City Council
MEETING DATE: 3/11/2015
TITLE:
Title
Digital Infrastructure & Video Competition Act of 2006 ("DIVCA")
End
FROM:
Tami E. Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
Receive presentation and direct staff to update the City's ordinance reflecting the changes in State Law related to DIVCA
Body
BACKGROUND:
Chapter 5.11 of the City's Municipal Code has historically governed how cable service providers provide services in Cathedral City. Up until 2006, the City was the sole local franchising authority for those companies wishing to provide cable services using Cathedral City rights-of-way. With the passage of AB2987 and the signing of the Digital Infrastructure and Video Competition Act of 2005 ("DIVCA") into law in September 2006, new cable / video service providers obtained a franchise to provide video services in a local jurisdiction from the State of California. Upon expiration or termination of local franchising agreements, cable providers incorporate their service area into their State Franchise License. Time Warner Cable has provided cable and video services in Cathedral City under a local franchise agreement that expired on December 21, 2014. On January 2, 2015 they applied to amend their state franchise to include Cathedral City. Based on the above information, the City's ordinance, Title 5, needs to be amended and chapter 5.11 repealed and a new Chapter 5.11 adopted to be compliant with state law.
DISCUSSION:
In September 2006, the Governor signed DIVCA into law. The Act changed the authority to issue cable franchises from local municipalities to the California Public Utilities Commission (PUC). The goal of DIVCA was to create a fair market place that does not advantage or disadvantage one service provider or technology over another; promote widespread access to the most technologically advanced cable and video services to all communities in a nondiscriminatory manner; protect local government revenues (continued 5% Franchise Fees) and control of public rights-of-way; require providers to comply with all applicable consumer protection laws (Cal. Govt. Code Sections 53055, 53055.1, 53055.2, 53088.2; FCC 47 C.F.R. 76.309, 76,1602, 76.1603,76.1619; and Cal. Penal Code 637.5); continue to provide access and maintenance of Public, Education and Government (PEG) channels (additional 1% PEG Fee); and maintain all existing authority of the Commission as established by State and Federal Statutes.
New entrants (Cable Service Providers) are required to obtain a state franchise agreement, while incumbents holding local franchise agreements would continue to provide services under the terms of the local agreement until the agreement expires, which occurred with Time Warner.
Time Warner currently holds a State Cable Franchise License. Upon the expiration of its franchise agreement with Cathedral City, which was December 21, 2014, Time Warner applied for an amendment to its State Franchise License to include Cathedral City into its service area. The term of a state issued franchise is 10 years. Renewals, terminations and transfer in ownership are handled by the PUC. Franchise fees and PEG fees are paid directly to the local municipality. All PEG fees are designated for capital expenses related to equipment for PEG broadcasting.
The PUC's role is to accept and approve franchise applications, enforce antidiscrimination, determine and monitor build out rules, prevent the use of stand-alone, residential, primary line, basic phone service revenues from being used to pay for deployment of video infrastructure and to handle complaints brought forth by local governments regarding discrimination or build-out. The local municipality's role is to regulate PEG channel requirements, maintain Emergency Alert System requirements, enforce Federal and State customer service and protection standards and manage environmental review with respect to network construction, installation and maintenance of local rights-of-way.
Since the original ordinance was conformed to the franchise agreement with Time Warner, it is appropriate to repeal the original ordinance all together and adopt a new ordinance that appropriately reflects the responsibilities where the PUC dictates rules and regulations refer back to DIVCA. Those areas that continue to be the responsibility of the City to manage would remain as reflected in the original ordinance. A new ordinance would reflects all future franchise agreements are issued by the PUC; reflect the provisions of DIVCA that impact state franchise holders and how their franchise agreements play into the City's ordinance provisions; reassert a franchise fee of 5% of gross revenues, existing on the books and in compliance with DIVCA provisions; establish a PEG Fee of 1% of gross revenues in accordance with DIVCA provisions; would dictate the circumstances of use of existing City rights-of-way; manage and protect quality service by enforcing standards established at federal and state levels and maintain FCC Emergency Alert requirements.
FISCAL IMPACT:
Ensuring that new service providers recognize the updated city ordinance, and adhere to both DIVCA and City Ordinance regulations will include payment of franchise fees of 5% of gross revenues to the City. This currently amounts to approximately $520,000 annually.
If the Council chooses to enact the PEG fee of 1%, the City could receive an additional $104,000 in capital revenue to maintain or improve broadcasting equipment used for public, education or government broadcasts.
ATTACHMENTS:
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