
fundamentally restructure the company requiring the City’s approval under applicable state law
and the Franchise;
WHEREAS, in relation to such restructuring, Charter was to provide various services
and operational support for all Comcast systems in Minnesota being divested to a newly formed
company, GreatLand Connections, in which Charter would own 33%; and
WHEREAS, in December, 2014, the City adopted a resolution conditionally approving
Charter’s fundamental corporate restructuring;
WHEREAS, the conditions establish beneficial requirements related to Charter’s
fundamental corporate restructuring;
WHEREAS, Comcast has recently announced that the GreatLand divesture will not
occur and the associated Charter restructuring is not expected to occur;
WHEREAS, at Charter’s request, the City adopted a resolution further extending the
Franchise to December 31, 2015;
WHEREAS, the Report identifies a need to continue adequate funding of public,
educational, and governmental (“PEG”) programming, and the draft franchise proposes an up-
front grant and continuation of PEG support payments by Charter calculated as a per month, per
subscriber amount itemized on subscriber bills as a “PEG fee;”
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WHEREAS, since the Report was approved, the Commission has become aware that a
number of franchising authorities in Minnesota are seeking or have obtained PEG support
arrangements calculated as a percentage of the cable operator’s revenues (as franchise fees are
typically calculated);
WHEREAS, the Commission recommends that calculation of PEG support as a
percentage of cable revenues is likely to produce greater stability in funding, and will allow
franchise and PEG fees to be audited in an identical manner;
WHEREAS, Charter has accepted PEG funding arrangements calculated as a percentage
of cable revenues in other pending or recently completed franchise renewals including in
Minnesota;
WHEREAS, based on the foregoing, the Commission recommends that the City
supplement the Report as provided herein.
NOW, THEREFORE, BE IT RESOLVED as follows:
1. The conditions imposed in the resolution approving relocation of PEG channels
are hereby identified as cable-related needs or interests.
2. The conditions imposed in the resolution approving the fundamental corporate
restructuring of Charter Communications, Inc. are hereby identified as cable-related needs or
interests.
3. The need to address Charter’s poor communications with the Commission and its
member cities and the company’s apparent lack of interest in cooperation are hereby identified as
cable-related needs or interests.
4. The need to provide for future PEG support and funding as a percentage of
Charter’s gross cable revenues, and at a level adequate to address previously identified PEG
needs, is hereby identified as a cable-related need or interest.
BE IT RESOLVED FURTHER, that the Report is hereby supplemented as indicated
herein and any renewed Franchise shall include corresponding provisions.
Approved by the City of Rosemount, Minnesota this 20th day of May 2015.
By:
Its: Mayor
By:
Its: City Clerk