Cable Franchise Renew MCCiowaMEMORANDUM
TO:
February 10, 2004
The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Advancing the Formal Franchise Renewal Process
Franchise renewal negotiations and informal meetings between representatives of the
City of Dubuque and Mediacom have produced a variety of mixed signals, but as yet, no
real progress. While willing to continue talks, Mediacom's offers have not advanced
much beyond the initial "low-ball" stage. Promised financial and technical detail have
been meager, such that even if their network engineering designs for system expansion
and an Institutional Network should contain opportunities to address the community's
needs, City staff can't detect them in the sparse data provided. It appears that
Mediacom wants to remain in Dubuque, but believes they will be able to renew their
lucrative franchise for another ten or fifteen years without needing to address some of
the community's most important cable-related needs.
Federal law provides for a specific formal franchise renewal process that can be
employed at the discretion of either the local franchise authority or the cable operator in
the event of an impasse. It is a more careful, detailed, expensive process for both
parties, involving a precise request for renewal proposal issued only once by ~he
franchise authority and a responding detailed renewal proposal offered only Once by the
incumbent cable operator.
It is important to note that the formal process does not close or supersede further
informal negotiations. In fact, the greater value of the formal process may be that it
offers real incentive to both parties to invest a more serious and earnest effort in the
informal process. In neady all cases where the formal process is underway, the
informal process continues as well, often leading to a solid agreement before the formal
process has reached the courtroom.
Dubuque's Future Cable-Related Needs Ascertainment by CBC Communications and
Dr. Constance Book of Elon University will form one pillar of the City's foundation in the
formal renewal process. Additional strength typically flows from franchise fee and
technical audits and other elements. With the expert guidance of the Miller and Van
Eaton law firm, CBG Communications, and an as-yet unnamed financial expert, the City
is well-positioned to gather and set these additional pillars in place.
Cable Franchise Administrator Merrill Crawford recommends City Council authorization
to advance to the formal cable franchise renewal process, while continuing informal
franchise renewal negotiations. Hopefully the Cable T.V. franchise renewal will have a
negotiated settlement. If not, this formal process, as prescribed under federal law,
could lead to a denial of renewal of the franchise.
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
January 30, 2004
MEMO TO: Michael C. Van Milligen, City Manager
FROM: Merrill Cravvford, Cable Franchise Administrator
SUBJECT: Advancing the Formal Franchise Renewal Process
INTRODUCTION: The purpose of this memorandum is to recommend that the
City move ahead with the formal renewal process as provided by federal Jaw for
the Dubuque cable franchise of MCCIowa, Inc., d.b.a. Mediacom.
BACKGROUND: As I have previously reported, franchise renewal negotiations
and informal meetings between representatives of the City of Dubuque and
Mediacom have produced a variety of mixed signals but as yet no real progress.
While willing to continue talks, Mediacom's offers have not advanced much
beyond the initial "low-ball" stage to date. Promised financial and technical detail
have been meager, such that even if their network engineering designs for
system expansion and an Institutional Network should contain opportunities to
address the community's needs, we can't detect them in the sparse data
provided. Still, we have seen indications of behind-the-scenes work by
Mediacom employees, and the company continues to upgrade its subscriber
network to a moderate degree absent the guarantee of a long-term renewal, as
they offer new services and marketing strategies to target discount offers from
direct-broadcast satellites and DSL service providers. It appears that Mediacom
wants to remain in Dubuque but believes they will be able to renew their lucrative
franchise for another ten or fifteen years without needing to address some of the
community's most important cable-related needs.
in recent history, the cable industry seems to be moving with unity of purpose or
strategy typical of a cartel, to avoid meaningful negotiation and compromise in
the informal renewal process. While we do not see a hard line drawn in the dirt,
nor antagonistic behavior at the negotiating table, we do hear familiar stories
from across the country of long delays, minor offers retracted at a later session,
and minimal responses to information requests. This behavior is being observed
on the part of virtually every major cable operator engaged in renewal
negotiations in communities of all sizes.
Federal law provides for a specific formal franchise renewal process that can be
employed at the discretion of either the local franchise authority or the cable
operator in the event of an impasse. It is a more careful, detailed, expensive
process for both parties, involving a precise request for renewal proposal (RFRP)
issued only once by the franchise authority, a responding detailed renewal
proposal offered only once by the incumbent cable operator, a formal
administrative hearing, a likely court appeal of any preliminary denial of renewal,
and a definitive final resolution.
Since the procedure was established in the 1984 Cable Act, statistically few
franchise renewals have used the formal renewal process. Of those, a still
smaller number have proceeded to latter stages of the process, and only a
handful have carried the process through to completion.
It is important to note that the formal process does not close or supersede further
informal negotiations. In fact, the greater value of the formal process may be that
it offers real incentive to both parties to invest a more serious and earnest effort
in the informal process. In nearly all cases where the formal process is
underway, the informal process continues as well, often leading to a solid
agreement before the formal process has reached the courtroom.
Dubuque's Future Cable-Related Needs Ascertainment by CBG
Communications and Dr. Constance Book of EIon University will form one pillar
of the City's foundation in the formal renewal process. Additional strength
typically flows from franchise fee and technical audits and other elements. With
the expert guidance of the Miller and Van Eaton law firm, CBG Communications,
and an as-yet unnamed financial expert, the City is well-positioned to gather and
set these additional pillars in place.
As described by Attorney Rick EIIrod in recent briefings, the formal franchise
renewal process is a steep pyramid that leads rather quickly to ratified air, few
climbing companions, and, potentially, national attention. A franchise authority
should not step onto this track half-heartedly or as a bluff. In authorizing the
formal franchise renewal process, we must be of single resolve to pursue the
rigorous trail to its end, striving to meet the community's needs and interests with
benefits from the highly profitable web of technology that lives within our rights of
way.
RECOMMENDED ACTION:
The Recommended Action is that the City Council authorize the advancement of
the formal cable franchise renewal process to its ultimate conclusion, in tandem
with continued informal franchise renewal negotiations, with expenses paid from
cable franchise fee revenues and fund balances.
cc: Cindy Steinhauser, Assistant City Manager
Barry A. Lindahl, Corporation Counsel
Tim O'Brien, Assistant City Attorney
Cable Community Teleprogramming Commission
Cable TV Regulatory Commission