Chapter 14.08
SPECIAL RULES APPLICABLE TO CABLE SYSTEMS
Sections:
14.08.010 Applications – Generally.
14.08.020 Application for an initial franchise or renewal franchise.
14.08.030 Application for renewal franchise filed pursuant to 47 U.S.C. Section 546.
14.08.040 Application for transfer.
14.08.050 Legal qualifications.
14.08.080 Minimum franchise conditions.
14.08.090 Rate regulation and consumer protection.
14.08.010 Applications – Generally.
A. Application Required. An application must be filed for an initial and renewal cable system franchise, or for approval of a transfer. A request for renewal filed under 47 U.S.C. Section 546(h) need not contain the information required by subsection (B)(1) of this section.
B. Application Contents.
1. The city manager may specify the information that must be provided in connection with an application and the form in which the information is to be provided. At a minimum each application must identify the applicant; show that the applicant is financially, technically and legally qualified to construct, maintain and operate the cable system; contain a pro forma showing capital expenditures and expected income and expenses for the first five years the applicant is to hold the franchise; and show that the applicant is willing to comply unconditionally with its franchise obligations. In addition, any application for an initial or renewal franchise or rebuild of the operator’s system and/or facilities must describe in detail the cable system that the applicant proposes to build, show where it will be located, set out the system construction schedule, and show that the applicant will provide adequate channels, facilities and other support for public, educational and government use (including institutional network use) of the cable system. The detailed description of the physical facilities proposed shall include at least the following:
a. A description of the channel capacity, technical design, performance characteristics, headend, access (and institutional network) facilities and equipment;
b. The location of proposed facility and facility design, including a description of the miles of plant to be installed, and a description of the size of equipment cabinets, shielding and electronics that will be installed along the plant route, the power sources that will be used and a description of the noise, exhaust and pollutants, if any, that will be generated by the operation of the same; provided, however, that, if some of the descriptive data is not available at the time of application, the franchise may be issued subject to conditions that the data be filed and approved by the city before construction begins and that the franchise will be deemed to be forfeited if the data is not supplied and approved; provided further, that the foregoing proviso does not authorize the granting of a franchise where there is not sufficient information to appraise the impact of the applicant’s proposal;
c. A map of the general route the facility will follow; a designation of the portions of the system that will be placed above ground and the portions that will be placed underground, and the construction techniques that the operator proposes to use in installing the system above ground and underground; a schedule for construction of the facility, describing when and where construction will begin, how it will proceed, benchmarks indicating the schedule of completion of portions of the system and when construction will be completed; and the expected effect on right-of-way usage, including information on the ability of the public rights-of-way to accommodate the proposed system, including, as appropriate given the system proposed, an estimate of the availability of space in conduits and an estimate of the cost of any necessary rearrangement of existing facilities;
d. A description, where appropriate, of how services will be converted from existing facilities to new facilities, and what will be done with existing facilities;
e. A demonstration of how the applicant will reasonably meet the future cable-related needs and interests of the community, including descriptions of the capacity, facilities and support for public, educational, and governmental use of the system (including institutional networks) the applicant proposes to provide and why the applicant believes that the proposal is adequate to meet the future cable-related needs and interests of the community. A demonstration of the financial qualifications of the applicant, including at least the following:
i. The proposed rate structure, including projected charges for each service tier, installation, converters, and all other proposed equipment or services;
ii. A statement regarding the applicant’s financial ability to complete the construction to meet the time frame proposed and to operate the cable system proposed, certified by the applicant’s chief financial officer;
f. A demonstration of the applicant’s technical ability to construct and/or operate the proposed cable system;
g. A demonstration that the applicant is legally qualified, which proof must include a demonstration that the applicant:
i. Has received, or is in a position to receive, necessary authorizations from state and federal authorities;
ii. Has not engaged in conduct (fraud, racketeering, violation of antitrust laws, consumer protection laws, or similar laws) that allows the city to conclude the applicant cannot be relied upon to comply with requirements of the franchise, or provisions of this title;
iii. Is willing to enter into a franchise, to pay required compensation and to abide by the provisions of applicable law, including those relating to the construction, operation or repair of its facilities; and has not entered into any agreement that would prevent it from doing so; and
iv. The applicant must not have submitted an application for an initial or renewal franchise to the city, which was denied on the ground that the applicant failed to propose a cable system meeting the cable-related needs and interests of the community, or as to which any challenges to such franchising decision were finally resolved (including any appeals) adversely to the applicant, within three years preceding the submission of the application;
h. An applicant may show that it would be inappropriate to deny it a franchise by virtue of: (a) the particular circumstances surrounding the acts or omissions at issue; (b) the steps taken by the applicant to cure all harms flowing therefrom and to prevent their recurrence; and the lack of involvement of the applicant’s principals, or (c) the remoteness of the acts or omissions from the operation of communications systems;
i. To the extent that the applicant is in any respect relying on the financial or technical resources of another person, including another affiliate, proofs should be provided for that person;
j. A description of the applicant’s prior experience in cable system ownership, construction, and operation, and identification of cities and counties in California in which the applicant or any of its principals have a cable franchise or any interest therein; provided, that an applicant that holds a franchise for the city and is seeking renewal of that franchise need only provide this information for other cities and counties in California where its franchise is scheduled to expire during the 12-month period prior to the date its application is submitted to the city and for other cities and counties in California where its franchise is scheduled to expire during the 12-month period after the date its application is submitted to the city. If an applicant has no other franchise in California, it shall provide the information for its operations in other states;
k. An affidavit or declaration of the applicant or authorized officer thereof certifying the truth and accuracy of the information in the application, and certifying that the application meets all requirements of applicable law.
2. To be accepted for filing, an original and six copies of a complete application must be submitted. All applications shall include the names and addresses of persons authorized to act on behalf of the applicant with respect to the application.
3. An applicant (and the transferor and transferee, in the case of a transfer) shall respond to any request for information from the city by the time specified by the city.
C. Incomplete Applications. An application may be rejected if it is incomplete, or if the response to requests for information is not timely and complete. (Ord. 04-646 § 1 (2.1)).
14.08.020 Application for an initial franchise or renewal franchise.
A. Scope. This section establishes additional provisions that apply to an application for an initial franchise or a renewal franchise application that is not governed by 47 U.S.C. Section 546(a) through (h).
B. Process. Any person may apply for an initial or renewal franchise by submitting an application therefor on that person’s own initiative, or in response to a request for proposals issued by the city. If the city receives an unsolicited application, it may choose to issue a request for additional proposals, and require the applicant to amend its proposal to respond thereto. The city shall promptly conduct such investigations as are necessary to act on an application.
C. Consideration of Application. In determining whether to grant a franchise, the city may consider:
1. The extent to which an applicant for renewal has substantially complied with the applicable law and the material terms of any existing cable franchise;
2. Whether an applicant’s quality of service under its existing franchise, including signal quality, response to customer complaints, billing practices, and the like has been reasonable in light of the needs of the community;
3. Where the applicant has not previously held a cable system franchise in the city, whether the applicant’s record in other communities indicates that it can be relied upon to provide high-quality service throughout any franchise term;
4. Whether the applicant has the financial, legal, and technical ability to provide the services, facilities, and equipment set forth in an application, and to satisfy any minimum requirements established by the city;
5. Whether the applicant’s application is reasonable to meet the future cable-related needs and interests of the city, taking into account the cost of meeting such needs and interests;
6. Whether issuance of a franchise is in the public interest considering the immediate and future effect on streets, public property, and private property that will be used by the applicant’s cable system;
7. Whether issuance of the franchise would reduce competition in the provision of cable service in the city;
8. Such other matters as the city is authorized or required to consider.
D. Issuance of Franchise. If the city determines that issuance of a franchise would be in the public interest considering the factors described above, it may offer a franchise agreement to the applicant. No franchise shall become effective until the franchise is unconditionally accepted by the applicant, approved by the Fortuna city council, and the franchise agreement is signed by both parties. (Ord. 04-646 § 1 (2.2).
14.08.030 Application for renewal franchise filed pursuant to 47 U.S.C. Section 546.
A. Scope. This section establishes additional provisions that apply to applications for renewal governed by 47 U.S.C. Section 546(a) through (g).
B. Process. A franchisee which intends to exercise rights under 47 U.S.C. Section 546(a) through (g) shall submit a notice in writing to the city in a timely manner clearly stating that it is activating the procedures set forth in those sections. The city shall thereafter commence any proceedings that may be required under federal law, and upon completion of those proceedings, the city may issue a request for proposals and an application may be submitted for renewal. The city may preliminarily deny the application by resolution, and if the application is preliminarily denied, the city may conduct such proceedings and by resolution establish such procedures and appoint such individuals as may be necessary to conduct any proceedings to review the application. (Ord. 04-646 § 1 (2.3)).
14.08.040 Application for transfer.
A. Scope. This section establishes additional provisions that apply to applications for transfer approval.
B. Information. An application for transfer must contain all the information required by the city manager, by FMC 14.08.010, and all information required by any FCC transfer form.
C. Consideration of Application. In determining whether a transfer application should be granted, denied, or granted subject to conditions, the city may consider the legal, financial, and technical qualifications of the transferee to operate the cable system; any potential impact of the transfer on subscriber rates or services; whether the incumbent cable operator is in compliance with its franchise; whether the transferee owns or controls any other cable system in the city, whether operation by the transferee may eliminate or reduce competition in the delivery of cable service in the city; and whether operation by the transferee or approval of the transfer would otherwise adversely affect subscribers, the public, or the city’s interest under this title, the franchise, or other applicable law. The proposed transferee shall pay all reasonable costs incurred by the city in reviewing and evaluating the applications.
D. Minimum Conditions. In order to obtain approval of a transfer, an applicant must show, at a minimum, that: the transferee is qualified; the transfer will not adversely affect the interests of subscribers, the public, or the city; and that non-compliance issues have been resolved. No application shall be granted unless the transferee agrees in writing that it will abide by and accept all terms of this title and the franchise, and that it will assume the obligations, liabilities, and responsibility for all acts and omissions, known and unknown, of the previous franchisee for all purposes. (Ord. 04-646 § 1 (2.4)).
14.08.050 Legal qualifications.
A. Standards.
1. The applicant must be willing to comply with the provisions of this title and applicable laws; and to comply with such requirements of a franchise as the city may lawfully require.
2. The applicant must not have had any cable system or OVS franchise validly revoked (including any appeals) by the city within three years preceding the submission of the application.
3. The applicant must not have had an application to the city for an initial or renewal cable system franchise denied on the ground that the applicant failed to propose a cable system meeting the cable-related needs and interests of the community, or as to which any challenges to such franchising decision were finally resolved (including any appeals) adversely to the applicant, within three years preceding the submission of the application; and must not have had an application for an initial or renewal OVS franchise denied on any ground within three years of the application.
4. The applicant shall not be issued a franchise if, at any time during the 10 years preceding the submission of the application, the applicant was convicted of fraud, racketeering, anticompetitive actions, unfair trade practices or other conduct of such character that the applicant cannot be relied upon to deal truthfully with the city and the subscribers, or to substantially comply with its obligations.
5. The applicant must have the necessary authority under California and federal law to operate a cable system, or show that it is in a position to obtain that authority.
6. The applicant shall not be issued a franchise if it files materially misleading information in its application or intentionally withholds information that the applicant lawfully is required to provide.
7. For the purposes of subsections (A)(2) through (4) of this section, the term applicant includes any affiliate of applicant.
B. Exception. Notwithstanding subsection (A) of this section, an applicant shall be provided a reasonable opportunity to show that a franchise should be issued even if the requirements of subsections (A)(3) and (4) of this section are not satisfied, by virtue of the circumstances surrounding the matter and the steps taken by the applicant to cure all harms flowing therefrom and prevent their recurrence, the lack of involvement of the applicant’s principals, or the remoteness of the matter from the operation of a cable system. (Ord. 04-646 § 1 (2.5)).
14.08.060 Franchise fee.
A cable operator shall pay to the city a franchise fee in an amount equal to five percent of gross revenues, or such other amount as may be specified in the franchise; provided, however, that if the franchise specifies an amount, that amount shall be subject to increase should federal limits on fee payments be eliminated or changed and other cable operators are subject to a higher fee.
A. “Bundled services.” In the event that the franchisee shall, during the term of the franchise, offer bundled, tied, or combined cable services (which are subject to the franchise fee) with non-cable services (which may not be subject to the franchise fee) to individual subscribers, the combined revenues from such bundled services shall be allocated consistent with the rates or prices advertised by the franchisee through its marketing materials or on its published rate card. In the event the franchisee does not advertise or publish separate prices for the combined services, the percentage that the price for the combined services is discounted from the regular retail rates of the individual services shall be pro-rated across all the services in the bundled package; provided, however, that the net revenues derived from services subject to mandatory tariff rates imposed by the California Public Utilities Commission (or other governmental entity having such authority) shall be deducted from the combined revenue to determine the revenue subject to the franchise fee. As an example, the franchisee may offer a “bundle” of video, voice and data services for a flat fee of $75.00 where the retail rate for the services purchased on an individual basis would equal $100.00. Assuming that there is no service subject to the mandated tariff rate, grantee would apply a 25 percent discount to each service. Thus, if the retail rate for the cable service in the bundle were $50.00, the grantee would recognize cable service revenue in the amount of $37.50 and pay a franchise fee on that revenue.
B. The definition of “gross revenue” is to be as inclusive as possible consistent with existing applicable law. If a change in federal law occurs subsequent to the effective date of the ordinance codified in this title, such change shall not impact the gross revenues definition in such a way to reduce gross revenues, unless the change specifically preempts the affected portion of the definition above. (Ord. 04-646 § 1 (2.6)).
14.08.070 No exclusivity.
A franchisee may not require a subscriber or a building owner or manager to enter into an exclusive contract as a condition of providing or continuing service. However, nothing herein prevents a franchisee from entering into an otherwise lawful, mutually desired exclusive arrangement with a building owner or manager of a multiple dwelling unit or commercial subscriber. (Ord. 04-646 § 1 (2.7)).
14.08.080 Minimum franchise conditions.
In addition to satisfying such additional or stricter conditions as the city finds necessary based on its investigations, the following elements shall be required in every franchise serving more than 1,000 subscribers; an operator who provides service in an area which is defined as “isolated rural” may be exempted from the minimum franchise requirements for that area.
A. System Design. Each franchisee shall provide a cable system which uses at least 750 MHz equipment of high quality and reliability. Each franchisee shall install and activate the return portion of the cable system in the sub-low frequency spectrum of five MHz to 30 MHz.
B. Public, Educational and Government Use of the System.
1. A franchisee shall provide a minimum of three channels for PEG access to each subscriber.
2. Each franchisee shall install, maintain, and replace as necessary, a dedicated, bi-directional fiber optic link between its headend and a location designated by the city as the primary access center.
3. Each franchisee shall install, maintain, and replace activated two-way cable plant and all headend, cable plant, and node equipment required to make it operable so that the city, schools, and all designated PEG access centers and access facilities located within the franchise area will be able to send and receive signals (video, audio, and data) using the activated two-way cable plant.
4. Each franchisee shall ensure that technically adequate signal quality, routing systems, and switching and/or processing equipment are initially and continuously provided for all access interconnections both within franchisee’s cable system and with other cable systems throughout the duration of its franchise.
5. In the event a franchisee makes any change in the cable system and related equipment and facilities or in the franchisee’s signal delivery technology which, directly or indirectly, substantially affects the signal quality or transmission of access programming, the franchisee shall at its expense take necessary steps or provide necessary technical assistance, including the acquisition of all necessary equipment, to ensure that the capabilities of access programmers are not diminished or adversely affected by such change.
6. A franchisee shall maintain all access channels (both upstream channels and downstream channels) and all interconnections of access channels at the same level of technical quality and reliability as the best commercial channels carried on the grantee’s system.
C. Service to Franchise Area. It is the policy of the city to ensure that every cable system provide service in its franchise area upon request to any person or any government building. Each franchisee shall extend service upon request within its franchise area; provided, that a franchise may permit a franchisee to require a potential subscriber to contribute a fair share of the capital costs of installation or extension as a condition of extension or installation in cases where such extension or installation may be unduly expensive. Service must be provided within time limits specified in subsection (D) of this section.
D. Time for Extension. Except as a franchise otherwise provides, service must be extended upon request to any person or to any government building in a franchisee’s franchise area (1) within seven days of the request, where service can be provided by activating or installing a drop; (2) within 90 days of the request where an extension of one-half mile or less is required; or (3) within six months where an extension of one-half mile or more is required. Notwithstanding the foregoing, the franchisee shall not be deemed to be in violation of this section in the event the franchisee uses reasonable efforts to complete the extension in a timely manner but weather or other circumstances beyond the reasonable control of the franchisee prevent such timely completion.
E. Technical Standards. A cable system within the city shall meet or exceed the technical standards set forth in 47 C.F.R. Section 76.601 and any other applicable technical standards.
F. Testing. Each cable operator shall perform at its expense such tests as may be necessary to show whether or not the franchisee is in compliance with its obligations under applicable FCC standards, this title or a franchise.
G. Interconnection. Upon request of the city, every cable system shall be required to interconnect with every other cable system within the city, or adjacent to the city, on fair and reasonable terms for purposes of providing PEG and I-Net services.
H. Continuity of Service. Each franchisee shall, during the term of the franchise, ensure that subscribers are able to receive continuous service. In the event the franchise is revoked or terminated, the franchisee may be required to continue to provide service for a reasonable period to assure an orderly transition of service from the franchisee to another entity. A franchise may establish more particular requirements under which these obligations will be satisfied. (Ord. 04-646 § 1 (2.8)).
14.08.090 Rate regulation and consumer protection.
A. All Rates Subject to Regulation. The city may regulate any of the cable operator’s rates and charges, except to the extent it is prohibited from doing so by law. The city will regulate rates in accordance with FCC rules and regulations, where applicable. Except to the extent FCC rules provide otherwise, all rates and charges that are subject to regulation, and changes in those rates or charges must be approved in advance. The city manager may take any required steps to file complaints, toll rates, issue accounting orders or take any other steps required to comply with FCC regulations. The city council shall be responsible for issuing rate orders that establish rates or order refunds.
B. No Rate Discrimination. Except to the extent the city may not enforce such a requirement, a cable operator is prohibited from discriminating in its rates or charges or from granting undue preferences to any subscriber, potential subscriber, or group of subscribers or potential subscribers; provided, however, that a franchisee may offer temporary, bona fide promotional discounts in order to attract or maintain subscribers, so long as such discounts are offered on a nondiscriminatory basis to similar classes of subscribers throughout the franchise area; and a franchisee may offer discounts for the elderly, the disabled, or the economically disadvantaged and such other discounts as it is expressly entitled to provide under federal law, if such discounts are applied in a uniform and consistent manner.
C. Redlining Prohibited. A cable operator shall not deny access or charge different rates to any group of subscribers or potential subscribers because of the income of the residents of the local area in which such group resides.
D. Customer Service.
1. Each cable operator must satisfy FCC, state and the city cable customer service standards (see Appendix A) or consumer protection standards. The city cable customer service standards may be adopted by resolution. In the case of a conflict among standards, the stricter standard shall apply.
2. For violation of cable customer service standards, penalties will be imposed as follows:
a. Two hundred dollars for each day of each material breach, not to exceed $600.00 for each occurrence of the material breach.
b. If there is a subsequent material breach of the same provision within 12 months, $400.00 for each day of each material breach, not to exceed $1,200 for each occurrence of the material breach.
c. If there is a third or additional material breach of the same provision within 12 months of the first, $1,000 for each day of each material breach, not to exceed $3,000 for each occurrence of the material breach.
3. Any penalty assessed under this section will be reduced dollar for dollar to the extent any liquidated damage provision of a franchise imposes a monetary obligation on a franchisee for the same customer service failures, and no other monetary damages may be assessed. The city will provide notice, and impose penalties, under this section pursuant to the procedures established by California Government Code Section 53088.2(r). (Ord. 04-646 § 1 (2.9)).