PURPOSE:

The purpose of this report is to request City Council authorization for staff to commence the renewal process of its cable television franchise agreement with Charter Communications. 

BACKGROUND:

On December 6, 2002, Charter Communications (�Charter�), a cable operator, requested the City commence the renewal process of its cable television franchise agreement.  The current franchise agreement, which was originally granted on October 17, 1995, expires on October 17, 2005. Pursuant to federal law, the cable operator may formally request the commencement of renewal proceedings within 36 months prior to the expiration of the franchise.  The City�s authority to grant cable television franchises is regulated by the Cable Communications Policy Act of 1984, as amended by the Cable Television Consumer Protection and Competition Act of 1992 and by the Telecommunications Act of 1996 (the �Cable Act�).

The City must �commence� the renewal process within six months of Charter�s request (by June 6, 2003).  The City Council may �commence� the renewal process by authorizing the retention of any necessary experts, and providing notice to Charter.  There is no deadline as to when franchise renewal proceedings must be completed. 

ANALYSIS:

Under the Cable Act, the City may use one or all of the following four criteria to determine whether to renew a franchise.  The City may deny a renewal proposal only if it makes one or more adverse findings with respect to one or more of these four criteria:

1.                  Has Charter �substantially complied� with the material terms of the existing franchise and applicable law?

2.                  Has Charter�s quality of service, including signal quality, response to consumers� complaints and billing practices been reasonable in light of community needs?

3.                  Does Charter have the financial, legal and technical ability to provide the services, equipment and facilities offered in its proposal?  And;

4.                  Is Charter�s proposal reasonable to meet future cable-related interests and needs of the community considering the cost of meeting those interests and needs.  The City is required to consider the community�s need for certain services, and the costs of providing such services, facilities and equipment.

Staff seeks Council�s approval to initiate the process for gathering relevant data under the four criteria.  Once such data has been compiled, staff will return to the Council for determination as to whether Charter�s cable franchise should be renewed.

In the past, the City has conducted cable television franchise renewal and other cable television negotiations jointly with the City of Glendale and anticipates working cooperatively with Glendale on this renewal negotiation.  This allows the cities to pool staff resources and split the costs of the necessary consultants.

At this time, staff recommends that the City retain appropriate outside legal counsel.  William Marticorena of Rutan & Tucker, LLP has in the past assisted the City in providing legal counsel in this highly specialized area of telecommunications law and it is recommended that Mr. Marticorena be engaged to assist in Charter�s franchise renewal process.  For reference, the City of Glendale has retained Mr. Marticorena for the renewal negotiations.  The estimated fee for Mr. Marticorena�s services for the City of Burbank is $25,000.

The City is also evaluating retaining additional experts to perform the following services:

1.  Evaluate Charter�s compliance with current franchise requirements.

2.  Conduct a community needs and interests assessment.

3.  Conduct a technical audit including possibly a review of Charter�s physical plant.

4.   Conduct a financial qualifications audit.

FISCAL IMPACT:

At this time, staff is requesting that the City Council authorize an appropriation of $25,000 from the Fiscal Year 2002-2003 unappropriated fund balance to cover estimated legal fees for telecommunications legal counsel, William Marticorena of Rutan & Tucker, LLP.  Staff also requests an additional appropriation of $60,000 from the Fiscal Year 2002-2003 unappropriated fund balance to hire consultants to perform the other services necessary in the renewal negotiations.  Such costs have been reimbursed by the cable operator in past procedures and are expected to be reimbursed by Charter should the Council ultimately grant renewal at the end of the franchise renewal proceedings.

RECOMMENDATION:

It is respectfully recommended that the Council direct staff to commence cable franchise renewal proceedings with Charter Communications.  In furtherance of such renewal proceedings and to assist in the renewal process, staff requests approval of an agreement for telecommunications legal counsel with Mr. Marticorena of Rutan & Tucker, LLP in the amount of $25,000 and the appropriation of $60,000 for additional services related to the renewal negotiations.  Both of these appropriations would be funded through the Fiscal Year 2002-2003 unappropriated fund balance.

go to the top