Mediacom Franchise ExtensionMEMORANDUM
June 5, 2002
TO:
FROM:
SUBJECT:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Mediacom Franchise Extension
Cable Franchise Administrator Merrill Crawford recommends an additional three-month
extension to September 30, 2002, of the existing Mediacom cable franchise agreement
under the same terms as the franchise extension currently in effect, and further
recommends that a public hearing be set for June 17, 2002.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Merrill Crawford, Cable Franchise Administrator
CITY OF DUBUQUE, IOWA
MEMORANDUM
June 5, 2002
MEMO TO: Michael C. Van Milligen, City Manager
FROM: Merrill Crawford, Cable Franchise Administrator
SUBJECT: Mediacom Franchise Extension
INTRODUCTION: The purpose of this memorandum is to recommend that the
City Council grant an additional three-month extension of the existing Mediacom
cable franchise under the same terms as the franchise extension currently in
effect.
BACKGROUND: MCClowa, L.L.C. (Mediacom) became the franchisee
providing cable services within the Dubuque city limits in July, 2001. With the
pending expiration of the franchise (September 30, 2001), the City Council
approved the terms of an agreement extending the franchise term to June 30,
2002, to allow for a detailed ascertainment of the community's future cable-
related needs, and to conduct franchise renewal negotiations in accordance with
requirements of federal law. The temporary extension agreement also
incorporated the extension of a number of related side agreements. At the time
the extension was granted, we anticipated the completion of the ascertainment
and negotiations as early as March, 2002. This estimate was not met, due to a
number of local and nationwide factors:
Future Cable-Related Needs Ascertainment
The City retained the services of CBG Communications, Inc. to conduct the
needs ascertainment. In January and February, Tom Robinson of CBG
Communications and Dr. Connie Book of Elon University, assisted by City staff,
conducted a series of workshops, focus groups, surveys, interviews and firsthand
inspections. They have continued to gather and refine data by telephone and e-
mail, and are forming recommendations supported by this information. They are
in regular contact with our Washington attorneys and with myself regarding
issues and further questions indicated by the research.
The written survey of a random selection of 4000 Dubuque households was
initially delayed because of the unfortunate timing of a major increase in Basic
Cable Service rates, implemented by Mediacom on February 1. As a result, we
extended the return deadline to permit the initial public emotion to dissipate
somewhat, and Dr. Book reports that the skewing effect of the rate increase on
survey responses has been measured and the survey data is able to provide
clear answers to many other questions. An impressive 39% return rate was
realized from these mailed citizen surveys.
Though generally cooperative at the local level, Mediacom has been rather slow
in responding to a series of technical questions posed by CBG Communications.
This is due, in part, to the heavy workload placed upon local engineering staff in
February and March with the bankruptcy of the @Home broadband intemet
service and a number of significant channel changes and system upgrades.
Also, as is typically the case, corporate attorneys and managers have taken time
to review and respond to our questions, and in some cases to decline to offer
answers. As a result, we are still refining and resubmitting clarifying technical
questions to better evaluate the technical design and operating condition of the
Dubuque cable system.
A Change In The Ground Rules re: Cable Broadband Modem Service
An important part of the technical advice being prepared by CBG
Communications involves data-voice-video services under the renewed
franchise, particularly as regards the design of the Institutional Network and the
needs of the community for universally-available competitively priced broadband
networking capabilities.
The old "B-Cable" coaxial cable network is outdated and unreliable, and the
needs to be met by its successor will be a major part of renewal negotiation.
Also, the recent implementation of broadband modem services to residents and
small businesses are an early step in meeting identified community broadband
needs. Unfortunately, in March, the FCC issued a very troublesome declaratory
ruling that cable modem services are not "cable services". Cable operators,
including Mediacom, immediately pressed the issue by discontinuing their
payment of franchise fees based upon the gross revenues from the cable modem
portion of their services. Though not specifically voiced by Mediacom in
Dubuque, some industry representatives are also trumpeting the theory that no
aspect of cable-delivered broadband service is subject to regulation by local
franchise authorities. This further complicates our negotiating position regarding
broadband requirements and consumer protections in a renewed franchise.
The City of Dubuque has joined other cities and national organizations in
appealing the FCC's declaratory ruling and in commenting in the FCC's related
rulemaking process.
Illness
On May 8, I was admitted to Mercy Medical Center for unexpected major
surgery. I returned to work half-days beginning June 3 and will resume a full
schedule June 17.
As a combined result of these developments, it is clear we can not complete the
ascertainment, negotiation, publication and public hearing processes of the
franchise renewal by the June 30 expiration of the franchise extension
agreement.
Multiple franchise extensions are not unusual in a franchise renewal process,
particularly where the franchise authority takes its responsibility seriously and
works to get the best possible result under changing and sometimes unfavorable
federal legal developments. Given the quality and strength of our existing
franchise and side agreements, even after federal preemptions, we do not stand
to lose any significant existing or potential benefits by granting an additional
short-term extension. I am recommending such an extension to September 30,
2002.
Lo.qistics of an Additional Short-Term Franchise Extension
The extending of the franchise for another three months would be accomplished
in the same manner as the first extension, by adoption of an Ordinance
authorizing the City Manager to sign the extension agreement. A public hearing
is required. Attorney Ric EIIrod of the Miller & Van Eaton law firm, is preparing
the form of agreement as he did the previous one, and proposed resolutions
setting the public hearing and approving the agreement are attached. Mediacom
has indicated it would agree to the extension of the franchise and side
agreements on the same terms as the first extension.
RECOMMENDED ACTION: The Recommended Action is that the City Council
adopt the proposed Resolution setting a public hearing for their June 17, 2002
regular meeting, and that the proposed Ordinance be adopted following the
public hearing.
Cc: Pauline Joyce, Administrative Services Manager
Barry Lindahl, Corporation Counsel
Tim O'Brien, Assistant City Attorney
Cable TV Regulatory Commission
Cable Community Teleprogramming Commission
RESOLUTION -02
A RESOLUTION OF THE CITY'S INTENT TO GRANT A SHORT-TERM
EXTENSION OF AN EXISTING CABLE SERVICES FRANCHISE AND AN
EXISTING HUB SITE LEASE TO MCCIOWA EEC.
Whereas, MCCIowa, L.L.C. (Mediacom) is the current holder of a cable services
franchise, embodied in Ordinance No. 42-81, as modified by a series of waivers and side
agreements, and acquired from TCl of Iowa, ln(~. via a transfer approved by the Dubuque
City Council on June 18, 2001; and
Whereas, one of the side agreements is a lease to Mediacom to build and maintain
a network hub on City-owned property located at 1585 West Third Street in Dubuque; and
Whereas, the terms of the franchise and of the lease will expire June 30, 2002; and
Whereas, representatives of the City of Dubuque and of Mediacom have entered
into good faith negotiation of terms and conditions for the renewal of the franchise and the
lease.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. That the City of Dubuque intends to extend the term of the cable services
franchise and the term of the lease to September 30, 2002 under the same terms and
conditions as currently in effect; and
Section 2. That the City Clerk is hereby authorized and directed to cause notices to
be published of the proposed extension in the manner prescribed by law.
Passed, approved and adopted this day.of
,2002
Attest:
Terrance M. Duggan, Mayor
Jeanne Schneider
City Clerk
ORDINANCE NO - 02
AN ORDINANCE EXTENDING THE TERM OF THE EXISTING CABLE
FRANCHISE AGREEMENT AND HUB SITE LEASE OF MCCIOWA, L.L.C. TO
SEPTEMBER 30, 2002.
Whereas, MCClowa, EEC. (Mediaoom) is, the current holder of a cable services
franchise, embodied in Ordinance No. 42-81~ as modified by a series of waivers and
side agreements, and acquired from TCl of Iowa, Inc. via a transfer approved by the
Dubuque City Council on June 18, 2001; and
Whereas, one of the side agreements is a lease to Mediacom to build and
maintain a network hub on City-owned property located at 1585 West Third Street in
Dubuque; and
Whereas, the terms of the franchise and of the lease will expire June 30, 2002;
and
Whereas, representatives of the City of Dqbuque and of Mediacom have entered
into good faith negotiation of terms and conditions for the renewal of the franchise and
the lease.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. The term of the cable services franchise and the term of the lease
are hereby extended to September 30, 2002, with all the rights, privileges and
responsibilities appertaining thereunto; and
Section 2. The City Manager is hereby authorized to sign and administer the
extension agreement on behalf of the City of Dubuque.
Passed, approved and adopted this day of
2002.
Terrance M. Duggan, Mayor
Attest:
Jeanne Schneider, City Clerk