HomeMy WebLinkAbout2.b. Evermoor Fiber OpticsCITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR DISCUSSION
COMMITTEE OF THE WHOLE OCTOBER 11, 2000
AGENDA ITEM: EVERMOOR FIBER OPTICS
AGENDA NO.
DISCUSSION
PREPARED BY: THOMAS D. BURT, CITY ADMINISTRATOR
i fix
ATTACHMENTS: UTILITY COMMISSION STAFF REPORT
This information was presented to the Utility Commission on Monday, September I I' The developer has
requested the City consider allowing him to install a total fiber network within his development to provide the
residents of Evermoor a complete telephone system. This means a resident of Evermoor could subscribe with
one vendor for video, audio and data service which is far beyond what is being offered by other vendors.
RECOMMENDED ACTION NOTES:
i +
,.
CITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACTION
UTILITIES COMMISSION MEETING DATE: September 11, 2000
AGENDA ITEM: Fiberoptics in Evermoor
AGENDA SECTION:
New Business
PREPARED BY: Tom Burt, City Administrator
AGENDA NO:
6b.
ATTACHMENTS: Letter from WOW & Confidential memo from
APPROVED BY:
Attorne
The City advertised for interested parties to overbuild the cable system in the City and unfortunately we did not
receive any responses. The attached letter from Wide -Open West explains that due to our small population they
are not interested at this time.
Homer Tompkins of Contractor Property Development Inc. (Evermoor) has indicated an interest in building a
total fiber telephony system for his development. This would include a total fiber backbone that would provide
residents of Evermoor a single provider for video, data and audio service. This does not preclude Frontier and
Charter from installing their own lines and offering service but it does allow the residents of the Evermoor
development more options for service.
If the Commission is interested in allowing this type of service in the development our attorney has identified at
least three ways it could happen. The Developer could build the system and give_it to the City, the City could be
co -owner of the system or the City franchises this development. Staff is still reviewing the best alternative. If the
Commission would like to proceed with the Developer to install the improved system, Staff will continue to
work on the item and return at a future meeting with a recommended resolution.
RECOMMENDED ACTION: Discussion.
4
WideOpenWest
August 36,2000'
City of Rosemount
2875 —145h Street West,
Rosemount, MN 55068
Attention: Mr. Tom Burt
Dear Nir. Burt,
Recently, the City of Rosemount advertised its Intent to Franchise. WideOpenWest
seriously considered submitting a franchise application but upon analysis could not
substantiate an application based on the housing density in Rosemount, including
overtures from the developer of Evermoor. This is purely an economic decision since
Rosemount has all the demographic attributes that WideOpenWest seeks in communities.
As WideOpenWest expands in the Twin Cities area and our density threshold decreases,
Rosemount will be a prime candidate for future expansion.
If you have any questions regarding our decision, I would be very pleased to respond.
Si ce ly,
C
Wid nWest Minnesota LLC
Chris Julian
Vice President, Market Development
Cc George Duffy
Julia McGrath
Tom Creighton
Two Carlson Parkway
Suite 350
Plymouth-.MN 55447
t 612-249.2580
f 6=249-2305
www.w1deo9em
470 Pillsbury Center
Kenn• 200 South Shah Street
Minneapolis lW 55402
0 MY- (612) 337 -9300 telephone
M M (612) 337 -9310 Fax
C H A R T E R E D
htrpJ-/wwwJkennedy-gmven.com
RobertJ. V. Vax
A=meyatLz%
Direct Dist (612) 337 -9275
Emul- m=@ketmedyjp%v Dorn
July 25, 2000
Mr. Tom Burt Attorney -Client Privileged
City of Rosemount
2875 145 St W.
Rosemount, MN 55068
RE: Evermoor Development Installation of Fiber Communications Network
Dear Tom:
Based on our meeting last month -with representatives from Contractor Property Developers
Company, we have prepared a fairly detailed research memorandum which is enclosed After your
review, we can discuss how to relay this information to the developer.
In short, we have concluded that there are several scenarios in which the City could permit
installation and operation of a telecommunications network as proposed for the Evermoor
Development Alternatively, the City could require that the developer obtain a cable franchise that
mandates service City -wide. This would effectively prevent construction of the network as planned
The Council will need to make a policy decision to determine how to proceed.
Please feel free to call if you have any questions.
Very truly yours,
V"
Robert J. V. Vose
Enclosures RECEEIVED
cc: Charlie LeFevere JUL 2 6 2OW ,
CITY OFRO OUNT
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. f
MEMORANDUM
CONFIDENTIAL /ATTORNEY CLIENT
TO: Charlie LeFevere;
Tom Burt, City of Rosemount
FROM: Bob Vose
DATE: July 19, 2000
RE' ' RS22"7
Background
On Friday, June 30, 2000, I met with the City Administrator, Tom Burt, and representatives from
Contractor Property Developers Company ( "Developer"). The Developer's representatives
included Homer Tompkins, President; Craig Rapp, Vice President; Milda Hedblom, attorney
with Lockridge, Grindal Nauen; and Wendy Chretien, network consultant with Elert &
Associates. The Developer is working on the Evermoor Development in the City and Apple
Valley.
The Developer °s representatives indicated that as part - of this "high. end" development, the
Developer plans to install fiber optic cable to each .home in the Everruoor development.: The
Developer plans to contract with a provider (the leading candidate is Viacom) to provide video,
data and telephony services. The service capability would include 10 megabytes downstream and
2 megabytes upstream (very fast service). The service would be modeled after high capacity
services provided in similar "planned communities" around the country. The Developer
indicated that this model allows for a greater sense of a small community, a high level of work
from home, reduced traffic, and other community benefits.
The Developer also indicated that its plans may discourage other communications providers from
installing facilities in the development because of the quality of this comprehensive "package" of
services. The Developer indicated that this package of services would be superior to other
communications providers' products. The Developer plans to begin providing services via this
network by next February or March.
The Developer's representatives suggested that all Evermoor homeowners may be required to
Purchase services/pay fees through an association dues structure. I suggested that this
arrangement may be unlawful under the 1996 Telecommunications Act but that this was not a
regulatory issue for which the City is responsible. The Developer's representatives
acknowledged the issue and indicated plans to research the matter further. Even if not paid in
association dues, customers would receive a single bill.
The City indicated that the Developer would likely need to obtain a cable franchise. The
Developer was concerned with this for two reasons: (1) the length of time that obtaining a
RJV rE2693v3 1
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franchise would take; (2) a perceived requirement that a franchised cable operator serve the entire
City. The Developer suggested that it would meet all of the City's cable franchise needs through
a contract "in -lieu" of a franchise. The Developer wondered what the City's primary concerns
were. The City indicated that the primary franchise concerns were with PEG programming, PEG
funding, franchise fees, overall control over the service, and other typical forms of consideration
granted in a cable.franchise..
The Developer's representatives suggested that the City could view Evermoor as exempt from
franchising because: (1) Evermoor would be a single campus -like setting; (2) the Developer
would not provide the programming but would rather contract for the provision of such
programming; (3) there is a provision in the existing City franchise that allows the City to
"otherwise provide" services. The Developer asked that the City consider alternatives to
requiring a franchise.
The City agreed to consider the Developer's concerns and prepare a response.
ISSUES
1. Is a Franchise required?
2. If a Franchise is required, could services including cable service be provided to less than
the whole City; i.e. only to the Evermoor Development?
ANALYSIS
Cable television services are regulated under federal, state and local law.' Unlike most states
Minnesota has adopted a comprehensive state statutory scheme governing cable operations.
Telecommunications services such as telephone service, on the other hand, are primarily
regulated by federal and state law with little local governmental oversight 2 For example, a local
government may not exercise control over a cable operator's provision of telecommunications
services using cable franchising authority.
Some background concerning cable `regulation is necessary. Cable television systems appeared
in the 1950's as "Community Antenna Television :' or `'CATV." In 1960, the FCC asserted
1 47 U.S.C. § 521 et seq.; Minn. Stat. § 238.01 et seq.
2 See Minn. Stat. § 237.163, Subd. 7.
3 47 U.S.C. § 541(bx3). Fundamentally federal law provides that if a cable operator or an affiliate provides
"telecommunications services," the operator. (1) shall not be required to obtain a cable franchise for the provision of
such services and the Cable Act will not apply to the services; (2) the local franchising authority may not impose any
franchise requirement that prohibits, limits, restricts, or conditions the provision of the telecommunications service;
(3) the local authority may not order the operator to discontinue the provision of a teleco service; and
(4) the local authority not require the operator to provide any telecomtmnications service or facilities as a cable
franchise requirement or condition. 'Telecommunications" is defined as "the transmission, between or among points
specified by the user, of information of the user's choosing, without change in the form or content of the information
as sent and received." 47 U.S.C. $153(43). It is unclear what services provided by a cable operator will be treated
as " telecommunications" although one court recently held that "cable modem" service is a telecommunications
service rather than cable service. AT&T v City of Portland. _ F.3d _ (9th Cir. 2000) [No. 99- 35609, June 22,
2000]:
RN- ISM3v3 2
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jurisdiction over CAN systems. In 1968, the Supreme Court upheld the FCC's authorie
Eventually the FCC preempted local regulation in a number of ways but did not preempt local
government franchising of cable systems.
In 1984, Congress adopted the Cable Communications Policy Act which provided that a cable
operator is required to obtain a franchise'to provide cable service in the manner provided by state
or local law. 6 Minnesota state law provides that a municipality must require a franchise "of any
cable communications system providing service within the municipality. The comprehensive
Minnesota cable franchising regime further applies to:
... every cable communications system and every cable communications company as
defined in section 238.02, operating within the state, including a cable communications
comanv which constructs, operates and maintains a cable communications system in
whole or in Dart through the facilities of a person franchised to offer common or contract
tamer services. Persons possessing franchises for any of the purposes of this chapter are
subject to this chapter although no property has been acquired, business transacted or
franchises exercised.
Therefore, under Minnesota law both cable communications systems and cable communications
companies must, with limited exceptions discussed below, obtain a local franchise. Where a
person is a "cable communications company" by virtue of leasing and operating a "cable
communications system" owned by an unaffiliated entity, it appears that both the operator and
the owner would need to obtain franchises under state law.
There have been very feu- reported cases interpreting the Minnesota cable Iaws and franchising
requirement. However, there has been some reported litigation concerning the complementary
and largely parallel federal Cable Act provisions. For purposes of our analysis we focus on the
federal statutory framework but note relevant distinctions in the state statute.
The federal law analog to a "cable communications company, which must be franchised under
state law, is a "cable operator. A "cable operator" is defined as a person who provides service
over a "cable system" in which it either owns a "significant iummst" or "controls or is
responsible for" the sptem's management and operation. A "cable system" is defined as a
"facility, consisting of a' set of closed transmission paths and associated signal generation,
` United States v Southwerern CableCo 392 U.S. 157 (1968).
S Cable Television Report ayd Order, 36 FCC 2d 143, 325 (1972); Clarification of the Cable Television Rules, 46
FCC 2d 175 (1974); New York State Comm'n of Cable Television v. FCC. 749 F2d 804 (1984).
s 47 U.S.C. § 541(b).
Minn. Star § 238.08, Subd 1(a). A "cable communications system" is defined broadly as - a system which
operates the service of receiving and amplifying programs... and distributing those programs by wire, cable,
microwave or other means, stether the means are owned or leased, to persons who subscribe to the service:' Minn.
Stat. § 238.02, Subd. 3. Thm are specific statutory exclusions discussed below:
$ Minn. Stat. § 238.03 (esphasis supplied). A "cable communications company" is defined as "any person owning,
controlling, operating, man -aTn or leasing a cable communications system within the state.' Minn. Stat. § 238.02,
Subd. 2.
9 47 U.S.C. § 522(5).
RN- 182693v3 3
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reception, and control equipment that is designed to provide cable service which includes video
programming and which is provided to multiple subscribers within a community. " Finally, the
term "cable service" means "the one -way transmission to subscribers of (i) video programming,
or (ii) other programming service, and subscriber interaction, if any, which is required for the
selection or use of such video programming or other programming service.""
The 7` Circuit Court of Appeals recently addressed application of these complex and interrelated
definitions with respect to local franchising. 12 The Court upheld a ruling by the FCC that a
company providing video services, ECl, was not a "cable operator" of a "cable system" as
defined in federal law. Accordingly, the Court deferred to the FCC's conclusion that ECI was
not required to obtain a franchise from the affected local government.
The facts in the ECI case are important to understand. ECI had about 1,600 subscribers in 12
large apartment buildings of at least 100 residents each. ECI initially provided service using a
satellite master antenna system with a `'headenX' on top of each building it served. It aas
uncontested that no local franchise was necessary, in part because the signal was not sent over
the public right -of -way. In 1996, ECI altered its method of operation by interconnecting a single
"headend" to provide service to its customers both in the building on which the antenna was
located as well as in other buildings. The signal was transmitted to the other buildings by fiber
optic and coaxial cables owned by Ameritech and located in the public right -of -way. ECI
subscribed to Ameritech's Supertrunking Video Service, for which it paid a monthly tariff_
The affected city claimed that ECI was required to obtain a franchise after the change in the
manner of operations in 1996. In a ruling "expressly limited to the facts before the Commission
as presented by ECI," the FCC determined that ECI was not a cable operator because it did not
provide service to its subscribers through a cable system. The 7th Circuit affirmed focusing on
the factors that the FCC had relied upon:
(i) there is absolute separation of ownership between ECI and Ameritech, the ovmer of
the facilities in the right -of -way, i.e. purely a carrier -user relationship;
(ii) ECI placed facilities solely on private property;
(iii) Ameritech provides service to ECI as a tariffed common carrier service;
(iv) Ameritech lacks editorial control over the content of ECI's programming;
(v) the facilities used by Ameritech to provide service to ECI were not constructed at
ECI's request;
(vi) capacity is available to serve several other programming providers; and
(vii) ECI committed to make its drops available to other prog providers.
Accordingly, the Court found that those portions of the network owned or controlled by ECI did
not constitute a cable system subject to franchising.
10 47 U.S.C. § 522(7).
11 47 U.S.C. § 522(6); there is no state st=wf analog.
12 City of Chicago v. FCC. 199 Fad 424 (7th Cir.1999) (sustaining In re Entertainment Connections, Inc. Motion
for Declaratory Ruling, FCC 98- 111,13 FCC Rcd.14277 (1998) VA 418 -61)).
RN- 18M3v3 4
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1. Is a franchise Required for the Developer's Planned Network?
A. City -Owned System Approach
Based on the information provided, it is possible that the City and Developer could 'establish a
relationship that would meet one of the narrow exceptions to franchising as delineated in ECI and
similar cases. For example, the City could install and/or ultimately own the fiber and lease
capacity to the Developer as part of a city -wide project In this scenario, the City could contract
with various other providers, in addition to the Developer, to serve various areas /developments in
the City. The City is'currently installing conduit in a new downtown development and such a
fiber project could be an extension of that effort.
This relationship could be formed to correspond with some of the factors relied upon in the ECI
case: (i) there could be absolute separation of ownership between the City and the Developer, i.e.
purely a carrier -user relationship; (ii) the Developer's equipment such as the headend and related
electronics could be placed solely on private property and not in right -of -way; (iii) the City could
provide capacity to the Developer in a manner equivalent to a tariffed common carrier, (iv) the
City would lack editorial control over the content of the programming and other services; (vi) the
overall city -wide capacity would be available to serve several other programming providers.
However, several elements - would also be lacking. Unlike in the ECI case, the facilities serving
the Evermoor development would be constructed, at least in part, at the Developer's request. 20
Further, it seems unlikely that the Developer would make its drops available to other providers.
The ECI case and other cases suggesting that this type of system need not be franchised have not
indicated that any spec factors are necessary and seem to indicate' that the totality of the
circumstances should be evaluated. Accordingly, it is impossible to evaluate with certainty what
effect these distinctions would have.
An additional significant difficulty with this approach is that the Minnesota equivalent of the
"private cable" exemption is narrower than under federal law in exempting only "specialized
closed- circuit systems" that do not use public rights -of -way. This exemption would not apply to
operator." SB VS's signals are routed via SWBT, another wholly -owned first -tier subsidiary of SBC. Because
SBVS `owns" and "controls" only some components of a "cable system" which collectively do not amount to a
"significant interest" therein, SBVS is not a "cable operator" - as defined at 47 US.0 $ 522(5): Although owned by
the same entity, SBVS and SWBT operate independently and share no officers or employees; SBVS pays SWBT for
the video supertrunidng service and leases the space located on SWBTs property that serves as the demarcation
point for the transfer of signals; and SWBT alone decades how it will transmit the signals through its wire network
The Court expressly avoided the issue of whether SWBT could be required to obtain a cable franchise. )
19 Carlson T.V. v. City of Marble. 612 F.Supp. 669,673 (D.C. Minn. 1985) (a person that merely installs but does
not "own, control, operate, manage, or lease the system, it also does not fall under the coverage of [Chapter 238]:"
20 The ECI Court noted that another type of system ltaown as 'channel service" must be franchised. Channel service
is the provision of video transport services by a local telephone company exclusively to a cable operator holding a
local cable franchise. A channel service facility is typically built at the request of the cable company. Under this
arrangement the cable company would obtain a franchise but the common carrier would not.
RN- 182693v3 6
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the Developer's system even if the fiber in the right -of -way were owned by the City because the
network would not be a closed circuit. The network would need to be interconnected with the
public switched phone network and would likely receive cable programming via an
interconnection arrangement.
Finally, in the ECI case, the Court seemed to'conclude that because ECI did not control or have a
significant interest in a unified cable system (ownership of the system was separated) it did not
meet the federal definition of a "cable operator." However, the equivalent state - definitions of
both "cable communications company" and "cable communications system" expressly include
leasing or similar contractual arrangements. Accordingly, ownership or control of the system by
a single person may be irrelevant under state law. The Developer would apparently be a cable
company under the state law definition which includes a person "owning, controlling, operating,
managing or leasing a cable communications system within the state"
We suggest that the City consider and discuss this alternative with the Developer. Given the
risks associated with exempting the Developer from franchising in this fashion, the Developer
would need to fully indemnify the City from potential claims by other providers. The City may
also wish to prepare a more detailed proposal including cost estimates for constructing fiber in
the Evermoor development and City-wide.
B. Statutory Exemption Approach
Even if the network proposed by the Developer. falls within the definition of a. "cable
communications system, " state Iaw allows a municipality to exempt certain cable systems from
the definition and therefore from the scope of Chapter 238 and franchising. In particular, the
definition excludes:
a system which serves fewer than 50 subscribers or a system which serves more than 50
but fewer than 1.000 subscribers if the aoveminL bodies of all political subdivisions
served by the system. vote. by resolution, to remove the system from the provisions of
this chapter. No part of a system nor any area within the municipality served by the
system, may be removed from the provisions of this chapter if more than 1.000
subscribers are served by the system Any system which serves more than 50 but fewer
than 1,000 subscribers that has been removed from the provisions of this chapter shall be
returned to the provisions of this. chapter if the governing bodies of 50 percent or more of
the political subdivisions served by the system vote, by resolution in favor of the return.
Assuming the planned community network will serve fewer than 1,000 households in the
Evermoor development, the City could elect to exempt the network from Chapter 238. In the
event the Evermoor development includes Apple Valley or other municipalities, it would be
necessary to obtain such municipality's agreement to this approach.
u Minn. Stat. $ 238.02, Subd. 2(a); See also, s arhon TY._v. City of Marble. 612 F.Supp. 669,673 (D.0 Man
1985) (confirming a city's authority to elect not to apply Chapter 238 to a system that serves between 5o and 1000
subscribers).
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The Developer has indicated willingness to enter into an agreement in lieu of a franchise to meet
all of the City's needs and concerns. Such an agreement in lieu would provide for payment of
consideration equivalent to a franchise fee, provision of community programming channels,
equipment and support equivalent to that which the incumbent cable operator provides, and other
requirements equivalent to those in the existing franchise. In the event the City determines that
there are valid policy reasons to exempt: the Developer from franchising, the City should expect.
to receive an agreement in lieu of franchising that compensates and protects the City in a manner
equivalent to franchising.
It is important to note that at the suggestion of the Cable Commission in which the City
participates, the City has adopted Policies and Procedures Governing Competitive Franchising
dated May 1, 2000 ("Competitive Franchising Policies"). The Competitive Franchising Policies,
Section 3, provides that the City shall require a franchise of any cable company or cable system
providing cable service within the city, "in accordance with state and federal law."
The Competitive Franchising Policies defines a "cable company" generally in accordance with
state law but defines "cable system" and "cable service generally in accordance with federal
law. We are unclear as to why these terms ale defined in this way. However, we conclude that
the Competitive Franchising Policies should be interpreted to permit the City to elect not to
franchise the Developer's network "in accordance with" and as provided in state law, Minnesota
Statutes, Section 238.02, Subd. 2(a).
2. If a Franchise is Required, Must the Franchise Require Service City -wide?
The City will determine whether the Developer's network must be franchised under applicable
law, or whether an exemption discussed above may apply. In the event the City determines that a
franchise is required, any cable franchise issued by the City will include a defined service area.
The Developer has proposed providing service only within the Evermoor Development and does
not plan to serve the entire City. The Developer is concerned that if a franchise is required, the
franchise will require service City -wide.
Federal law confirms that the City may award one or more franchises within its jurisdiction.P
However, the City may not grant an exclusive franchise and may not unreasonably refuse to
award "an additional competitive franchise." In granting cable franchises the City must "assure
that access to cable service is not denied to any group of potential residential cable subscribers
because of the income of the residents of the local area in which'such group resides."u
On its face, federal law does not require the City to issue franchises with equivalent franchise
areas and does not require that cable operators receive identical or even non- discriminatory
zz 47 U.S.C. § 541(aXI).
23 Id.
Zs 47 U.S.C. § 541(a)(3). Ina practice known as "redlining;" cable operators have commonly attempted to extend
facilities and offer service only to high income areas where there may be a higher percentage of cable customers.
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treatment's Rather, federal law prohibits the City from granting franchises that allow low
income residents to go unserved. The City does not allow residents to go unserved based on
income. The City requires the incumbent cable operator to provide service based on the density
of households and not household income. Granting the Developer a franchise that serves less
than the whole .City should not, therefore, run afoul of federal law. '
Minnesota state law, however, contains -what is commonly known as a "level playing field"
requirement concerning regulation of cable service. State law provides that:
No municipality shall grant an additional franchise for cable service for an area included
in an existing franchise on terms and conditions more favorable or less burdensome than
those in the existing franchise pertaining to:(I) the area served (2) public, educational, or
governmental access requirements; or (3) franchise fees: '
There is an unambiguous exception to this "level playing field" requirement. The requirement
does not apply `when the area in which the additional franchise is being sought is not actually
being served by any existing cable communications company holding a franchise for the area. "
Although we have not researched legislative history concerning this requirement, it appears that
the exception is intended to permit issuance of a separate franchise for service to new
developments. Notably, this exception to the' level playing field" requirement ,%U only apply to
the extent that the incumbent is not "serving" the Evirmoor development. The incumbent could
attempt to claim that the development is being served as soon as the incumbent installs facilities
in the development.
LJItimately, the Council would need to determine as a matter of policy whether to use this
exception to permit the Developer to serve only the Evermoor development. Typically, cable
franchises in Minnesota define the service area as all areas within municipal boundaries. A
separate franchise provision requires the extension and provision of service within the
municipality where the density of households or dwelling units exceeds a given threshold. For
example, many franchises require service throughout the municipality to any area where there are
30 or more households per cable mile.
However, many municipalities have issued franchises covering only portions of the municipality.
Typically, this is to - divide large municipalities into individual service territories that may be
served by different companies. For example, Minneapolis originally granted two franchises
covering different parts of the City (although within a few years one company was acquired by
as Section 253 of Telecommunications Act of 1996 (47 U.S.C. § 253) proNides that state and Iocal regulation may
not prohibit any entity fromproviding "telecommunications service" but also preserves state and local authority to
manage the public rights -of -way and require fair and reasonable compensation from "telecommunications
providers" on a "competitivelyneutral and nondiscriminatory basis:" Accordingly, while the 1996 Act confirms and
to some extent limits state and local authority concerning `telecommunications service' and `providers ", the 1996
did not impose any new non- Tacrimination requirements concerning "cable service."
' Minn. Stat. § 238.08, Subd. I(b)
r Id.
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the other). New York, Chicago, Los Angeles and other cites continue to operate under this
model.
It would not be unreasonable for the City to mandate, as.a policy matter, that all cable franchises
require service to parallel service areas; i.e. the entire City. It is -very unlflmly that the Developer
could pursue a claim against the City for unreasonablyrefusing to grant a competitive franchise if
the Developer refused to serve the same area as the incumbent. However, the state statutory
"level playing field" requirement would not mandate that the City refuse the Developer's:. ^
application for a franchise covering only the Evermoor Development.
Of course, the incumbent cable operator could seek to sue the City in the event the Developer
were permitted to serve less than the whole City.' In order to protect against such - a:-suit, we
recommend obtaining clear indemnification from the Developer.
CONCLUSION
There are several approaches that would permit the Developer to legally provide "cable service"
within the Evermoor development only. The Developer may present policy arguments that
would support a City decision to allow the provision of service by the Developer only within the
development. Similarly, the incumbent cable operator may present policy arguments against
such a decision.
The City must determine as a matter of policy whether introduction of the Developer's services
would serve the interests of the City and community. Staff can proceed with development of
appropriate planstproposals after such decision.
28 The Minnesota Court of Appeals has held that the incumbent cable operator will not have standing to pursue a suit
for improper grant of a competitive franchise because the state cable laws are intended to promote competition and
mere potential economic injury is insufficient. However, the Court indicated that an allegation that a City has
violated the "level playing field" requirements may be sufficient to confer standing. Q Re DTG_ 590 N.W2d 644,
647-8 (Mn.Ct.App.1999).
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Relevant Statutory Provisions
47 U.S.C. § 541. General franchise requirements
(a) Authority to . award franchises; public Frights -of -way and easements; equal access to service;
time for provision of service; assurances
(1) A franchising authority may award, in accordance with the provisions of this
subchapter, 1 or more franchises within its jurisdiction; except that a franchising
authority may not grant an exclusive franchise and may not unreasonably refuse to
award an additional competitive franchise. Any applicant whose application for a
second franchise has been denied by a final decision of the franchising authority may
appeal such final decision pursuant to the provisions of section 555 of this title for
failure to comply with this subsection..
(2) Any franchise shall be construed to authorize the construction of a cable system over
public rights -of -way, and through easements, which is within the area to be served by
the cable system and which have been dedicated for compatible uses, except that in
using such easements the cable operator shall ensure -
(A) that the safety, functioning, and appearance of the property and the
convenience and safety of other persons not be adversely affected by the
installation or construction of facilities necessary for a cable system;
(B) that the cost of the installation, construction, operation, or removal of such
facilities be borne by the cable operator or subscriber, or a combination of
both; and
(C) that the owner of the property be justly compensated by the cable operator for
any damages caused by the installation, construction, operation, or removal of
such facilities by the cable operator.
(3) In awarding a franchise or franchises, a franchising authority shall assure that access
to cable service is not denied to any group of potential residential cable subscribers
because of the income of the residents of the local area in which such group resides.
(4) In awarding a franchise, the franchising authority -
(A) shall allow. the applicant's cable system a reasonable
.period of time to become
capable of providing cable service to all households in the franchise area;
(B) may require adequate assurance that the cable operator wM provide adequate
public, educational, and governmental access channel capacity, facilities, or
financial support; and
(c) may require adequate assurance that the cable operator has the financial,
technical, or legal qualifications to provide cable service.
(b) No cable service without franchise; exception under prior law
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(1) Except to the extent provided in paragraph (2) and subsection (f) of this section, a
cable operator may not provide cable service without a franchise.
(2) Paragraph (1) shall not require any person lawfully providing cable service without a
franchise on July 1, 1984, to obtain a franchise unless the franchising authority so
requires.
(3) (A) If a cable operator - or - affiliate thereof is engaged in the provision: of _
telecommunications services -
(i) such cable operator or affiliate shall not be required to obtain a
franchise under this subchapter for the provision of
telecommunications services; and
(ii) the provisions of this subchapter shall not apply to such cablavperator
or affiliate for the provision of telecommunications services.
(B) A franchising authority may not impose any requirement under this subchapter
that has the purpose or effect of prohibiting, limiting, restricting, or conditioning
the provision of a telecommunications service by a cable operator or an affiliate
thereof.
(C) A franchising authority may not order a cable operator or affiliate thereof -
0) to discontinue the provision of a telecommunications service, or
(ii) to discontinue the operation of a cable system, to the extent such cable
system is used for the provision of a telecommunications service, by
reason of the failure of such cable operator or affiliate thereof to obtain a
franchise or franchise renewal under this subchapter with respect to the
provision of such telecommunications service.
(D) Except as othemise permitted by sections 531 and 532 of this title, a franchising
authority may not require a cable operator to provide any telecommunications
service or facilities, other than institutional networks, as a condition of the initial
grant of a franchise, a franchise renewal, or a transfer of a franchise.
(c) Status of cable system as common carrier or utility. Any cable system shall not be subject to
regulation as a common carrier or utility by mason of providing any cable service.
(d) Informational tariffs; regulation by States; "State" defined_
(1) A State or the Commission may require the filing of informational tariffs for any
intrastate communications service provided by a cable system, other than cable
service, that would be subject to regulation by the Commission or any State if offered
by a common carrier subject, in whole or in part, to subchapter lI of this chapter. Such
informational tariffs shall specify the rates, terms, and conditions for the provision of
such service, including whether it is made available to all subscribers generally, and
shall take effect on the date specified therein.
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(2) Nothing in this subchapter shall be construed to affect the authority of any State to
regulate any cable operator to the extent that such operator provides any
communication service other than cable service, whether offered on a common carrier
or private contract basis.
(3) For purposes of this subsection, the term "State" has the meaning given It in section
153 of this title.
(f) Local or municipal authority as multichannel video programming distributor. No provision
of this chapter shall be construed to - _
(1) prohibit a local or municipal authority that is also, or is affiliated with, a franchising
authority from operating as a multichannel video programming distributor in the
franchise area, notwithstanding the granting of one or more franchises by such
franchising authority; or
(2) require such local or municipal authority to secure a franchise to operate as a
multichannel video programming distributor.
47 U.S.C. § 253 (Section 253 of Telecommunications Act of 199
(a) IN GENERAL- No State or local statute or regulation, or other State or local legal
requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide
any interstate or intrastate telecommunications service.
(c) STATE AND LOCAL GOVERNMENT AUTHORITY- Nothing in this section affects the
authority of a State or local government to manage the public rights -of -way or to require fair
and reasonable compensation from telecommunications providers, on a competitively neutral
and nondiscriminatory basis, for use of public rights -of -way on a nondiscriminatory basis, if
the compensation required is publicly disclosed by such government
Blinn. Stat. § 238.08
Subd. 1. Franchise; conditions.
(a) A municipality shall require a franchise or extension permit of any cable
communications system providing service within the municipality.
(b) No municipality shall grant an additional franchise for cable service for an area.-
included in an existing franchise on terms and conditions more favorable or less
burdensome than those in the existing franchise pertaining to:(1) the ales served; (2)
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Public, educational, or governmental access requirements; or (3) franchise fees. The
provisions of this paragraph " not apply when the area in which the additional
franchise is being sought is not actually being served by any existing cable
communications company holding a franchise for the area. Nothing in this paragraph.
prevents a municipality from imposing additional terms and conditions on any additional
franchises.
Subd. 2. Other requirements. Nothing in this chapter shall be construed 'to prevent franchise
requirements in excess of those prescn`W unless such requirement is inconsistent with this
chapter.
Subd. 3. Municipal operation. Nothing in this chapter shall be construed to limit any
municipality from the right to construct, purchase, and operate a cable communications system.
Any municipal system shall be subject to this chapter to the same extent as would any nonpublic
cable communications system.
Subd. 4. Fee, tax, or charge. Nothing in this chapter shall be construed to limit the power of any
municipality to impose upon any cable communications company a fee, tax or charge.
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