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Mediacom Franchise Extension D~~@UE ~<k~ MEMORANDUM :? June 2, 2004 '-" TO: The Honorable Mayor and City Council Members s:: Michael C. Van Milligen, City Manager .~ ~':c". ~? ~., Q '?? FROM: en .- SUBJECT: Mediacom Franchise Extension The actions the City Council has taken recently to spur Mediacom into taking the negotiations process seriously appear to be working. The Formal Renewal Process is proceeding and Mediacom understands that could end up in denial offranchise renewal. The Franchise Fee Payment Analysis to analyze franchise fee payments made by Mediacom to the City in calendar years 2002 and 2003 is progressing. The Technical System Audit, which is a technical design and performance review of the Mediacom system, will include on-site inspections in July. Informal discussions have been held and Mediacom has announced new services. Hopefully, Mediacom will continue to make attempts to resolve issues the City has identified. Cable Franchise Administrator Merrill Crawford is recommending a six month extension of the Franchise Agreement to give these processes time to be completed. It is anticipated that this will be the last requested extension. I concur with the recommendation and respectfully request Mayor and City Council approval. (11AJA ~ frlÁ Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager Merrill Crawford, Cable Franchise Administrator CITY OF DUBUQUE, IOWA MEMORANDUM June 2, 2004 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 six-month extension of the existing Mediacom cable franchise and side agreements under the terms currently in effect. BACKGROUND: At their December 15,2003 meeting, the City Council adopted Ordinance No.1 00-03 extending the current cable franchise with MCClowa, LLC (Mediacom) to June 30, 2004. On February 16, 2004, the Council authorized the advancement of the Formal Renewal Process as provided in the 1984 Cable Act, in tandem with the continuation of informal negotiations. On March 15, the Council approved a contract with Lewis & Associates of Hollywood, FL to conduct a franchise fee payment analysis and also authorized the expanded scope of services of the Miller & Van Eaton law firm and CBG Communications, Inc. to include the component tasks of the Formal Franchise Renewal Process. The tasks of the Formal Renewal Process are proceeding as planned: 1. Franchise Fee Payment Analysis - On March 15, 2004, the City Council approved a contract with Lewis & Associates, of Hollywood, FL to analyze franchise fee payments made by Mediacom to the City of Dubuque in calendar years 2002 and 2003. The firm has reconciled Mediacom's address database with the City's GIS address database. A few discrepancies were found and resolved. On May 21, Lewis received from Mediacom a package of requested supporting data re: the computation and payment of franchise fees to the City over the two-year studied period. Analysis is underway, and I expect a further report from Lewis & Associates soon. 2. Technical System Audit - (Note: this is not a financial audit as reported in the Telegraph Herald in February. It is a technical design and performance review of Mediacom's Dubuque cable system, measuring compliance with franchise standards, FCC rules, and other relevant codes.) Mediacom has promised delivery by June 14 of the requested system technical reports, test data and answers to specific questions posed by CBG Communications. In July, Dick Nielsen of CBG will perform on-site inspections and tests in Dubuque. 3. RFRP - Attorney Rick Ellrod of the Miller and Van Eaton law firm has begun preparation of the detailed Request For Renewal Proposal that lies at the core of the Cable Act's Formal Renewal Process. In the Formal Process, when the very specific RFRP is presented to the cable operator, the operator has a single opportunity to respond with a proposal that reasonably meets the community needs as detailed in the RFRP, taking into account the cost of meeting those needs. That essential question becomes the focus of a formal administrative hearing and likely court proceedings which eventually determine whether, and under what terms, the cable franchise is renewed, per federal law. 4. Related Ordinances - Mr. Ellrod will also be working with the City's Legal Services Department and the franchise renewal negotiating team on the framework of ordinances needed to enact the provisions of the renewed franchise and otherwise protect the City's interest in the use of public rights of way for cable and telecommunications services. In the meantime, meetings continue between City and Mediacom negotiators, attorneys, and technical experts under the informal negotiating process, which both sides hope will produce a sound agreement. While specific details of individual negotiating sessions cannot be made public at this time, I can report progress in most key elements of the City's concerns. The tone of negotiations and level and pace of information exchange have also improved as we work through very complicated technical and financial issues that surround such items as the Institutional Network, local community programming, business infrastructure and services, a lower-priced "broadcast basic" option, and broadcast signal quality issues. We note that Mediacom's investment and system upgrade activity in the community continues absent the prospect of a long-term future in Dubuque that a renewed franchise would assure. As you know, Mediacom upgraded its Dubuque system from 550 Mhz to 750 Mhz bandwidth in the Summer and Fall of 2003 to enable the offering of additional video, voice and data services. This was accomplished, in part, by upgrading electronic components, re-spacing some amplifiers, and installation of some additional fiber optic cable in outlying areas. Mediacom has also been finishing and lighting its long-haul fiber optic network, connecting the Dubuque headend to other systems in the Tri-states and beyond. We've begun to see the diverse practical effects of these interconnections, for example, in Mediacom's preliminary plan to import the KFXA Fox broadcast signal by fiber to replace the current KFXB signal later this year. We've also noticed that cable channel override alerts for severe weather or other emergencies now occur simultaneously in a surrounding cluster of communities as they occur in Dubuque; a development which carries both advantages and disadvantages, depending upon the circumstances. In February, Mediacom doubled the potential download speed of its residential and cottage business cable modem service, and in mid-May, introduced a mid-speed (128Kbps) cable modem service priced to compete directly with phone companies' DSL products and to draw "average" Internet users away from traditional dial-up Internet Access via phone lines. On May 12, Mediacom introduced its first package of High Definition TV products in Dubuque and has since added to the HDTV line-up. They have also introduced Video-On-Demand services, including digital video recorder devices. On May 21, Mediacom invited area business representatives to a luncheon meeting at Dubuque Greyhound Park for a presentation about the variety of voice-data-video broadband networking options now available in Dubuque and the surrounding area from their new Enterprise Networks Division. Chris Kohlmann and I attended. Mediacom announced the inauguration of IP-delivered business services in Dubuque, including Local Area Networks (LAN), Virtual Private Networks (VPN), dedicated Internet links, and point-to-point links of custom-configurable capacities and speeds. They also announced a plan to roll out Voice-Over-IP competitive telephone services early next year. If the range of capabilities and pricing of these new broadband services are in practice as they were described at the presentation, they represent significant technical and comp"etitive alternatives for Dubuque area businesses needing local network connections as well as high-capacity fiberoptic links to the outside world. We do, however, intend to quiz Mediacom further as to certain technical features and design elements of their new business services, particularly as to reliability, redundancy, priority attention should a problem occur, and worst case scenario installation costs if a particular business is not located close to a fiber node. Meanwhile, as in the past, it is essential to the preservation of current franchise benefits and the protection of the interests of the City and cable subscribers that the current franchise extension not be permitted to expire by default on June 30. RECOMMENDED ACTION: The Recommended Action is that the City Council set a public hearing for June 21, 2004 and following that hearing adopt the proposed ordinance extending Mediacom's present franchise and associated leases to December 31, 2004, under the same terms as previous extensions and authorizing the City Manager to execute the Agreement. cc: Cindy Steinhauser, Assistant City Manager Barry Lindahl, Corporation Counsel Tim O'Brien, Assistant City Attorney Cable TV Regulatory Commission Cable Community Teleprogramming Commission RESOLUTION NO. .237-04 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 L.L.C. Whereas, MCClowa, 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 TCI 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, 20O4,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, 1OWA: . Section 1. That the City of Dubuque intends to extend the term of the cable services franchise and the term ofthe lease to December 31, 2004 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 7th day of June, 2004. Terrance M. Duggan, Mayor Attest: Jeanne F. Schneider, CMC City Clerk