THE CITY OF
SAN JOSE,
CALIFORNIA
REPORT ON CABLE-RELATED
NEEDS AND INTERESTS
AND OPERATOR PAST PERFORMANCE
June 11, 2001 Draft for Public Comment
City of San José, California
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY................................................................................................... 3
A. Purpose of Report and Action Requested.................................................................. 3
B. Summary of Community Cable-related Needs and Interests....................................... 4
1......... What was done............................................................................................. 4
2......... Summary of Future Cable-related Needs and Interests................................... 4
(a)....... System Design – Generally................................................................ 4
(b)....... PEG use of the system....................................................................... 6
(c)....... Institutional network.......................................................................... 8
(d)....... Miscellaneous.................................................................................... 8
3......... Relationship of needs and interests to settlement........................................... 10
II. BACKGROUND AND PURPOSES OF THIS REPORT.................................................. 10
A. Why Renewal Is Important, And Why This Report Is Being Submitted..................... 10
B. How the Ascertainment Was Conducted, and How We Arrived At Our Conclusions on Cable-Related Needs and Interests. 16
C. Structure of the Report............................................................................................ 19
III. IDENTIFICATION OF FUTURE, CABLE-RELATED NEEDS AND INTERESTS........ 19
A. General System Design............................................................................................ 19
1......... Developments in the industry........................................................................ 20
2......... The Ascertainment in San José..................................................................... 26
(i) Our community................................................................................ 26
(ii) The ascertainment studies................................................................ 27
B. Other Issues............................................................................................................ 33
C. Support for Public, Educational and Government Use............................................... 35
1......... General trends............................................................................................. 35
2......... The results of the ascertainment in San José.................................................. 37
D. System Construction And Extension Issues.............................................................. 46
1......... Time for completion..................................................................................... 46
2......... System extension......................................................................................... 47
3......... Supervision of construction.......................................................................... 47
4......... Coordination of construction........................................................................ 48
IV. FRANCHISE CONDITIONS AND OTHER REGULATORY ISSUES............................ 50
1......... Term........................................................................................................... 50
2......... Franchise Fees............................................................................................ 51
3......... Scope of Grant............................................................................................ 51
4......... Transfers..................................................................................................... 52
5......... City’s Exercise of Police Powers and Modification of Applicable Rules and Ordinances 53
6......... Compliance with Applicable Laws............................................................... 53
7......... Severability................................................................................................. 53
8......... Insurance Requirements; Indemnification; Bonds; Letters of Credit; No Recourse 53
9......... Liquidated Damages.................................................................................... 54
10....... Termination................................................................................................. 54
11....... Relationship of Remedies............................................................................. 54
12....... Abandonment.............................................................................................. 54
13....... Conditions on Use of Public Rights-of-Way................................................. 55
14....... Customer Service Provisions....................................................................... 55
15....... Rate Regulation........................................................................................... 56
16....... Reports and Records................................................................................... 56
17....... Non-Discrimination..................................................................................... 56
V. PAST PERFORMANCE................................................................................................... 56
Heritage Cablevision of California, Inc., providing services as AT&T Broadband (“AT&T”) has asked the City of San José to issue it a renewal cable franchise. The City must decide whether to grant or deny this request. To that end, staff has prepared this summary of the community’s future, cable-related needs and interests, and an evaluation of the past performance of AT&T. The report refers to three other studies, commissioned by the City, which also discuss and identify several of the needs and interests of the community, and evaluate the existing systems. Staff believes that these reports are accurate, and this report adopts the needs and interests identified in those reports.
In addition to identifying needs and interests, as part of the preparation of this report staff has developed certain renewal requirements, consistent with the Cable Act. Also as contemplated by the Cable Act, staff has prepared a document that requests that AT&T submit a proposal, showing how it intends to satisfy the community’s future, cable-related needs and interests in any renewal term. The requirements that staff recommends for adoption are reflected in that request for renewal proposal (“RFRP”), which is attached to this document. In the RFRP, the operator is asked to explain why it believes it should be entitled to renewal, and is required to provide certain information that the City will use in evaluating any proposal.
In connection with the issuance of this report, staff asks the City Council to take two actions:
1. Adopt the findings of this report (and the City-commissioned studies referenced in it) and the draft RFRP with respect to the needs and interests of the community, and the past performance of the cable operators. Once this is done, staff asks that the Council close the first stage of the cable renewal proceedings, which is described below.
2. Authorize the issuance of the RFRP as attached to this report with a deadline for response of October 19, 2001, and confirm that the requirements and model system are the requirements and the model system that the City Council believes will help meet the needs and interests of this community.
As part of the renewal process, the City commissioned
several studies. The Buske Group developed
an “Ascertainment And Recommendations Regarding Community Cable-Related Needs
And Interests for the City Of San José, California” (the “Buske Group
Report”). Columbia Telecommunications
Corporation (“CTC”) inspected the condition of the subscriber network. In addition, CTC conducted an ascertainment
of the information technology (“IT”)
needs of various City departments and interviewed the City’s IT
director, and developed recommendations for an institutional network and for a
subscriber network design based on those discussions, as well as discussions
with the Buske Group and the company’s experience in the field. The report on the subscriber network is
titled “San José, California Cable Television System Technical Evaluation” The institutional network report is titled
“City of San José Institutional Network Report.” These reports are referred to, respectively, as the “CTC
Technical Review” and “CTC I-Net Report”).
Further, in the course of preparing this report, staff has reviewed our
conclusions with The Buske Group and CTC and sought clarifying information
where necessary.
The
City itself conducted a series of hearings on cable, consulted with
superintendents and information technology
personnel from the school districts, gathered information from
subscribers through phone calls and letters, and reviewed the CTC and Buske
Group findings in light of its own familiarity with the community. In addition, staff reviewed a series of
forward looking vision studies conducted by various City agencies. These studies include:
· “Strategy 2000 -- San José Greater
Downtown Strategy for Development”
· “City of San José Information Technology
Master Plan”
· “The Silicon Valley ITS Strategic Plan”
· “The San José Public Library Branch
Facilities Master Plan”
· “City of San José Greenprint for Parks
and Community Facilities and Programs”
· There is a need and interest in the system being rebuilt to state-of-the-art with substantially greater capacity, reliability and flexibility to respond to changes in cable television that could be expected over a new franchise term. A system that that will meet this need and interest would have the characteristics of an 860 MHz system, with fiber to the node, small nodes, and minimum active components in any cascade, or a system with similar characteristics that is capable of providing the level of functionality described below. Staff recommends that the City require the operator to build a such a system.[1]
·
There is a
need and interest in two-way activated facilities and equipment with ample
bandwidth upstream and downstream to support broadband, advanced cable
services, such as two-way Internet access via the cable system, as well as
live, original programming from locations throughout the City. AT&T has taken the position in filings
before the FCC that internet access over the cable modem platform is a cable
service. However, AT&T continues to
claim that the issue is called into question by the Ninth Circuit’s decision in
Portland.[2] Regardless of whether AT&T is wrong or
right, the ascertainment suggest that there will be a need and interest in
interactivity for both commercial and non-commercial purposes. Staff recommends that the City require the
operator to provide the facilities and equipment required to meet this need and
interest.
· There is a need and interest in the system being designed so that it sufficiently flexible to respond to increases in consumer demand over the franchise term.[3] There is also a need and interest in having the system include equipment and facilities typical of well-designed, modern cable systems, and the equipment and facilities required to maximize consumer choices. Staff recommends that the City require the operator to provide the facilities and equipment required to accomplish this.
· There is a need and interest in having the cable system provide service to residential and non-residential locations throughout the entire City upon request. Staff recommends that the City require the operator, as part of the system rebuild, to extend service throughout the downtown area and into all residential areas of the City. Service should be available in other areas of the City as well, although the operator could require persons who desire service to share in extension costs outside a universal service zone.
· There is a need and interest in having the cable system interconnected to other communications networks inside and outside the City so that signals can flow back and forth across the systems.[4] Staff recommends that the City require that the system be interconnected with other networks as necessary. Staff recommends that the City require the operator to provide the facilities and equipment required to accomplish this.
· There is a need and interest in the system including useable emergency alert capabilities that allow the City to remotely and securely override the audio and video portion of all channels in the event of an emergency. This system should permit the City to send out a local emergency alert throughout the City, and should also function effectively as part of a regional, state, and national emergency alert system. Staff recommends that the City require the operator to provide the facilities and equipment required to accomplish this.
· There is a need and interest in ensuring that the system keeps pace with technological developments over the franchise term. Staff recommends that the City require the operator to provide the facilities and equipment required to accomplish this.
· There is a need and interest in having the system rebuilt promptly, and pursuant to a rational plan that minimizes the disruption to the City and to subscribers. Staff believes that a four-year rebuild schedule is reasonable; the rebuild should proceed according to a rational plan; and staff recommends that the City establish requirements to this effect.
Existing PEG operations are inadequate to meet the community’s future, cable-related needs and interests. The Public Access operation may have served a few groups well, but on the whole the Public Access operation in this community has not been managed well. Facilities and equipment and support for Public Access use of the system is limited and not adequate. Educational Access in this community has been limited, and is also not adequate. The Community Colleges have utilized an Educational Access channel for distance learning programming, and their usage has risen to the level where they are entitled to a second channel under the terms of the existing franchise – and the City has recently requested that channel on their behalf. However, there has been no channel for K-12 Educational Access programming. Government Access now provides coverage of City Council meetings as well as a community bulletin board. However, more facilities and equipment are needed to enable the Government Access to produce more programming, both in its current space an in an expanded facility one the operation is relocated in the new City Hall. Therefore, the community cable-related needs and interests with respect to PEG Access use of the system are:
·
There is a need and interest in having additional
capacity set aside on the system for public, educational and government use; at
least 4 channels should initially be available, as the rebuilt system is
activated, a fifth channel should be provided.
These channels should be available for transmission of information in a
variety of formats, and more capacity should be available if needed to meet
cable-related community needs and interests.
There is a need and interest in having sufficient capacity set aside or
shared to allow the public to able to take advantage of future interactive
(two-way) capabilities of the system, in order to receive, originate, and use
interactive PEG programming.
Additionally, there is a need and interest in the operator providing
capacity for PEG that can be used for digital PEG programming. Staff recommends that the City adopt the
channel capacity requirements in the RFRP to this end.
·
There is a need and interest in having facilities and
equipment support for PEG access, adequate to ensure that PEG channels will be
available to all potential users in the community. To make PEG a reality in this City, it is important that PEG
facilities be available to all parts of this very diverse community. This is even more important here, where the
costs of real estate militate in favor of the efficiencies of shared facilities,
because of the large geographic area that the access facilities must
serve. Staff recommends that the City
adopt the facilities and equipment requirements in the RFRP. This will require establishment of at least
two PEG facilities and a continuation of existing support for a period.
·
There is a need and interest in having the facilities
and equipment available so that the access channels can be programmed from
central locations, without the assistance of the cable operator. There is a need and interest in being able
to originate programming from remote locations on the cable system. Staff
recommends that the City require the operator to provide the facilities and
equipment required to accomplish this.
·
There is a need and interest in having access managed
by an entity designated by the City, subject to rules that are designed to
encourage access use. Staff recommends
that the City adopt requirements in the RFRP to meet this need and
interest.
·
There is a need and interest in having the system
available in schools, libraries and other public buildings, so that those
entities can at least receive educational and governmental service provided
over the cable system, at no charge.
Staff recommends that the City adopt facilities and equipment requirements
consistent with this goal.
In many communities, operators construct “institutional networks.” These institutional networks are communications networks designed primarily to provide services to subscribers other than residential subscribers – small businesses and the like. An institutional network might be used to deliver a variety of advanced services to small businesses in San José. Our report concludes:
· There is a need and interest in the system constructing an institutional network capable of providing advanced services to non-residential subscribers.
· Capacity on that network should be provided at least for educational and government use, to link City facilities and other public buildings (including schools, libraries, public safety facilities and others) for a variety of two-way video, voice and high-speed data communications with each other. It is the intent of the City to use the capacity provided in a way that will improve educational services in the community, and that will allow government to provide information to the public and serve the community more effectively. It is also the intent of the City to use the network to improve public safety by, for example, making it easier to train police and fire personnel without removing them from service. The institutional network should also permit the City to cut expenses, without reducing services. Thus, the institutional network should be designed in such a way as to minimize the costs to the end user, and to maximize their ability to use the equipment that is now in place. The institutional network should also be designed so that it can readily expand to meet future increases in City needs, both in the capacity of the network and in the number of sites served by the network. Staff recommends that the City establish facilities and equipment requirements, and capacity requirements that would result in the creation of a highly flexible, and reliable, institutional network.
Under the Cable Act, there are a number of areas where a community must establish requirements in an RFRP; a number of places where requirements cannot be established; and some areas where the community may act unilaterally. In this case, we propose to establish requirements in an RFRP, as contemplated by the Cable Act, and establish certain other conditions unilaterally, as permitted by law. To this end we have developed a model franchise which establishes certain contractual obligations each operator would be required to assume. The operator will also be required to satisfy a Cable Ordinance which would be part of the City’s municipal code. The provisions that are included in the Model Franchise and in the Cable Ordinance are justified by the needs and interests of the community, although, in the City’s view, these requirements are not subject to the Cable Act’s “needs and interests” test (the requirements involve an exercise of the City’s basic police and governmental powers). Among other things, the staff concludes:
· A long franchise term does not serve the public interest, both because the system may become outdated, and because PEG and I-Net requirements may need to be revisited. Changes in law could require that some obligations be changed. Also, because the Cable Act protects a cable operator against unfair franchise denial, a shorter term may be more reasonable. Staff recommends that the City limit the term to 10 years if all the needs and interests identified in this report are adequately met. However, staff would recommend that the franchise be much shorter to the extent that these needs and interests are not met.
· A 5% franchise fee should continue to be charged. This is now a standard part of the “rent” that is charged to cable operators for use of cities’ valuable rights of way. By charging a rent, we ensure that the cable operator pays a fair amount to use the rights of way. A franchise should establish a broad definition of gross revenues which ensures that the operator pays the franchise fee based on all revenue which the City is entitled to collect the 5% fee on. As the 5% fee limit is a form of “rent control,” the City should also have the right to increase the fee if the law changes.
· A franchise should include provisions that ensure the franchisee will comply with its obligations, and which ensure that the City bears no cost as a result of the use of the rights-of-way by the cable operator.
· A franchise should ensure that the operator will use the rights of way in a manner that minimizes the risk of damage and undue interference with public and private property. The franchise should ensure that the operator’s use is secondary, and therefore should be clear that no property rights, or any other implied rights, are being granted. The franchise should be subject to conditions that ensure that goals of this community – undergrounding facilities for example – can be satisfied without undue public burden.
· A franchise should ensure that franchisee will not discriminate against potential subscribers, employees or subcontractors on any unlawful ground.
· The system should be required to provide good customer service. Rates should be subject to regulation to the extent not prohibited by law.
· The City should have the tools to monitor and enforce franchise and ordinance requirements. A franchise should provide those tools, and should require the operator to comply with such requirements, including those which the operator disagrees with, unless and until the operator has obtained relief in a court of competent jurisdiction.
· A franchise is personal in nature, and based on an assessment of the unique financial, legal, and technical qualifications of the individual grantee, along with that grantee’s history of performance. Thus, the franchise should ensure that no one may succeed to the franchisee’s rights, by any means, without the City’s permission.
· Each franchisee should be subject to the ongoing exercise of the City’s police, regulatory and other powers. The City needs the ability to respond to changing circumstances, over time.
On
December 18, 2000, the City entered into a settlement agreement with Heritage,
which addressed some of the City’s needs and interests, but preserved the
City’s rights to require more through the renewal. In preparing this report, Staff has taken
into account that settlement
agreement. PacBell had begun, but
abandoned, construction of a cable system in the City. PacBell subsequently sold its cable
facilities to Heritage. In order to
permit Heritage to take advantage of those facilities, the City entered into a
settlement agreement under which it agreed to issue permits so that Heritage
could integrate the PacBell plant into its plant; and under which Heritage
agreed to rebuild its cable system in the PacBell area. Heritage also agreed to rebuild the
remainder of its cable system as part of the settlement.
By its terms, the settlement does not prevent the City from
requiring a more advanced design than was agreed to; it does not prevent
Heritage from proposing a less advanced design. By its terms, the agreement cannot be used as proof of
cable-related needs and interests, one way or the other. However, after reviewing the settlement
agreement in light of the completed needs assessment, staff concludes that with
some important exceptions the system design described in the settlement
agreement generally meets the needs and interests of the community. Those exceptions, as well as a number of
other important issues that the settlement agreement did not address, are described in the RFRP. Staff recommends that the City require the
operator to build a system that meets the needs and interests of the community
as specified in the RFRP and incorporate provisions of the settlement agreement
in a final franchise as appropriate.
Cable television systems operate pursuant to franchises issued by local governments. A franchise authorizes the operator to provide cable service, and to occupy public rights-of-way for that purpose. The franchise sets out the terms and conditions under which service is to be provided. Cable service in this City is provided by Heritage Cablevision of California, Inc., providing services under the name AT&T Broadband. There is a dispute as to whether Heritage now lawfully holds the franchise (the City contends that there were unlawful transfers) which we discuss below. The Franchise which Heritage claims gives it rights to operate with the City was originally set to expire on December 31, 2000, and which has been extended by the City until June 30, 2001, with an automatic 3-month extension.
When a franchise is about to expire, a City has a rare opportunity to review the performance of the cable operator, and ensure that the operator will meet the needs and interests of the community for the future. The opportunity is rare because franchises are issued for periods of years. At the time of renewal, the City can establish requirements for system upgrades, to ensure that the community has adequate infrastructure. The City can ensure that everyone has real opportunities to originate, as well as receive programming. And, the City can ensure that service will be reliable, and that the company will be in a position to bring the benefits of advances in cable technology into our homes and schools. This report is intended to look to the past, and to identify what is needed for the future; based on this information, the City may ultimately determine whether or not Heritage may continue to operate in San José.
Overall, the City staff has concluded that (1) this community has been underserved for many years; and (2) the cable franchisee has failed to satisfy its obligations to the City. Examples of under-service are many and varied. The subscriber system is outdated; unreliable, and at its technical limits. Indeed, the subscribers still receive their service via an antiquated “A/B switch” system that was initially constructed and 1967 and 1968. Inspection and testing by CTC demonstrated that portions of the system are not in compliance with technical standards, and the physical plant is in generally poor condition. The inspection further revealed safety-related problems, and conditions that may adversely impact signal quality.
As another example, there is a great deal of demand in this community for channels, facilities and equipment that will permit members of the public, educational institutions and government agencies to produce and disseminate programming. This type of programming – so-called “public, educational and government (or “PEG” access),” serves critical public interests. Access requirements help eliminate the danger that our society will be sharply divided between information “haves” and “have-nots.” As the National Telecommunications and Information Administration (NTIA) has noted, “[b]ecause information means empowerment — and employment — government has a duty to ensure that all Americans have access to the resources and job creation potential of the Information Age.”[5] However, our review shows that the cable operator is not providing adequate support for PEG programming. The policies at the existing public access facility, managed by the operator, are designed to discourage programming, not encourage it. The facility is available only at limited hours, and there is a long waiting list of groups who wish to, but cannot, use the facility. Further, those who do use the facility generally have to pay the operator’s staff to operate the equipment, because is no formal training program provided to encourage community groups to learn to produce their own programming.
Finally, both customer complaints on file with the City, and the findings of the Buske Group, indicate that customer service provided by the operator has been substandard. By adopting this report, the City will be making it clear that changes in the level and quality of service provided by the operator need to occur, and will dictate what sort of changes are necessary.
Examples of the operator failing to satisfy its obligations to the community are equally numerous and varied. One fundamental example is the actual identity of the franchisee itself. The City renewed a non-exclusive franchise for Gill Industries, doing business as Gill Cable, to operate a cable system in the City in January, 1986. Among the obligations accepted by the franchisee was the obligation not to transfer the franchise without the consent of the City. In 1988, however, Heritage took over ownership and control of the franchise. Subsequently, Heritage was acquired by TCI, and in 1999, by AT&T. The City, however, never consented to any of these ownership transfers, and Heritage continues to fail to seek such consent, despite notice from the City that it considers the transfers to be a franchise violation. Thus, staff continues to dispute whether Heritage holds a valid franchise or not. Further, under the terms of the franchise, Heritage was to provide a network connection to 17 municipal buildings, to facilitate electronic communication between these buildings. Heritage failed to provide such a connection, despite requests and notice from the City. Further, Heritage has failed to comply with certain City rate orders, repeatedly using the fact that it has appealed the orders to the FCC as its excuse. However, the FCC never issued a stay of the City’s orders, and therefore Heritage was obligated to comply, notwithstanding the pending appeals.
Cable systems once served merely to retransmit broadcast television signals. They have now, however, become “a dominant nationwide video medium,”[6] with many companies rebuilding or poised to rebuild their systems into "electronic information highways." In fact, even though the broadcast networks’ audience share had steadily declined, cable network viewing shares have continued to increase.[7] The development of these electronic highways has the potential to significantly change the way people live, work, and interact with each other by providing users access to vast quantities of information, services and entertainment in a variety of forms. As a result, a local government has a compelling interest in ensuring that a cable system is adequately designed and constructed to help satisfy the community’s cable-related needs and interests; that good service is provided for the price paid; that services are available to all; and that the flow of information is not monopolized by the companies that owns the cable networks. These interests are reflected in federal, state and local law.[8]
The foregoing interests are particularly strong because, in order to operate, cable systems must occupy scarce and valuable public property — property that the public effectively pays to acquire and maintain. AT&T’s cables are on poles and underground in rights of way throughout the City. The City, as trustee of the public’s interest in this property, has a compelling interest in ensuring that the companies use this public property in a way that benefits the entire community. This means, among other things, that the City must ensure that public property is used in optimal ways, and that the public receives fair compensation — in the form of franchise fees and other conditions — for the use of its public property to provide cable service.
As a matter of state law, recognized and modified by federal law, these interests and others are protected, in part, through the franchising process.
Many in the community no doubt want the City simply to put the franchise up for competitive bid, and then award franchises to the best operator. That, however, is not an option. In 1984, the federal government passed a law that was intended to provide cable operators with a fair opportunity to obtain renewal. To that end, the 1984 federal law – the “Cable Act”[9] – establishes two possible ways a community can respond to a request for a franchise renewal: informal renewal negotiations and the statutory formal renewal process.
Under the informal process, Congress contemplated that the City and a cable operator will meet informally and attempt to resolve franchise issues through negotiation.[10] If the issues are resolved a City can, after providing the public with an opportunity for comment, adopt a renewal franchise. An informal proposal can be rejected at any time.
Alternatively, either the operator or the City can invoke the more formal renewal procedures set out at 47 U.S.C. Section 546(a)-(g). These “formal” procedures give the operator the opportunity for a fair hearing on its renewal proposal. At the same time, the procedures insure that a City can deny renewal if an operator has performed poorly in the past, or is not qualified, or is not willing make a reasonable proposal for meeting the community’s needs and interests for the future. Under the formal process, the City is given broad authority to define what the needs and interests of the community are. It is up to the operator to then submit a proposal that is reasonable to meet the community’s cable-related needs and interests, taking into account the costs of meeting those needs and interests (the focus is the entire community, not just the individual subscribers currently receiving service).
The legislative history of the 1984 Cable Act explains:
The ability of a local government entity
to require particular cable facilities (and to enforce requirements in the
franchise to provide those facilities) is essential if cable systems are to be
tailored to the needs of each community [and the legislation] explicitly grants
this power to the franchising authority.[11]
More specifically, the formal renewal process under the Cable Act is a four-stage process.
In the first stage, a City must conduct a proceeding to identify future, cable-related needs and interests of the community, and to review the past performance of the cable operators serving the community.[12]
Once
that proceeding is complete, the City may issue a request for renewal proposals
(“RFRP”). Because each renewal proposal
is evaluated on its own merits, this RFRP cannot simply be a competitive
bidding document.[13]
The Cable Act specifically
allows the City to establish the following requirements in an RFRP:
(1) “that channel capacity be designated for
public, educational or government use, and channel capacity on institutional
networks be designated for educational or governmental use, and may require
rules and procedures for the use of channel capacity designated....” 47 U.S.C. §531(b).
(2) “for facilities and equipment.”
The legislative history explains that this includes requirements for
institutional networks, studios, equipment for public, educational and
government use, two-way networks, and so on.
57 U.S.C. §544.
The Cable Act also
states that “A franchising authority may establish and enforce customer service requirements of the cable
operator, and construction schedules and other construction-related
requirements, including construction-related performance requirements, of the
cable operator.” The City staff believes
that this language permits the City to establish these requirements
unilaterally in a franchise (or through a regulatory ordinance), along with
various other requirements established pursuant to the City’s police and other
governmental powers.
In the next stage of the renewal process, the operators submits a renewal proposal in response to the City’s RFRP. “Any such proposal shall contain such material as the franchising authority may require.” Id. If an operator submits a timely and proper response,[14] the City has four months to evaluate the proposal, and decide whether to grant renewal based on the proposal, or to preliminarily deny renewal. 47 U.S.C. Section 546(c).
Finally, if renewal is preliminarily denied, and an operator desires it, the City must commence an administrative proceeding. The four issues that are considered at that proceeding are whether:
(A) the cable operator has substantially complied with the material terms of the existing franchise and with applicable law;
(B) the quality of the operator’s service, including signal quality, response to consumer complaints, and billing practices, but without regard to the mix or quality of cable services or other services provided over the system, has been reasonable in light of community needs;
(C) the operator has the financial, legal, and technical ability to provide the services, facilities, and equipment as set forth in the operator’s proposal; and
(D) the operator’s proposal is reasonable to meet the future cable-related community needs and interests, taking into account the cost of meeting such needs and interests.
This report thus is being submitted to discharge one of the City’s important responsibilities under the Cable Act. With the submission of this report, the City should be prepared to end step one of the formal process. This report reviews the past performance of the cable operator, and concludes that it has failed to comply fully with existing franchise. The report identifies cable-related needs and interests.
Consistent with the Cable Act, this report identifies needs and interests and the accompanying RFRP identifies the requirements that must be satisfied in a proposal, in accordance with the Cable Act sections quoted above. In addition to restating some of the key points of this report, the RFRP identifies a “model system” that could satisfy the requirements that staff recommends should be established.
While this report identifies needs and interests broadly, not every need and interest identified has been translated into a requirement that is included in the RFRP. That is because the federal law includes some limitations on what may be required in an RFRP.
As part of the renewal process, the City commissioned
several studies. The Buske Group
developed an “Ascertainment And
Recommendations Regarding Community Cable-Related Needs And Interests for the
City of San José, California” (the “Buske Group Report”). This report incorporated the results of two
telephone surveys performed by the Buske Group, and focus groups conducted by
the Buske Group. The Buske Group Report
also disclosed the results of an inspection of existing PEG facilities and equipment
in the City, and compared the results of the community-specific analyses
performed in this case with work performed elsewhere. The Buske Group examined the level of support required to satisfy
the needs and interests of this City and the level of support provided in other
communities (The goal of this review was not to come up with an “average” of
the support provided in other communities.
Instead, the purpose of the review was to determine whether the level of
support provided appeared to be reasonable and affordable). Finally, The Buske Group reviewed plans
developed by other agencies that bear on cable-related needs and interests, and
took those plans into account in developing recommendations as to needs and
interests.
Columbia
Telecommunications Corporation inspected the existing systems, and worked with
The Buske Group and the City staff to develop recommendations for system design
requirements. CTC concluded that the
portions of the networks devoted primarily to providing service to residential
subscribers required a rebuild, with most existing equipment being
replaced. CTC’s recommendations for
this part of the network, which we refer to as the “subscriber network,” are
included in the “CTC Technical Report.”
CTC worked with key City departments to assess the City’s information
technology needs and interests. These
departments include the Information Technology Department; the San José
Libraries; The Fire Department; and the Department of Transportation. CTC concluded that there should be an
institutional network – a network devoted primarily to serving non-residential
customers. CTC concluded that capacity
on an institutional network should be devoted to schools, libraries and various
public agencies. The recommendations
are set out in the “CTC I-Net Report.”
The City itself conducted the
following series of hearings on cable.
CITY COUNCIL ACTIONS
|
ACTION
DATE |
SUBJECT |
|
September 29,
1999 |
Public Hearing
regarding goals and objectives for renewal negotiations |
|
February 29,
2000 |
Report on
Status of Cable Renewal Negotiations |
|
January 30,
2001 |
Report on
Status of Cable Renewal Negotiations |
|
March 20, 2001 |
Acceptance of
a Status Report on Cable Renewal Negotiations |
|
June 19, 2001 |
Hearing in
conjunction with this Report |
|
|
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An
additional hearing is scheduled in connection with the final adoption of this
report.
Members of the
public and various non-profit organizations appeared and spoke at those
hearings. For example, at the March 20,
2001 meeting, Jim Henderson, who is the Project Manager of the High School
Transformation Project for San José Unified School District, spoke about the
importance of an educational channel and facilities. Mr. Henderson identified several important benefits, including
instructional programs enabling the schools to reach out to more students, especially
in the area of advanced placement or career-related courses which are only
offered at certain schools; professional distance learning which would assist
the schools in addressing substitute teacher training issues; adult continuing
education opportunities; allowing parents to “virtually come into the
classroom” and see new math and science programs; and adding television
production as a dimension to the performing arts magnet programs.[15]
Clay
Whitlow, President of Evergreen Valley College spoke in favor of PEG Access
generally, and stressed that public access is something the community cares
about, especially in light of need for community-based organizations to reach
out to the diverse population of San José.[16] Brenda McHenry, President of the League of
Women’s Voters of San José and Santa Clara, spoke about the important role
public access plays in providing an electronic media source beyond the
commercially-produced offerings which informs people about what is going on in
their communities.[17]
The cable company had the opportunity to
present information about the cable-related needs and interests of the
community at these hearings.
Informally, for example, AT&T claimed to have survey information
bearing on PEG requirements, but while the survey and supporting information
was requested, it was never produced.
Staff
also gathered information from subscribers through phone calls, letters, and
electronic correspondence. A large
percentage of these subscriber-initiated communications dealt with customer
service issues: poor signal quality, missed appointments, long delays in phone
response time, repeated service calls with no resolution of the problems. In addition, Staff reviewed the CTC and
Buske Group findings in light of its own familiarity with the community. Further, staff reviewed a series of forward
looking vision studies conducted by various City agencies. These studies include:
· “Strategy 2000 -- San José Greater
Downtown Strategy for Development”
· “City of San José Information Technology
Master Plan”
· “The Silicon Valley ITS Strategic Plan”
· “The San José Public Library Branch
Facilities Master Plan”
· “City of San José Greenprint for Parks
and Community Facilities and Programs”
In
addition, staff, in conjunction with the Mayor, invited the superintendents and
IT directors of each of the City’s school districts to participate in a
round-table discussion regarding the schools future information-technology
needs and interests and how the cable system could assist the schools in
meeting those needs and interests.
Staff
also inspected records of customer complaints and service issues. Finally, the
City considered information on developments in the cable industry both to help
identify cable-related needs and interests and to determine whether it was
reasonable to expect the operators to meet those needs and interests.
In
the course of examining needs and interests in this community, staff looked at
rates in communities where similar commitments had been made. Among the reasons
that we took this approach – as opposed to simply costing out each of the
requirements – are the following:
1. AT&T’s
rates are subject only to modest rate regulation, on the basic service
tier. As a result, there is no
assurance that reducing requirements will actually reduce subscriber’s total
monthly bills. In fact, there is
evidence that rates in this City are substantially higher than the rates that
are being charged in communities where the operator has provided substantial PEG
and I-Net benefits.
2. A
strict cost analysis ignores the fact that improvements to the cable system
create opportunities for the cable operator to generate new streams of revenues
and can eliminate or reduce existing costs by, for example, reducing the amount
of maintenance required. These revenue
streams could be substantial. For
example, Comcast Corp., a large multiple system operator estimates that it
generates about $100 per year in cash flow for each digital customer, which,
based on its reported one million digital customer base, translates into $100
million in revenues from the digital offering alone – which the president of
Comcast’s cable unit noted was just the “tip of the iceberg” considering the
variety of new services that can be offered through a fully digital plant, such
as video-on-demand, e-mail, instant messaging, and telephony.[18] AT&T Broadband CEO Dan Somers, who
refers to the delivery of such multiple products as “packing the pipe” said
that the company added 2.4 million new digital cable TV, high-speed data, and
telephone customers in 2000, and estimated the company was on track to increase
that number to 3 million in 2001.
AT&T’s totals at the end of 2000 were 2.8 million digital TV
subscribers, 1.1 million cable modem, and 560,000 telephone subscribers – all
additional revenue streams through the same “packed pipe”[19] Thus, the continued roll-out of these
digital service enables cable operators to substantially lessen the impact of
competition from satellite multi-channel video programming (DBS) providers.[20]
By looking at other systems, we have a
better sense of the types of revenues the company will likely realize once it
rolls out advance services in San José.
Thus,
while at this stage of the process, the City is not required to consider costs,
we did do so, and assessed needs and interests based on this cost
analysis.
This remainder of this report is divided into several
parts. In the next part, we summarize
the community’s key future, cable-related needs and interests that have been identified,
and, where appropriate, the requirements that are associated with those needs
and interests. In the third part of
this report, we discuss the past performance of the operator. Attached to this report are a draft request
for renewal proposals, a Model Franchise and a Model Cable Ordinance.
The cable industry is changing
dramatically. What was once an industry
primarily focused on delivering television signals to the home is developing
into an industry that is providing a critical part of the “information highway”
that is changing the way the people receive information, shop and
communicate. Cable now delivers a wide
variety of two-way cable services through modern, upgraded cable systems. And according to the California Cable
Television Association, cable services “will increasingly be showcased” through
the continued advancement of other significant technological advances, such as
digital compression, interactive video, and high-definition television (HDTV).[21]
The potential impact of an advanced cable
system on a community cannot be underestimated. For example, in schools, accessing the internet via an advanced
cable system’s “superior bandwidth” allow students and teachers to download at
speeds “50 to 100 times faster than telephone-based modem technologies.”[22] The benefits of this technology are not just
confined to the schools. An advanced
cable system can provide a small business with high-quality, high-speed access
to the Internet Beyond the Internet, a two-way cable system permits local
businesses to interact with local governments and other institutions in ways
that save time and cut costs.
The benefits of advanced cable are not just limited to providing
new ways to “surf the web.” New
programming services are developing every year. According to a graph produced by the NCTA, in 1993, there were
approximately 100 national cable video networks; by 2000, there were well over 200.[23]
However, in order to fully achieve the
promise of cable technology, companies such as AT&T must upgrade their
networks, to increase capacity, reliability, and responsiveness. This typically requires a system rebuild to
take advantage of “fiber optic” technology, which is “an ideal medium for
transmitting vast amounts of information – data, graphics, and even video – at
high speed.”[24]
There are several reasons why development
of information highways ultimately depends on development of fiber-based
cable systems. Traditional
all-coaxial cable systems have the capacity to transmit large amounts of
information, but fiber optic technology provides much greater useable capacity
or "bandwidth" -- at least ten times the capacity now, and as equipment
improves, the difference in the capabilities of the two types of systems will
become even more dramatic. This
additional capacity is critical now for potential high-volume users such as
schools, businesses and government.
Signals lose strength significantly as
they travel through coaxial cable. As
one adds more electronics to increase the capacity of a coaxial system, the
system suffers even higher signal losses. To compensate for these losses, which
are almost non-existent for fiber optic cable, the coaxial cable signals have
to be amplified at regular intervals,[25]
and every amplifier distorts the signal.
In addition, these amplifiers require regular maintenance and
"tweaking" in order to operate most efficiently and effectively;
reliable high-quality upstream transmissions are particularly hard to maintain.
For this reason and others, there often are much higher maintenance costs
associated with coaxial, compared to fiber optic cable. And, because each amplifier is a potential
"failure point," all-coaxial systems suffer from more outages than
well-built fiber-based systems, which require many fewer amplifiers. This makes a difference for the home
subscriber, and an even more significant difference for the potential business
user, who is often less able to tolerate system failures, or signal errors when
transmitting video or data.
This does not mean that fiber must
immediately be brought directly to every building and home. For residential service, most cable systems
being built today use fiber trunk lines to carry signals into neighborhoods, to
a point called a "node." At
the node, signals are routed onto the wires from which individual locations are
served. While it is considered
cost-effective to use fiber as a "backbone" for cable systems, there is a significant
question as to whether it is necessary or cost effective to use fiber to carry
signals from the trunk all the way to the home. So long as the distance the coaxial cable must carry the signal
is limited (so that the system does not use many amplifiers), a system using a
combination of coaxial and fiber can deliver high-quality signals to the home,
and provide enough two-way capacity to send video and data from the home to
various locations on the cable system.
Many modern cable systems being built today have limited node size, in
anticipation of future consumer demand for advanced services requiring
increased bandwidth. For example,
Charter Communications is rebuilding its systems to 860-Mhz, with two-way plant, averaging about 380 homes per
node. Charter is deploying six fibers
to each node, and claims it can split nodes down to 60 homes per node if demand
for bandwidth by consumers dictates.[26] Indeed, AT&T tested a “mini-fiber node”
systems in Salt Lake City, “in anticipation that we’re going to get millions of
subscribers for our advanced services,” because “if we do, the current
architecture – where 600 households are served from a fiber node – may not be
the best approach.”[27] While the amount of capacity available is
less than that of an all-fiber system, it will still allow other uses,
including transfers of data at speeds much faster than are supported by
existing coaxial cable networks. The
residual coaxial links on a fiber-coaxial hybrid system may be upgraded to
fiber later. In addition, using coaxial cable lines to individual homes enables
those customers who use cable solely to receive traditional television service
to avoid paying for the special and potentially expensive devices that would be
required in all-fiber systems.[28]
By contrast, it makes sense to bring
fiber all the way to any building containing high-volume users, and to
eliminate any coaxial cable when the capacity available on coaxial links is
inadequate to satisfy the location's known needs. Thus, trends in the industry
suggest that, for now, it makes sense to build high-capacity fiber systems to
neighborhood nodes; to serve residences from those nodes using coaxial cable;
and to serve other high-demand users from the node using fiber optic cable.[29]
In addition to being upgraded to
incorporate fiber, the cable industry is concluding that systems need to be two-way activated. Two way-activation is required for
providers to be able to readily offer many advanced, interactive television
services – services in which the set top interacts with a server.[30] Cable companies are developing interactive
television services which rely on two-way activation, including Interactive
Program Guides; Personal Video Recorders;
which will deploy features offered by companies like TiVo into the cable
set-top box; Video on Demand; Enhanced
TV Services which allow consumers to obtain more information about programs and
commercials they are watching, for example; access to the internet over the
television set; and locally-oriented interactive sites which “offer customers
information which is not available on the Internet but which provides an
“internet-like” interactive experience.”
In four Midwestern states, Insight Communications already offers some
100,000 customers the ability to “call up restaurant menus, show times at local
theaters, local government information, and stories from selected newspapers.” [31] Thus, rather than some “blue sky” fantasy of
the future, interactive television is already here. Indeed, AT&T is currently marketing “AT&T Digital Cable
with Interactive Services,” which, according to their website, will turn
watching television into a “multidimensional experience, providing internet
access from the TV, the ability to get “interactive” with content providers,
etc.[32]
Interactive television provides a unique
opportunity for PEG providers to better serve the community, as well. In fact, because of the very nature of PEG
– public access allows viewers to actively participate in creating programming;
government access allows for increased citizen involvement and participation in
government; and educational access involves participation by students in
learning – PEG and interactive television “compliment each other because both
focus on a specialized interactive community of specific interests in a
specific geographic area.”[33] One application is the interactive council
meeting, which allows viewers at home to participate in council meetings by
text, voice, or video link, depending on technical capabilities. There are several other applications, such
as GIS mapping services and enhanced interactive distance learning, as well as
enhanced interactive service for government information that is not available
on the web, similar to the Insight Communications service. Interactive television functionality can be
provided for analog or digital television channels, and if the technology is
present on the system – which AT&T marketing says it will be in the future
-- than PEG programmers can utilize the technology to enhance the services they
provide to their communities.
Finally, the cable industry is
discovering that higher capacity systems are required in order to provide
advanced services adequately,[34]
in order to meet subscriber demand for analog and digital services, and in
order to prepare for high definition television. Traditionally, television has been delivered via an analog
signal. However, there are significant
advantages to delivering video in a digital format. It allows delivery of brilliant, high-definition signals of
substantially better quality than the signal delivered to today’s
televisions. A digital signal can also
include multiple layers of information that a viewer can select and manipulate
as desired -- for example, a video news program could carry with it additional
text information on a story that could be called up interactively. A viewer could order desired products
instantaneously. The FCC views digitization
as so important that it is requiring all broadcasters to begin delivering digital
services on an accelerated schedule and to abandon analog transmissions by the
year 2006. As the FCC has described it,
“the arrival of digital television (“DTV”) … promises to be one of the most
significant developments in television technology since the advent of color
television in the 1950’s. DTV has the
capability to provide clearer and sharper, cinema-like pictures as well as
multi-channel, CD-quality sound. It can
provide new uses such as multiple video programs or other services on a single
television channel, including data services.
The use of DTV technology will also allow television to enter the
digital world of the personal computer and the internet.” FCC Office of Engineering and Technology,
November 1998.[35]
While digital signals can be delivered
via coaxial cable, a one-way coaxial system simply is not in a position to
deliver the full advantages offered by digitization to a community. Accordingly, the cable industry is busily
upgrading systems throughout the country. For example, Charter, which is
upgrading to 860 Mhz, two-way plant, averaging 380 homes per node, plans to
complete 90 percent of its advanced system rebuild by the end of 2001,
upgrading some 135,000 miles of plant.[36]
At the end of 2000, 73% of Cox Cable’s
network was upgraded with two-way interactivity, and 70% had capacity of at
least 750 MHz. Cox anticipates that by
the end of 2001, the totals will increase to 88 and 83%m respectively.[37] The National Cable and Telecommunications
Association, the trade group for the cable industry, reports that by the end
of 2000, 92 percent of consumer homes
were passed by high-capacity plant offering bandwidth for delivery of digital
TV, high-speed data services, and HDTV programming, and of these homes, 81%
were served by 750 Mhz systems, “positioning cable to compete more effectively
with DBS companies, which typically offer more than 200 channels.” The NCTA estimated that the average cable customer now receives 95
channels.[38]
Cable systems in several of the
communities in this area are being upgraded consistent with the foregoing. AT&T has installed cable systems in the
Cities of San Francisco and Mountain View, for example that will incorporate
fiber optics, will be two-way activated, and will employ electronic equipment
capable of supporting a bandwidth of at least 750 MHz. These projects were begun some time
ago. Moreover, franchising authorities
in many communities are taking advantage of the advances in technology to
require operators to provide “institutional networks”[39]
and to devote significant two-way capacity for public, educational and
government use of the system. These
requirements can include requirements, for example, for linking schools,
libraries and government agencies together, and providing links to the Internet. The goal is not simply to allow these
agencies to communicate more effectively internally (or with one another). The goal is to obtain the resources required
to provide better services to the public.[40] In Montgomery County, Maryland, for example,
the government is planning for a joint venture with the American Film Institute
(AFI) in its renovation of a classic art deco movie theater to create a
state-of-the-art multi-media facility. The community benefits from AFI’s use of
new digital technology for distance learning applications in its partnership
with the local college and public schools using fiber connections as part of
the County’s I-Net. The cable system
benefits from enhanced programming planned to be cablecast in conjunction with
the AFI programs. Cincinnati, Ohio uses
its optical fiber I-Net to interconnect its computers and carry police and fire
and rescue operations, land mobile radio feeds, and telephone services. This directly translates into better
protection for the community.
The potential benefits of advanced
networks to communities are widely recognized, particularly when connected to
other communications networks, such as the Internet. As former Vice President Gore noted, in commenting on the cable
industry’s commitment to connect all schools and libraries to the Internet: “By
connecting our libraries, citizens, young and old, literally will have the
future at their fingertips! They will be able to enjoy the marvels of the
Internet in the convenience of their local library. And they will have access
to vast resources, such as the entire Library of Congress, in the time it takes
to click the mouse... Providing access through our nation's libraries is a
critical part of this effort. Recent studies have shown that many Americans, particularly
low-income, Blacks, Hispanics and Native Americans, lack access to computers
and the Internet at home. If we are to connect all Americans, technological
resources must be available in public places, such as our schools and local
libraries. We must provide all Americans, no matter what race or age, location,
or income level with the tools to explore new worlds or find new jobs.!”[41]
Of course, not every system will go
"high-tech" -- at least not immediately. For some small systems situated in rural, isolated locations, for
example, the cost of providing a high-capacity connection to every customer may
be prohibitive. But, general industry
trends suggest that that there are needs and interests in having (1)
high-capacity, reliable, high quality, fiber-based (or equivalent) cable
systems, with activated, interactive capabilities; (2) a system that includes
an institutional network and that devotes a significant amount of capacity for
public, educational and government use; (3) a system interconnected to other
telecommunications systems, including other local cable systems and the
Internet. Further, because of the
importance of these systems, a community would be remiss if it did not insure
that all of its citizens have an opportunity to take advantage of system
benefits.[42]
The
City’s work in ascertaining cable-related needs and interests confirms these
points. Indeed, the ascertainment
confirms that there is a great need and interest in having advanced cable
systems providing service throughout this community.
San José is the third largest city in
California, and the 11th largest city in the Country, encompassing
177 square miles, with a population of over 918,000 people.[43] It is a very diverse community, whose
residents, according to the San José Unified School District, speak more than
46 different languages. 26.6% of the
community is of Hispanic origin, and 18.7% percent are Asian or Pacific
Islander. This diversity is celebrated
in many ways, including many cultural festivals such as the Cinco de Mayo
Festival, the Vietnamese Spring Festival, the Obon Festival, the Afribbean
Music & Cultural Festival, the Little Portugal Parade, and the Gay Pride
Parade. It is also represented in the
business community. The City
features several ethnic chambers of
commerce, including the Portuguese Chamber of Commerce, the Vietnamese Chamber
of Commerce, The Filipino American Chamber of Commerce of Santa Clara County,
the Hispanic Chamber of Commerce Silicon Valley, and the Japanese American
Chamber of Commerce.
A large portion of the population lives
and works in the City. San José lives
up to its name “Capital of Silicon Valley,” boasting more of the top 100
high-tech global manufacturers than any state except Massachusetts, and about
1500 of the nations largest 2500 electronics firms. There is a high computer penetration throughout this
community. The telephone survey performed by The Buske Group found that over
75 per cent of the households in San José had a computer, and that nearly eight
out of ten such computers were connected to the Internet.
One of the “real strength[s] of the city
is in its neighborhoods, all sustained by their own shops, movies, restaurants,
video outlets, churches, and social organizations, and activities, many
organized around schools.”[44] These distinct neighborhoods include Santa
Teresa, Evergreen, East Valley, North Valley, Alviso, Central San José, Willow
Glen, South San José, Blossom Valley, Alamaden Valley, and Cambrian. The City has 19 school districts providing
K-12 education. The City is also well
served by universities and colleges, including San José State, Evergreen
Valley, DeAnza, San José City, Mission, Foothill, and West Valley.
The City has identified as one of its
critical goals the revitalization of the downtown, with redevelopment plans
designed to address the increased demand for additional downtown residential
units, as well as to attract more retail and business to the downtown area. Other critical City goals include a strong
commitment to partnering with schools through a number of efforts including the
City-Schools Collaborative, strengthening of neighborhood organizations through
the City’s Strong Neighborhoods Initiative, and using technology to enhance
E-business opportunities as detailed in the City’s recently completed Information Technology Master Plan.
Given the demographics of this City, and
the critical goals for growth and development, staff believes that it is
particularly important that this community be served by high-quality
communications infrastructure that, among other things (a) can provide reliable
service, including advanced services, to the entire community; (b) provides
schools and government facilities with high-quality, high-speed networking; and
(c) provide members of the public with opportunities to receive and develop
programming relevant to the community, and the neighborhoods, in which they
live and work. The history,
demographics and the economy of this community suggest that, among other things
it is appropriate to require construction of a reliable advanced cable system,
to require an I-Net, and to require set aside of significant capacity for PEG
use.
The ascertainment studies indicate that there
is a substantial need and interest in having the community served by a
high-capacity, two-way cable system that is well-built and highly reliable, and
flexible enough to respond to changing needs.
Further, the study found significant
levels of interest in two-way educational and governmental services, including
the ability to obtain permits and licenses electronically; the ability to
access library resources; the ability to communicate with government officials
and educators; the ability to obtain access to City and school documents; the
ability to obtain public safety information; and the ability to participate in
distance learning from the home.[45]
Participants at the focus groups were quite clear that there is a
significant need and interest in an advanced cable system, in PEG use of the
system, and in an institutional network.
An analysis of the input received through the focus group discussions
resulted in the identification of six key communications challenges for public
agencies, community and civic groups, and schools. Those areas include: (1)
cost barriers; (2) inadequacy of available communications media; (3) lack of
cooperation and collaborations; (4) the need for new education and skill sets
(5) more and better managed information needed; and (6) communicating with
diverse groups.[46]
Participants indicated that there are now cost and other barriers
that prevent them from communicating effectively.[47] Participants concluded that the cable system
could be used to address many of the problems facing the community.
Testimony before the City Council, as
detailed earlier in this report, echoed the comments made during the focus
groups. And, studies by the school
district, various City agencies, and submissions by the libraries underlined
the importance of ensuring that San José is served by an advanced cable system.[48] Likewise, the Fire Department’s “Strategic
Plan 1997-2000” emphasizes the importance of using the electronic media to
improve public safety.
In addition the ascertainment process
indicates that there is a need and interest in requiring the cable system to
interconnect with other communications networks An interconnected institutional network is needed, because, among
other things, the 19 school districts serving San José residents do not follow
City boundaries, thus interconnection to systems in neighboring jurisdictions
is essential to provide seamless educational and distance learning
opportunities throughout the school districts.
Additionally, the Community College channels must continue to be
interconnected, to allow for the transmission of educational and distance
learning programming.
In addition to the needs and interests
described above, the ascertainment identified the importance of being able to
use the cable system to notify the public in San José about localized
emergencies. This would require some
from of remotely activated, secure channel override, that would permit an
authorized official send an emergency video and audio message to the City via
the cable system overriding both video and audio on all channels.[49]
The
existing system is simply not capable of meeting the needs and interests
discussed above, and in the reports submitted by The Buske Group and CTC. CTC inspected the system and found it to be
old and in generally poor condition.[50] The system is not capable of providing
adequate two-way service.[51] The bandwidth that can be delivered to any
subscriber is quite limited.[52]
The
system is inherently unreliable, because of the number of active components
between the headend and subscribers, which increase the potential sources of
signal degradation and service outages.[53] A rebuild of the system is required. In addition, many of the subscriber drops
are old and in need of replacement.[54]
Problems
with the systems are reflected also in the surveys and studies that were
performed, as well as in information from the customer complaint records
reviewed by the staff.
The
needs and interests with respect to general system design can be summarized as
follows:
There
is a need or interest in a system that includes the facilities and equipment
required:
·
To
provide substantially greater channel capacity than is provided on the existing
cable system. The system should be
capable of responding to subscriber demands for channels delivered in various
formats without substantial additional upgrades, and should be designed so that
it will be capable of responding to the technological developments described
earlier in this report (e.g., high definition television and
interactive television) promptly.
·
To
provide substantially better signal quality and system reliability than is
provided by the existing cable system.
The system should have a minimal number of failure points between signal
sources (headend) and each individual subscriber.
·
To
support two-way, advanced cable services.
The system should be entirely two-way activated, and should be designed
so that it can support services that require broadband transmissions upstream
and downstream from subscriber locations.
Further, the system should be designed so that as subscriber demand
increases, the system’s upstream and downstream capacity to subscribers can be
rapidly and efficiently expanded through such techniques as “node splitting” without the need for cable
plant construction or modification.
·
To
satisfy all applicable technical standards for system performance over the
franchise term.
·
To
permit the operator to respond quickly and effectively to outages, requests for
service, and customer complaints.[55]
·
To
allow subscribers to receive signals in substantially the same form in which
they were received by the cable company from the programming source, e.g.,
color television signals should be received by subscribers in color, stereo
signals should be received by subscribers in stereo, secondary audio signals
should be receivable, and closed captioning signals should be receivable on television sets capable of decoding the
closed captioning signal.
·
To
allow parents to control viewing by children, with only minor modification
of adult viewing options.[56]
·
So
that the services (including, by way of example, customer service support)
provided by the operator are reasonably accessible to the hearing-impaired and
other persons with disabilities.[57]
·
To
permit the City to remotely and securely override audio and video on all
channels as part of a local emergency alert system.
·
So
that the cable system is capable of being easily connected to additional cable
systems in the City, to systems in adjoining cities, and (directly or
indirectly) to the Internet, so that PEG signals (including institutional
network signals) can be effectively transmitted to and from the system
seamlessly, without substantial deterioration or degradation.[58]
·
To
allow customers to use the cable system for two-way communications from the
home, and to use PEG resources interactively.
·
To
allow members of the public, educators and government representatives to
produce programming and transmit that programming, at no charge from the
operator, from suitable distant locations throughout the City to PEG
programming control site(s), and from there, through the headend to
subscribers, without the assistance of the operator.[59]
·
To
permit PEG users to take advantage of the capabilities of an advanced system,
as such capabilities are activated for commercial purposes; and to ensure that
changes in the system do not hamper the use of the system for PEG purposes.
·
To
link each of the City facilities and other public buildings (including schools,
libraries, public safety facilities and others) identified in the draft RFRP
via reliable capacity on the institutional network for a variety of two-way
video, voice and high-speed data communications with each other. We will use the term "institutional
network" to refer to that portion of the cable system primarily designed
to meet the needs and interests of non-residential customers, and the term
"subscriber network" to refer to the network equipment and facilities
primarily designed to serve residential customers. We do not mean to suggest, however, that an institutional network
is for the benefit of institutions. It
is in fact the intent of the City to use the I-Net in a way that will improve
educational services in the community, and that will allow government to provide
information and serve the community more effectively. It is also the intent of the City to use the network to improve
public safety by, for example, making it easier to train police and fire
personnel without removing them from service. The institutional network should
also permit the City to cut expenses, without reducing services.
The capacity on the
institutional network that is devoted to educational and government use (and
public use, to the extent the operator proposes to allow the institutional
network to be used for public use purposes), and the associated interface
devices at each PEG location on the institutional network should have the
following characteristics:
·
The
institutional network should be available throughout the City of San José, and
should be able to meet the needs and interests in governmental and educational
use (and public use, if proposed by the
operator) throughout the community.
·
There
should be sufficient capacity available to support user requirements over the
next decade. This requires that the
capacity be scalable and expandable as needed, and that system be designed so
that it can be extended to new locations without deterioration in system
capabilities. This also requires the
operator to provide initially the devices necessary to provide activated,
useable capacity supporting the functionality required in the CTC I-Net Report.
·
The
network needs to support integrated services which will include applications
for voice, data, and video (one and two-way) transmissions, and must be
designed in a way to minimize the cost of end user equipment and interfaces.
·
The
institutional network should be designed and constructed to support standard
interfaces such as conventional NTSC analog, M-peg, and J-peg digital video,
telephone “T” carrier services ( DS1, DS3), Ethernet interconnection (10 Mpbs,
100 Mbps and Gigabit platforms), and other similar commonly used interfaces.
·
I-Net
users must be able to access the network in a variety of ways – not just through direct physical
connections For example, the City may
wish to attach wireless devices to control traffic signals and receive
telemetry data, among other things.
·
There
must be sufficient capacity available for educational and government (and if
proposed by the operator, public) use of an institutional network, and all
required network switches and other equipment so that the there is sufficient
throughput to allow institutional network locations simultaneously to use the
system, without meaningful interference with their applications. In addition, capacity must be provided in
such a way so that users operating at different transmission speeds, or using
different media can cost-effectively use the institutional network.
·
I-Net
capacity should be provided and be available at no charge to the users.
The staff recommends that the RFRP requirements be adopted for
facilities and equipment consistent with the above.
In addition, based on the ascertainment,
we conclude that the community’s future, cable-related needs and interests
include the following:
·
All
parts of the City should be served by systems that have similar characteristics
and capabilities. There is a need and
interest in having equivalent facilities available throughout the community.[60]
·
Given
the age of the system, there is a significant interest in having all or almost
all components replaced. There is a
particular need and interest in having all drops replaced as part of the
rebuild, in all areas but the PacBell area to the extent that the drops in that
area were replaced as part of the integration of PacBell facilities into the
AT&T network.
·
A
franchise should include provisions that ensure that the Cable System will stay
apace of developments in the industry over the franchise term, and so that the
community can take advantage of changes in technology. Among other things, an appropriate provision
should permit the City to require further upgrades of the technical
capabilities of the Cable System (including by construction of additional
two-way links between public buildings); and for additions and improvements to
the facilities, equipment and other support required for PEG use.[61]
·
There
is a need in interest in having the Cable System designed so that users can
(physically or virtually) “co-locate” facilities or equipment at the Cable
System’s headend and control centers and major backbone facilities such as
hubsites and optical transfer nodes (OTN).
·
There
is a need and interest in advanced services, including digital services. This need and interest, which is identified
in The Buske Group Report, applies for both PEG and non-PEG applications.
·
There
is a need and interest in an open network.
Several commenters raised issues that relate to the “open access”
debate. While the City may not be able
to require commercial open access, there is a need and interest in it, and in
ensuring that PEG information, regardless of format, is available and useable
to subscribers.
PEG requirements take several forms.[62] Franchising authorities can require
operators to designate channels for public, educational and governmental use in
an RFRP. Franchising authorities can establish requirements for equipment and
facilities -- for example, requirements for studios and cameras. Franchising authorities can establish rules
for the management and use of the facilities and channels devoted to PEG
use. Franchising authorities can
enforce promises for services made by a Franchise Applicant. In any event,
before issuing a Franchise, a franchising authority can insist that the
operator "provide adequate public, educational, and governmental access
channel capacity, facilities or financial support.[63]" This section will focus on what our needs
assessment shows with respect to specific requirements for channel
capacity, facilities and equipment, and operating support for PEG use, in
addition to those network requirements described above.
As Congress noted when it first passed
cable legislation:
One
of the greatest challenges over the years in establishing communications policy
has been assuring access to the electronic media by people other than the
licensees or owners of those media. The development of cable television, with
its abundance of channels, can provide . . . the meaningful
access that . . . has been difficult to obtain.
Almost all
recent franchise agreements provide for access by local governments, schools,
and non-profit and community groups over so-called "PEG" (public,
educational and governmental) channels.
Public access channels are often the video equivalent of the speaker's
soapbox or the electronic parallel to the printed
leaflet . . . PEG channels also contribute to an informed citizenry
by bringing local schools into the home and by showing the public local
government at work.[64]
While there are certainly many
communities that have no PEG channels, communities that have concluded that PEG
requirements serve important community needs and interests often require three
or more channels. That is because the
programming interests of the public, educational and governmental entities that
use the channels are diverse.
Separating the channels by use allows different user groups to schedule
and develop programming of a particular type, and ensures that viewers have a
general idea as to the type of programming that will be available on each
channel. In addition, providing for
adequate access from the outset avoids potential subscriber disruption that
could occur if a community begins with too few channels, and must displace
channels in order to obtain adequate capacity.
If it turns out that there is not enough programming, the cable operator
can use the PEG channel capacity for its own purposes.
There
are several substantial PEG access operations in California, serving
communities of various size and character.
Some of these are discussed in the Buske Group Report. To take one example, Mountain View
California, a community with approximately 12,000 subscribers, has four
channels guaranteed, may obtain additional analog channels if certain triggers
are met. Mountain View can also obtain
the right to deliver up to six distinct digital channels to each subscriber for
PEG purposes. The channels can be used
to transmit voice, data and video signals to subscribers. The Buske Group Report contains examples of
many other communities where operators have devoted substantial capacity to PEG
use; there are others, large and small.[65] They are located across the country. In Larchmont, New York, an AT&T system
serving approximately 9,000 subscribers has three PEG channels, and an option
for one more. Vancouver, Washington, has seven PEG channels; Spokane,
Washington, six; Multnomah County, Oregon, eight; Austin, Texas, eight; and
Portland, Oregon, five. The
experience of these and other communities suggests that substantial channel
capacity should be devoted to PEG use.
It
is also generally recognized, however, that channels alone are not enough. Resources must also be available to enable
potential users to produce programming
The channels need to be publicized; potential users needs to be trained;
equipment and facilities need to be available to produce good quality
programming (audio and video must be satisfactory); equipment and facilities
need to be available to edit programming; necessary facilities and equipment
need to be in place in order to send signals to the headend from origination
points, and then to subscribers via the headend. It is difficult for access to succeed without these
resources. Many franchise agreements
contain commitments by cable operators to provide support for PEG access in
addition to providing a 5% franchise fee to the community. In Mountain View California, for example,
the operator provides funding each year for capital support, and provides
substantial studio space for an independent, non-profit access
corporation. Moreover, the Mountain
View franchise contains a provision which permits an operator to escape its
capital funding obligations if it is providing adequate support to an
independent, third-party non-profit that runs PEG operations; as a result, most
of the funding goes directly to a non-profit, and ensures that the money can be
used for operational or capital purposes, as best meets the need of the
community. Even with these benefits,
and a 5% franchise fee, the rates per channel in Mountain View are in fact less
on a per channel basis than the rates being charged by AT&T in San José.[66]
PEG
use is changing as cable technology changes.
Access centers originally were concerned with the provision of video
programming, just as cable operators focused on the provision of video
programming. A number of access centers
are now evolving into community media centers, which provide people in the
community opportunities to take advantage of the Internet, and cable’s new
technical capabilities to provide diverse, multimedia information to the home
(and to provide everyone in the community the opportunity to participate in the
Information Age).[67] Recent franchise negotiations in several
cities (Santa Clara, Santa Rosa and Mountain View) have secured the right to
use the cable system to transmit video, data and voice PEG communications.
In sum, the developments in
communities that have determined that PEG access can serve important community
needs and interests suggests that (a) multiple channels should be devoted to
PEG use; (b) operators should provide substantial support for PEG access, in
addition to the franchise fee; and (c) PEG access requirements should be
structured to enable the community to take full advantage of advances in cable
technology, including advances in interactivity and in digital capacity. In addition, as The Buske Group has pointed
out, many of the most successful PEG operations are run by non-profit groups
designated by the City. In almost every
case, the PEG resources and channels are available for use at no charge from
the cable operator.
The ascertainment in San José showed that
there is a strong need and interest in this community in making PEG use of the
cable system a high priority. The I-Net
is also a high priority, in that, among other things, it will facilitate the
use of the system for PEG purposes, especially educational and government
access
In
the Buske Group focus groups, 84% of cable subscribers who participated said
that they had seen or would be interested in seeing local cable television
programs about San José citizens, organizations, community events, schools, or
local government. A large majority of
these respondents said that they had watched programs on Public Access channel
15-A or Educational Access channel 34-A.
(The focus groups were held prior to the start of programming on
CivicCenter TV – Channel 37A, the City’s government access channel.) Of this group, over two thirds had watched
the channel(s) at least once during the previous month, and another 22% said
that they had watched more than five times during the previous month. Further, over two thirds of the focus group
survey respondents felt is was very important, and another 29% thought it was
important, to have cable TV channels featuring programs about local schools,
colleges, organizations, local government, and residents.[68]
There
is also a substantial need and interest in the operator providing additional
facilities and equipment that will be available for the public to produce such
programming. The Buske Report indicates
that there is a long waiting list to use the public access facilities.[69] One reason is that the operator makes its
production facility available for Public Access purposes for only 45 hours a
week.[70] Further, there is currently no field
production equipment available for residents to produce programming outside the
studio.[71] Moreover, the operator has not undertaken
any outreach efforts to encourage the use of the Public Access resources. Indeed, only about half of the focus group
respondents knew that community groups could have television programs about
their services and activities aired on Public Access channel 15-A, and over two
thirds of the respondents did not know that they could learn how to make such
programs using the public access facility and equipment provided by the
operator.[72] An even larger majority of the cable
subscribers who responded to the telephone survey (82.4%) indicated that they
were unaware that they could be trained to make Public Access programs.
Given
the foregoing, its not surprising that, by the operator’s estimates, only 80
individuals used the operator’s public access facilities in 1998 – a very low
number for the 11th largest city in the United States, and certainly
as compared to other large cable franchise areas in the country.[73] Moreover, the staff of the operator’s public
access facility doesn’t provide any organized training in the use of the Access
production equipment to produce programming.
Instead, the operator’s management approach to the public access
facility emphasizes having qualified residents pay the company to produce a
studio program for them, rather than offering training that encourages the
participants to learn how to use the facilities and equipment to produce
programming on their own, for free.
Thus, only a small percentage of the programs that do get produced at
the public access facility are created by certified volunteers free of charge.[74] And, these programs must be produced
entirely “live to tape -- which requires skill and training -- as the
operator’s policy is that no post-production is allowed on studio programs.[75]
These
problems were also highlighted in public testimony. For example, at the September 21, 1999 public hearing, Patricia
Reagan testified that the with respect to public access programming and
facilities, the City has “not been getting the service we deserve.”[76] At that same meeting, Dennis Marks testified
that his organization, the Northside Theatre Company, stressed a need for field
production equipment such as cameras, as well as training, so that his
organization could produce documentaries and other programming.[77]
It
appears clear that there is a significant need and interest in greater access
to public access production facilities.
There
is also a significant need and interest in additional facilities and equipment
to produce government access programming.
The Buske Report in indicates that over 85% of the focus group
subscriber respondents were very interested or interested in seeing programming
on the cable system about issues facing City government, information regarding
public emergencies, local public safety issues, and consumer protection.[78] Additionally, well over half of all
telephone survey respondents responded positively about the importance of
receiving several different types of government and communication information
and services over the cable system.[79]
CivicCenter TV, channel 37A has been broadcasting government access programming for more than a year. Programming currently consists of a City bulletin board promoting City-sponsored events and services and connecting residents with local government. All City Council meetings are carried live and are rebroadcast several times to maximize viewership. All meetings include closed-captioning for the hearing-impaired. Programming also includes the annual State of the City speech, information from the City’s Redevelopment Agency on the Strong Neighborhoods Initiative, and study sessions on a range of issues facing the City. In addition, public meetings of significant regional impact have been covered including recent energy summits and the California State Transportation Commission meetings held in San José. Work to produce high-quality original programming to inform and educate residents about a variety of topics of local interest has now been initiated.
In 2004, City staff will occupy a new civic center complex. The new space will include two control rooms to cover simultaneous meetings in the City Council Chambers and a committee meeting room. In the new facility, programming will increase to encompass other types of meetings, studio productions, and imported satellite programming. All of these will require increased capital funding and channel capacity.
There
is also a need and interest in additional educational access channels. Educational Access Channel 34-A is currently
managed and programmed by the Community College Telecommunications Learning
Consortium, which includes San José City College, Evergreen Valley College,
Mission College, West Valley College, DeAnza Community College, and Foothill
College. The Consortium currently provides
a great deal of distance leaning programming and other televised classes on
Educational Access Channel 34-A. The
majority of students taking these classes live in San José.[80] Evergreen Valley College has notified the
City that it is now prepared to present additional courses and programming on a
second educational access channel, and the City has requested this second
educational access channel under the current franchise. Over the course of the new franchise term,
educational programmers anticipate producing enough programming to expand to a
third channel.[81]
Over
the past two years, City staff has been working with members of the local K-12
educational community to ensure that a new franchise addressed their
requirements. There are 19 school districts
in San José, with nearly 200 schools.
Among these are several magnet schools built around media and technology
programs. The two largest school
districts, Eastside and San José Unified, have expressed a high level of
interest in taking advantage of the advanced communication technology that a
new system can provide.
There
is no need to repeat all of the findings in The Buske Group Report, which
discuss the PEG ascertainment in great detail.
We have discusses some of the results of the ascertainment above that
directly relate to demand for PEG use.
However, it is worth emphasizing the following:
a. The focus groups and every survey
performed in connection with this ascertainment showed high support for public
channels, educational channels and government channels.
b. The focus groups and the public
testimony presented indicate that there is every reason to conclude that PEG
use is of significant interest to this community. There is thus every reason to
believe that, with the proper support, PEG can be a great success in the
community. However, to meet the needs
and interests of this community, there must be facilities, equipment and
operational support, as noted in the Buske Group Report.
c. There is every reason to conclude that
PEG channels will be used in this community, if adequate support in the form of
readily accessible modern facilities and equipment, and training in how to
utilize that equipment, is provided.
d. The
focus groups and testimony made it clear that the public also considers it
necessary to manage PEG resources differently.
e. The ascertainment makes it clear that
San José has significantly less local programming resources when compared to
other similarly sized franchise areas:
|
COMPARISON OF LOCAL PROGRAMMING RESOURCES IN SAN JOSE TO
AVERAGES FOR 10 OTHER COMMUNITIES IN THE UNITED STATES |
||||
|
Item |
San
José
|
10 Access Centers (1999 Averages)* |
|
||
|
Number of Cable Subscribers |
177,500 |
178,250 |
|
|
|
Number of Public Access
channels |
1 |
2.4 |
|
|
|
Number of FTE Staff |
7 |
14.4 |
|
|
|
Number of Studios |
1 |
2.4 |
|
|
|
Number of Video Editing
Systems |
1 |
5.1 |
|
|
|
Number
of Single-Camera Field Production Systems (e.g., Camcorders) |
0 |
10.4 |
|
|
|
Number
of Multiple-Camera Field Production Systems |
0 |
1.2 |
|
|
*These 10 Access centers are located in
Manhattan, NY; Columbus, OH; Sacramento, CA; Dallas, TX; Knoxville, TN;
Albuquerque, NM; Milwaukee, WI; Denver, CO; Fort Wayne, IN and Tucson, AZ.
F. The
channels and other resources available for PEG in this community are not
adequate to satisfy the level of access interest in this community. As pointed out earlier, there is a long
waiting list to use the operator’s public access facility, which is only
available 45 hours per week, and there is no formal training program provided
to encourage community groups to learn how to produce their own programming for
free, rather than to pay the operator to produce such programming.
The Buske Group inspected the public access facilities
and found that the equipment was old, and the facilities were not adequate to
support a successful access program that could meet the needs and interests of
this community. The Buske Group
summarized its main findings with respect to the facilities and equipment as
follows:
·
AT&T’s
Public Access facility in San José relies on the ¾” videotape format. This is a serious concern since most of
these units are old, and this format is no longer being manufactured.
·
The number
of local programming equipment packages, channels, and staff members provided
in San José is significantly exceeded in every category when compared to the
averages for these items in 10 comparable (but smaller) communities.
·
Almost all
of the Public Access Channel programming is produced by the operator’s staff
for a fee, with only a small percentage produced by volunteers trained to use
the equipment and facilities to produce programming for free.
·
The amount
of first-run locally produced programming in San José during 1998, the number
of people trained, and the use of camcorders by community residents are all
greatly exceeded by the averages for these items as reported in 10 comparable
(but smaller) communities.
·
AT&T
does not promote the availability of the public access resources in ways that
are common elsewhere. Therefore, a low
percentage of San José residents are aware of the availability of the existing
public access resources managed by AT&T.
·
AT&T’s
public access policies and procedures, which include a variety of serious
restrictions on the availability of the local programming resources to the
general public, are a major reason for the relatively low level of activity in
this area by San José residents.
The Buske Group’s inspection verified the statements made
by members of the focus groups, who complained that existing production
equipment was inadequate, the time limits on its use too restrictive, the
available training and support inadequate, and the facility too small to use.[82]
In addition, some limitations of the access operations
are the result of the design limitations of the system. One way to increase coverage of community
cultural and arts events – which focus groups identified as one of the critical
ways in which the PEG resources could be used – would be to have the ability to
originate programming remotely from city locations where such events are
held. However, because the cable system
does not have two-way capability, it is not now possible to originate
programming remotely from city locations where cultural events are held. This problem could be addressed if the cable
system had adequate two-way capacity.
.
Based on the foregoing, in addition to the PEG/system
design needs and interests already identified, the PEG needs and interests in
this community can be summarized as follows:
·
There
is a need and interest in having a sufficient number of channels provided for
PEG use, receivable by all subscribers.
At a minimum, this requires that the existing three PEG channel be
maintained, that the fourth channel
already requested by the City under the existing franchise be added as soon as
possible, and that at least one new channel be added as the rebuilt network is
activated throughout the City. The existing capacity devoted to PEG use is
inadequate. In addition, there is a
need or interest in having additional channel capacity set aside if and as the
use of the channels grows. Moreover,
PEG channels should be available in analog formats, and digital formats, if
both formats are provided commercially.
PEG programmers should be able to use the capacity provided for
transmission of any information, not just video; moreover, sufficient capacity
should be available on the network to enable PEG users to take full advantage
of advances in cable technology and system capabilities, including two-way
capability that allows PEG providers and users to take advantage of interactive
television services if and as they
become available on the cable system.[83] Among other things, there is a need and
interest in assuring the company’s cable modem platform can be used to receive
and transmit PEG programming, without unreasonable interference, with
appropriate connections to avoid latency and other technical problems.
·
There
is a need and interest in having PEG channels managed by an entity or entities
committed to promoting the use and development of the channels., and with
adequate experience to ensure such use and development.
·
There
is a need and interest in having substantially improved access facilities,
equipment and support so that use of the system can be encouraged, so that
potential users can be properly trained and assisted in production, so that
production facilities are readily available for remote and studio productions
(and post-production work), and so that playback can occur smoothly.
·
More
specifically, there is a need and interest in having two user-friendly, accessible Community Media Centers that
provide both public and educational access users with a places of sufficient
size (and expandability) so that (a) there is adequate studio space, designed
in such a way that it can meet user demands efficiently; (b) there is adequate
space for equipment to playback and control programming on PE channels; (c)
there is separate and adequate space available for editing programs; (d) there
is separate and adequate space available for training, planning meetings and
administrative functions (office space, storage space, bathrooms, and so on);
and (e) PE facilities and equipment are distributed so that people throughout
this large and diverse community have reasonable access to them, at convenient
locations and times. Each facility
should have adequate parking and be fully accessible to persons with
disabilities.
·
There
is a need and interest in having high-quality equipment[84] provided for public use that
could be used for producing programming in the field or in the studio; editing
it; and for playing back programming that may be produced utilizing a variety
of formats. This equipment should be
replaced and upgraded over the term of the franchise as needed.
·
There
is a need and interest in having high quality equipment provided for
educational use, including playback equipment and equipment permitting
educators to receive and record programming submitted over the channels set
aside for educational use on the subscriber network or the institutional
network. This equipment should be replaced and upgraded over the term of the
franchise as needed.
·
There
is a need and interest in having high quality equipment provided for government
use, including cameras and sound equipment for City Council chambers, field and
editing equipment and studio equipment for public service programming. This
equipment should be replaced and upgraded over the term of the franchise as
needed.
·
There
is a continuing need and interest in being able to utilize the existing PEG
facilities and equipment until the City determines that those facilities and
equipment are no longer needed. Any
proposal should contain a provision that ensures that such facilities and
equipment will remain available for up to 24 months, to allow for continuing
PEG operations until the transition to new facilities is complete.
·
There
is a need and interest in having operating reliable upstream capacity available
throughout the community to enable PEG users to originate and cablecast
programming live from remote locations.
·
There
is a need and interest in having dedicated bi-directional connections available
from access production facilities for public, for educational and for
government use, with sufficient capacity activated in both directions to enable
those managing the PEG channels to (a) receive signals intended for
retransmission on the subscriber network from the institutional network and
from remote locations; (b) select signals for retransmission, and to transmit
and route those signals onto appropriate channels on the subscriber network, or
on the institutional network, without the assistance of the applicant. The connections should include all routers,
modulators, demodulators and other equipment required to provide this
functionality.
·
PEG
facilities and equipment should be
available to the user at no charge to the user from the cable operator.
·
There
is a need and interest in AT&T providing support for PEG so that among
other things: facilities are open days, weekend and evening hours; there is an
active outreach program and a carefully planned training program, aimed at
different skill levels; playback and technical assistance can be provided to
users; and the access facilities and equipment can be properly managed and
maintained.
In addition to the foregoing, there are a few
miscellaneous PEG needs and interests that staff believes should be emphasized
here (as already indicated, The Buske Group Report contains a more detailed
description of PEG needs and interests).
Staff is advised by the Buske Group that, in several
communities, access centers are bounced from one channel location to another.
Thus making it more difficult for viewers to find and use the channels (and
preventing the channels from developing a clear identity). Some channel locations are not as good as
others, and are subject to interference.
Placing an access channel so that a good quality signal cannot be
delivered to subscribers is akin to not providing the channel at all. Further, it is important that the
availability of the access resources be publicized. The Buske Group found that the access channels had not been
sufficiently publicized. Accordingly:
·
There
is a need and interest in ensuring that the PEG channels are provided and
publicized in a way so that they are easily identifiable to subscribers, and
provided using channels that can deliver PEG signals without significant
degradation.
·
There is a
special need and interest in ensuring that cable service are available to all
schools, libraries and government buildings, particularly so that these
entities can receive the important educational and governmental information
carried over the cable system.
Accordingly, in almost every franchise, operators are required to
provide free drops and free service to these locations. We conclude there is a need and interest in
drops and services here, that will make cable available throughout these
facilities.
·
The
need to coordinate PEG use (including PEG use of the institutional network)
will present particular issues if and when a second provider enters the
community. The franchise must therefore include provisions that require the
incumbent to cooperate with new entrants to ensure that PEG and I-Net
obligations are satisfied cost-effectively, and that, under appropriate
circumstances, permit the City to modify obligations as appropriate so that it
can comply with the requirements of state law for competitive franchises, to
the extent applicable.
As already discussed, the cable system in the City is not close to the state of the art in the cable industry, and needs to be rebuilt. City residents have fewer program choices, receive less reliable service, and have no opportunity to receive advanced, interactive services. The City has reviewed complaint logs that reveal substantial complaints about existing cable service. There is a clear demand that cable problems be remedied as quickly as possible.
Under federal law, the City must allow the cable companies a reasonable time to make the improvements required to upgrade the system.[85] As suggested above, the City has an interest in ensuring that construction and system modifications are completed expeditiously, so as to minimize any necessary service interruptions, as well as disruption of economic activity and of the rights-of-way. To adequately protect their economic and property interests, the Cities must be able to enforce timing and construction requirements.
CTC reviewed the requirements of the proposed RFRP in light of the density of the community, and the number of underground and aerial miles in the City. CTC concluded that the company could be reasonably expected to complete build-out of a rebuilt system within 48 months. Because operators can commence work required on an upgrade even before a renewal proceeding is completed, we propose to adopt that time frame, geared to a date certain. In that way, any delays caused by the renewal process will not affect subscribers. To satisfy the staff’s model, the entire City should be rebuilt by a date no later than 48 months from the granting of the franchise renewal or June, 2006, whichever is earlier.
Even after a cable system is constructed, it will often need to be extended to new subdivisions. These may be areas within the boundaries of an existing service area that are not now reachable by the cable system, without extending the network plant to a point where the home or business can be served by a drop. As already discussed, the City and schools have an interest in being able to deliver information service to the entire community. And, the ascertainment, as discussed earlier, demonstrates substantial interest by residents and subscribers in receiving advanced services via the cable system. To get on the information highway, of course, the highway must pass by one’s door.
There is a cost to requiring an operator to extend service to all areas of the community. However, according to CTC, this is a relatively dense community. Given this, and the importance of the need and interest identified, staff concludes that the company should be required to extend service promptly upon request of any potential subscriber who wishes to subscribe to the company’s service.
Cable system construction can involve significant
disruption in a community. CTC has
advised the staff that its experience in other communities shows that this type
of project should proceed according to a rational plan, that ensures the public
is informed, that construction proceeds rationally, and that it is completed on
time. A construction plan can also
ensure that the City understands what it can expect to be required to do in
order to help an operator move efficiently through the permitting process. It also permits the City and other to
coordinate and take advantage of street openings. In addition, of course, the City has an interest in ensuring that
the system that is being installed will in fact comply with franchise
requirements. By requiring adequate
quality control, and by requiring the operator to describe in detail what it is
doing, the operator and the City can be in a position to address problems so
that the problems can be resolved before the date scheduled for the project to be
completed.
Setting aside the advice from CTC, the results of the
inspection of the physical plant, as well as the City’s experience in previous
cable build-out projects, suggest that there is very good reason for the City
to ensure that it is in a position to supervise this project, and to ensure
that during the course of the rebuild, problems with the existing system are in
fact cured.[86] A plan will also help us ensure that there
is an acceptable procedure for
notifying property owners along the affected right-of-way as to when the
right-of-way will be trenched, and the expected duration of the trenching.[87]
Moreover, given the current states of the systems, staff
believes that there is a need and interest in assuring that the existing
problems, once corrected, do not recur.
CTC has advised us that it would be appropriate to establish
requirements for ongoing inspection, maintenance and testing (as well as
compliance with all local codes) in order to protect against future
problems. It also follows, that,
because construction work on a cable system, and other tasks, are often
performed by contractors or subcontractors, there is a need and interest in
ensuring that the contractors and subcontractors are properly trained, subject
to the same rules that apply to the cable operator, and that the cable operator
bears unqualified responsibility for their work.
The City’s Public Works
Department has emphasized the importance of ensuring that the cable operator is
required to coordinate and cooperate with the City in trenching. There is an overall effort in the City to
improve the transportation corridors and to preserve and improve the beauty of
the community. Therefore, the City must be in a position to require cable operators
to underground facilities consistent with these goals. Street cuts can limit the life of a
roadway. They are expensive for both
the City and the operator. It is
therefore important to minimize cuts and trenching by coordinating street use,
and by requiring companies to cooperate so that facilities can be placed when
trenches are open.
In sum, based on the
ascertainment, staff has identified the following construction-related needs
and interests.[88]
·
There is a need and interest in having cable
service available to all in the community, (including to businesses, non-profit
organizations, and to residences, as well as to schools and government
agencies). To that end, the Applicant
should be required to extend its system upon request for service to any
potential subscriber in the City on a timely basis, without requiring the
potential subscriber to pay for that extension. In areas that are zone commercial, and not mixed use, however,
the applicant may charge for extension where an extension of (a) more than 400
feet is required to reach the property line of the commercial establishment;
and (b) less than 10 commercial outlets are requested per lineal mile. In that instance, unless the Applicant is
already providing service, the potential non-residential subscriber may be
required to help share in the cost of the extension; but the subscriber share
should be just that: a reasonable share. There also is a need and interest in
having free drops and services to schools, libraries and public buildings. No extension charge can be levied for
schools, libraries and government buildings.
·
There
is a need and interest in assuring that any upgrade performed should be
performed pursuant to a construction plan that is reviewed by the City for
compliance with the requirements of the franchise. There is a need and interest in having the plans for upgrade of
the system ensure that the rebuild is completed with minimum disruption of the
rights-of-way or service.
·
There
is a need and interest in ensuring that Applicant has plans in place that are
designed to ensure that it complies with local standards for construction, and
that ensure that construction errors are promptly corrected.
·
There
is a need and interest in providing for testing of the system to determine whether
the rebuild has been successfully completed and to identify problems and
resource performance on an ongoing basis.
·
There
is a need and interest in ensuring that the franchise includes the right for
the City to require that Applicant adopt a maintenance plan; that it follows
that plan (subject to regulations and applicable law), and periodically reviews
and updates the plan. The plan should
ensure that all parts of the system are properly maintained in a way that is
designed to prevent failures. There is
a need and interest in ensuring Applicant has procedures in place for complying
with local requirements (including permitting requirements) for use of the
rights of way.
·
There
is a need and interest in ensuring that the Applicant cooperates and coordinates
in joint trenching, and complies with the requirements of the City with respect
to joint trenching and undergrounding.
·
There
is a need and interest in ensuring that Applicant’s employees, contractors and
subcontractors are competent and well-trained, and will abide by the
requirements of the franchise and applicable law, as if the work were being
directly performed by the Applicant.[89]
In addition to the matters already discussed, a renewal franchise agreement must contain a number of provisions in order to ensure that franchise requirements are properly implemented. In addition, both the franchise agreement and local law must contain provisions to protect the Cities’ and their citizens, including cable subscribers, and to enable the Cities to manage their public rights-of-way fairly and effectively. The City believes that it has the authority to establish these conditions unilaterally. However, it is also the case that these conditions serve paramount public needs and interests.
The following brief discussion of certain key provisions is intended to elaborate on some of the reasons underlying those provisions. This discussion is not intended to be comprehensive.
The length of the franchise is primarily a function of allowing the operator sufficient opportunity to earn a return on its required investment, while ensuring that (a) the operator’s performance will be evaluated within a reasonable period of time, so that the operator has incentives to maintain its performance at a high level, to ensure that its franchise can be renewed; and (b) to allow the community to reevaluate franchise requirements, in light of changes in technology. Several recent franchises have been granted for 10 years, and staff is not aware of any that exceed 15 years. Given the City’s current experience with a 15-year franchise – for example the antiquated A/B switch system still in place, and PEG facilities that are inadequate to meet current needs -- and given the renewal provisions of the Cable Act, which ensure any application for renewal will be fairly considered, staff believes a 10-year franchise is the maximum appropriate.
Franchise fees are imposed to help compensate the Cities for use of their public rights-of-way, property that was acquired and is maintained by each community as a whole.[90] However, franchise fees are subject to a form of federal “rent control” that prevents cities from simply charging the fair value of the property that the cable companies use. Charging less than the maximum amount allowed by law would effectively mean that everyone subsidizes cable’s use of the rights-of-way. While staff recognizes that cable subscribers would prefer not to have a franchise fee --- because operators itemize the fee on bills, staff also note the following. First, it is fair to those who DO NOT subscribe to cable to ensure that the companies pay for the public property that they use. Second, the City Council may choose to designate a portion of increased franchise fees – to the extent that the amount collected increases due to, for example advanced services an/or increase in subscribership – to fund Public and Education access activities that will provide substantial benefits to subscribers and to the community at large. Thus, we think the best approach to the franchise fee is to continue to charge the maximum permitted fee, which for now is 5% of gross revenues.
The City’s experience over the last term suggests that the franchise fee definition should be clear and broad, and consistent with the federal rent limitations. It also further suggests that we should have the clear ability to review all of the company’s financial data.
Federal
law draws a distinction between cable systems and telecommunications systems,
and suggests that to the extent telecommunications systems are authorized and
regulated by local governments, this ought to be done separately from a cable
franchise.[91] In particular, changes in the Cable Act made
by the Telecommunications Act of 1996 indicate that the federal Cable Act does
not apply to the provision of telecommunications services by a cable operator;
that a cable operator is not required to obtain a franchise under the federal Cable Act for the
provision of telecommunications services; and that a franchising authority may not impose any requirement under the federal Cable Act that has the
purpose or effect of prohibiting, limiting, restricting, or conditioning the
provision of a telecommunications service by a cable operator or its affiliate.[92] By restricting these prohibitions to
franchises issued under the federal Cable Act, however, Congress indicated its
intent to permit state and local governments to require appropriate
compensation and to manage their public-rights-of-way through instruments other
than cable franchises issued under the federal Cable Act.[93] Thus, it appears to be the intent of
Congress that the two be treated separately.
For this reason, among others, any renewal franchise for AT&T will
only authorize the company to use the City’ public rights-of-way for the
provision of cable service and to
provide such other services as are required to meet its PEG obligations
(including PEG obligations related to the I-Net).
The City’s decision to grant renewal franchise is based on the expectation that the entity to whom the franchise is granted will be the person who will perform the franchise requirements. In effect, the decision to grant a franchise is a decision to ensure the City’s needs and interests are met for the duration of a renewal franchise. Any transfer may affect these and other conditions, and the City may have chosen to deny a franchise to the transferee had it applied. Thus, the City must have the opportunity to review a transfer, to determine the likely impact on the performance of franchise requirements and the community, and to grant, grant with conditions or deny the transfer based on the reasonably predicted impact. For similar reasons, the term “transfer” should be broadly construed to include transactions they may result in the transfer of all or a portion of the franchisee’s interests in the cable system or the franchise, change in the control of the franchise itself, or similar results however achieved.[94]
This is so
because a change of control, as well as a change in the actual holder of the
franchise can have enormous consequences for the community. In some cases, the effect may be beneficial,
by increasing the financial resources available to the community. But a merger could also have the reverse
effect, and could result in the transfer of the franchise to an entity that is
simply not prepared to satisfy its franchise obligations. while the City could always seek to enforce
the franchise, a change that effectively increases the cost to the City of
obtaining its contractual benefits harms the City and subscribers. The City has a substantial interest in
avoiding these adverse effects.
For this reason,
the City has devised a transfer procedure that uses standards for measuring
changes in control that are consistent with standards that have been used by
other regulatory agencies. In addition,
the City has developed factors that will be considered in determining whether
to grant a transfer which go the basic question of the determining whether (a)
performance is likely to be affected; and (b) whether there is likely to be an
adverse impact on the City or the public.
The fact that the City makes an adverse determination on any point does
not mean a transfer will be denied, but it does mean that the City will be in a
position to establish transfer conditions to avoid adverse effects (this might
include requirements for corporate guarantees, for additional bonds, or
resolving compliance and non-compliance issues so that there is no
misunderstanding as to what is and is not required). Finally, the transferee
should reimburse each city for all costs incurred in connection with a transfer
request. The transferee is not the
franchisee and the review will uniquely benefit it.
The City has the legal authority to utilize its police and other powers to secure and promote the public health, safety, and general welfare of its residents, and to adopt appropriate regulations of businesses over which it has jurisdiction. In particular, because of the technical, economic and regulatory volatility of the cable industry, the City must have regulatory flexibility if it is to meet its duty to the public while still granting renewal franchises. Accordingly, any renewal franchise must preserve the City’s police powers and regulatory flexibility to the maximum extent possible.
Many matters governing the operation and business practices of a cable operator are addressed by federal, state and local laws and regulations. The City’s grant of any franchise is based on the assumption that a franchisee would comply with such laws and regulations.
A cable television franchisee will enjoy special rights to use the City’s unique rights-of-way. To ensure that a franchisee does not essentially convert what is valuable city property to private purposes, the City imposes conditions on the franchisee’s use of the rights-of-way. This ensures, among other things, that the community at large shares in the benefits which flow from the franchise grant. The grant would not be made if those benefits were not received. Therefore, any franchise agreement must include a provision that makes it clear that if material provisions of the agreement are unenforceable, the City can void or reconstitute the franchise. The cable companies should not be able to retain the benefits of a franchise agreement without providing the corresponding benefits to this community.
Franchises typically include provisions that are designed to (a) ensure that the City, and the City’s citizens, bear no risk as a result of a franchisee’s use of rights-of-way; and (b) ensure that the franchisee complies with applicable requirements, and if it does not, the City can complete the required work and obtain compensation for the damages caused. As to the first point, the franchisee can cause damage to public and private property when it is in the streets. It can create hazards that may lead to lawsuits. It should be clear that the City should bear no risk associated with such suits, and what is more, the City has an interest in assuring the operator has the insurance and other protections in place so that it can be held responsible for the damage that it causes.
In addition, the City needs to enter and use the streets constantly. The use by the cable company is an important use, but that use is secondary to other uses. If, by reason of allowing a cable company to use the streets, the City were exposed to liability if it caused damage to the cable company’s property, the City’s potential liability would be enormous and its ability to use its own property limited. In commercial leases, landlords usually require tenants to assume all risks that flow from the occupancy of the building: a landlord doesn’t, for example, agree typically to compensate the tenant for business losses if a roof leaks. The City cannot afford to assume any risks associated with the use of the rights of way by a cable company.
Performance guarantees, in the form of letters of credit and bonds, ensure that work that the operator promises to perform is performed. If the City’s only remedy is a lawsuit, the benefits that are promised will inevitably be delayed, and may in many cases be deferred forever. By ensuring that there are funds available, the City ensures that the benefits promised are delivered.
As a related matter, there are a number of franchise requirements where noncompliance could significantly reduce the benefits of the franchise, and thus harm the City, but where the amount of damages is hard to estimate. Because of this, it is essential to include liquidated damages amounts, and to make it clear that those damages apply from the time a breach occurs. This ensures that the company is not rewarded for non-compliance, and ensures that it does not adopt a policy of only complying when caught.
The City must also have available more serious remedies -- revocation or shortening the term of a franchise -- in the event of a serious breach of performance. Any business relationship depends upon a satisfactory working relationship between the parties; no working relationship can be established and maintained if the franchisee lies or attempts to deceive, refuses to comply with key provisions of law or its agreed upon obligations, or repeatedly violates law or its agreed upon obligations.
At the same time, it is important that subscribers not be disadvantaged if a franchise must be revoked. Therefore, a cable operator must be required to ensure continuity of service for a reasonable time until a new cable operator begins to offer service. Any renewal franchise must be subject to these provisions.
The remedies available under a renewal franchise agreement should not be exclusive. The public’s compensation for harm suffered should be as complete as possible; therefore, remedies should be available singly or in combination.
Any renewal franchise would be granted in return for each franchisee’s promise to provide service throughout its franchise area in accordance with a franchise agreement. Thus, a renewal franchise must ensure that if for any reason the company stops providing service in accordance with the franchise over all or a part of its system, the City is able to take action to ensure that service continues. In addition, if property is abandoned, the City must be able to ensure that it is either removed, or that, the City can take ownership of the property. There is enormous potential risk to the City if property remains in the street, it is no longer subject to a franchise, and the City does not have the right to dispose of that property as it sees fit (during construction or excavation projects, for example).
One purpose of the franchising process is to protect public property used by private entities from harm and to ensure that the property can be used by others. For example, a franchisee may need to cut open a road or bore under it to install or repair a line. Improper restoration can leave a permanent bump or depression in the road, or even cause it to collapse. This is an important public safety issue. Thus, franchises in the City must be subject to conditions regarding the use of the public rights-of-way. It is essential that a renewal franchise continue to protect municipal property and make it safe and available for multiple users, including other utilities. Moreover, use standards and requirements change over time, as do the City’s planning goals. The placement of these private facilities in the right-of-way must not be allowed to interfere with the implementation of these new standards, or permit cable franchisees to avoid rules or fees that are imposed in connection with various activities in the rights of way. Finally, the use of the rights of way cannot be allowed to interfere with any public projects. Accordingly, franchisees should be required to meet certain minimum standards for use of the rights of way to satisfy these goals, and the City must have the flexibility to establish new standards and procedures over time.
The failure of cable operators to provide good customer service received national recognition in the 1992 amendments to the Cable Act and the minimum customer service standards adopted by the FCC.[95] Those federal standards, however, recognize that additional or more stringent standards may need to be adopted by particular localities, based on specific conditions and on the behavior of particular cable companies.[96]
The record here shows, as discussed earlier, that AT&T has not provided adequate service. As The Buske Group points out, in order to meet the needs and interests of this community, it is necessary and appropriate to adopt strong customer service standards. Moreover, because customer service practices and community needs change over time, the City must be able to alter and apply these altered standards to each franchisee, to protect the public. This, too, is contemplated by the Cable Act, which permits the establishment of customer service standards by ordinance.
In 1992, Congress determined that it was necessary to protect subscribers from unreasonable rates for cable service and equipment. The current Cable Act, and the FCC’s implementing regulations, place significant limitations on local governments to regulate service rates. Nonetheless, based on the rate issues that have arisen in this City, it is important that the City retain the right to regulate rates, and the right to pre-approve rates and rate changes, except where the law prohibits it from doing so. (Indeed, while service rate regulation is limited, some charges levied by cable operators – disconnect rates, for example – may be subject to the control of the City). [97]