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HomeMy WebLinkAbout04 - Ad Hoc Telecommunications CommitteeITEM 4 TO: Members of the Newport Beach City Council FROM: Dave Kiff, Deputy City Manager SUBJECT: Formation of Ad Hoc Telecommunications Committee RECOMMENDED Adopt Resolution 2000 -_ creating the Ad Hoc Telecommunications Committee. ACTION: BACKGROUND: On Tuesday, October 24, 2000, the City Council heard a Study Session presentation on the various issues that the City faces regarding telecommunications. The issues identified in the Staff Report (a portion of the Staff Report is included as Attachment A) included: 1 - MUNICIPAL CODE RELATING TO TELECOM IS OUTDATED. We're not ready for the Year 2002. The City's municipal code chapters that relate to cable television and telecommunications require significant amendments before the City can enter into any effective franchise agreements or use permits with providers of cable television or wireless communication. 2 - FRANCHISE RENEWAL PREPARATIONS. The City's two major cable television franchise agreements with Cox Communications and Comcast /Adelphia will expire on January 27, 2002. What should the City be doing to prepare for the Agreements' expiration? 3 - COMCAST CUSTOMERS MAY BE UNAWARE OF PENDING "SWAP" Comcast will soon be leaving Southern California after "swapping" its local customer base with Adelphia Communications. Do we know what effect this swap will have on service? On rates? On the franchise? How should this information be communicated to Newport Beach residents? 4 - SUBSCRIBERS UNAWARE OF CITY'S INABILITY TO CONTROL RATE HIKES. Newport Beach cable customers have seen a series of significant cable rate hikes. Customers often think that the City has a "say" in the increases. What CAN the City do regarding rate increases? 5 - TELECOM HIGH TECH- WHAT SHOULD BE THE CITY'S POSTURE? Video, audio, and Internet communication technology is changing rapidly. What should the City's posture be regarding the Telecom industry and its interest in the Newport Beach customer base? At the end of the 10 -24 -2000 meeting, we suggested that the Council form an ad hoc committee to address these issues. This Agenda Item asks the City Council to form an ad hoc Telecommunications Committee and charges the Committee with addressing several cable TV and telecommunications issues. Newport Beach City Council Page 2 ATTACHMENTS: Attachment A -Portion of Staff Report from the Study Session on 10 -24 -2000 Attachment B - Resolution 2000 -_ creating the Telecommunications Committee Attachment C - Description of Committee Authorization, Membership, Term, and Purpose and Responsibilities for Boards, Committees, and Commissions book. Page 3 Attachment A CITY OF NEWPORT BEACH MEMORANDUM TO: Mayor and Members of the Newport Beach City Council FROM: Dave Kiff, Deputy City Manager Robin Clauson, Assistant City Attorney DATE: October 24, 2000 RE: Study Session on Cable Television and Telecommunications Here are the Cable TV and Telecommunications issues that we believe need to be addressed by the City in the coming twelve to eighteen months. As you will see, we recommend that the Council form an ad hoc committee on Cable TV and Telecommunications to address the issues and accomplish the tasks that follow. 1- MUNICIPAL CODE RELATING TO TELECOM IS OUTDATED ISSUE: We're not ready for the Year 2002. The City's municipal code chapters that relate to cable television and telecommunications require significant amendments before the City can enter into any effective franchise agreements or use permits with providers of cable television or wireless communication. BACKGR'D: Both the Comcast and Cox franchise agreements for cable television service to the residents of expire on January 27, 2002. The existing Agreements -circa 1966 - contain information and requirements that may have been superceded by Federal action on telecommunications (please see a summary of these aspects in Attachment A). Assistant City Attorney Robin Clauson has developed a draft telecommunications ordinance that can be updated to reflect the latest FCC regulations. We also have a copy of a more generic telecommunications Ordinance developed by William Marticorena of Rutan and Tucker and used by many other cities. Part of the City's new telecommunications ordinance should address whether or not the City wants to assess an encroachment fee for the use of city streets. Other cities are considering encroachment fees of from $1.80 to $3.65 per lineal foot. Page 4 TASKS: • Form Committee. Appoint an ad hoc Council Committee on Cable TV /Telecommunications to address the issues outlined in the entirety of this memorandum. • Update or Create New Ordinances. Direct Council Committee to work with City staff to update the City's Cable Television Ordinance and to create a separate Telecommunications ordinance (addressing wireless services, street encroachment fees, city infrastructure use fees, and antenna siting). 2 - FRANCHISE RENEWAL PREPARATIONS ISSUE: The City's two major cable television franchise agreements with Cox Communications and Comcast /Adelphia will expire on January 27, 2002. What should the City be doing to prepare for the Agreements' expiration? BACKGR'D: As noted previously, the City's two franchise agreements (one with Cox Communications and one with Comcast) appear as codified ordinances per the City Charter. Both were developed in 1966 and later amended several times. Because neither reflects the regulatory environment in place today, the Agreements must be re- written upon renewal based on a new Cable Television ordinance yet to be adopted by the City Council. As an important note to the Council and to Newport Beach residents, our colleagues in other cities tell us that it is "virtually impossible" to deny a franchise agreement to an existing provider who seeks a renewal unless the provider has seriously compromised service or has a demonstrated inability to provide the level of service expected by the community. Remember that the "plant" in the streets (and on telephone wires) - cable lines, amplifiers, node infrastructure, etcetera -- is the not the property of the City but the property of the existing cable company. That said, an important part of any franchise renewal is the preparation of a Community Needs Assessment. The Needs Assessment is an analysis - based on extensive public input - of the television, high -speed data, service standard, and cable - related telecommunications needs of a community. The City needs to begin planning and convening this Needs Assessment right away so that it is completed in time for franchise renewal talks. TASKS: • Update or Create New Ordinances. Direct Council Committee to work with City staff to update the City's Cable Television Ordinance. • Community Needs Assessment. Direct rat hoc committee to develop and conduct (with staff or expert assistance) a Community Needs Assessment between now and June 2001. Page 5 3 - COMCAST CUSTOMERS MAY BE UNAWARE OF PENDING "SWAP" ISSUE: Comcast will soon be leaving Southern California after "swapping" its local customer base with Adelphia Communications. Do we know what effect this swap will have on service? On rates? On the franchise? How should this information be communicated to Newport Beach residents? BACKGR'D: Depending upon the date at which the Federal Communications Commission ( "FCC ") approves the customer transfer from Comcast to Adelphia, residents in about 2 /3rds of Newport Beach who today subscribe to Comcast will have a new cable TV provider - Adelphia Communications of Philadelphia, PA. See Attachment B for information about Adelphia taken from adelphia.com, the company's website. The City has retained William Marticorena of Rutan and Tucker to represent the City in this transfer. Mr. Marticorena also represents several other cities that will see Comcast swap its subscribers to Adelphia. TASKS: • Communication Plan. Inquire with Comcast /Adelphia as to Adelphia's plans to communicate the transfer of service from Comcast. • Contents of Plan. Direct Comcast /Adelphia to provide critical information about pending transfer to subscribers in a timely manner, including local phone numbers and bill payment /service office. 4 - SUBSCRIBERS UNAWARE OF CITY'S INABILITY TO CONTROL RATE HIKES ISSUE: Newport Beach cable customers have seen a series of significant cable rate hikes. Customers often think that the City has a "say" in the increases. What CAN the City do regarding rate increases? BACKGR'D: As cable customers are well aware, the rate of increase in cable bills has been higher in recent years than the rate of inflation. From 1998 to 1999, the FCC reported that cable rates went up by 6.9 %, resulting in an average cable bill (nationwide) of $30.53. The same FCC report said that rates in areas subject to "effective competition" went up by 5.8% and the average cable bill was $28.71 per month. Here is the approximate increase in cable bills for limited basic, cable programming services tier, and special services from Cox and Comcast in 1998, 1999, and the rates proposed for 2000: Page 6 Newport Area Cable Rates —1998 -2000 The average increase for both Comcast and Cox during the two -year period was about 5.2% annually. This compares to a 3.4% change in the Consumer Price Index (All Urban Consumers, August 1999 to August 2000) and a 2.7% annualized change for the first eight months of 1999. Readers will note the non - existent or modest increase in prices on the Limited Basic Tier of channels (typically channels 2 -13). Local governments retain the ability to "regulate" this tier. Previous to March 1999, municipalities could file a "Form 328" to raise questions about rate hikes in the Cable Progranuning Services Tier ( "standard service" above). The City filed a Form 329 on Comcast's 1999 rate hike - the FCC responded later that the hike was appropriate. With the CPST rate deregulation in March 1999, the City has no direct authority to review or regulate CPST rates. Complaints about these rate increases should be filed individually with the FCC (www.fcc.gov). TASK: • Public Information. Direct ad hoc Committee to explain City's regulatory ability (of lack thereof) through the Community Needs Assessment process. 5 - TELECOM HIGH TECH - WHAT SHOULD BE THE CITY'S POSTURE? ISSUE: Video, audio, and Internet communication technology is changing rapidly. What should the City's posture be regarding the Telecom industry and its interest in the Newport Beach customer base? BACKGR'D: More and more information services can be delivered through a cable line. Some information services are bypassing "hard" infrastructure entirely, using satellites and a series of antennas to transmit voice and data. These technologies and the companies that provide them include: • Overbuilders or Newbuilders. In a practice that was unheard of as recently as two years ago, new telecom companies (RCN and Wide Open West) now compete directly with more established cable TV providers for a variety of cable services. Newbuilders enter into franchise agreements with cities where there is an existing cable provider and compete directly with the provider for Comcast Cox 1998 1999 1998 1999 2000 Limited Basic $11.57 $11.57 d$23.16 $13.27 $13.36 $13.93 Standard Service $19.26 $21.16 $16.13 $21.63 $23.06 Plus $5.41 $5.41 $3.99 Complete Basic $36.55 $38.45 $33.39 $34.99 $36.99 The average increase for both Comcast and Cox during the two -year period was about 5.2% annually. This compares to a 3.4% change in the Consumer Price Index (All Urban Consumers, August 1999 to August 2000) and a 2.7% annualized change for the first eight months of 1999. Readers will note the non - existent or modest increase in prices on the Limited Basic Tier of channels (typically channels 2 -13). Local governments retain the ability to "regulate" this tier. Previous to March 1999, municipalities could file a "Form 328" to raise questions about rate hikes in the Cable Progranuning Services Tier ( "standard service" above). The City filed a Form 329 on Comcast's 1999 rate hike - the FCC responded later that the hike was appropriate. With the CPST rate deregulation in March 1999, the City has no direct authority to review or regulate CPST rates. Complaints about these rate increases should be filed individually with the FCC (www.fcc.gov). TASK: • Public Information. Direct ad hoc Committee to explain City's regulatory ability (of lack thereof) through the Community Needs Assessment process. 5 - TELECOM HIGH TECH - WHAT SHOULD BE THE CITY'S POSTURE? ISSUE: Video, audio, and Internet communication technology is changing rapidly. What should the City's posture be regarding the Telecom industry and its interest in the Newport Beach customer base? BACKGR'D: More and more information services can be delivered through a cable line. Some information services are bypassing "hard" infrastructure entirely, using satellites and a series of antennas to transmit voice and data. These technologies and the companies that provide them include: • Overbuilders or Newbuilders. In a practice that was unheard of as recently as two years ago, new telecom companies (RCN and Wide Open West) now compete directly with more established cable TV providers for a variety of cable services. Newbuilders enter into franchise agreements with cities where there is an existing cable provider and compete directly with the provider for Page 7 cable TV, telephone, Internet, and high -speed data services. Newbuilders require permits for street cuts just like existing cable companies. • Cable Providers andTelephony/High Speed Data. Cox Communications has been one of the more active proponents of providing local and long distance phone service over their existing cable lines. Both Cox and Comcast /Adelphia provide high -speed data service to most areas in cooperation with Excite @Home. • Phone Companies and High -Speed Data. Digital Subscriber Line Service ( "DSL ") is a recently- offered technology that transmits Internet and other high- speed data over existing phone lines. PacBell is a major provider of DSL service. • Wireless Internet/Voice/Data. Verizon, Nextel, and others provide local and long - distance voice communications using satellites and /or extensive antenna - based transmission infrastructure. In several recent instances, companies which "site" antennas for the major voice communication players have asked to use City facilities for these antennas. The City has already negotiated an Agreement (circa 1998) with Metricom to provide Internet and data over a similar "over -the -air" system with antennas placed on city -owned street lights. The economic demographics of Newport Beach make us a prime target for the entire range of services provided by telecom companies. The Council may wish to adopt a formal Council Policy regarding City Staff's posture to the companies - to ensure that our residents get a full range of telecom services (and to increase the City's revenue), should we market ourselves and our facilities as sites for more telecom facilities? Or - because we cannot ban such facilities outright - should we take a less welcoming role in reviewing infrastructure applications? TASK: • New Council Policy. Direct the ad hoc Council Committee to develop a Council Policy relating to the manner in which the City reviews and approves requests for telecommunications infrastructure easements. Page 8 Attachment B A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH RELATING TO THE FORMATION OF AN AD HOC TELECOMMUNICATIONS COMMITTEE WHEREAS, the City of Newport Beach holds two separate non - exclusive franchise agreements with its community cable television providers, Comcast /Adelphia and Cox Communications; and WHEREAS, these Agreements both expire in January 2002; and WHEREAS, the City is obligated to prepare for the expiration of these Agreements by conducting a Community Needs Assessment which identifies and articulates those aspects of community cable television service that the community desires; and WHEREAS, the City is also home to residents and business owners who desire a wide variety of telecommunications services, including high -speed data, voice, video, and wireless Internet; and WHEREAS, telecommunications providers have sought permission from the City to use City -owned facilities for telecommunications transmission (antenna) sites; now, therefore be it RESOLVED by the City Council of the City of Newport Beach that it hereby forms the Ad Hoc Telecommunications Committee to address the following issues and have the following term and membership: ISSUES TO ADDRESS: • An Update of the City's Cable TV Ordinance and the possible development of a separate Telecommunications Ordinance; • The Development of a Community Needs Assessment, • The dissemination of appropriate information about the City's regulatory role regarding cable TV and telecommunications. • The adoption of a City Council policy regarding the manner in which the City reviews and approves requests for telecommunications infrastructure easements. Page 9 TERM: The term of the Ad Hoc Telecommunications Committee shall be two years from the date of this resolutions adoption OR the Committee shall terminate three months after the City Council approves new cable television franchise agreements (anticipated to be in January 2002); MEMBERSHIP: Membership of the Ad Hoc Telecommunications Committee shall consist of two (2) members of the City Council and up to three members of the Newport Beach community, all appointed by the Mayor. City staff support shall come from the City Manager's Office, the City Attorneys Office, and the Department of Public Works. ADOPTED this 28th day of November, 2000. John E. Noyes MAYOR OF NEWPORT BEACH ATTEST: LaVonne Harkless CITY CLERK Page 10 Attachment C AD HOC TELECOMMUNICATIONS COMMITTEE AUTHORIZATION: Established by Resolution 2000-. adopted on November 28, 2000. MEMBERSHIP: Two members of the City Council and up to three members of the Newport Beach community, all appointed by the Mayor. City staff support shall come from the City Manager's Office, the City Attorney's Office, and the Department of Public Works. TERM: Two years or three months after City Council approval of new Cable Television franchise agreements (estimated to be April 2002), whichever comes first. PURPOSE & RESPONSIBILITIES: A. Ordinance(s) Update - Work with City staff to update the City's Cable Television Ordinance and to create a separate Telecommunications ordinance (addressing wireless services, street encroachment fees, city infrastructure use fees, and antenna siting). B. Community Needs Assessment - Develop and conduct (with staff or expert assistance) a Community Needs Assessment between December 2000 and June 2001. C. Public Information -- Assist with explanation and community understanding City's regulatory ability (of lack thereof) regarding Cable Television. D. Council Policy on Use of City Facilities for Telecommunications -- Develop a Council Policy relating to the manner in which the City reviews and approves requests for telecommunications infrastructure easements. Section III - Page 13