HomeMy WebLinkAbout03 - Cox Communications Franchise AgreementAgenda Item No. 3
June 27, 2006
CITY OF NEWPORT BEACH
MEMORANDUM
TO: Mayor Webb and Members of the City Council
FROM: Dave Kiff, Assistant City Manager
DATE: June 27, 2006
RE: Item #3 -- Franchise Agreement with Cox Communications
Please use this document as the proposed Franchise Agreement between Cox
Communications and the City. The version in your staff report needs to be replaced with
this version. I will be happy to outline the differences between the two on Tuesday'- I
don't believe them to be significant.
Dave
City Hall • 3300 Newport Boulevard • Post Office Box 1768 • Newport Beach, California 92659 -1768
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FRANCHISE TO PROVIDE CABLE TELEVISION SERVICES
BETWEEN THE CITY OF NEWPORT BEACH, CALIFORNIA
AND COX COM, INCORPORATED
THIS AGREEMENT AND FRANCHISE (the "Franchise ") is made and entered into this
day of 2006, by and between Cox Com, Incorporated, a Delaware corporation dba
Cox Communications Orange County (hereinafter "Cox ") and the City of Newport Beach,
California ( "City ").
1. Authority.
This Franchise has been granted and approved pursuant to the provisions of Title 5,
Business Licenses and Regulations, Chapter 5.44, Cable Communications Franchise, of
the Municipal Code of the City of Newport Beach ( "NBMC "). This Franchise is in the
form of a nonexclusive franchise, contract and agreement.
2. Definitions.
All terms used in this Franchise Agreement shall be as defined herein and in Title 5,
Business Licenses and Regulations, Chapter 5.44, Cable Communications Franchise, of
the NBMC. The provisions of the NBMC and the wordings, specifications, and
requirements in this Franchise shall constitute the terms of a franchise as authorized in
the NBMC in the form of an agreement to permit use of the public rights —of -way and to
provide the cable television services by Cox. Words, terms, or phrases not defined in the
NBMC or herein shall first have the meaning as defined in the Cable Act, and then the
special meanings or connotations used in any industry, business, trade, or profession
where they commonly carry such special meanings. If those special meanings are not
common, they will have the standard definitions as set forth in commonly used and
accepted dictionaries of the English language.
3. Scope of Franchise.
A. Cox is authorized and obligated to construct, reconstruct, and operate the System
within the public streets and rights -of -way. This authority includes the privilege
to use Cox's cable television system in the Service Area, as defined in Section 14
below, (hereinafter the "System ") to provide Cable Service to customers in the
Service Area located in all residential dwellings, commercial structures and
industrial structures.
B. This Franchise Agreement solely and exclusively creates, defines, and limits the
legal rights and obligations between City and Cox and does not; in any way,
obligate City to take any action, actions or refrain from taking any action, or
actions, to or in relation to any third party.
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4. Payments.
Regular Percentage Franchise Fee. From and after the Effective Date, Cox shall pay a
Franchise Fee, in quarterly installments, in a sum equal to five percent (5 %) of the Gross
Annual Revenue. The Franchise Fee shall be paid to the City within forty-five (45) days
after the close of the calendar quarter. In the event the Effective Date, as defined in
Section 18 below, does not occur on the first day of a calendar quarter, then Cox shall
pay the Franchise Fee for the fractional quarter based on a per diem basis within forty -
frve (45) days after the close of the fractional calendar quarter. Cox expressly
acknowledges and agrees that:
A. Except for the payments expressly required by this Section 4, none of the
payments or contributions made by, or the services, equipment, facilities, support,
resources, or other activities required to be provided or performed by Cox
pursuant to this Agreement are franchise fees chargeable against the compensable
payments to be paid to City by Cox pursuant to this Section 4; and
B. As applicable, except for the compensation payments expressly required by this
Section, each of the payments or contributions made by, or the services,
equipment, facilities, support, resources, or other activities to be provided by Cox,
are voluntary and are not "franchise fees" within the meaning of the Cable Act
(47 U.S.C. §542.(g)(2)); and
C. The compensation payments due from Cox to City pursuant to this Section shall
take precedence over all other payments, contributions, services, equipment,
facilities, support, resources, or other activities to be paid or supplied by Cox
pursuant to this Franchise; and
D. The compensation and other payments to be made pursuant to this Franchise
Agreement shall not be deemed to be in the nature of a tax, and shall be in
addition to any and all taxes of general applicability or other fees or charges
which Cox or any Affiliated Person shall be required to pay to the City or to any
state or federal agency or authority, all of which shall be separate and distinct
obligations of Cox and Affiliated Persons; and
E. Neither Cox nor any Affiliated Person shall have or make any claim for any
deduction or other credit of all or any part of the amount of the compensation or
other payments to be made pursuant to this Franchise from or against any city or
other governmental taxes of general applicability (including any such tax, fee, or
assessment imposed on both utilities and cable operators or their services but not
including a tax, fee, or assessment which is unduly discriminatory against cable
operators or cable subscribers or income taxes) or other fees or charges which
Cox or any Affiliated Person is required to pay to City or other governmental
agency; and
F. Neither Cox nor any Affiliated Person shall apply or seek to apply all or any part
of the amount of the compensation or other payments to be made pursuant to this
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Franchise as a deduction or other credit from or against any City or other
government taxes of general applicability (other than income taxes) or other fees
or charges, each of which shall be deemed to be separate and distinct obligations
of Cox and Affiliated Persons; and
G. Neither Cox nor any Affiliated Person shall apply or seek to apply all or any part
of the amount of any City or other government taxes or other fees or charges of
general applicability (including any such tax, fee, or assessment imposed on both
utilities and cable operators or their services) as a deduction or other credit from
or against any of the compensation or other payments to be made pursuant to this
Franchise, each of which shall be deemed to be separate and distinct obligations
of Cox and Affiliated Persons; and
H. City acknowledges that, during the term of this Agreement, Cox may offer to its
subscribers, at a discounted rate, a bundled or combined package of certain cable
services that are subject to the franchise fee referenced above in Section 4, and
other services that are not subject to that fee. With regard to such bundled or
combined services, the following provisions are applicable:
During the term of this Agreement, if Cox offers to individual subscribers cable
services subject to the franchise fee that are bundled or combined with non -cable
services that are not subject to the franchise fee, then the revenue from those
bundled or combined services must be allocated on the basis of proportionality, as
follows:
1. The percentage that the price for all bundled services is discounted from
the established retail rates for the individual services, as those rates are
advertised by Cox in its marketing materials or published rate cards, will
be prorated across all services in the bundled package, subject to the
adjustment referenced below in Section 4(H)(2). Cox shall provide the
City with the all requested information regarding the charge for each
individual service for any bundled package within ten (10) days of the
City requesting this information.
2. The revenue derived by Cox from services that are subject to mandatory
tariff rates imposed by the California Public Utilities Commission, or any
similar governmental rate - setting authority, will be deducted from the
aggregate revenue to determine the revenue that is subject to the franchise
fee. By way of example, Cox may offer a bundle of voice, video, and data
services for a flat fee of $75, where the aggregate retail rate of those
services when purchased on an individual basis would equal $100. If
there is no service in that bundled package subject to a mandated tariff
rate, Cox would apply a 25 percent discount to each individual service.
Thus, if the established retail rate for video service was then $50, Cox
would recognize revenue in the amount of $37.50 and would pay a
franchise fee on that amount.
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3. Cox will not structure the pricing of any bundled or combined services so
as to intentionally or unreasonably cause a reduction in the Gross Annual
Revenue against which franchise the City may impose fees or other
proportionately derived taxes, surcharges, or fees.
4. If City reasonably determines that Cox has unlawfully, inequitably, or
contrary to Section 4(H) allocated Gross Annual Revenue between video
services and non -video services in calculating franchise fee payments,
then the parties will meet upon advance notice from the City to discuss the
allocation methodology. If the parties cannot resolve the dispute within a
reasonable period of time, then the parties will submit the matter to a
mutually agreeable third party for non - binding mediation. The parties will
share the cost of the mediation equally. If the mediation is not successful,
or if the parties cannot mutually agree upon a mediator, then either party
may file an action in a court of competent jurisdiction or pursue any other
remedies available under the law or this Agreement.
I. If any franchise payment or recomputed amount is not made on or before the
dates specified above in Section 4, Cox shall pay as additional compensation the
greater of the following:
An interest charge, computed from the applicable due date, at an annual
rate equal to the prevailing commercial prime interest rate in effect upon
the due date, plus three percent (3 %).
2. In addition to any late payment made pursuant to this section, if a payment
is late by sixty (60) days or more, Cox shall pay a sum of money equal to
five percent (5 %) of the amount due in order to defray reasonable
additional documented and itemized expenses and costs incurred by City
as a result of such delinquent payment.
3. No acceptance of any payment shall be construed as a release of, or an
accord, or satisfaction of, any claim that the City might have for further or
additional sums payable under the terms of this Franchise, or for any other
performance by Cox of an obligation hereunder.
4. Payments of compensation made by a Cox to the City pursuant to the
provisions of this Franchise are in addition to, and exclusive of, any and
all authorized taxes, business license fees, and other fees, levies, or
assessments now in effect, or subsequently adopted in accordance with
state and federal law.
5. Letter of Credit.
A. Pursuant to Section 5.44.060(B)(1)(a) of the NBMC, within thirty (30) days of the
Effective Date of this Franchise, Cox shall post an irrevocable standby Letter of
Credit in the amount of ($17.25 per current subscriber but not less than One
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Hundred Thousand Dollars ($100,000). The Letter of Credit provider shall have,
at a minimum, a credit rating of A issued by Moody's or Standard & Poor's. The
letter of credit shall incorporate wording approved by City enabling City to draw
such sums from time to time as the City may find necessary to satisfy any
material default of Cox or to meet any payment due City under or in connection
with the NBMC or this Franchise, upon ten (10) days' written notice to the Letter
of Credit provider. The Letter of Credit shall provide in substance that, upon
written notice by City of a material default or failure to make a payment due to
City under or in connection with the NBMC or this Franchise, City may draw
upon the Letter of Credit without any offset, contingencies or conditions of any
kind. This Letter of Credit shall provide that it may not be revoked or amended
without City's prior written approval. Cox shall obtain prior approval by the City
of the wording of the Letter of Credit, the form of the Letter of Credit, and the
Letter of Credit provider. Such approval shall not be unreasonably withheld.
B. The Letter of Credit requirement may, in the unilateral discretion of the City, be
increased by up to three times its original amount if there is an assignment,
transfer, and/or change of control of the Franchise and/or the Cox.
C. The Letter of Credit required by this Section satisfies the financial security
requirements of this Franchise Agreement and is in lieu of a Security Fund or
Faithful Performance Bond pursuant to Section 5.44.060(B)(1)(a) of the NBMC.
6. Insurance.
Within ten (10) days of the Effective Date of this Franchise, Cox, at its sole cost and
expense, for the full term of this contract (and any extension thereof), shall obtain and
maintain at minimum all of the following insurance coverage:
A. Types of insurance and Minimum Limits. The coverages required herein may be
satisfied by any combination of specific liability and excess liability policies.
1. Workers' Compensation and Employers Liability Insurance in
conformance with the laws of the State of California (not required if Cox
has no employees).
2. Cox's vehicles, including owned, non -owned (e.g., owned by Cox's
employees and used in the course and scope of employment), leased or
hired vehicles, shall each be covered with Automobile Liability insurance
in the minimum amount of two million dollars ($2,000,000) combined
single limit per accident for bodily injury and property damage.
3. Cox shall obtain and maintain comprehensive or commercial General
Liability Insurance coverage in the aggregate annual amount of two
million five hundred thousand dollars ($2,500,000) combined single limit,
including bodily injury, personal injury, and broad form property damage.
Such insurance coverage shall include, without limitation:
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a. Contractual liability coverage adequate to meet Cox's
indemnification obligations under this Contract; and
b. A cross - liability clause.
C. Cox shall obtain and maintain Slander /Libel/Defamation Liability
Insurance in the aggregate annual amount of one million dollars
($1,000,000).
B. All required Automobile Liability insurance and Comprehensive or Commercial
General Liability Insurance shall contain the following endorsement as a part of
each policy:
"The City of Newport Beach is hereby added as an additional
insured as respects the operations of the named insured pursuant to
cable television franchise as granted by the City and said insurance
shall specifically cover the acts and omissions of Cox and the acts
and omissions of its employees, agents and subcontractors in the
performance of work hereunder."
C. Within thirty (30) days from Effective Date of this Franchise, Cox shall furnish
proof to City that a satisfactory insurance policy for all insurance required by this
Franchise so that the City can ensure that the insurance is in place. The insurance
policies for vehicles shall be in effect prior to usage and the City may, from time
to time, reasonably increase the required amount of said insurance so long as said
increased coverage is reasonably available at reasonable prices.
D. The insurance required of Cox pursuant to this Franchise shall be primary and no
insurance held by City shall be called upon to contribute to a loss under this
coverage.
E. All insurance policies shall provide that in the event of material change,
reduction, or cancellation or non - renewal by the insurance carrier for any reason,
not less than thirty (30) days written notice will be given to City by registered
mail of such intent to cancel, materially change, reduce or not renew the coverage.
An authorized agent of such insurance carrier shall provide to City, on such
schedule as is requested by City, a certification that all insurance premiums have
been paid and all coverages are in force. If for any reason Cox fails to obtain or
keep any of such insurance in force, City may (but shall not be required to) obtain
such insurance, in which event Cox shall promptly reimburse City its premium
cost therefore plus interest at the City's portfolio rate until paid.
F. All insurance shall be contracted through companies licensed to do business in
California.
G. Any deductible or self - insured retentions must be declared to and approved by
City. At the option of City, insurer shall reduce or eliminate such deductible or
self- insured retention as respects City, its officials, officers, employees and
Cox -CNB Franchise Agreement
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agents, or Cox shall procure a bond guaranteeing payment of losses and related
investigations, claims, administration and defense expenses.
7. Defense and Satisfaction of Claims.
A. Cox shall, at the sole cost and expense of Cox, upon demand by City, defend City,
its officers, boards, commissions or employees, in any and all suits, actions, or
other legal proceedings, whether judicial, quasi judicial, administrative, or
otherwise arising out of the negligent or willful acts or omissions of Cox, its
employees, subcontractors and agents. Where Cox is required to provide legal
services to City under this paragraph, and chooses to utilize joint counsel, the
parties shall make a good faith effort to cooperate and agree upon litigation
strategy and implementation thereof. In the event that Cox's litigation strategy or
choice of legal counsel create a conflict of interest, or result in inadequate
representation to protect the City's interests and separate counsel is necessary for
the representation of City, City may obtain separate legal counsel chosen by City
at Cox's cost and expense provided, however, that if City obtains separate legal
counsel as set forth above, Cox is only obligated to pay an hourly amount for
legal services which does not exceed one hundred percent (100 %) of the highest
hourly rate that City has paid for legal services within the twenty -four (24) month
period prior to obtaining legal services as provided in this paragraph. City shall
submit to Cox on a regular basis, statements for attorney's fees which shall be
paid to City within sixty (60) days of Cox's receipt of said statement.
B. Cox shall cause to be paid and satisfied any judgment, decree, or order rendered,
made, or issued against Cox, City, its officers, boards, commissions, or
employees, and hold City harmless therefrom, arising out of Cox's negligent or
willful acts or omissions in connection with the construction, operation,
maintenance, or other activities in relation to Cox's cable television system
including, but not limited to, damages arising out of copyright infringement,
defamation, personal and property liability; and antitrust liability, whether or not
said damages are compensatory or punitive, provided, however, Cox shall not be
required pursuant to this paragraph to hold City harmless for actions relating to
programming decisions outside of Cox's control. Such indemnity shall exist and
continue without reference to the amount of any bond, policy of insurance,
deposit, undertaking, or other assurance; provided, however, City may not enter
into any compromise or settlement which imposes any obligation on Cox without
Cox's consent, which consent shall not be unreasonably withheld, and Cox shall
not make or enter into any compromise or settlement of any claim, demand,
causes of action, suit, or other proceedings which settlement involves anything
other than the payment of money by Cox without contribution by City, without
first obtaining the written consent of City, which consent shall not be
unreasonably withheld.
C. The indemnification provided pursuant to paragraphs 7(A) and 7(B) above shall
apply to all damages and claims for damages of any kind suffered by reason of
any of the aforesaid operations referred to in those paragraphs, regardless of
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whether or not City has prepared, supplied, or approved the plans and /or
specifications for the operation or regardless of whether or not any insurance
policies shall have been determined to be applicable to any of such damages or
claims for damages.
8. Liquidated Damages and Other Remedies.
A. Damages for Violation of Technical Standards, Customer Service Standards and
Other Violations.
In addition to, and without limiting the damages for delays as specified in Section
4 of this Franchise, City may impose any of the other liquidated damages
described below for the violations and in the amounts described below:
1. Technical Standards violations.
If more than ten percent (10 %) of the locations tested pursuant to FCC
regulations fail to meet the FCC technical standards, City may impose
liquidated damages in an amount equal to two hundred dollars ($200) per
day, if Cox does not cure the violation in accordance with Section 8(B)(1)
below.
2. Customer Service Violations.
If Cox violates, in any material way, any of the customer service standards
specified in the NBMC or this Franchise, City may impose liquidated
damages in the amount of two hundred dollars ($200) per violation per
day if Cox does not cure the violation in accordance with Section 8(B)(1)
below.
3. Other Violations.
For all violations and breaches specified in the Franchise or the NBMC,
the City may impose liquidated damages in the amount of two hundred
dollars ($200) per day if Cox does not cure the violation in accordance
with Section 8(B)(1) below.
4. Reduction of Damages and Letter of Credit.
If City does not impose any damages on Cox for delays in violation of
technical standards, violation of customer service standards or for other
violations in the four (4) year period which shall commence on the date
which is sixty (60) days from the Effective Date of this Franchise, after
such four (4) year period, the penalties contained in Sections 8(A)(1) and
8(A)(2) above shall be reduced to one hundred fifty dollars ($150) per day
per violation, and the letter of credit contained in Section 5 above shall be
reduced to seventy -five percent (75 %) of the original amount thereof,
provided however, that the original, penalties and the original amount of
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the letter of credit, as increased as allowed herein upon transfer,
assignment or change of control, shall be immediately reinstated if (a) City
imposes two (2) penalties on Cox in any twelve (12) month period, and/or
(b) if Cox assigns, sells, leases or otherwise transfers this Franchise or
control of the System. This entire paragraph shall immediately cease to
have any force or effect if City imposes a penalty or penalties on Cox
within the four (4) year period which commences sixty (60) days from the
Effective Date of this Franchise Agreement.
B. Payment of Damages.
1. Cure.
In the event that City has reason to believe that Cox has failed to comply
with any material provision of this Franchise or the NBMC and therefore .
desires to impose damages on Cox as stipulated above and/or in the
NBMC, City shall notify Cox in writing of the provision or provisions
which City believes may be in default as well as the applicable cure
period. Cox shall, upon receipt of said Notice:
a. Cure the alleged violation within the cure period provided by the
NBMC, or if no cure period is provided, within five (5) working
days of said notice. In the event that Cox does not correct said
violation within the applicable cure period, said liquidated
damages may be imposed from the date of original violation; or
b. Respond to City in writing during the cure period contesting City's
assertion of violation and providing such information or
documentation as may be necessary to support Cox's position
and/or request an extension of the cure period. The decision to
extend the cure period shall be within the sole discretion of the
City.
2. Appeal and Payment.
In the event Cox fails to respond to said notice of violation, or to cure the
violation within the applicable cure period, or provide an explanation for
failure to cure acceptable to City, City or its designee shall schedule a
hearing no sooner than ten (10) days after written notice to Cox of the
expiration of the cure period and the scheduling of said hearing. Cox shall
be provided an opportunity to be heard at such hearing, including the right
to present evidence, cross - examine witnesses, and be represented by
counsel. Within thirty (30) days after said hearing, City shall determine
whether or not Cox is in violation and submit written findings of facts
supporting such determination. The hearing described above may be
conducted, at City's selection, either before the City Council or before an
administrative officer or commission selected by the City Council. In the
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event that said hearing is not held before the City Council, Cox shall
possess the right to appeal said determination to the City Council within
ten (10) days of issuance of the statement of decision and findings of fact.
The City Council shall decide said appeal pursuant to a hearing at which
Cox has an opportunity to be heard and the right to present evidence,
examine witnesses and be represented by Counsel. Cox shall have the
right to appeal the City Council's decision to a court of competent
jurisdiction within ninety (90) days of any final decision by the City
Council. In the event a court orders repayment of said liquidated damages
from City to Cox, interest on such amounts shall be included at the rate
paid by the Local Agency Investment Fund to the City for City
Investments. City's All liquidated damages shall be due and owing thirty
(30) days after the final decision by either the City Council or the hearing
officer in the event of no appeal to the City Council. The aforesaid
assessment may be levied directly against the letter of credit and collected
by City thirty (30) days from date said damages are due and owing. Such
assessment shall not constitute a waiver by City of any other right or
remedy it may have under the Franchise or under applicable law including,
without limitation, its right to recover from Cox such additional damages,
losses, costs and expenses, including reasonable attorneys' fees, as may
have been suffered or incurred by City by reason of or arising out of such
breach of the Franchise. Nothing in this paragraph is intended to waive,
modify or otherwise affect Cox's rights under the NBMC, this Franchise,
or any applicable law, except for the specific procedures expressly
provided herein, including without limitation the right to judicial review of
the legal rights and obligations of the parties with respect to each other,
Cox's right to challenge the decision of City under applicable legal
standards, and any issue of performance or breach by either party to this
Franchise.
C. Validity of Liquidated Damages.
The parties acknowledge that it would be impractical or extremely difficult to fix
actual damages in the case of Cox's default, and that the amount of damages
specified above is a reasonable and complete estimate of City's damages. Cox
recognizes that Cox's prompt development and offering of cable television
service for which penalties can be imposed is of critical importance to City.
City:
(Initials)
IQ M6
(Initials)
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Cox -CNB Franchise Agreement
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D. Sole Financial Remedy.
No financial penalties will be applied pursuant to Ordinance or other similar
document for the same offenses to which the liquidated damages apply.
9. Cox Support for Development of Technology and Prograimning.
Cox shall provide the following support for the purpose of technology development and
implementing non - commercial public, benefit uses of the Cable System. The provision
of the support items listed herein shall be considered as binding commitments of Cox
within the terms of this Franchise, and if not provided, shall subject Cox to applicable
remedies and penalties for violations of the Franchise.
Cox shall provide the following support:
A. Channel Capacity Requirements.
Cox Support for Public, Educational or Government Access "PEG Access ":
1. Cox shall designate three (3) channels for the exclusive use of the City
( "PEG channels "). The PEG channels shall be under the exclusive
management and editorial control of the City and shall not be shared with
other cities. The City may designate a representative, such as a non - profit
entity, to use and administer to said channels, with all of the attendant
rights and obligations provided to the City hereunder.
In the event Cox is required by federal law, regulations, or otherwise to
change the channel number of a PEG channel, Cox shall provide thirty
(30) days advance notice to the City and its customers. Should Cox desire
to change the channel number of a PEG channel that is in use by a PEG
user within the criteria set forth in Section 9(A)(2)for any other reason,
Cox shall provide the City with the reason for change at least ninety (90)
days prior to the proposed change, advertise the change to customers on its
website, in at least three (3) bill messages prior to the change, and in a
television spot announcement that Cox shall carry on its system for at least
six weeks prior to the change. Cox shall also reimburse the City for its
actual costs for reprinting any materials such as program guides or other
promotional materials occasioned by the change in an amount not to
exceed $7,500.00 for its costs of remarketing the channel.
2. Cox shall make available additional PEG channels designated for use
exclusively by the City pursuant to the following criteria:
a. The initial governmental channels must be in use and programmed
with non - commercial PEG programming, of which no more than
ten (10) hours can be character generated programming, during at
least 80% of the weekdays for at least 80% of the time during any
consecutive 6 -hour period for ten (10) consecutive weeks.
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b. The initial public and educational channel must be in use and
programmed with non- commercial and at least 50% locally
produced programming, of which no more than ten (10) hours per
week can be character - generated programming during at least 80%
of the weekdays for at least 80% of the time during any
consecutive 6 -hour period for ten (10) consecutive weeks.
C. No more than 33 -1/3% of the aggregate hours utilized for PEG
programming during such ten week period can represent repeat
programming.
d. Any additional PEG channel shall be made available within 180
days following the City's written request and verification of
compliance with each of the foregoing conditions.
e. Whenever such additional PEG channels but not the original three
PEG channels, are programmed for less than ten (10) hours per day
for six (6) days per week for a continuous period of not less than
twelve (12) consecutive weeks, the City may permit Cox to utilize
unused chatmel capacity on that channel under the following
conditions:
(i) Any request from Cox to use any fallow capacity
designated for PEG Access must be submitted in writing to
the City.
(ii) The City shall approve the request from Cox to use fallow
channel capacity if it finds that: (i) the utilization of the
channel is as represented; (ii) Cox has not acted in violation
of any of the provisions of the Franchise regarding
utilization of the channel; and (iii) there are no special
circumstances which would justify the denial or delay of
implementation of the use of the channel. After approval,
Cox may continue to utilize the channel for any other
purposes it so chooses, consistent with the Franchise, until
it is required to be designated for PEG purposes pursuant to
the provisions hereof.
(iii) Unless Cox receives written notice within one hundred and
twenty (120) days that the City disapproves Cox's request,
the City's approval shall be deemed granted.
f. The maximum number of access channels which may be required
under this Franchise shall be five (5), subject to the City's right to
exchange channels, as set forth herein. On six months notice to
Cox, City may exchange each analog PEG channel for four (4)
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digitally compressed channels upon satisfaction of the following
conditions:
(i) Cox provides digitally compressed channels which offer at
least as many services as are available by analog channels
on the system; and
(ii) Digital decompression terminal devices are installed in the
homes of a least 50% of Cox's subscribers, and are used to
receive Cox's services; and
(iii) City provides six (6) months notice to Cox.
(iv) City provides written waiver of any state or federal laws
pertaining to requirements for the placement of such
channels.
As used in this section, a "digitally compressed channel" shall mean a data
stream capable of delivering video programming on a basis comparable to
the delivery of other digitally compressed video programming.
3. The City shall have sole responsibility for the administration and
programming of the Governmental channel(s) provided by Cox, including
without limitation, the carriage of programming on the channel(s) to
include trafficking of tapes and playback and the establishment and
administration of all rules, regulations and procedures pertaining to the use
and scheduling of the programming presented over the channel(s). The
channel(s) shall be used for noncommercial, public, governmental or
educational programming. In relation to the public access channel(s), Cox
shall continue its current practices of providing studio facilities,
equipment, trafficking of tapes, playback, for public access users in a
quality and quantity generally consistent with that provided over the past
franchise tern.
4. City and Company acknowledge that there are certain logistic and
technical issues that remain unresolved as of the Effective Date due to the
fact that two separate cable companies provide cable service in the City of
Newport Beach and the City Hall main operation for PEG Channel(s)
resides in the cable service area of another cable service provider.
Company agrees to work in good faith to resolve any logistic and technical
issues to ensure seamless quality and continuity of PEG channel(s) access
by the City's citizens including but not limited to:
(i) Allowing physical playout equipment and signal to remain
at Company's Rancho Santa Margarita facility or arranging
for transfer of decks and racks in the City Hall area at a
mutually agreeable location;
■
Cox -CNB Franchise Agreement
Page 14
(ii) Ensuring that signal transmission/reception mutual
exchange across cable service boundaries is accomplished;
and
(iii) Ensuring continuation of transmission/reception across the
two cable system.
B. A Grant in the amount of sixty dollars ($60.00) per Basic Service Tier subscriber
( "BST") of Cox in the City as of the Effective Date ( "Threshold Subscribers ")
shall be paid by Cox to be utilized for any capital or non - capital purposes (the
"Initial Grant "). Said Initial Grant shall be paid by Cox within thirty (30) days of
the Effective Date of this Agreement.
C. On January 1, 2010, the City shall provide Cox with a list of newly constructed
residential units which have been constructed in the City subsequent to the
Effective Date, if any, (the "Construction List"). Within thirty (30) days of
receipt of the Construction List, Cox shall determine and report in writing to the
City the number of newly constructed units which are BST Subscribers as of that
date (the "New Construction Subscriber List "). Cox shall also report to the City
the number of BST Subscribers contained in the City other than those subscribers
set forth on the New Construction Subscriber List (the "Continuing Subscribers ").
Within ten (10) days thereafter, Cox shall pay to the City an additional grant (the
"Additional Grant ") equal to the number of New Construction Subscribers, less
the difference between Threshold Subscribers and Continuing Subscribers times
$30.00 per subscriber.
D. City and Cox agree that said Initial Grant and Additional Grant are neither
franchise fees nor offsettable against franchise fees, irrespective of how they are
expended, for the purposes of the Cable Act. City shall waive normal permit fees,
but not inspection fees, for residential dwelling units, constructed subsequent to
the Effective Date in new subdivisions where Cox installs its cable television
plant in otherwise open trenches along with other utilities at the time of new
subdivision construction. Other than the waiver of normal permit fees as
provided above, Cox will comply with all other City requirements.
E. In the event any dedication to PEG Programming required by this Franchise is
deemed by a legislative body, administrative body, or court of competent
jurisdiction to constitute a payment which must or may be offset against the
franchise fee, City hereby reserves the right, but is not required to do so, to
terminate said program and/or requirement so as to provide the maximum
allowable franchise fee. Cox shall not offset any charge, of any kind, against a
franchise fee or other payment due City without prior written consent of City.
Nothing in this Franchise is intended, and shall be so construed, to confer any
third party beneficiary rights on any party(s), and no rights are created by this
Agreement other than rights in City and Cox.
10
Cox -CNB Franchise Agreement
Page 15
10. Governmental and Institutional Drop Policy; Provision of Live Local Insertion Locations.
A. Drops to City Facilities.
Within one hundred eighty (180) days of written notice provided by the City, Cox
shall provide, without charge, up to four (4) cable drops, as determined by City,
for all levels and all tiers of Cable Service per building, excluding premiums and
pay - per -view, a cable modem drop, and cable modem service (residential speed of
up to 3 mbs) per drop for those buildings, institutions and facilities on Exhibit
"A ", plus those buildings, institutions and facilities which are constructed
subsequent to the Effective Date of this Franchise Agreement, as designated by
City in writing. Except for a City Hall which shall be served irrespective of
distance if it is located in the Service Area, existing or future, which Cox shall
construct at its sole expense, drops to all buildings, institutions and facilities
which are constructed subsequent to the Effective Date of this Franchise
Agreement shall be limited to 250 feet from the closest point to Cox's distribution
system. In the event that requested drops exceed said distance, Cox shall
determine the incremental cost beyond said distance and the City shall pay such
incremental costs to Cox upon completion of construction. Cox shall not impose
programming or other charges for any additional outlets within said buildings.
Installation and maintenance of interior wiring of said building(s) beyond the four
(4) drops per building shall be the responsibility of the building owner, provided
that if Cox is requested to install such wiring, it will do so within a reasonable
time at its actual cost of labor and materials.
B. Live Insertion Locations.
Within one hundred eighty (180) days of written notice provided by the City, Cox
shall provide live insertion points at the locations set forth on Exhibit `B" by way
of fiber connection so that the City can insert and transmit audio, video, and
digital programming from said site to Cox's headend for retransmission over one
or more of the PEG Channels specified in Section 9(A) (collectively, the "Return
Feeds "). The Return Feeds shall be constructed pursuant to technical standards
mutually agreed upon by Cox and the City (the "Design Specifications "). The
City shall possess no obligation to insert programming upon the Governmental
Channel pursuant to Section 9(A)(3) until such time as the Return Feeds are
constructed and activated pursuant to the Design Specifications. Within one
hundred and twenty (120) days of the completion and activation of the Return
Feed, any playback of local government programming or insertion of audio, data
or other information on the Government Access channel shall be the sole
responsibility of the City.
11. Services and Broad Categories of Video Programming.
Cox should provide, at a minimum, the following broad categories of services and video
programming: local broadcast, public affairs, satellite services, news, sports, cultural,
foreign language programming, general entertainment, and children's. If any listed broad
61
Cox -CNB Franchise Agreement
Page 16
category of service or video programming shall become unavailable, or is commercially,
impractical, or cannot be provided under existing FCC regulations, Cox should provide
substitute programming of the same category if reasonably available. City may request
Cox to cooperate with City in developing and distributing a printed PEG channel guide at
City's cost. Said printed guide shall be of a reasonable weight and size and could
include, but is not limited to, a printed guide distributed through the bills, via direct mail,
or included in local newspaper or Cox's printed guide, all at City's cost, if any, but shall
not include advertising. If City requests Cox to distribute a printed guide through the
bills, Cox shall comply so long as City produces said guide at its own cost for production
and insertion and provides Cox sufficient advance notice and there is room for said guide
in Cox's billing envelopes, and said guide does not take the place of other inserts desired
by Cox. City shall have complete responsibility for the content of any information
included in said guide: The payments by City referred to in this Section shall be limited
to reimbursing Cox's actual incremental cost of providing and distributing the guide.
12. Minimum System Design and Capacity Requirements.
A. Channel Capacity.
The cable television system shall be constructed with hybrid fiber coax ( "HFC ")
architecture and engineered to deliver signals at forward frequencies up to and
including a minimum bandwidth of seven hundred and fifty (750) megahertz
(MHz) on the Residential Network. The System will be engineered to allow
simultaneous downstream delivery of no less than one hundred ten (110) analog
video channels and shall be constructed pursuant to the specifications and routing
described herein.
B. Interactive Capacity and Services.
The cable television system shall be two -way activated in all of the distribution
plant.
C. Minimum Design Criteria.
In addition to the requirements of Section 12(A) -(B) above, minimum system
construction requirements shall be as follows:
Cox shall at all times maintain equipment capable of providing standby
power for the entirety of the cable system for a minimum of two hours.
Emergency Override System.
a. Cox shall provide, install, activate, and maintain an emergency
override system which includes audio override on all analog
channels of Cox's system and character generated message
capabilities on a designated channel, receivable only within the
City. City shall be able to activate, provide audio programming,
and terminate such emergency audio override via dial -up or
1t
13.
14.
Cox -CNB Franchise Agreement
Page 17
dedicated telephone control upon system upgrade. City shall use
the audio override and character generated system only in
emergency situations, as declared by the City Council or the City
Manager when there is threat to the public welfare, health or
safety.
b. In addition to subsection (a) above, and in accordance with the
provisions of FCC Rules and Regulations Part 11, Subpart D,
Section 11.5(h)(1), and as such provisions may from time to time
be amended, Cox shall install and maintain an Emergency Alert
System (EAS). As allowed by FCC Order FCC 97 -338, Paragraph
33, Cox shall transmit all national, state, and local activations of
the Federal EAS, utilizing the four -part message protocol specified
in FCC Rules and Regulations Part 11, Subpart B, or successor
protocols. This shall include such local and state -wide situations
as may be designated to be an emergency by the Local Primary
(LP), the State Primary (SP) and/or other authorities identified and
defined within FCC Rules and Regulations, Part 11 or the Local
and State Plans provided for under those rules.
3. Cox shall provide subscribers, upon request, with a parental control
locking device or digital code or other means that permits inhibiting the
viewing of parental designated channels.
4. All new underground trunk and distribution cables shall be in conduit.
5. Minimum Technical Standards for Forward (Downstream) and Reverse
(Upstream) Directions.
The minimum technical standards shall be those adopted by the FCC from
time to time. To the extent that no FCC standards exist, the standards
shall be those FCC technical standards in effect on the Effective Date, or,
if none, those established by City.
Universal Service.
Cox shall design, construct and maintain the cable television system in such a manner as
to pass by every existing single or multiple - family dwelling unit in the City and shall
make the system available on an identical basis to all single or multiple family dwelling
units constructed during the term of this Franchise. For new construction in residential,
and industrial areas, Cox shall make the system available at the, same time as. the units,
residential, or otherwise, are constructed. Nothing herein shall preclude Cox from
providing service to multi - family dwellings and other residential developments on a
discounted bulk- billing basis.
System Extension Policies.
Description of Service Area(s).
Cox -CNB Franchise Agreement
Page 18
A. The service area shall constitute that portion of the City set forth on Exhibit "C"
(the "Service Area").
B. All subscribers, residential, or otherwise, within one hundred twenty -five (125)
feet from the closest public right -of -way or easement, shall be provided service
for the standard installation fee. Subscribers located beyond one hundred twenty-
five (125) feet from the closest public right -of -way or easement will be connected
upon the payment of Cox's time and materials for that portion of the installation
which exceeds one hundred twenty -five (125) feet.
15. Provision of Service.
Unless the subscriber requests otherwise, Cox shall deliver initial service within seven (7)
business days after receipt of a subscriber order so long as the subscriber is within the
existing Service Area. Service additions or deletions shall be made within twenty -four
(24) hours of a subscriber request, unless additional terminal equipment is required, in
which case Cox shall make such service change within seven (7) calendar days. Cox
shall provide all subscribers, prior to the initiation of cable service and thereafter, with
the ability to subscribe to only Basic Service.
16. Technical Standards Testing.
A. Cox's cable television system shall be periodically tested by Cox, at Cox's sole
expense, at the times, and pursuant to the procedures, described in the then
applicable rules and regulations of the FCC or, if no such rules and regulations
exist, in the manner prescribed in rules and regulations in effect on the Effective
Date.
B. Reimbursement of City Expenses. City shall bear all costs associated with its
attendance, either directly or through an independent consultant, in the initial
testing but not retesting procedure described herein except as provided below:
1. Upon written request by the City and based on a pattern of customer
complaints to the City regarding system performance, Cox shall measure
and report to City the number of service complaints, which related to
customer dissatisfaction with the quality of the picture excluding partial or
tonal system outages. The number of said complaints over a twelve (12)
month period shall be divided by twelve (12) and constitute the "base year
average monthly subscriber complaints" for the purposes of this
paragraph.
2. At the conclusion of said twelve (12) month period, Cox shall calculate
and report to City monthly the number of subscriber complaints relating to
the quality of the picture ( "Monthly Subscriber Complaints "). Said
information shall be provided to City within fifteen (15) working days of
the last day of each calendar month.
2D
Cox -CNB Franchise Agreement
Page 19
3. So long as Monthly Subscriber Complaints, as defined herein, remain
within twenty percent (20 %) of the base year average monthly subscriber
complaints, as defined herein, City shall bear all costs relating to its
participation in the technical standards testing process defined herein.
However, if, for any given two (2) consecutive months or any three (3)
nonconsecutive months in any six (6) month period, said Monthly
Subscriber Complaints increase more than twenty percent (20 %) over the
base year average Monthly Subscriber Complaints, Cox shall reimburse
City for City's actual and reasonable cost of supervising and /or
participating in the technical standards testing for a three (3) quarter
period commencing upon the occurrence of the contingency(ies) provided
herein if the unsupervised periodic testing, as defined herein, indicates that
Cox's system during said period is operating in conformance with the
technical performance standards provided by Section 12 hereof, Cox shall
reimburse City for any and all costs incurred by it in monitoring Cox's
technical standards testing for twelve (12) months subsequent to a
determination by City that liquidated damages pursuant in Section
10(3)(1) may be imposed.
4. Subscriber Complaint Log. Cox shall maintain a written or computerized
record of subscriber complaints, including: loss of signal requiring a field
visit, non - receipt of programming or services ordered, billing disputes,
missed appointments, unsatisfactory performance of maintenance,
malfunctioning signal traps on blocked channels, and unresolved or
chronic technical problems. Said record shall indicate:
a. Date and time of Subscriber complaints;
b. Street name of complainant;
C. Nature of complaint;
d. Cox's action(s) to resolve complaint; and
e. Date(s) and time(s) actions(s) taken.
Said record shall be kept at Cox's local office for a period of two (2)
years. A copy of said Subscriber complaint record shall be submitted by
Cox to City within ten (10) working days following receipt of a written
request by City.
5. To the extent that Cox maintains and provides Subscriber complaint
information consistent with the above requirements, it shall be deemed to
have maintained and provided sufficient Subscriber complaint information
as required by this paragraph.
PA
Cox -CNB Franchise Agreement
Page 20
17. Equipment in Rights of Way.
A. Design and construction requirements, permit and other fees, public and
customers notifications, requirements for public communication, and other
oversight requirements by City imposed on Cox shall be consistent to the extent
legally permissible and technically feasible, with those requirements imposed
upon other users of the public rights -of -way and easements within the City.
B. The Cable System shall be constructed or installed in the City only after the
express written approval of the City and only at such locations and in such
manner, design, and size as shall be approved by the City. In granting such
approvals, the City shall exercise reasonable discretion in accordance with
applicable law. Upon Cox's written request, City staff shall meet and confer with
Cox in order to develop a process for expediting City processing and approval of
proposed Cable System installation of multiple "like- kind" facilities.
C. The Cable System shall be placed underground or where all other utilities are
located in all areas which are subject to the provisions of the NBMC unless
otherwise approved by the City Engineer. Such approval shall not unreasonably
be withheld.
D. All construction or maintenance work shall be conducted in a good and
workmanlike manner consistent with industry standards. Installation of new
facilities shall occur, whenever practical, concurrent with the installation of
subdivision public improvements.
E. Upon its receipt of reasonable advance notice, not to be less than five (5) business
days, Cox shall, at its own expense, protect, support, temporarily disconnect,
relocate in the Public Way, or remove from the Public Way, any property of Cox
when lawfully required by City by reason of traffic conditions, public safety,
street abandonment, freeway and street construction, change or establishment of
street grade, installation of sewers, drains, gas or water pipes, or any other type of
structures or improvements by the Franchising Authority; but, the Cox shall in all
cases have the right of abandonment of its property.
18. Franchise Term.
The term of this franchise shall commence upon its approval by the City Council (the
"Effective Date "), and shall expire on April 1, 2011. At Cox's written election filed with
the City no later than January 1, 2010, Cox may extend the Initial Term by seven (7)
additional years so that the Franchise will expire on April 1, 2018.
19. Most Favored Nations Review.
A. At any time and at City's request, Cox shall provide information on any Cable
Services not being provided in the City which are being provided on an
operational basis in systems operated by Cox, or any affiliate thereof in the States
of California, Arizona and Nevada (the "Comparison Systems "). For purposes of
N
Cox -CNB Franchise Agreement
Page 21
this section, "operational basis" means that Cox has offered a Cable Service to all
Subscribers in the Comparison Systems for at least six (6) months, but does not
include Cable Services that are offered on a trial or test basis to a limited number
of subscribers.
B. If Cox is providing Cable Services on an operational basis in any Comparison
Systems, City may require Cox, and Cox shall comply, to provide said Cable
Service(s) within one (1) year of the City's written request, and to upgrade its
Cable System, if necessary, to provide said Cable Service. Further, City shall
reasonably consider not requiring such service based upon information supplied
by Cox but, after considering said information, may still require the provision of
these Cable Services.
C. After the Effective Date of the Franchise, if Cox, or any affiliate, parent, or
subsidiary thereof, enters into any renewal, franchise extension, of a franchise or a
new franchise to provide cable television service to any city located within
Orange County or the County of Orange itself, within thirty (30) days thereof,
Cox shall provide to the City a copy of the Other Franchise.
D. In the event that the City concludes that the Other Franchise contains terms,
conditions or provisions regarding Public, Educational or Government access (the
"PEG Access Provision "), including, without limitation, the financial support
thereof) or Cable System Technology (i.e., channel capacity, services offered,
etc.) (hereinafter the, "Technology Provision "), as originally contained therein or
as modified that are more favorable than those contained in the Franchise, when
considering the Franchise and its requirements as a whole, then the City may, at
its sole discretion, require Cox to provide the more favorable PEG Access
Provision and the more favorable Technology Provision, or either of them;
provided, however, (1) the City must notify Cox in writing of its election to
require Cox to provide the more favorable provision within one hundred eighty
(180) days of the City's receipt of the Other Franchise or the City shall be deemed
to have irrevocably declined to impose such requirement; and (2) any requirement
imposed pursuant to this paragraph of the Franchise to incorporate the more
favorable PEG Access Provision and the Technology Provision, or either of them,
shall also include, upon Cox's identification and request, the imposition of any
and all other terms or conditions in the Other Franchise which are more favorable
to Cox than those contained in the Franchise when considering the Franchise and
its requirements as a whole, (by way of example, if the Other Franchise contains a
franchise fee less than the franchise fee in the Franchise or has a term longer than
the term of the Franchise, then the Franchise shall be modified to include such
more favorable terms to the City at the same time that the Franchise is modified to
include the more favorable PEG Access Provision or the more favorable
Technology Provision).
E. Cox shall provide the same Cable Services to customers in the City as it provides
to customers in communities served off the same headend as of the date of this
Agreement. In the event Cox deploys new or different Cable Services as a result
I
Cox -CNB Franchise Agreement
Page 22
of a Cable System upgrade in one or more of the communities served off the same
headend as of the date of this Agreement, then Cox shall deploy those new or
different services within 24 months to customers in the City provided however
Cox may request an extension for good cause and the City may or may not in its
discretion consent to the extension.
20. Construction Responsibility.
Cox shall be responsible for the acts and omissions of its contractors, subcontractors and
employees. Only authorized employees and/or agents of Cox shall apply for and be
issued all necessary permits and building authorizations. Cox shall designate to City a
construction manager who is an employee of Cox to be contacted regarding all cable
construction issues.
21. Compliance with Construction Standards.
Cox shall not construct any portion of its cable television system in City streets and
rights -of -way without obtaining all necessary City building permits and paying in
addition to, the franchise fee, all then applicable fees to the extent legally and practically
feasible to be required of all users of the public rights -of -way and public utility easements
and shall only construct said system in accordance with City standards for methods of
construction in public rights -of -way.
22. Compliance with all Laws and City Orders and the NBMC.
A. Cox shall at its own cost and expense comply with all statutes, ordinances,
regulations and requirements of all governmental entities, including federal, state,
county or municipal, whether now in force or hereinafter enacted. In addition, all
work prepared by Cox shall conform to applicable City, county, state and federal
laws, rules, regulations and permit requirements.
B. Cox shall promptly comply with all lawful City orders, resolutions and the
NBMC related to Cox's operation of the System, including all lawful rate orders.
Failure to so comply shall be considered a breach of this Franchise and shall
subject Cox to (1) all liquidated damages contained in this Franchise and the
NBMC, and (2) all other actions, remedies and penalties available to City as a
result of such. failure to comply.
23. City may require, at its option, that performance audits of the System be conducted every
two (2) years by an independent technical consultant selected and employed by City at its
sole expense to verify that the System complies with all technical standards and other
specifications of the Franchise.
24. Franchise Construction.
This Franchise shall be construed according to the internal laws of the State of California
and all federal laws of the United States. Any action brought relating thereto must be
brought exclusively in the state or federal courts located in Orange County, California.
I
Cox -CNB Franchise Agreement
Page 23
25. Notices.
Any notice required to be given by this Agreement shall be presumed given five (5) days
after deposit in the United States mail, properly addressed by certified mail and return
receipt requested, as follows:
To City: City Manager
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
With a COPY to: City Attorney
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
To Cox: Cox Com, Inc.
Cox Communications Orange County
29947 Avenida de las Banderas
Rancho Santa Margarita, CA 92688
Attn: Vice President, Government Affairs
With a COPY to: Cox Com, Inc.
Attn: Director, Government Affairs
1400 Lake Hearn Drive
Atlanta, GA 30319
26. Pass- Through of Expenses.
Cox will not separate out, line itemize, or surcharge the cost of the Initial Grants and the
Additional Grants described in Section 9 or any other cost related to this Agreement
(except the franchise fee) as a line item on City customer's cable bills. Additionally, Cox
shall not impose rates and charges on subscribers which are higher for like -kind services
or of packages of services than those imposed upon subscribers in any of the cities of
Mission Viejo, Laguna Hills, Tustin, Rancho Santa Margarita, and Aliso Viejo.
27. Possessory Interest.
By accepting this Franchise, Cox acknowledges that notice is and was hereby given to
Cox pursuant to California Revenue and Taxation Code Section 107.6 that use or
occupancy of any public property pursuant to the authorization herein set forth may
create a possessory interest which may be subject to the payment of property taxes levied
upon such interest. Cox shall be solely liable for, and shall pay and discharge prior to
delinquency, any and all possessory interest taxes or other taxes levied against Cox's
right to possession, occupancy or use of any public property pursuant to any right of
possession, occupancy or use created by this Franchise. Cox shall not be barred from
challenging such try on any amounts assessed pursuant thereto.
I
Cox -CNB Franchise Agreement
Page 24
28. Rates.
City may, without amendment of this Franchise, regulate Cox's rates, charges, and prices
to the maximum extent permitted by law.
29. Force Majeure.
In the event Cox's performance of any of the terms, conditions, obligations or
requirements of this Franchise is prevented or impaired due to any cause beyond its
reasonable control and not reasonably foreseeable, such inability to perform shall be
deemed to be excused, and no penalties or sanctions shall be imposed as a result thereof.
Such causes beyond Cox's reasonable control and not reasonably foreseeable shall
include, but not be limited to, any acts of God, civil emergencies, labor unrest, strikes,
inability to obtain access to an individual's property and any inability of Cox to secureall
necessary permissions or permits to utilize necessary poles or conduits so long as Cox
utilizes due diligence to timely obtain said permissions or permits.
30. Meet and Confer.
Prior to exercising any rights of audit or inspection upon Cox pursuant to Section
5.44.130 of the NBMC, City and Cox shall reasonably attempt to meet and confer to
achieve voluntary compliance.
31. Interpretation.
The terms of this Franchise shall be construed in accordance with the meaning of the
language used and shall not be construed for or against either party by reason of the
authorship of the Franchise or any other rule of construction which might otherwise
apply. _
In recognition of the obligations stated in this Agreement, the parties have executed this
Agreement on the date indicated above.
ATTEST:
LaVonne Harkless, City Clerk
APPROVED AS TO FORM:
COX COM, INC.
Its:
CITY OF NEWPORT BEACH
William M. Marticorena, Special Counsel Its:
Cox -CNB Franchise Agreement
Page 25
EXHIBIT A
Drops to City Public Buildings, Institutions and Facilities
1. Central Library — 1000 Avocado Avenue
2. Police Department — 870 Santa Barbara Drive
3. Fire Station 3 — 868 Santa Barbara Drive
4. Fire Station 5 /Corona del Mar Library -410 & 420 Marigold Avenue
5. Fire Station 8 — 6502 Ridge Park Road
6. Big Canyon Reservoir— 3300 Pacific View Drive
7. Oasis Senior Center — 800 Marguerite Avenue
8. Grant Howald Park/Community Youth Center - 3000 Fifth Avenue
9. Newport Coast Community Center — NPCoast Drive & San Joaquin Rd
10. Between the Police Facility and Newport Coast Fire Station
11. Andersen Elementary —1900 Port Seabourne Way
Al
Cox -CNB Franchise Agreement
Page 26
EXHIBIT B
Live Local Insertion Locations
1. Police Department Emergency Operations Center
2. Central Library Friends Meeting Room
3. Oasis Senior Center Community Meeting Room
4. Newport Coast Community Center Meeting Room
a$
Cox-CNB Franchise Agreement
Page 27
EXHIBIT C
Cox Service Area
Cable Proeider
111.1F11
�A
CITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 3
June 27, 2006
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: City Managers Office
Dave Kiff, Assistant City Manager
949/644 -3002 or dkiff @city.newport- beach.ca.us
SUBJECT: CABLE TELEVISION: ORDINANCE 2006- ADOPTING A FRANCHISE
AGREEMENT WITH COX COMMUNICATIONS
ISSUE:
Should the City enact an ordinance that adopts a new Franchise Agreement with Cox
Communications?
RECOMMENDATION:
1. Introduce Ordinance No. 2006 - relating to the adoption of a Cable Communications
Franchise Agreement with Cox Communications;
2. Pass to second reading on July 11, 2006.
DISCUSSION:
As far back as 1966, the City of Newport Beach has had a Cable TV Ordinance and separate
"franchise agreements" with two cable providers. Today, those providers are Cox
Communications and Adelphia (see service areas on map below). The agreements have been
extended several times:
ADELPHIA FRANCHISE AGREEMENT
• Agreement adopted December 1966 -15 -year term (to 1981).
• Amended December 1970 -term reset again to 15 years (to 1986).
• Amended April 1986 -term extended by five years (to 1991)
• Amended October 1991 -term extended to January 27, 2002.
• Amended December 11, 2001 -- term extended to January 27, 2003.
• Amended January 27, 2003 -- term extended to January 27, 2004 (now on holdover
status)
COX FRANCHISE AGREEMENT
Agreement adopted December 1966 -15 -year term (to 1981).
Cox Communications Franchise and Ordinance
June 27, 2006
Page 2
• Amended November 1981 -term extended for 10 years (to 1991).
• Amended October 1991 -term extended to January 27, 2002
• Amended December 11, 2001 -- term extended to January 27, 2003.
• Amended January 27, 2003 -- tear extended to January 27, 2004 (now on holdover
status).
('able TV Franchise Areas
\ .'
cE"
$' ('iq' of TJre'Fr rt lw+.ai. /
\
i �/� i `.✓
\
$
656,558
f
266,671
$
923,229
[71 jIn,,v.,- a1
$
722,714
$
280,602
$
1,003,316
- -2001
$
705,709
$
395,824
$
1,101,533
- -2002
$
714,762
$
394,732
$
1,109,494
- -2003
$
640,330
$
470,404
$
1,110,734
- -2004
$
766,343
�
494,411
a
� v v
� ✓ t �:
$
411,480
$
,nv ,
$
813,494
Al.la.lpe
a i v. c"
J
?tISN -2fiF
# of homes passed in Franchise Area x 31,123 13,900 x45,023
# of cable N subscribers 16,978 10,100 27,078
% of homes passed that subscribe to cable 55% 73% 60%
x
-- 1999 (Calendar Year)
$
656,558
$
266,671
$
923,229
- -2000
$
722,714
$
280,602
$
1,003,316
- -2001
$
705,709
$
395,824
$
1,101,533
- -2002
$
714,762
$
394,732
$
1,109,494
- -2003
$
640,330
$
470,404
$
1,110,734
- -2004
$
766,343
$
494,411
$
1,260,753
-- 2005 (to date, includes 4th Q'04)
$
411,480
$
402,014
$
813,494
Cox Communications Franchise and Ordinance
June 27, 2006
Page 3
In May of 2004, the City adopted a new Cable Communications Franchises Ordinance (Chapter
5.44 of the NBMC). Since that time, the staff team (Bill Marticorena of Rutan and Tucker,
Assistant City Attorney Aaron Harp (as well as City Attorney Robin Clauson), Assistant City
Manager Dave Kiff, and PIO Marilee Jackson) has worked to negotiate two new franchise
agreements (which mirror each other) with Cox and Adelphia. Adelphia's bankruptcy filing and
subsequent sale of Adelphia assets to Time Warner greatly complicated our discussions.
Preparing for the franchise renewals, the City Council worked with us to amend or wholly re-
vamp three different ordinances (Public Right -of -Way, Cable Communications Franchises, and
Wireless Telecommunications) to lay a framework for the Agreements and for the overall
industry's work in the area. Those tasks are complete.
Generally, the negotiations with both Cox and Adelphia/Time Warner have centered around
template agreements - 95% of the template is a fairly standard version of the agreements that
Mr. Marticorena's clients (cities and counties) have adopted in recent years. The remaining 5%
of the discussions have centered around:
• How many channels will be dedicated for PEG -- now and in the future (in case our
community programming grows).
• How much money might be forthcoming for a one -time capital grant to enable us to
install one -time projects like cameras in City Hall, a computer editing bay, and more.
• How many remote City facilities will be hooked up with a network (called the
"Institutional" or "I -Net" we talk about).
• How much will the companies provide on an ongoing basis per subscriber to support
community programming.
Not surprisingly, areawide research shows that Cox and Adelphia have given a variety of capital
grants, a variety of sums per subscriber, and different ]-Net services to different municipalities.
The City has been fairly aggressive in stressing that we know what other cities have received
and that we expect similar treatment by our cable providers.
Additional Background. In the 1960s, when the City of Newport Beach entered into two
separate franchise agreements with companies that provide cable television service, cities
across the nation had a significant amount of say in cable companies' operations, including:
• Rates and rate increases;
• Customer service standards; and
• Channel selections and placement
Cities were able to dictate these aspects of cable companies' operations because the cable
companies used the public right -of -way to lay the cable "plant" (plant includes coaxial cable,
boxes in the rights -of -way, connections to homes, etc).
Federal law has changed significantly since the City adopted its franchise agreements - and
both Federal and State law will continue to affect us in the years to come. The changes, in part,
took away almost all of cities' regulatory abilities relating to cable and moved them to the
Cox Communications Franchise and Ordinance
June 27, 2006
Page 4
Federal Communications Commission (FCC or www.fcc.gov). Today, several different laws,
ordinances, and agreements direct our decisions about cable television.
The Effect of Changes in Law. It's important to remind the Council and Newport Beach
residents that:
FCC regulates rates, not cities. The FCC alone has the power to regulate rates and
channel selections, with the lone exception of rate regulation on the basic service tier of
channels (typically Channels 2 -13 and PEG channels). Cities can only regulate basic tier
rate increases if fully certified by the FCC to do so. Cable customers should note that
cable companies rarely, if ever, raise the rates on this tier - much more frequent are rate
increases on the larger (and unregulated) broadcast basic tier(Channels 14 -65 and up).
Other tiers are generally unregulated. In March 1999, the FCC (generally) deemed many
cable systems subject to "effectivE� competition" from satellite dish services and removed
almost all rate regulation from cable TV.
Cable TV in Newport is not literally a monopoly. Cities like Newport Beach have non-
exclusive franchise agreements. Any cable provider can come into the city limits,
negotiate a franchise agreement, lay new cable, and compete directly with either Cox or
Adelphia. Similarly, Cox can attempt to compete directly with Adelphia and vice - versa.
But doing so requires significant investment in new cable infrastructure, because each
cable company owns the cable in the ground (and on poles). Very few companies
anywhere in the nation "overbuild" other systems.
Denial of renewal is extremely difficult and expensive. Cities cannot typically deny a cable
provider an opportunity to renew an existing franchise agreement.
Internet services are unregulated. Courts have ruled that the provision of Internet service
over cable is not a cable - related service and therefore not subject to municipal regulation.
Newport Beach can do very little to help cable customers interact with their Internet
Service Providers (ISPs).
Many more changes are expected. Legislation in both Sacramento and Washington
propose "statewide" franchises for telephone and cable providers - these may supercede
local agencies' franchise abilities and some or all franchise revenue.
A note about the City Charter. The City Charters section on franchises (Article XIII) requires the
City Council to adopt franchises via ordinance and to hold a public hearing prior to granting a
franchise. It limits all franchise terms to 25 years or less if a determinate term is stated. The
Article allows indeterminate terms but specifies that the City may end the franchise and possess
the franchisee's property if the franchisee is out of compliance with the franchise agreement
(Section 1302).
Franchise Discussions. Since at least Fall 2000, the City has retained Mr. Marticorena to assist
us in our telecommunications work. Mr. Marticorena has extensive experience in all phases of
franchise renewals and ordinance amendments. Additionally, upon recommendation of the
Telecom Committee, we hired Sue Buske of the Buske Group to conduct a statistically valid
Cable Needs Assessment (CNA) to determine the community's desires and concerns regarding
cable TV (for more information about the Assessment itself, see the Agenda Item from April 8,
2003 whereby the City Council formally accepted the Assessment).
Given the problems with Adelphia (and generally no one there with whom to negotiate), we used
the Assessment and the Statement of Minimum Goals to work with Cox on a new Franchise
Cox Communications Franchise and Ordinance
June 27, 2006
Page 5
Agreement. A Franchise Agreement is separate and distinct from a new Cable Communications
Ordinance as follows:
• The Ordinance reflects the regulatory environment and practices that any cable provider
must follow while doing business in the City.
The Agreement(s) reflects specific permission to a specific company to use the public
right -of -way to operate a cable system. Included in the permission are negotiated terms
by the company and the City as to adequate compensation paid to the City and its
residents for the use of the right -of -way. Adequate compensation may include the 5%
franchise fee, dedication of equipment, dedication of specific channels and support for
Public, Educational, and Government (PEG) services, and more.
The Proposed Franchise Agreement with Cox. The attached Franchise Agreement - which, as
noted, must be adopted by Ordinance - has the following key provisions:
TERM:
Until April 1, 2011 -with an option to extend to April 1, 2018
FRANCHISE FEE:
5%
LETTER OF CREDIT:$17.25
per subscriber
BANDWIDTH
At least 750 Mhz
LOCAL OFFICE:
Within 20 miles
PEG SUPPORT:
Initial grant of $60 /subscriber (roughly $660,000); and
Additional grant of $30 /new subscriber over 2006's numbers in 2010.
No ongoing PEG support
PEG CHANNELS:
Three immediately, up to 2 more if needed.
OTHER:
Drops provided to City facilities in Cox service area
Undergrounding required
Subscriber Complaint Log kept
Technical Service standards met
Assurance that changes to State or Federal law will not impact Capital
Grant or Franchise Fee payments for the duration of the Franchise Term.
More
This tentative agreement with Cox compares to the negotiated settlement with Adelphia -Time
Warner, via a proposed Memorandum of Understanding (MOU). The MOU twould be binding on
Time Warner for ten years (until December 31, 2016) and includes the following benefits from
Time Warner for the City and its residents:
For support of Public, Educational, and Government (PEG) programming, an Ongoing
PEG Grant of $0.50 per subscriber per month (roughly $120,000 per year). Importantly,
Cox asserts that Cox will not and has not agreed to ongoing PEG support - instead, Cox
offers limited one -time capital grants (thus the higher number at $60 /sub than the below
$28 /sub offered by the Time Warner MOU;
An Initial PEG Access Grant of $28.00 per subscriber (roughly $476,000 on a one -time
basis); and
Maintenance of current 5% franchise fee.
The MOU also directs that the City and Time Warner negotiate a new Franchise Agreement with
the goal of completing the Agreement by December 31, 2006.
Cox Communications Franchise and Ordinance
June 27, 2006
Page 6
Staff agrees with the proposed terms of the Cox Franchise Agreement and recommends that the
Council approve the Cox FA by ordinance as required by the City Charter.
Committee Action: This item came to Council before staff had the opportunity to convene the
Media & Communications Committee, but we have discussed the recommended actions with
the Council Members who serve on the Committee.
Public Notice: This agenda item may be noticed according to the Brown Act (72 hours in
advance of the public meeting at which the City Council considers the item).
Submitted by
—Dave Kiff
cy Assistant City Manager
Attachments: Ordinance No. 2006 -
Draft Franchise Agreement with Cox
Cox Communications Franchise and Ordinance
June 27, 2006
Page 7
ORDINANCE NO. 2006 -
AN ORDINANCE OF THE CITY OF NEWPORT BEACH
GRANTING TO COXCOM, INCORPORATED, A
NONEXCLUSIVE FRANCHISE TO CONSTRUCT,
MAINTAIN AND OPERATE A CABLE
COMMUNICATIONS SYSTEM WITHIN THE CITY OF
NEWPORT BEACH
The City Council of the City of Newport Beach does ordain as follows:
SECTION 1. Definitions.
Wherever in this ordinance the following words or phrases are used, they shall have the
respective meanings assigned to them in the following definitions; and words or phrases
not defined in this section which are defined in any franchise document shall have the
same meaning in this ordinance assigned to them in such franchise document, unless
the context in which they are used shall clearly indicate a different meaning:
(a) "City" shall mean the City of Newport Beach in its present incorporated form or in
any later recognized, consolidated, enlarged or reincorporated form.
(b) "Council' shall mean the present governing body or the City, or any future board
constituting the legislative body of the City.
(c) "Person" shall mean any individual, firm, partnership, association, corporation,
company or organization of any kind.
(d) "Cox" shall mean CoxCom, Incorporated, a Delaware Corporation, doing
business as Cox Communications Orange County, its employees, agents,
successors and assigns.
(e) "Subscribers" shall mean any person or entity receiving for any purpose the
Cable Service of Cox herein.
(f) "Franchise Area" shall mean the territory within the City throughout which Cox
shall be authorized to construct, maintain and operate its system which is
depicted on Exhibit A, which is incorporated herein by this reference, and shall
include any enlargements thereof and additions thereto approved by the City in
writing.
(g) "Franchise Documents" shall mean and shall include all of the following:
(1) Article XIII of the Charter of the City of Newport Beach.
VA
Cox Communications Franchise and Ordinance
June 27, 2006
Page 8
(2) Chapter 5.44 of Title 5 of the Newport Beach Municipal Code as the same now
exists or as it may hereafter be amended.
(3) Any and all rules and regulations governing the operation of Cable Systems
within the City of Newport Beach which are adopted by the City Council.
(4) The written acceptance of a Cable Communications Franchise filed with the City
by Cox.
(5) The Franchise Agreement approved by the Office of the City Attorney executed
by the City and Cox.
(i) "Street" shall mean the surface of and the space above and below any public
street, road, highway, freeway, lane, path, alley, court, sidewalk, parkway, or
right of way whether or net improved, now or hereafter existing as such
throughout the City.
SECTION 2. Grant of Franchise.
There is hereby granted to Cox by the City a nonexclusive franchise to construct, erect,
operate and maintain, in, upon, along, across, above, over and under the public streets,
alleys, public ways and public places, now or in the future dedicated for public use in the
City, poles, wires, cables, underground conduits, manholes and other television
conductors, appurtenances and fixtures necessary or convenient for the maintenance
and operation in the City of a Cable System to transmit television and FM radio signals,
within the franchise area depicted on Exhibit A.
The Cable System herein franchised shall be used and operated solely and exclusively
for the purposes expressly authorized by ordinance of the City of Newport Beach and
no other purposes whatsoever.
SECTION 3. Nonexclusive Grant.
The right to use and occupy said streets, alleys, public ways and places for the
purposes herein set forth shall not bes exclusive, and the City reserves the right to grant
a similar use of said streets, alleys, public ways and places to any person at any time
during the term of this franchise.
SECTION 4. Term of Franchise.
The initial term of this franchise shall commence upon its approval by the Council (the
"Effective Date "), and shall expire on April 1, 2011, provided that Cox has filed written
notice of acceptance and executed the franchise agreement in accordance with the
requirement of Section 9 of this ordinance ('Initial Term "). At Cox's written election filed
with the City no later than January 1, 2010, Cox may extend the Initial Term by seven
3
Cox Communications Franchise and Ordinance
June 27, 2006
Page 9
(7) additional years so that the franchise will expire on April 1, 2018.
SECTION 5. Inclusion of Franchise Documents.
All of the franchise documents applicable to this franchise are hereby incorporated by
reference and made a part of this ordinance. By acceptance of this franchise, Cox
agrees to be bound by all of the terms, provisions and conditions contained in said
franchise documents.
SECTION 6. Right of City to Adopt Additional Rules and Regulations.
The right is hereby reserved to the City to adopt, in addition to the provisions contained
in this ordinance and in any other applicable ordinances and resolutions, such additional
regulations as it shall determine to be necessary or convenient in the exercise of the
police power.
SECTION 7. Prohibited Activities of Cox.
Cox shall be prohibited from directly or indirectly doing any of the following:
(a) Engaging in the business of selling at retail, leasing, renting, repairing or
servicing of television sets, radios or other receiving apparatus, or any part or
component thereof.
(b) Providing any repair service to its subscribers, for a fee or otherwise which
extends beyond the connection of its service and the determination by Cox of the
quality of its signal to its subscribers.
(c) Soliciting, referring, or causing or permitting the solicitation or referral of any
subscriber to any specific named persons firms or corporations engaged in any
business which Cox is prohibited from engaging in by the provisions hereof.
SECTION 8. Transfer of Franchise.
This franchise shall not be sold, transferred, assigned, leased or otherwise disposed of
in whole or in part by voluntary or involuntary sale, merger, consolidation, or otherwise,
without the prior consent of the Council expressed by resolution, and then upon such
terms and conditions as the Council may prescribe. No sale, transfer or assignment
shall be effective until the vendee, assignee or lessee has filed in the Office of the City
Clerk an instrument, duly executed and approved as to form and content by the City
Attorney, reciting the fact of such transfers sale, assignment or lease, accepting the
terms of the franchise, and agreeing to perform all the conditions thereof, including any
additional conditions required by the Council.
SECTION 9. Acceptance of Franchise.
M
Cox Communications Franchise and Ordinance
June 27, 2006
Page 10
This franchise shall not become effective for any purpose unless and until the franchise
agreement is executed by Cox and the City and written acceptance of the franchise
shall have been filed with the City Clerk. The franchise agreement and written
acceptance of the franchise shall be in form and substance as shall be prescribed by
the City Attorney and shall be and operate as an acceptance of each and every term,
condition and limitation contained herein, or otherwise specified by ordinance or
resolution of the City Council. An executed franchise agreement and written
acceptance of the franchise shall be filed by Cox not later than 12:01 P.M. of the
fifteenth (15th) day next following the date of the adoption by the Council of this
ordinance; and, in default of the filing of an executed franchise agreement and written
acceptance of the franchise as herein required, Cox shall be deemed to have rejected
and repudiated the same; and thereafter, the acceptance by Cox of the franchise shall
not be received by the City Clerk and the City shall not execute the franchise
agreement, and such Cox shall have no rights, remedies, or redress in the premises,
unless and until the City Council shall, by resolution, determine that such written
acceptance of the franchise be received and filed and that the franchise agreement be
executed by the City, and then upon such terms and conditions as the Council may
impose.
SECTION 10. Annual Franchise Fee.
Cox shall pay annually to the City during the life of this franchise for the privilege of
operating a Cable System under this franchise the franchise fees and other payments
set forth in the franchise agreement.
SECTION 11: If any section, subsection, sentence, clause or phrase of this ordinance is,
for any reason, held to be invalid or unconstitutional, such decision shall not affect the
validity or constitutionality of the remaining portions of this ordinance. The Council hereby
declares that it would have passed this ordinance, and each section, subsection, clause or
phrase hereof, irrespective of the fact that any one or more sections, subsections,
sentences, clauses and phrases be declared unconstitutional.
SECTION 12: The Mayor shall sign and the City Clerk shall attest to the passage of this
ordinance. The City Clerk shall cause the same to be published once in the official
newspaper of the City, and it shall be effective thirty (30) days after its adoption; provided,
however, that the franchise hereby granted shall not become effective unless and until
Cox files written acceptance thereof and executes and delivers the franchise agreement in
the manner specified in Section 9 of this ordinance and delivers to the City all bonds and
insurance policies required to be furnished in accordance with the requirements of Chapter
5.44 of the Newport Beach Municipal Code and /or the franchise agreement.
SECTION 13: This ordinance was introduced at a regular meeting of the City Council of
the City of Newport Beach, held on the 27`h day of June, 2006, and adopted on the
day of 2006, by the following vote, to wit:
10
Cox Communications Franchise and Ordinance
June 27, 2006
Page 11
AYES, COUNCILMEMBERS
NOES, COUNCILMEMBERS
ABSENT COUNCILMEMBE
MA
ATTEST:
CITY CLERK
CABLE SYSTEM FRANCHISE AGREEMENT
BETWEEN
THE CITY OF NEWPORT BEACH
AND
COXCOM INCORPORATED
13
TABLE OF CONTENTS
SECTION 1 GRANT OF FRANCHISE
N
1.1 Authority 2
1.2 Franchise Term 2
1.3 Scope of Franchise 2
1.4 Conflict with Municipal Code 2
1.5 Definitions 3
SECTION 2 GENERAL REQUIREMENTS 3
2.1
Governing Requirements
3
2.2
Franchise Fee
3
2.3
Letter of Credit
8
2.4
Insurance
10
2.5
Defense and Satisfaction of Claims
14
2.6
Franchise Violations/Liquidated Damages and Other Remedies
16
SECTION 3 SERVICE AREA AND LINE EXTENSION POLICY 20
3.1
Franchise and Service Area
20
3.2
System Extension Policy
21
3.3
Provision of Service
21
3.4
Commercial Areas
22
SECTION 4 SYSTEM CONSTRUCTION
22
4.1
Emergency Override System for Analog and Digital Cable
22
4.2
Standby Power
22
4.3
Parental Control Lock
23
4.4
Status Monitoring
23
4.5
Technical Standards
23
SECTIONS SERVICES AND PROGRAMMING 23
5.1 Services and Broad Categories of Video Programming 23
5.2 Minimum System Design and Capacity Requirements 24
5.3 Local Office 26
5.4 Services for the Disabled 26
SECTION 6 LOCAL CABLE ACCESS AND COX SUPPORT 27
6.1 Company Support for PEG Ac --ess 27
6.2 Governmental and Institutional Drop Policy; Provision of Live Local
Insertion Locations 32
6.3 Compliance with Federal Law 34
SECTION 7 MISCELLANEOUS
34
7.1
Rate Regulation
34
7.2
Reporting Requirements
34
7.3
Technical Standards Testing
36
7.4
"Most Favored Nations' Review
37
7.5
Restrictions against Transfers
39
�0
7.6
Use of the Public Right -of -Way
39
7.7
Construction Responsibility
40
7.8
Compliance with Construction Standards
41
7.9
Compliance with all Laws, City Orders and the Code
41
7.10
Choice of Law
41
7.11
Notices
42
7.12
Successors and Assigns
42
7.13
Separability
42
7.14
Possessory Interest
43
7.15
Meet and Confer
43
7.16
Rights Cumulative
43
7.17
No Waiver
43
7.18
Declaration of Invalidity
44
7.19
Time of the Essence; Maintenance of Records
44
7.20
Force Majeure
45
7.21
Interpretation
45
7.22
Exhibits
45
EXHIBITS
A. Service Area Map
B. Drops to Public Buildings, Institutions and Facilities
C. Live Local Insertion Locations
IS
AGREEMENT
This FRANCHISE Agreement (the "Franchise" or "Agreement ") is made and
entered into this day of July, 2006 at Newport Beach, California, by and between
the City of Newport Beach, a municipal corporation of the State of California ( "City'),
and CoxCom, Inc. ( "Company ").
RECITALS
City is a municipal corporation duly organized and validly existing under the taws
of the State of California with the power to carry on its business as it is now being
conducted under the statutes of the State of California and the Charter of the City of
Newport Beach.
A. Company is incorporated under the laws of the State of Delaware and
provides cable television services in cities throughout the State of California.
B. Section 1300 et seq. of the Newport Beach City Charter authorizes the
City to enter into franchise agreements for cable television services.
C. In 2004, the City adopted Ordinance No. 2004 -8, which enacted Section
5.44 of the Newport Beach Municipal Code ( "Code "), outlining the duties and obligations
for operating a cable television franchise in the City.
D. Pursuant to this Agreement, City desires to authorize Company to provide
non - exclusive cable services within the City.
E. The City Council has determined that the grant of a non - exclusive
franchise to Company to provide cable services is in the public interest.
NOW THEREFORE, the City of Newport Beach hereby grants to Company a
non - exclusive Franchise to operate a cable communications system to provide cable
services in the City of Newport Beach in accordance with the provisions of Chapter 5.44
1
iI,,
of the Code, subject to the terms and conditions set forth in this Agreement.
SECTION 1 GRANT OF FRANCHISE
1.1 Authority
This non - exclusive Franchise has been granted and approved pursuant to the
provisions of the Charter of the City and Chapter 5.44, as amended, of the Code. This
Franchise is in the form of a non - exclusive franchise, contract and agreement.
1.2 Franchise Term
The term of this Franchise shall commence upon its approval by the City Council
(the "Effective Date "), and shall expire on April 1, 2011. At Company's written election
filed with the City no later than January 1, 2010, Company may extend the initial term by
seven (7) additional years so that the Franchise will expire on April 1, 2018.
1.3 Scope of Franchise
A. Company is authorized and obligated to construct, reconstruct,
maintain and operate the System within the public streets and rights -of -way. This
authority includes the privilege to use Company's cable television system in the Service
Area, defined in Section 3.1 below, (hereinafter the "System ") to provide Cable Service
to subscribers in the Service Area located in all residential dwellings, commercial
structures, and industrial structures.
B. This Franchise solely and exclusively creates, defines, and limits
the legal rights and obligations between City and Company and does not, in any way,
obligate the City to take any action, actions or refrain from taking any action, or actions,
to or in relation to any third party.
1.4 Conflict with Municipal Code
The provisions of Chapter 5.44 of the Code are hereby incorporated by reference
as if set out in full, and form part of the terms and conditions of this Agreement. In the
h
event of a direct and clear conflict between the terms and conditions of this Agreement
and the provisions of Chapter 5.44, this Agreement shall prevail.
1.5 Definitions
The definitions contained in Chapter 5.44 of the Code are incorporated by
reference as if fully set forth in this Agreement. Words, terms, or phrases not defined
herein or in Chapter 5.44 of the Code shall first have the meaning as defined in the
Cable Act, and then the special meanings or connotations used in any industry,
business, trade, or profession where they commonly carry such special meanings. If
those special meanings are not common, they will have the standard definitions as set
forth in commonly used and accepted dictionaries of the English language.
SECTION 2 GENERAL REQUIREMENTS
2.1 Governing Requirements
Company shall comply with all requirements of this Agreement, Chapter 5.44 of
the Code and all applicable local, state and federal laws, statutes, ordinances, rules,
regulations, and orders.
2.2 Franchise Fee
A. Company shall pay to City an annual Franchise Fee of five percent
(5 %) of Gross Annual Revenues, as that term is defined in Section 5.44.020 of the
Code. If federal or state law permits an annual Franchise Fee of greater than five (5 %),
the City shall be entitled to the maximum fee allowable by law.
B. If federal or state law permits the Company to provide non -video
Telecommunications Services to Subscribers (such as telephone communications) or
other non -Cable System services through the facilities of the Cable System, and the
City has the authority to collect either a Franchise Fee or an in- lieu -of- franchise fee
payment on such services, then the Company shall pay a fee for revenues derived from
3
I
such services at the rate established in an ordinance and /or resolution adopted by the
City Council.
C. Payments due the City shall be computed quarterly, and shall be
paid within forty -five calendar (45) days after the close of each calendar quarter. The
payment shall be accompanied by a report showing the basis for the computation and
such other facts as may be required by the City to determine the accuracy of the
payment. In the event the Effective Date does not occur on the first day of a calendar
quarter, then Company shall pay the franchise fee for the fractional quarter based on a
per diem basis, within forty -five (45) calendar days after the close the fractional calendar
quarter. A final annual reconciliation, and payment if any, shall be delivered to City by
Company within ninety calendar (90) days after the end of each calendar year.
D. If any Franchise Fee payment or recomputed amount is not made
on or before the dates specified above in Section 2.2 (C), Company shall pay as
additional compensation the greater of the following:
1. An interest charge, computed from the applicable due date,
at an annual rate equal to the prevailing commercial prime interest rate in effect upon
the due date, plus three percent (3 %).
2. In addition to the interest charge on any late payment, if a
payment is late by sixty (60) days or more, Company shall pay a sum of money equal to
five percent (5 %) of the amount due in order to defray reasonable additional
documented and itemized expenses and costs incurred by City as a result of such
delinquent payment.
E. No acceptance of any payment shall be construed as a release of,
or an accord, or satisfaction of, any claim that the City might have for further or
additional sums payable under the terms of this Franchise, or for any other performance
4
IU
by Company of an obligation hereunder. All amounts shall be subject to audit at the
times and in the manner authorized by Section 5.44.130 of the Code.
F. Payments of compensation made by Company to the City under
this Agreement are in addition to, and exclusive of, any and all authorized taxes,
business license fees, and other fees, levies, or assessments now in effect or
subsequently adopted in accordance with state and federal law.
G. Except for the compensation payments expressly required by this
Section, each of the payments or contributions made by, or the services, equipment,
facilities, support, resources, or other activities required to be provided or performed by
Company pursuant to this Agreement, are voluntary and are not "franchise fees" within
the meaning of the Cable Act (47 U.S.C. §542.(g)(2)).
H. The compensation payments due from Company to City pursuant
to this Section shall take precedence over all other payments, contributions, services,
equipment, facilities, support, resources, or other activities to be paid or supplied by
Company pursuant to this Franchise.
I, The compensation and other payments to be made pursuant to this
Franchise Agreement shall not be deemed to be in the nature of a tax, and shall be in
addition to any and all taxes of general applicability or other fees or charges which
Company or any Affiliated Person shall be required to pay to City or to any state or
federal agency or authority, all of which shall be separate and distinct obligations of
Company and Affiliated Persons.
J. Neither Company nor any Affiliated Person shall have or make any
claim for any deduction or other credit of all or any part of the amount of the
compensation or other payments to be made pursuant to this Franchise from or against
any City or other governmental taxes of general applicability (including any such tax, fee,
5
I
or assessment imposed on both utilities and cable operators or their services but not
including a tax, fee, or assessment which is unduly discriminatory against cable operators
or cable subscribers or income taxes) or other fees or charges which Company or any
Affiliated Person is required to pay to City or other governmental agency.
K. Neither Company nor any Affiliated Person shall apply or seek to
apply all or any part of the amount of the compensation or other payments to be made
pursuant to this Franchise as a deduction or other credit from or against any City or
other government taxes of general applicability (other than income taxes) or other fees
or charges, each of which shall be deemed to be separate and distinct obligations of
Company and Affiliated Persons.
L. Neither Company nor any Affiliated Person shall apply or seek to
apply all or any part of the amount of any City or other government taxes or other fees
or charges of general applicability (including any such tax, fee, or assessment imposed
on both utilities and cable operators or their services) as a deduction or other credit from
or against any of the compensation or other payments to be made pursuant to this
Franchise, each of which shall be deemed to be separate and distinct obligations of
Company and Affiliated Persons.
M. City acknowledges that, during the term of this Agreement,
Company may offer to its subscribers, at a discounted rate, a bundled or combined
package of certain cable services that are subject to the franchise fee referenced
above, and other services that are not subject to the franchise fee. With regard to such
bundled or combined services, the following provisions are applicable: During the term
of this Agreement, if Company offers to individual subscribers cable services subject to
the franchise fee that are bundled or combined with non -cable services that are not
subject to the franchise fee, then the revenue from those bundled or combined services
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must be allocated on the basis of proportionality, as follows:
1. The percentage that the price for all bundled services is
discounted from the established retail rates for the individual services, as those rates
are advertised by Company in its marketing materials or published rate cards, will be
prorated across all services in the bundled package, subject to the adjustment
referenced below in Section 2.2(M)(2). By way of example, Company may offer a
bundle of voice, video, and data services for a flat fee of Seventy -Five Dollars ($75.00),
where the aggregate retail rate of those services when purchased on an individual basis
would equal One Hundred Dollars ($100.00). If there is no service in that bundled
package subject to a mandated tariff rate, Company would apply a twenty -five percent
(25 %) discount to each individual service. Thus, if the established retail rate for video
service was then Fifty Dollars ($50.00), Company would recognize revenue in the
amount of Thirty -Seven Dollars and Fifty Cents ($37.50) and would pay a franchise fee
on that amount. Company shall provide the City with any and all requested information
and documents regarding the charge for each individual service for any bundled
package within ten (10) days of the City requesting this information and documents.
2. The revenue derived by Company from cable services that
are subject to mandatory tariff rates imposed by the California Public Utilities
Commission, or any similar governmental rate - setting authority, will be deducted from
the aggregate revenue to determine the revenue that is subject to the franchise fee.
3. Company will not structure the pricing of any bundled or
combined services so as to intentionally or unreasonably cause a reduction in the Gross
Annual Revenue against which franchise the City may impose fees or other
proportionately derived taxes, surcharges, or fees.
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4. If City reasonably determines that Company has unlawfully,
inequitably, or contrary to Section 2.2(M) allocated Gross Annual Revenue between
video services and non -video services so as to reduce its franchise fee payment
obligations, then the parties will meet within fifteen (15) calendar days, upon advance
notice from the City, to discuss the allocation methodology. If the parties cannot resolve
the dispute within a reasonable period of time, then the parties will submit the matter to
a mutually agreeable third party for non - binding mediation. The parties will share the
cost of the mediation equally. If the mediation is not successful, or if the parties cannot
mutually agree upon a mediator, then either party may file an action in a court of
competent jurisdiction in the County of Orange or pursue any other remedies available
under the law or this Agreement.
2.3 Letter of Credit
A. Within thirty (30) days of the Effective Date of this Agreement,
Company shall post an irrevocable standby Letter of Credit to provide City with a
security fund (hereinafter "Letter of Credit") as security for the faithful performance by
Company of all material provisions of this Agreement, in accordance with Section
5.44.060.6(1)(a) of the Code.
B. The Letter of Credit shall be in the amount of Seventeen Dollars
and Twenty -Five Cents ($17.25) per current Subscriber, but not less than One Hundred
Thousand Dollars ($100,000.00).
C. The Letter of Credit provider shall have and maintain, at a
minimum, a credit rating of A issued by Moody's or Standard & Poor's. The letter of
credit shall incorporate wording approved by the City Attorney enabling City to draw
such sums from time to time as City may find necessary to satisfy any material default
of Company or to meet any payment due City under or in connection with the Code or
P
this Franchise, upon ten (10) days' written notice to the Letter of Credit provider. The
Letter of Credit shall provide in substance that, upon written notice by City of a material
default or failure to make a payment due to City under or in connection with the Code or
this Franchise, City may draw upon the Letter of Credit without any offset, contingencies
or conditions of any kind. This Letter of Credit shall provide that it may not be revoked or
amended without City's prior written approval. Company shall obtain prior approval by
the City Attorney of the wording of the Letter of Credit, the form of the Letter of Credit,
and the Letter of Credit provider. Such approval shall not be unreasonably withheld.
D. The Letter of Credit requirement may, in the unilateral discretion of
City, be increased by up to three (3} times its original amount if there is an assignment,
transfer, and /or Change of Control of the Franchise and /or the Company.
E. The Letter of Credit may be assessed by City for those purposes
specified in this Agreement and in Section 5.44 of the Code, in accordance with the
procedures set forth herein or in Section 5.44.060.8.1 of the Code.
F. The rights reserved to the City with respect to the letter of Credit
are in addition to all other rights of the City, and no action, proceeding or exercise of any
right with respect to such Letter of Credit shall affect any other right the City may have.
G. The Letter of Credit required by this Section satisfies the financial
security requirements of this Franchise Agreement and is in lieu of a Security Fund
required pursuant to Sections 5.44.060(B)(1)(a) and 13.20.130(A) of the Code;
however, this satisfaction of security requirements does not apply to any rebuild,
upgrade, and other substantial construction, for which additional requirements may be
imposed by the City. Nothing herein shall be deemed a waiver of the normal permit and
bonding requirements made of all contractors working within the City's rights -of -way.
Before performing such work, Company shall comply with Chapter 13.20 of the Code.
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2.4 Insurance
Company shall obtain, provide and maintain at its own expense during the
duration of the Franchise, a policy or policies of liability insurance of the types and
amounts described below and in a form satisfactory to City.
A. Certificates of Insurance. Company shall provide certificates of
insurance with original endorsements to City as evidence of the insurance coverage
required herein. Insurance certificates must be approved by the City's Risk Manager.
Current certification of insurance shall be kept on file with City's at all times during the
term of the Franchise.
B. Signature. A person authorized by the insurer to bind coverage on
its behalf shall sign certification of all required policies.
C. Acceptable Insurers. All insurance policies shall be issued by an
insurance company authorized by the Insurance Commissioner to transact the business
of insurance in the State of California, with an assigned policyholders' Rating of A (or
higher) and Financial Size Category Class VII (or larger) in accordance with the latest
edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk
Manager.
D. Coverage Requirements.
1. Workers' Compensation Coverage. Company shall maintain
Workers' Compensation Insurance and Employer's Liability Insurance for its employees
in accordance with the laws of the State of California. In addition, Company shall
require each subcontractor to similarly maintain Workers' Compensation Insurance and
Employer's Liability Insurance in accordance with the laws of the State of California for
all of the subcontractor's employees. Any notice of cancellation or non - renewal of all
Workers' Compensation policies must be received by City at least thirty (30) calendar
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days (10 calendar days written notice of non - payment of premium) prior to such change.
The insurer shall agree to waive all rights of subrogation against City, its officers,
agents, employees and volunteers for losses arising from work performed by Company.
2. Automobile Liability Coverage. Company shall maintain
automobile insurance coverage covering bodily injury and property damage for all
activities of Company arising out of or in connection with work to be performed under
this Franchise, including coverage for any owned, hired, non -owned owned (e.g., owned
by Company's employees and /or subcontractors and used in the course and scope of
employment), or rented vehicles, in an amount not less than two million dollars
($2,000,000), combined single limit for each occurrence.
3. General Liabili Company shall obtain and
maintain General Liability Insurance in an amount not less than two million five hundred
thousand dollars ($2,500,000) per occurrence for bodily personal injury and property
damage. If Commercial General Liability Insurance or other form with a general aggregate
limit is used, either the general aggregate limit shall apply separately to this Franchise or
the general aggregate limit shall be twice the required occurrence limit. This limit shall
increase to three million dollars ($3,000,000) in year ten (10) of the Franchise. Such
insurance coverage shall include, without limitation:
a. Contractual liability coverage adequate to meet
Company's indemnification obligations under this Contract; and
b. A cross- liability clause.
4. Slander/Libel/Defamation Liability. Company shall obtain
and maintain Slander /Libel /Defamation Liability Insurance in the aggregate annual
amount of one million dollars ($1,000,000) with City of Newport Beach as additional
insured.
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E. Endorsements. With the exception of workers' compensation
insurance coverage, each insurance policy shall be endorsed with the following specific
language:
1. The City, its elected or appointed officers, officials,
employees, agents and volunteers are to be covered as additional insureds with respect
to liability arising out of work performed by or on behalf of the Company.
2. This policy shall be considered primary insurance as
respects to City, its elected or appointed officers, officials, employees, agents and
volunteers as respects to all claims, losses, or liability arising directly or indirectly from
the Company's operations under this Franchise. Any insurance maintained by City,
including any self- insured retention City may have, shall be considered excess
insurance only and not contributory with the insurance provided hereunder.
3. This insurance shall act for each insured and additional
insured as though a separate policy had been written for each, except with respect to
the limits of liability of the insuring company.
4. The insurer waives all rights of subrogation against City, its
elected or appointed officers, officials, employees, agents and volunteers.
5. Any failure to comply with reporting provisions of the policies
shall not affect coverage provided to City, its elected or appointed officers, officials,
employees, agents or volunteers.
F. Proof of Insurance. Within thirty (30) calendar days from the
Effective Date of this Franchise, Company shall furnish proof to City that satisfactory
insurance policies for all insurance required by this Franchise are in place. The
insurance policies for vehicles shall be in effect prior to usage. City may, from time to
time, reasonably increase the required amount of insurance.
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G. Notice of Change in Coverage. All insurance policies shall provide
that in the event of material change!, reduction, or cancellation or non - renewal by the
insurance carrier for any reason, not less than thirty (30) calendar days written notice
will be given to City by registered mail of such intent to cancel, materially change,
reduce or not renew the coverage. An authorized agent of such insurance carrier shall
provide to City, on such schedule as is requested by City, a certification that all
insurance premiums have been paid and all coverage is in force. If for any reason
Company fails to obtain or keep any of such insurance in force, City may (but shall not
be required to) obtain such insurance, in which event Company shall promptly
reimburse City its premium cost therefore plus interest at City's portfolio rate until paid.
H. Timely Notice of Claims. Company shall give City prompt and
timely notice of claim made or suit instituted arising out of or resulting from Company's
performance under this Franchise.
I. Deductibles /Self- Insured Retentions. Any deductibles or self-
insured retentions must be declared to and approved by City. At the option of City,
Company shall reduce or eliminate such deductibles or self- insured retention as
respects City, its officials, officers, employees and agents, or Company shall procure a
bond guaranteeing payment of losses and related investigations, claims administration
and defense expenses.
J. Indemnification for Insurance Coverage. Company hereby
indemnifies City for any damage resulting to it from failure of either City or any
subcontractor to take out and maintain such insurance.
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K. Insurance Requirements under Chapter 13.20 (Public- Rights -of-
Wav)_
Provision of the insurance as required herein shall be deemed to satisfy the
insurance requirements required for permitting work in the City's public right -of -way
under Chapter 13.20 of the Code, provided that all insurance policies provide coverage
for such work. This subsection does not apply, however, to any rebuild, upgrade, or
other substantial construction in the public right of way, for which the City may impose
additional requirements.
2.5 Defense and Satisfaction of Claims
A. Company shall, at its sole cost and expense, upon demand by City,
defend City, its officers, boards, commissions, employees and /or agents, in any and all
suits, actions, or other legal proceedings, whether judicial, quasi judicial, administrative,
or otherwise arising out of the negligent or willful acts or omissions of Company, its
employees, contractors, subcontractors and agents. Where Company is required to
provide legal services to City under this paragraph, and chooses to utilize joint counsel,
the parties shall make a good faith effort to cooperate and agree upon litigation strategy
and implementation thereof. In the event that Company's litigation strategy or choice of
legal counsel create a conflict of interest, or result in inadequate representation to
protect City's interests and separate counsel is necessary for the representation of City,
City may obtain separate legal counsel chosen by City at Company's cost and expense;
provided, however, that if City obtains separate legal counsel as set forth above,
Company is only obligated to pay an hourly amount for legal services which does not
exceed one hundred percent (100 %) of the highest hourly rate that City has paid for
legal services within the twenty -four (24) month period prior to obtaining legal services
as provided in this paragraph. City shall submit statements for attorneys' fees to
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Company on a regular basis, which shall be paid to City within sixty (60) calendar days
of Company's receipt of said statement.
B. Company shall cause to be paid and satisfied any judgment,
decree, or order rendered, made, or issued against Company, City, its officers, boards,
commissions, employees or agents, and hold City harmless there from, arising out of
the negligent or willful acts or omissions of Company, its employees, contractors,
subcontractors, agents, or representatives, in connection with the construction,
operation, maintenance, repair, or other activities in relation to Company's cable system
including, but not limited to, damages arising out of copyright infringement, defamation,
personal injury and property damage liability, and antitrust liability, whether or not said
damages are compensatory or punitive, provided, however, Company shall not be
required pursuant to this paragraph to hold City harmless for actions relating to
programming decisions outside of Company's control or City's use of the PEG Channels
required herein. Such indemnity shall exist and continue without reference to the
amount of any bond, policy of ins Trance, deposit, undertaking, or other assurance;
provided, however, City may not enter into any compromise or settlement which
imposes any obligation on Company without Company's consent, which consent shall
not be unreasonably withheld, and Company shall not make or enter into any
compromise or settlement of any claim, demand, causes of action, suit, or other
proceedings which settlement involves anything other than the payment of money by
Company without contribution by City, without first obtaining the written consent of City,
which consent shall not be unreasonably withheld.
C. The indemnification provided pursuant to paragraphs 2.5(A) and
2.5(B) above shall apply to all damages and claims for damages of any kind suffered by
reason of any of the aforesaid operations referred to in those paragraphs, regardless of
15
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whether or not City has prepared, supplied, or approved the plans and /or specifications
for the operation or regardless of whether or not any insurance policies shall have been
determined to be applicable to any of such damages or claims for damages.
2.6 Franchise Violations /Liquidated Damages and Other Remedies
In addition to, and without limiting the damages for delays as specified in Section
2.2 of this Franchise, City may impose liquidated damages as described below for the
following violations and in the amounts described below, along with compliance,
interest, and other financial remedies set forth in this Franchise or the Ordinance.
1. Technical Standards Violations.
If more than ten percent (10 %) of the locations tested pursuant to FCC standards
fail to meet the FCC technical standards, City may impose liquidated damages in an
amount equal to Two Hundred Dollars ($200.00) per day, measured from the first day
non - compliance is detected and continuing until the day FCC standards have been
satisfied at each and every re- tested location, if Company does not cure the violation in
accordance with Section 2.6(6)(1) below.
2. Customer Service Violations.
If Company violates, in any material way, any of the customer service standards
specified in the Code or this Franchise, City may impose liquidated damages in the
amount of Two Hundred Dollars ($200.00) per violation per day, measured from the
date Company first received written notice of the violation, if Company does not cure the
violation in accordance with Section 2.6(6)(1) below.
3. Other Violations.
For all violations and breaches specified in this Franchise Agreement or the
Code, City may impose liquidated damages in the amount of Two Hundred Dollars
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($200.00) per day per violation, measured from the date Company first received written
notice of the violation, if Company does not cure the violation in accordance with
Section 2.6(6)(1) below.
4. Reduction of Damages and Security Fund /Letter of Credit.
If City does not impose any liquidated damages on Company pursuant to this
Section or Section 2.2 within four (4) years after the Effective Date, after such four (4)
year period, the penalties contained in Sections 2.6(B)(1)(2)(3) above shall be reduced
to one hundred and fifty dollars ($150) per day per violation. In addition, the Letter of
Credit Required pursuant to Section 2.3 above shall be reduced to seventy -five percent
(75 %) of the original amount. However, the original penalties and the original amount of
the Letter of Credit (as increased as allowed herein upon transfer, assignment or
change of control), shall be immediately reinstated if: (a) City imposes two (2) penalties
on Company in any twelve (12) month period, and /or (b) if Company assigns, sells,
leases or otherwise transfers this Franchise or control of the System. This entire
paragraph shall immediately cease to have any force or effect if City imposes a penalty
or penalties on Company within the four (4) year period that commences on the
Effective Date of this Franchise.
B. Payment of Dariages.
1. Cure.
In the event City has reason to believe that Company has failed to comply with
any material provision of this Franchise or the Code and therefore desires to impose
liquidated damages on Company as stipulated in Section 2.6 and in Section 5.44 of the
Code, the City Manager, or his designee, shall notify Company in writing of the
provision or provisions that City believes may be in default as well as the applicable
cure period. Company shall, upon receipt of said Notice:
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a. Cure the alleged violation within the cure period that
is provided by the Code or if no cure period is provided, within five (5) working days of
said notice. In the event that Company does not correct the violation within the
applicable cure period, liquidated damages may be imposed from the applicable time
set forth in Section 2.6(A); or
b. Respond to the City in writing during the cure period
contesting City's assertion of violation and providing such information or documentation
as may be necessary to support Company's position and /or request an extension of the
cure period. The decision to extend the cure period shall be within the sole discretion of
the City.
2. Appeal and Payment.
a. In the event Company fails to respond to the notice of
violation, or to cure the violation within the applicable cure period, as may be extended
in the sole discretion of the City, or provide an explanation for failure to cure acceptable
to City, the City or its designee shall schedule a hearing no sooner than ten (10)
working days after written notice to Company of the expiration of the cure period and
the scheduling of the hearing. Company shall be provided an opportunity to be heard at
such hearing, including the right to present evidence, cross - examine witnesses, and be
represented by counsel. Within thirty (30) calendar days after such hearing, City shall
determine whether or not Company is in violation and submit written findings of facts
supporting such determination.
b. The hearing described above may be conducted, at
City's selection, either before the City Council or before an administrative officer or
commission selected by the City Council. In the event that such hearing is not held
before the City Council, Company shall possess the right to appeal to the City Council
IV
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within ten (10) working days of issuance of the statement of decision and findings of
fact. The City Council shall decide such appeal pursuant to a hearing at which Company
has an opportunity to be heard and the right to present evidence, examine witnesses
and be represented by counsel. Company shall have the right to appeal City Council's
decision to a court of competent jurisdiction within ninety (90) calendar days of any final
decision by the City Council. In the event a court orders repayment of any liquidated
damages imposed by City to Company, interest on such amounts shall be included at
the rate paid by the Local Agency Investment Fund to the City for City Investments.
C. All liquidated damages shall be due and owing thirty
(30) calendar days after the final decision by either City Council or the hearing officer, in
the event Company does not appeal to the City Council. Any liquidated damages
assessed may be levied directly against the Letter of Credit and collected by the City
thirty (30) calendar days from the date such damages are due. Assessment of
liquidated damages shall not constitute a waiver by City of any other right or remedy it
may have under the Franchise or under applicable law including, without limitation, its
right to recover additional damages, losses, costs and expenses, including reasonable
attorneys' fees, the City may have siffered or incurred by reason of Company's breach
of this Agreement. Nothing in this paragraph is intended to waive, modify or otherwise
affect Company's rights under the Code, this Franchise, or any applicable law, except
for the specific procedures expressly provided herein. No financial penalties will be
applied pursuant to the Code, ordinance or other similar document for the same
offenses which liquidated damages apply.
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C. Validity of Liquidated Damages.
The parties acknowledge that it would be impractical or extremely difficult
to fix actual damages in the case of Company's default, and that the amount of
liquidated damages specified above is a reasonable and complete estimate of City's
damages. Company recognizes that Company's prompt development and offering of
cable television service for which penalties can be imposed is of critical importance to
the City.
City:
(Initials)
D. Removal of Property.
Company:
(Initials)
The City's right to require Company to remove its equipment and /or
portions of its System as provided in Section 5.44 of the Code shall apply only if the
Franchise is revoked, otherwise terminated prior to its expiration, or expires based upon
a final and no longer appealable decision of the City not to renew the Franchise
pursuant to the formal renewal provisions of the Cable Communications Policy Act of
1984, as amended (the "Cable Act ").
SECTION 3 SERVICE AREA AND LINE EXTENSION POLICY
3.1 Franchise and Service Area
Company shall design, construct and maintain the Cable System in such a
manner to pass by every single or multiple -unit dwelling unit in the service area set forth
on Exhibit A, including any and all territory immediately adjoining this area as may be
annexed thereto, during the term of this Agreement ( "Service Area "). Company shall
offer the full range of Cable Services to all residents of the Service Area and shall make
the Cable System available on an identical basis to all dwelling units constructed during
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the term of this Franchise. For new construction in residential, and industrial areas,
Company shall make the system available at the, same time as the units, residential, or
otherwise, are constructed. Nothing herein shall preclude Company from providing
service to multi - family dwellings and other residential developments on a non-
discriminatory, discounted, bulk - billing basis.
3.2 System Extension Policy
All Subscribers within one hundred twenty -five (125) feet from the closest public
right -of -way or easement, above ground or underground, shall be provided service for
the standard installation fee. Subscribers located beyond one hundred twenty -five (125)
feet from the closest public right -of -way or easement will be connected upon the
payment of Company's fair and reasonable charges for time and materials for that
portion of the installation which exceeds one hundred twenty -five (125) feet. Fair and
reasonable charges shall be equal to the Company's actual cost of time and materials
for the incremental portion of the installation beyond the footage limitation established
above.
3.3 Provision of Service
Unless the Subscriber requests otherwise, Company shall deliver initial service
within seven (7) business days afler receipt of a Subscriber order so long as the
Subscriber is within the existing Service Area. Service additions or deletions shall be
made within twenty -four (24) hours of a Subscriber's written or verbal request, unless
additional terminal equipment is required, in which case the Company shall make such
service change within seven (7) business days. The Company shall provide all
Subscribers, prior to the initiation of cable service and thereafter, with the ability to
subscribe to only Basic Service, which shall include local PEG channels. Failure to
comply with this provision shall result in the assessment of liquidated damages as set
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forth in Section 2.6(A)(2) for non - compliance, incurred daily until Subscriber requests
are completed.
3.4 Commercial Areas
For areas of the City that are primarily commercial, the Company shall install
appropriate conduit at any time that open utility trenches are available and the Company
has received at least thirty (30) calendar days advance notice of the availability of the
trenches. Residences in primarily commercial areas shall be provided with Cable
Service upon request, at an installation fee equal to Company's actual costs of time and
materials.
SECTION 4 SYSTEM CONSTRUCTION
4.1 Emergency Override System for Analog and Digital Cable
Company shall provide, install, activate, and maintain an emergency override
system which includes audio override on all analog channels of Company's system and
character generated message capabilities on designated PEG Channels, receivable
only within the City area. The City shall be able to activate, provide audio programming,
and terminate such emergency audio override on City designated channels via dial -up
or dedicated telephone control upon system upgrade. City shall use the audio override
and character generated system only in emergency situations, as declared by the City
Council or the City Manager when there is a threat to the public welfare, health or
safety.
4.2 Standby Power
Upon the Effective Date of this Agreement, Company shall provide standby
power generating capacity at the Cable System control center and at all hubs capable of
providing at least two (2) hours of emergency supply. Company shall maintain standby
power system supplies throughout the major trunk cable networks capable of providing
22
emergency power within the standard limits of commercially available power supply
units.
4.3 Parental Control Lock
Company shall provide Subscribers, upon request, with a parental control locking
device or digital code or other means that prevents the distribution of the video and
audio portions of channels as designated by the Subscriber.
4.4 Status Monitoring
Company shall provide an automatic status monitoring system or a functional
equivalent when the Cable System has been activated for interactive service, provided
that such status monitoring is technically and economically feasible to Company's
satisfaction.
4.5 Technical Standards
The Federal Communications Commission (FCC) Rules and Regulations, Part
76, Subpart K (Technical Standards), as amended from time to time, shall apply, to the
extent permitted by applicable law.
SECTION 5 SERVICES AND PROGRAMMING
5.1 Services and Broad Categories of Video Programming
The Company should provide, at a minimum, the following broad categories of
services and video programming: local broadcast, public affairs, satellite services, news,
sports, cultural, foreign language programming (to be cleared by Company as to the
appropriateness of subject matter and content), general entertainment, and children's
programming. If any listed broad category of service or video programming shall
become unavailable, or is commercially impractical, or cannot be provided under
existing FCC regulations, Company should provide substitute programming of the same
category if reasonably available. City may request Company to cooperate with City in
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developing and distributing a printed PEG channel guide at City's cost. Said printed
guide shall be of a reasonable weight and size and could include, but is not limited to, a
printed guide distributed through the bills, via direct mail, or included in local newspaper
or Company's printed guide, all at City's cost, if any, but shall not include advertising. If
City requests Company to distribute a printed guide through the bills, Company shall
comply so long as City produces said guide at its own cost for production and insertion
and provides Company sufficient advance notice and there is room for said guide in
Company's billing envelopes, and said guide does not take the place of other inserts
desired by Company. City shall have complete responsibility for the content of any
information included in said guide: The payments by City referred to in this Section shall
be limited to reimbursing Company Company's actual incremental cost of providing and
distributing the guide.
5.2 Minimum System Design and Capacity Requirements
A. Minimum Design Criteria/ Channel Capacity.
1. Company shall operate a state -of- the -art Cable System
designed to meet the needs of Newport Beach residents for the foreseeable future.
2. The Cable System shall be constructed with hybrid fiber
coaxial ( "HFC ") architecture and engineered to deliver signals at forward frequencies up
to and including a minimum bandwidth of Seven Hundred and Fifty (750) megahertz
(MHz) on the Residential Network.
3. The System will be engineered to allow simultaneous
downstream delivery of no less than one hundred ten (110) analog video channels
delivered via fiber to node with each node serving no more than 500 households and
shall be constructed pursuant to the specifications and routing described herein.
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B. Interactive Capacity and Services.
The cable television systern shall be two -way activated throughout the
distribution plant. The two -way capability will allow for high -speed Internet service and
"impulse" ordering of pay - per -view services, as well as accommodating telephony and
video -on- demand services in the future.
C. System Construction Requirements.
In addition to the requirements of Sections 5.2(A) and 5.2(B) above, minimum
system construction requirements shall be as follows:
1. Each analog video Channel requires Six Megahertz (6 MHz).
However, through the use of digital Channels, Company has the ability of using existing
technology to provide eight (8) to ten (10) video Channels in the same Six Megahertz (6
MHz) spectrum.
2. Company's Cable System standard shall use a "node plus
four (4)" architecture, with a goal of no more than four (4) amplifiers used between the
fiber node and homes. This design takes the fiber deeper into the Cable System so
fewer homes are sharing the same fiber, resulting in more capacity to meet the
individual needs of customers. Each node shall be designed to serve no more than
Five Hundred (500) homes.
3. All nodes shall have standby power rated to provide a
minimum of two (2) hours of operation in the event of a commercial power disruption.
The headend will have standby power capable of providing two (2) hours of power in the
event of a commercial power interruption. The Cable System forward (to Subscribers)
bandwidth shall be a minimum of Fifty -Four to Eight Hundred Sixty Two Megahertz (54-
862 MHz). The reverse bandwidth (from Subscribers to Company) shall be a minimum
of Five to Thirty Megahertz (5 -30 MHz).
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4. Company shall provide a list of Node Locations and the
number of homes served by each node.
conduit.
5. All underground trunk and distribution cables shall be in
6. The minimum technical standards for forward (downstream)
and reverse (upstream) directions shall be those adopted by the FCC from time to time.
To the extent that no FCC technical standards exist, the standards shall be those FCC
technical standards in effect on the Effective Date, or, if none, those established by the
City.
5.3 Local Office
Company shall maintain a local office located within twenty (20) miles of the
City's boundary. This office may not be closed without the City Council's prior written
consent.
5.4 Services for the Disabled
Company shall provide the maximum services and equipment available for
persons with disabilities as reasonably practical. Information regarding the facilities,
equipment and ongoing services for disabled persons shall be kept updated and the
Company shall promptly submit to the City Manager's Office notification of any deletions
or additions to such information. Company shall also comply with FCC rules regarding
closed- captioning and shall offer, at no charge to subscribers or the City, closed -
captioned programming on all channels providing such options. The Company shall
also maintain TDD (or equivalent) equipment at the Company's local office that will
allow such Subscribers to contact the Company for any reason related to the System.
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SECTION 6 LOCAL CABLE ACCESS AND COX SUPPORT
6.1 Company Support for PEG Access
Company shall provide the following support for programming, technology
development, and implementation of non - commercial Public, Educational, and
Governmental ( "PEG') access within the Franchise Area. Provision of the items listed
herein shall be considered binding commitments of Company within the terms of this
Franchise, and if not provided, shall subject Company to applicable remedies and
penalties for violations of the Franchise. Company shall provide the following:
A. Channel Capacity Requirements.
Company Support for Public, Educational or Government Access "PEG Access ":
1. Company shall designate three (3) initial channels for the
exclusive use of the City which number can be increased in accordance with Section
6.1(A)(2). The PEG channels shall be under the exclusive management and editorial
control of the City and shall not be shared with other cities. The City may designate a
representative, such as a non - profit entity, to use and administer said channels, with all
of the attendant rights and obligations provided to the City hereunder. In the event
Company is required by federal law, regulations, or otherwise to change the channel
number of a PEG channel, Company shall provide thirty (30) calendar days advance
notice to the City and its customers. Should Company desire to change the channel
number of a PEG channel that is in use by a PEG user within the criteria set forth in
Section 6.1(A)(2) for any other reason, Company shall provide the City with the reason
for change at least ninety (90) calendar days prior to the proposed change, advertise
the change to customers on its website, in at least three (3) bill messages prior to the
change, and in a television spot announcement that Company shall carry on its system
for at least six (6) weeks prior to the change. Company shall also reimburse the City for
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its actual costs for reprinting any materials such as program guides or other promotional
materials occasioned by the change in an amount not to exceed Seven Thousand Five
Hundred Dollars ($7,500.00) for its costs of remarketing the channel.
2. Company shall make available additional PEG channels
designated for use exclusively by the City pursuant to the following criteria:
a. The initial government channel must be in use and
programmed with non - commercial PEG programming, of which no more than ten (10)
hours can be character generated programming, during at least eighty percent (80 %) of
the weekdays for at least eighty percent (80 %) of the time during any consecutive six
(6) hour period for ten (10) consecutive weeks.
b. The initial public and /or educational channels must be
in use and programmed with non - commercial and at least fifty percent (50 %) locally
produced programming, of which no more than ten (10) hours per week can be
character - generated programming during at least eighty percent (80 %) of the weekdays
for at least eighty percent (80 %) of the time during any consecutive six (6) hour period
for ten (10) consecutive weeks.
C. No more than thirty -three and a third percent (33-
1/3 %) of the aggregate hours utilized for PEG programming during such ten (10) week
period can represent repeat programming.
d. Any additional PEG channel shall be made available
within one hundred and eighty (180) calendar days following the City's written request
and verification of compliance with each of the foregoing conditions.
e. Whenever such additional PEG channels but not the
original three (3) PEG channels, are programmed for less than ten (10) hours per day
for six (6) days per week for a continuous period of not less than twelve (12)
FM
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consecutive weeks, the City may permit Company to utilize unused channel capacity on
that channel under the following conditions:
(i) Any request from Company to use any fallow
capacity designated for PEG Access must be submitted in writing to the City.
(ii) The City shall approve the request from
Company to use fallow channel capacity if it finds that: (1) the utilization of the channel
is as represented; (2) Company has not acted in violation of any of the provisions of the
Franchise regarding utilization of the channel; and (3) there are no special
circumstances which would justify the denial or delay of implementation of the use of
the channel. After approval, Company may continue to utilize the channel for any other
purposes it so chooses, consistent with the Franchise, until it is required to be
designated for PEG purposes pursuant to the provisions hereof.
(iii) Unless Company receives written notice within
one hundred and twenty (120) calandar days that the City disapproves Company's
request, the City's approval shall be deemed granted.
f. The maximum number of access channels which may
be required under this Franchise shall be five (5), subject to the City's right to exchange
channels, as set forth herein. On six (6) months notice to Company, City may exchange
each analog PEG channel for four (4) digitally compressed channels upon satisfaction
of the following conditions:
(i) Company provides digitally compressed
channels which offer at least as many services as are available by analog channels on
the system; and
(ii) Digital decompression terminal devices are
installed in the homes of a least fifty percent (50 %) of Company's subscribers, and are
9
1
used to receive Company's services; and
Company.
(iii) City provides six (6) months notice to
(iv) City provides written waiver of any state or
federal laws pertaining to requirements for the placement of such channels.
As used in this section, a "digitally compressed channel" shall mean a data
stream capable of delivering video programming on a basis comparable to the delivery
of other digitally compressed video programming.
3. The City shall have sole responsibility for the administration
and programming of the educational and government channel(s) provided by Company
including without limitation, the carriage of programming on the channel(s) to include
trafficking of tapes and playback and the establishment and administration of all rules,
regulations and procedures pertaining to the use and scheduling of the programming
presented over the channel(s). The channel(s) shall be used for noncommercial,
governmental or educational programming. In relation to the public access channel(s),
Company shall continue its current practices of providing studio facilities, equipment,
trafficking of tapes, playback, for public access users in a quality and quantity generally
consistent with that provided over the past franchise term.
4. Company agrees that it will work with the City in good faith
and will assist the City utilize the Company's existing relationships with educational
institutions to provide programming on PEG channels.
5. City and Company acknowledge that there are certain
logistic and technical issues that remain unresolved as of the Effective Date due to the
fact that two separate cable companies provide cable service in the City of Newport
Beach and the City Hall main operation for educational and government channel(s)
resides in the cable service area of another cable service provider. Company agrees to
work in good faith to resolve any logistic and technical issues to ensure seamless
quality and continuity of educational and governmental channel(s) access by the City's
citizens including but not limited to:
(a) Allowing physical playout equipment and signal to
remain at Company's Rancho Santa Margarita facility or arranging for transfer of decks
and racks in the City Hall area at a mutually agreeable location;
(b) Ensuring that signal transmission /reception mutual
exchange across cable service boundaries is accomplished; and,
(c) Ensuring continuation of transmission /reception across
the two cable system.
B. A Grant in the amount of sixty dollars ($60.00) per Basic Service
Tier subscriber ( "BST ") of Company in the City as of the Effective Date ( "Threshold
Subscribers ") shall be paid by Company to be utilized for any capital or non - capital
purposes (the "Initial Grant "). Said Initial Grant shall be paid by Company within thirty
(30) calendar days of the Effective Date of this Agreement.
C. On January 1, 2010, the City shall provide Company with a list of
newly constructed residential units which have been constructed in the City subsequent
to the Effective Date, if any, (the "Construction List "). Within thirty (30) calendar days of
receipt of the Construction List, Company shall determine and report in writing to the
City the number of newly constructed units which are BST Subscribers as of that date
(the "New Construction Subscriber List "). Company shall also report to the City the
number of BST Subscribers contained in the City other than those subscribers set forth
on the New Construction Subscriber List (the "Continuing Subscribers "). Within ten (10)
days thereafter, Company shall pay to the City an additional grant (the "Additional
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Grant ") equal to the number of New Construction Subscribers, less the difference
between Threshold Subscribers and Continuing Subscribers times $30.00 per
Subscriber.
D. City and Company agree that said Initial Grant and Additional Grant
are neither franchise fees nor off - settable against franchise fees, irrespective of how
they are expended, for the purposes of the Cable Act. City shall waive normal permit
fees, but not inspection fees, for residential dwelling units, constructed subsequent to
the Effective Date in new subdivisions where Company installs its cable television plant
in otherwise open trenches along with other utilities at the time of new subdivision
construction. Other than the waiver of normal permit fees as provided above, Company
will comply with all other City requirements.
E. In the event any dedication to PEG Programming required by this
Franchise is deemed by a legislative body, administrative body, or court of competent
jurisdiction to constitute a payment which must or may be offset against the franchise
fee, City hereby reserves the right, but is not required to do so, to terminate said
program and /or requirement so as to provide the maximum allowable franchise fee.
Company shall not offset any charge, of any kind, against a franchise fee or other
payment due City without prior written consent of City. Nothing in this Franchise is
intended, and shall be so construed, to confer any third party beneficiary rights on any
party(s), and no rights are created by this Agreement other than rights in City and
Company.
6.2 Governmental and Institutional Drop Policy; Provision of Live Local
Insertion Locations.
A. Drops to City Facilities.
Within one hundred eighty (180) calendar days of written notice provided by the
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City, Company shall provide, without charge, up to four (4) cable drops, as determined
by City, for all levels and all tiers of Cable Service per building, excluding premiums and
pay - per -view, a cable modem drop, and cable modem service (residential speed of up
to 3 mbs) per drop for those buildings, institutions and facilities on Exhibit B, plus those
buildings, institutions and facilities which are constructed subsequent to the Effective
Date of this Franchise Agreement, as designated by City in writing. Except for a City
Hall which shall be served irrespective of distance if it is located in the Service Area,
existing or future, which Company shall construct at its sole expense, drops to all
buildings, institutions and facilities which are constructed subsequent to the Effective
Date of this Franchise Agreement shall be limited to two hundred (250) feet from the
closest point to Company's distribution system. In the event that requested drops
exceed said distance, Company shall determine the incremental cost beyond said
distance and the City shall pay such incremental costs to Company upon completion of
construction. Company shall not impose programming or other charges for any
additional outlets within said buildings. Installation and maintenance of interior wiring of
said building(s) beyond the four (4) drops per building shall be the responsibility of the
building owner, provided that if Company is requested to install such wiring, it will do so
within a reasonable time at its actual cost of labor and materials.
B. Live Insertion Locations.
Within one hundred eighty (180) calendar days of written notice provided by the
City, Company shall provide live insertion points at the locations set forth on Exhibit C
by way of fiber connection so that the City can insert and transmit audio, video, and
digital programming from said site to Company's headend for retransmission over one
or more of the PEG Channels specifed in Section 6.1 (collectively, the 'Return Feeds ").
The Return Feeds shall be constructed pursuant to technical standards mutually agreed
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upon by Company and the City (the "Design Specifications "). The City shall possess no
obligation to insert programming upon the Governmental Channel pursuant to Section
6.1 until such time as the Return Feeds are constructed and activated pursuant to the
Design Specifications. Within one hundred and twenty (120) calendar days of the
completion and activation of the Return Feed, any playback of local government
programming or insertion of audio, data or other information on the PEG channel(s)
shall be the sole responsibility of the City.
6.3 Compliance with Federal Law
In accepting this Franchise, the Company agrees that the commitments indicated
in Sections 6.1 and 6.2 above are voluntarily entered into and shall not be charged
against any Franchise Fees due the City during the term of the Franchise. The
Company agrees to meet all of the commitments of Section 6.1 and 6.2 above, through
the term of the Franchise.
SECTION 7 MISCELLANEOUS
7.1 Rate Regulation
Company will not separate out, line itemize, or surcharge the cost of the Initial
Grants and the Additional Grants described in Section 9 or any other cost related to this
Agreement (except the franchise fee) as a line item on City customer's cable bills.
Additionally, Company shall not impose rates and charges on subscribers which are
higher for like -kind services or of packages of services than those imposed upon
subscribers in any of the cities of Mission Viejo, Laguna Hills, Tustin, Rancho Santa
Margarita, and Aliso Viejo.
7.2 Reporting Requirements
A. Subscriber Complaint Record. Company shall maintain a written or
computerized record of Subscriber complaints, including: loss of signal requiring a field
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visit, non - receipt of programming or services ordered, billing disputes, missed
appointments, unsatisfactory performance of maintenance, malfunctioning signal traps
on blocked channels, and unresolved or chronic technical problems. Such record shall
also include the following information:
1. Date and time of the Subscriber complaints;
2. Account number of complainant;
3. Nature of the complaint;
4. Action(s) laken to resolve each complaint; and,
5. Dates, time(s) and specific actions(s) taken.
This record shall be kept at Company's local office for a period of two (2) years.
A monthly subscriber complaint record containing the information set forth above and
the total number of complaints for the month shall be submitted by Company to the City
within ten (10) working days following the end of each month ( "Monthly Subscriber
Complaints Report "). The number of total complaints over the first year of this
Franchise shall be divided by twelve (12) and constitute the "base year average monthly
subscriber complaints ".
To the extent that the Company maintains and provides Subscriber complaint
information consistent with the above requirements, it shall be deemed to have
maintained and provided sufficient Subscriber complaint information as required by this
paragraph.
B. Technical Statistics Report. Company shall also maintain a written or
computerized record of technical statistics including: headend outages planned or
unplanned, system related outages planned or unplanned, drops added or
disconnected, converter boxes distributed or returned, total truck rolls including no fault
found, no access to premises, referred to other, beginning monthly subs, total monthly
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connects and disconnects and ending monthly subs ( "Technical Statistics Report"),
Company shall submit the Technical Statistics Report to the City within ten (10) working
days following the end of each month, upon City's written request.
7.3 Technical Standards Testing
A. Company's Cable System shall be tested biannually and at any
time the Monthly Subscriber Complaints Report, as defined above, provides that the
monthly subscriber complaints exceeds twenty percent (20 %) of the base year average
for any given two (2) consecutive months or any three (3) nonconsecutive months in
any six (6) month period. Company shall bear the sole cost and expense of all testing
required by this Section and all testing shall be conducted pursuant to the procedures,
described in the then - applicable rules and regulations of the FCC or, if no such rules
and regulations exist, in the manner prescribed in the rules and regulations in effect on
the Effective Date.
B. City shall have the right to participate in Company's testing and to
verify that the Cable System complies with all technical standards, including but not
limited to, signal strength, and other specifications of this Franchise. Upon completion
of testing, the Company and City shall meet to review the performance of the Cable
System. Any reports, the records of performance audits and tests, and any opinion
survey reports may be utilized as the basis for review. In addition, any Subscriber may
submit complaints prior to or during the review meetings, either orally or in writing, and
these shall also be considered. Within thirty (30) days after the conclusion of the review
meetings, City shall issue findings with respect to the adequacy of System performance
and quality of service. If areas of non - compliance are found, City may direct Company
to correct the non - compliance within a reasonable period of time. If material non-
compliance is determined to exist or if the City's participation in the testing or retesting
We
was based on Monthly Subscriber Complaints, Company shall reimburse City for the
costs of its participation in Company's testing or retesting.
7.4 "Most Favored Nations" Review
A. At any time during the term of this Agreement, City may request,
and Company shall provide, information on any Cable Services not being provided in
the City, which are being provided on an operational basis in systems operated by the
Company, or any affiliate thereof, in the states of California, Arizona and Nevada (the
"Comparison Systems "). For purposes of this section, "operational basis" means that
Company has offered a Cable Service to all Subscribers in the Comparison Systems for
at least six (6) months. The term "operational basis" does not include Cable Services
that are offered on a trial or test basis to a limited number of subscribers. Upon City
request, Company shall promptly provide City with a copy of the Franchise
Agreement(s) governing all Comparison Systems (hereinafter the "Other Franchise ")
B. If Company is providing Cable Services on an operational basis in
any Comparison Systems, the City may require Company to provide said Cable
Service(s) within one (1) year of City's written request, and to upgrade its Cable
System, if necessary, to provide such Cable Service.
C. After the Effecl:ive Date of the Franchise, if Company, or any
affiliate, parent, or subsidiary thereof, enters into any renewal, franchise extension, of a
franchise or a new franchise to provide cable television service to any city located within
Orange County or the County of Orange itself, within thirty (30) calendar days thereof,
Company shall provide to the City a copy of the Other Franchise.
D. In the event that City concludes that the Other Franchise contains
terms, conditions or provisions regarding Public, Educational or Government access
( "PEG Access ") (the "PEG Access Provision "), including, without limitation, the financial
37
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support thereof or Cable System Technology (i.e., channel capacity, services offered,
etc.) (hereinafter the "Technology Provision ") that are more favorable than those
contained in this Franchise Agreement, then City may, at its sole discretion, require
Company to provide the more favorable PEG Access Provision and the more favorable
Technology Provision, or either of them; provided, however, that: (1) the City must notify
Company in writing of its election to require Company to provide the more favorable
provision within one hundred eighty (180) calendar days of City's receipt of the Other
Franchise or City shall be deemed to have irrevocably declined to impose such
requirement; and (2) any requirement imposed pursuant to this paragraph of the
Franchise to incorporate the more favorable PEG Access Provision and the Technology
Provision, or either of them, shall also include, upon Company's identification and
request, the imposition of any and all other terms or conditions in the Other Franchise
which are more favorable to Company than those contained in this Franchise (by way of
example, if the Other Franchise contains a franchise fee less than the franchise fee in
this Franchise or has a term longer than the term of this Franchise, then the Franchise
shall be modified to include such more favorable terms at the same time that the
Franchise is modified to include the more favorable PEG Access Provision or the more
favorable Technology Provision).
E. Company shall provide the same Cable Services to its customers in
the City as it provides to customers in communities served off the same headend, as of
the date of this Agreement. In the event the Company deploys new or different Cable
Services as a result of a Cable System upgrade in one or more of the communities
served off the same headend as of the date of this Agreement, then the Company shall
deploy those new or different services within six (6) months to its customers in the City;
provided, however, that the Company may request an extension for good cause and the
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City may or may not in its discretion consent to the extension.
7.5 Restrictions Against Transfers
A. Unless prohibited by federal law, neither the Franchise nor any
rights or obligations of the Company in or pursuant to the Franchise, or the system shall
be transferred in part or as a whole, by assignment, trust, mortgage, lease, sublease,
pledge or other hypothecation, and shall not be sold, transferred, leased, assigned, or
disposed of in part of as a whole, either by forced sale, merger, consolidation, or
otherwise, nor shall title thereto, either legal or equitable, or any right or interest therein,
pass to or vest in any person, nor shall a transfer of control of the Company or the
system occur, either by act of the Company, by operation of law or otherwise, in each
case without the prior written consent of the City, which consent shall not be
unreasonably withheld, and which shall be expressed by resolution and then only under
the conditions as may be therein prescribed.
B. Company shall reimburse City for the City's reasonable processing
and review expenses in connection with a transfer of the Franchise or a change in
Control of the Franchise, including without limitation, the cost of administrative review,
financial, legal, and technical evaluation of the proposed transferee, notice and
publication costs, and document preparation expenses up to a maximum of Thirty -Five
Thousand Dollars ($35,000.00).
7.6 Use of the Public Right-of-Way
A. Design and construction requirements, permit and other fees,
public and customers' notifications, requirements for public communication, and other
oversight requirements by City imposed on Company shall be consistent, to the extent
legally permissible and technically feasible, with those ongoing requirements imposed
upon other users of the public rights -of -way and easements within the City.
39
B. The Cable System shall be constructed or installed in City only after
the express written approval of City and only at such locations and in such manner,
design, and size as shall be approved by City. In granting such approvals, the City shall
exercise reasonable discretion in accordance with applicable law. Upon Company's
written request, City staff shall meet and confer with Company in order to develop a
process for expediting City processing and approval of proposed Cable System
installation of multiple "like- kind" facilities.
C. The Cable System shall be placed underground or in areas where
other utilities are located underground unless otherwise approved by the City Engineer.
Such approval shall not be unreasonably withheld.
D. All construction or maintenance work shall be conducted in a good
and workmanlike manner consistent with industry standards. Installation of new facilities
shall occur, whenever practical, concurrent with the installation of subdivision public
improvements.
E. Upon its receipt of reasonable advance notice, but in any event not
less than five (5) business days, the Company shall, at its own expense, protect,
support, temporarily disconnect, relocate in the Public Way, or remove from the Public
Way, any of its property when lawfully required by City by reason of traffic conditions,
public safety, street abandonment, freeway and street construction, change or
establishment of street grade, installation of sewers, drains, gas or water pipes, or any
other type of structures or improvements by the City; but, the Company shall in all cases
have the right of abandonment of its property.
7.7 Construction Responsibility
The Company shall be responsible for the acts and omissions of its contractors,
H(I
i
subcontractors and employees. Only authorized employees of the Company shall apply
for and be issued necessary permits and building authorizations. Company shall
designate a construction manager, who the City may contact regarding all cable
construction issues.
7.8 Compliance with Construction Standards
Company shall not construct any portion of its cable television system in City
streets and rights -of -way without obtaining all necessary permits and paying, in addition
to the franchise fee, all then applicable fees required. Company must also comply with
City standards for construction in the public right -of -way.
7.9 Compliance with all Laws, City Orders and the Code
A. Company shall at its own cost and expense comply with all
statutes, ordinances, regulations and requirements of all governmental entities,
including federal, state, county or municipal, whether now in force or hereinafter
enacted. In addition, all work prepared by Company shall conform to applicable City,
county, state and federal laws, rules, regulations and permit requirements.
B. Company shall promptly comply with all lawful City orders,
resolutions and the Code related to Company's operation of the System, including all
lawful rate orders. Failure to do so shall be considered a breach of this Franchise and
shall subject Company to: (1) all liquidated damages contained in this Franchise and the
Code; and (2) all other actions, remedies and penalties available to City as a result of
such failure to comply.
7.10 Choice of Law
This Franchise shall be construed according to the internal laws of the State of
California and all federal laws of the United States. Any action brought relating thereto
must be brought exclusively in the state or federal courts located in or for Orange
Mi
County, California.
7.11 Notices
Any notice required to be given by this Agreement shall be presumed given five
(5) calendar days after deposit in the United States mail, properly addressed by certified
mail and return receipt requested, as follows:
To City:
City Manager
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
With a COPY to:
City Attorney
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
To Company:
CoxCom, Inc.
Cox Communications, Orange County
29947 Avenida de las Banderas
Rancho Santa Margarita, CA 92688
Attn: Vice President, Government Affairs
With a COPY to:
CoxCom, Inc.
Attw Director, Government Affairs
1400 Lake Hearn Drive
Atlanta, GA 30319
7.12 Successors and Assigns
All provisions of this Agreement shall apply to any lawful successors and
assigns.
7.13 Separability
If any provision of this Agreement or the application of such provision to any
circumstance is rendered unconstitutional or otherwise invalid by any law, ordinance,
regulation or court of competent jurisdiction, the remainder of this Agreement or the
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application of the provision to other circumstances, shall not be affected thereby.
7.14 Possessory Interest
By accepting this Franchise, the Company acknowledges that notice is and was
hereby given to Company pursuant to California Revenue and Taxation Code Section
107.6 that use or occupancy of any public property pursuant to the authorization herein
may create a possessory interest which may be subject to the payment of property
taxes levied upon such interest. Company shall be solely liable for, and shall pay and
discharge prior to delinquency, any and all possessory interest taxes or other taxes
levied against Company's right to possession, occupancy or use of any public property
pursuant to any right of possession, occupancy or use created by this Franchise.
Company shall not be barred from challenging such try on any amounts assessed
pursuant thereto.
7.15 Meet and Confer
Prior to exercising any rights of enforcement against Company pursuant to
Section 5.44 of the Code or this Agreement, the City and Company shall reasonably
attempt to meet and confer to achieve voluntary compliance.
7.16 Rights Cumulative
The rights and remedies of the parties pursuant to this Franchise are cumulative,
except as otherwise provided in this Franchise, and shall be in addition to and not in
derogation of any other rights or remedies which the parties may have with respect to
the subject matter of this Franchise.
7.17 No Waiver
A waiver of any right or remedy by a party at any one time shall not affect the
exercise of said right or remedy or any other right or other remedy by such party at any
other time. The failure of the City to take any action in the event of a material breach by
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the Company shall not be construed or otherwise be deemed to constitute a waiver of
the right of the City to take such action at any other time in the event that said material
breach has not been cured, or with respect to any other material breach by the
Company.
7.18 Declaration of Invalidity
In the event that, after the Effective Date of this Franchise, any court, agency,
commission, legislative body, or other authority of competent jurisdiction: (A) declares
that this Franchise is invalid, in whole or in part; or (B) requires the Company either to:
(1) perform any act which is inconsistent with any provision of this Franchise or (2)
cease performing any act required by any provision of this Franchise, City shall
reasonably determine whether said declaration or requirement has a material and
adverse effect on this Franchise. When the Company intends to exercise its rights
pursuant to such declaration or requirement, the Company shall so notify the City
Manager's Office of said declaration or requirement. If the City determines that said
declaration or requirement does have a material and adverse effect on this Franchise,
then Company shall then enter into good faith negotiations with the City to amend this
Franchise to eliminate any inconsistency or conflict between said declaration or
requirement and the provisions of this Franchise and to meet the original intent of the
parties as the circumstances warrant.
7.19 Time of the Essence; Maintenance of Records
In determining whether Company has substantially complied with the Franchise,
the City and Company agree that time is of the essence. As a result, the Company's
failure to complete construction, extend service, seek approval of transfers, or provide
information in a timely manner constitute substantial breaches of material terms of the
Franchise. Maintenance of records and provision of reports in accordance with the
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Franchise is also an essential part of this Franchise Agreement.
7.20 Force Majeure
The force majeure provisions of Section 5.44.140.1. of the Newport Beach
Municipal Code shall apply.
7.21 Interpretation
The terms of this Franchise shall be construed in accordance with the meaning of
the language used and shall not be construed for or against either party by reason of
the authorship of the Franchise or any other rule of construction that might otherwise
apply.
7.22 Exhibits
Exhibits "A" through "C" are art integral part of this Agreement and these Exhibits
are incorporated herein by reference. All references to this Agreement shall include all
Exhibits.
[SIGNATURES ON FOLLOWING PAGE]
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.„
In recognition of the obligations stated in this Franchise, the parties have
executed this Franchise on the date indicated above.
APPROVED AS TO FORM AND
CONTENT:
Robin Clauson, City Attorney
For the City of Newport Beach
ATTEST:
By:
LaVonne Harkless,
City Clerk
CITY OF NEWPORT BEACH
A Municipal Corporation
By:
Don Webb, Mayor
for the City of Newport Beach
CONSULTANT:
In
(Corporate Officer)
Title:
Print Name:
0
(Financial Officer)
Title:
Print Name:
EXHIBITS
A. Service Area Map
B. Drops to Public Buildings, Institutions and Facilities
C. Live Local Insertion Locations
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EXHIBIT A
COMPANY SERVICE AREA
(SEE ATTACHED CITY MAP)
47
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1.
2.
3.
4.
5.
6.
7.
8.
9.
iC
EXHIBIT B
Drops to City Public Buildings, Institutions and Facilities
Cox Area
Central Library — 1000 Avocado Avenue
Police Department — 870 Santa Barbara Drive
Fire Station 3 — 868 Santa Barbara Drive
Fire Station 5 /Corona del Mar Library — 410 & 420
Marigold Avenue
Fire Station 8 — 6502 Ridge Park Road
Big Canyon Reservoir — 3300 Pacific View Drive
Oasis Senior Center — 800 Marguerite Avenue
Grant Howald Park/Community Youth Center - 3000 Fifth Avenue
Newport Coast Community Center — NPCoast Drive &
San Joaquin Rd
Andersen Elementary — 1900 Port Seabourne Way
EXHIBIT C
Live Local Insertion Locations
Cox Area
1. Police Department Emergency Operations Center
2. Central Library Friends Meeting Room
3. Oasis Senior Center Community Meeting Room
4. Newport Coast Community Center Meeting Room
c.
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