Iowa Utilities Board_Petition for Amendment of Rule_Mediacom and fyreSTORMMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Petition Iowa Utilities Board for Amendment of Rule
DATE: January 25, 2010
In November 2009, the City received notification of Mediacom's assertion that it had
converted its municipal cable franchise with the City to a state certificate of franchise
authority pursuant to the Iowa State Cable Franchise Law (SF 554) enacted in 2007.
Mediacom claimed to have done this under provisions of SF 554 that allow an
incumbent video provider to convert a municipal franchise to a state franchise when a
competitive provider (fyreSTORM Fiber & Cable) applies for a state franchise. Because
the City never received the required 30 days' notification of intent to provide service as
required by SF 554, and because no competitive video service is currently being offered
in the City, staff believes Mediacom's conversion of the municipal franchise to a state
franchise and the granting of a state franchise to fyreSTORM are contrary to both the
letter and the intent of the state law.
Cable TV Coordinator Craig Nowack recommends City Council approval to file a petition
before the Iowa Utilities Board in an attempt to restore the City's Municipal Cable
Franchise with Mediacom.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Craig Nowack, Cable TV Coordinator
Michael C. Van Milligen
Dubuque
AI lady
2007
THE CITY OF
DUB TE MEMORANDUM
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manager
FROM: Craig Nowack, Cable TV Coordinator ( I -
DATE: January 25, 2010
RE: Petition Iowa Utilities Board for Amendment of Rule
cc: Randy Gehl, Public Information Officer
Barry Lindahl, City Attorney
Tim O'Brien, Assistant City Attorney
Teri Goodmann, Assistant City Manager
Dubuque
kiltri
All- America City
2007
INTRODUCTION
The purpose of this memorandum is to recommend that the City of Dubuque file the attached
petition before the Iowa Utilities Board in an attempt to restore the City's municipal cable
franchise with Mediacom.
BACKGROUND
In November 2009 the City received notification of Mediacom's assertion that it had converted
its municipal cable franchise with the City to a state certificate of franchise authority pursuant to
the Iowa state cable franchise law (SF 554) enacted in 2007. Mediacom claimed to have done
this under provisions of SF 554 that allow an incumbent video provider to convert a municipal
franchise to a state franchise when a competitive provider (fyreSTORM Fiber & Cable) applies
for a state franchise. Because the City never received the required 30 days' notification of intent
to provide service as required by SF 554, and because no competitive video service is currently
being offered in the city, we believe Mediacom's conversion of the municipal franchise to a state
franchise and the granting of a state franchise to fyreSTORM are contrary to both the letter and
the intent of the state law.
Assistant City Attorney Tim O'Brien has drafted the attached petition which seeks to have the
IUB adopt a new rule which would create a remedy for our situation. We are requesting an
amendment to Chapter 199 of Iowa Administrative Code under which the Iowa Utilities Board
(IUB) enforces SF 554 (now Iowa Code chapter 477A). This new rule would give the IUB the
authority to revoke a state franchise if the 30 day notice is not given or if video service is never
offered and to restore our municipal franchise.
RECOMMENDED ACTION
I respectfully recommend that the City of Dubuque file the attached petition in an attempt to
restore our municipal franchise and strengthen the rules by which the state franchise law is
enforced.
1
In re:
STATE OF IOWA DEPARTMENT OF COMMERCE
BEFORE THE IOWA UTILITIES BOARD
Requested Amendment to Rules
Regarding the Issuance of Certificates
of Franchise Authority for Cable and
Video Service
[199 IAC44]
No.
PETITION FOR AMENDMENT OF RULE
AND
REQUEST FOR EXPEDITED CONSIDERATION
Pursuant to Iowa Code § 17A.7 (2009) and 199 IAC 3.3, the City of Dubuque,
Iowa, petitions the Board to amend 199 IAC 44.4. This Petition is prompted by the
issuance of a Certificate of Franchise Authority to Phalanx Technology Holdings, LLC,
d /b /a fyreSTORM Cable & Fiber, Inc., on April 6, 2009 as Certificate No. VC -005, in
Docket No. VCA- 2009 -0004 and the Notice of Service Area Revision granted to MCC
Iowa d /b /a Mediacom on October 8, 2009 in Docket No. VCA- 2008 -0002.
Previously, in Docket No. RMU -07 -5, the Board deferred consideration of rules
regarding the enforcement of the provisions of Chapter 44 to such time as a material
problem arises. This Petition requests that the Board revisit the issue of enforcement in
light of the occurrence of just such a material problem resulting from the issuance of the
Certificate of Franchise Authority and service area revision referred to above. The City
of Dubuque believes that a material violation of Chapter 44 has occurred in that the
Certificate of Franchise Authority and service area revision were issued despite the
failure of the competitive service provider, Phalanx Technology Holdings, LLC, d /b /a
fyreSTORM Cable & Fiber, Inc. to provide Dubuque with the 30 day notice of offering
service as required by subrule 44.4.
Following the service area revision granted to MCC Iowa, LLC, d /b /a Mediacom,
the City of Dubuque was notified by letter dated November 20, 2009 from Mediacom
that Mediacom's municipal franchise with the City of Dubuque had been terminated.
Dubuque's existing 15 -year municipal franchise with Mediacom was approved in May
2005, following two years of negotiations. Compared to a state franchise, it is detailed in
addressing the operation of Mediacom's Dubuque cable system. The franchise
agreement contains many provisions not covered by the Iowa law, such as a 10 percent
senior citizen discount, one free cable drop to local schools and municipal buildings, the
requirement that cable service must be available to all city residents, reasonable
provisions to extend service to newly annexed areas, a broader definition of gross
revenues, requirements for Mediacom to operate two of the public access channels,
annual requirements to upgrade the cable system, and specific penalties and remedies
for violations. The state franchise will most likely mean less revenue to Dubuque from
franchise fees. In Fiscal Year (FY) 2008, the City received $641,711 in franchise fees
from Mediacom. In FY 2009, the amount was $679,800. Preliminary estimates place
the loss in the range of $80,000.00.
FyreSTORM's managing partner has been quoted in the press as saying the
company plans to establish itself in the Cedar Rapids and Iowa City areas before
moving into other areas.
In summary, Dubuque's municipal franchise agreement is threatened, the level of
supervision under the state franchise is minimal, and Dubuque residents have no
realistic or foreseeable competitive options for cable service.
The City believes that the attempted termination of its municipal franchise
constitutes a material problem sufficient to cause the Board to revisit the issue of
enforcement. Specifically, subrule 44.4(2) has been violated in that the competitive
service provider has failed to file a copy of the required 30 day notice with the Board
and subrule 44.4(1) has been violated due to the failure to give the 30 day notice to the
City of Dubuque. In addition, subrule 44.4(3) appears to contemplate some further type
of action by the competitive service provider and /or the Board if market entry is delayed.
No such action has been taken. Furthermore, subrule 44.5 provides that the
incumbent's application be effective on the same day as the competitive service
provider files the 30 day notice required by subrule 44.4. Because no such notice was
given or filed for Dubuque, the application by Mediacom for service area revision was
improvidently granted and should be subject to revocation.
Currently, no rules exist to address this issue and as a result, the City of
Dubuque urges the adoption of an additional subrule 44.4(4) as follows:
If the competitive cable service provider or competitive video service
provider fails to notify a municipality as required pursuant to this subrule or
if market entry is delayed for more than 30 days after the date service was
expected to begin, the Board may revoke the previously issued Certificate
of Franchise Authority with respect to that municipality and revoke any
Certificate of Franchise Authority or service area revision for that same
municipality issued to the incumbent cable provider in that municipality.
Such revocation shall be deemed to place the incumbent cable provider
and the municipality in the same position they were in prior to the issuance
of such Certificate of Franchise Authority or service area revision,
including reinstatement of the franchise agreement previously granted by
the municipality.
This amendment will give the Board the tools to enforce the law and correct a
material problem which is now arisen. We believe it is an appropriate remedy for the
particular situation.
2
The requested amendment merits expedited consideration. At the present time,
it appears that no enforcement action can be taken by the Board to remedy a situation
which is clearly in conflict with Iowa Code Chapter 477A and has left the relationship
between the City of Dubuque and Mediacom with respect to cable service authority in
Dubuque in a state of uncertainty. The City of Dubuque accordingly requests expedited
consideration. The City of Dubuque does not request a rule- making proceeding
pursuant to Iowa Code § 17A.4(2) (2009).
JAO:tls
Respectfully submitted,
City of Dubuque, Iowa
by: James A. O'Brien, Esq.
Assistant City Attorney
Suite 330, Harbor View Place
300 Main Street
Dubuque, IA 52001 -6944
(563) 583 -4113