Charter: What the city can & can not regulate.

Here is a note from Gary Neumann:

Mayor and Council,

In the last week or so a couple of you have asked questions on what Cities can and cannot regulate with regards to cable franchises.  I have attached some information including a couple of pages from the powerpoint reviewed at a COW meeting by Brian Grogan our consultant attorney on cable matters.  Brian is a recognized expert on cable franchises and has many municipal clients in Minnesota and other states (Terry always finds great resources for the City as you all know).

In Brian’s powerpoint pages (attached) it references that cities cannot regulate what most people are concerned about, the rates and charges for the services and equipment or programming content.  In addition the City only has authority to franchise for cable services, not internet or phone.  Cities can regulate the use of the right-of-way, the public access channels, and how the company responds to complaints.  And as you all know well by now, the City franchise with Charter or any past cable companies is required by law to be a “non-exclusive” franchise.  We can issue a franchise to other cable competitors under similar terms and conditions, but competitors to date have not come forward.  We have talked to several companies that had some interest in a second franchise in Rochester over the years, but those have not come to fruition.

There is one item for which cable rates are regulated in Rochester and that relates to “basic” cable service and equipment for “basic”cable service, the lowest tier available in Rochester.  That is an item that we often don’t reference as the City itself has not had a role in regulating those rates. There is a rate benchmarking and  cost analysis process established by the Federal Communications Commission for basic service rates.  It is a very complicated process and it is managed and overseen by the FCC.    I have asked Brian to provide information, which is attached that explains the regulation of “basic” cable service rates.  In short form Charter provides detailed financial data as required by the FCC for “basic” cable services in some cities to document how their basic service costs compare to the FCC benchmark rates.  Charter has been at or below the rates for basic service and basic equipment allowed under the  FCC benchmark process.  Charter provides the City with a copy of their filings to the FCC for the basic service rates and this office and Finance review those on a very cursory basis only as  the level of detail is such that other than catching a math error there is no way the City staff could understand or determine the accuracy of the information.  That is best left to the FCC to review.

There are a number of items relating to the cable franchise that have arisen in recent weeks.  As you are aware the City submitted a proposed franchise agreement to Charter some months ago.  A recent response from Charter was a completely re-written franchise document that it will not be feasible to negotiate or approve prior to the expiration of the franchise later this month.  At the 9/15/14 Council meeting staff will be recommending that the City approve an extension of the existing franchise to December 31, 2014.  There are also other matters that we need to discuss with you relating to the cable franchise, including a request received recently to consent to a transfer of the franchise to a new entity, resulting from a transaction between Comcast/Time Warner/Charter that will change management and ownership of many franchises in Minnesota.  Charter will continue to own the franchise in Rochester.  Staff has scheduled Brian Grogan to be at the 9/15/14 COW meeting to discuss several cable franchise matters with the Mayor and Council.

Any questions or concerns please feel free to give me a call.

Gary

Here is a link to that .ppt

https://drive.google.com/file/d/0BxMKqsc4J7x0eWZyckhqSzEzQjJfMWRzSGktd0JMbW1UeVJV/edit?usp=sharing

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