HomeMy WebLinkAboutItem #18 - Discussion ItemU
CITY OP MIAMI. PLORIBA
INTEft-OPrICE MEMOttANCIUM
Alz
fiat Mayor and Members of the
City Commission
thorn. Richard L. Fosmoen
City Manager
bAn: November 21, 1980 PILE:
subAct: Suggested changes to the Cable
Regulation Ordinance and Cable
Television Draft Request For
„..th.N.d.roposal s
tNCLO$UAM
In response to the instructions of the City Commissioners we have contacted each
of the prospective Cable Television License Applicants and requested comments on
Vie Gi ty's Draft Request For Proposals (RFP) and the Cable Regulation Ordinance,
Two companies, Cablesystems Miami and Dynamic Cablevision presented requests for
specific changes to the ordinance and RFP, In addition, Kenneth Meyers, repre-
senting Americable, presented the commission specific wording regarding the
License Fee. These changes have all been reviewed by Assistant City Attorney
John Copelan and our Cable Television Consultant David Korte of the Cable Tele-
vision Information Center. Also included are the items relating to arbitration
requested to be added to the Ordinance at the November 5, 1980 Commission Work-
shop.
The proposed changes to the Cable Television Regulation Ordinance are as follows:
1. Page 6 - Section 5 License Fee
Change the wording to track the language of the FCC Rule and the definition
of "Gross Revenue" used in the ordinance. The section would read,
Section 5 License Fee
A Licensee shalt pay, to the city a sum equal to five percent (5%) of the
total gross annual revenues of the Licensee from all Cable Services (added)
seurees (deleted) in the city which sum shall be paid quarterly as provided
in the ordinance granting the license . . .
We recommend this change to Section 5.
The suggested change to this section made by Americable as shown on the attached
sheet is not recommended for the following reasons:
a. The language tracks FCC Rules that were changed several years ago that
are now obsolete.
b. Allowing the proposer to choose the percentage of the fee makes the
financial evaluation of the proposals more difficult and time consuming
for the city. ca.21" 4ro 5% etc.
c. The present wording of Section 5 allows for some adjustment if the FCC
limitation on the percentage of the fee is either raised or eliminated,
Americables proposed wording does not allow the city that flexibility.
2. Page 9 - Section 8 Limitations Paragraph D.
A change to this section was requested by Dynamic Cablevision to clarify
when the city would need to respond to changes in the controlling interest
of the Licensee. The company's position is supplied in the attached letter.
Miyor and Members of th '
City COMMissiors
November 21, 1980
Page 2
It is recommended that the following change be made to the third sentence of para-
graph D "Every change irk.Controil.ing Interest gadded), transfer, or acquisition
of control of the company Shallmake the license subject to cancellation unless
and until the city shall have consented thereto, which consent will not be unrea-
sonably withheld+"
3. Page 23 - Section 24 Subscriber Privacy .--Use of Data,
This suggested change is also explained in —the attached letter from Dynamic
Cablevision and would allow the use of the upstream signals from subscribers
in a two way interactive system to be used for billing purposes. It is recom=
mended that the last line of paragraph D would be changed to read "Nothing
herein contained shall prohibit the company from using the upstream path for
billing purposes and (added) to verify the integrity and performance of the
cable system,
4. Page 29 - Section 39 Termination - City's Right to Acquire or to Transfer
Ownership Paragraph A subsection 3
This provision allows the city to purchase the system at any time at fair
market value, Dynamic Cablevision requests that this subsection be deleted.
There is no compelling reason for this subsection to be included. It makes
prospective bidders uncomfortable because it adds a degree of uncertainty to
the future ownership of the company by the Licensee. The advantage of muni-
cipal ownership would be the savings in taxes, control, and the distribution
of profits back to the citizens. Removal of this item does not effect the
remaining provisions that allow the city to acquire the system if the Licensee
fails to comply with the term of the license.
We recommend that Subsection 3 of Section 39 Paragraph A be deleted.
5. Page 29 - Section 39 Termination - City's Right to Acquire or to Transfer
Ownership Paragraph B.
Dynamic Cablevision requests that if as a final result the company must
remove all of its facilities that such a process would be started as a
result of a notice from the city. The recommended wording would then read,
"B. Upon termination or expiration, the Licensee shall remove upon notifi-
cation of the City Manager (added) its entire Cable Television System which
is visible from the city streets within a reasonable time "
The last two changes are the result of a request made at the November 5, 1980
Commission Workshop to include a provision for arbitration to resolve issues
between the City and the Cable Company and we recommend that they be included
in the Cable Regulation Ordinance.
6. Page 31 - Create a new Section 41 Board of Arbitration - Hearing - Expense
The Complete Section 41 is attached and is the same as the Arbitration Sec-
tion that was'included in the Draft Cable Television Ordinance distributed
to the commission last July.
7. Page 20 - Section 20 - Changes to Rate Schedule - Proceedure - Approval
Creates a Paragraph F
This section removes the issue of the final rates that are approved by the
City Commission after a public hearing from the arbitration process and
Mayor and Met�bers of th
laity CbMthission
November 21, 1980
Page 3
reads as follows:
"F. Any disagreement between the City and the Licensee concerning interpre-
tation and calculations of the financial and statistical information
provided by the Licensee may be submitted to arbitration at the request
of either party pursuant to Section 41 of this Ordinance, Final deci-
sions concerning rate increases or decreases shall not be subject to
arbitration."
Suggested Changes to the_W
There was only one suggested change to the City's Request For Proposals to pro-
vide Cable Television service in Miami,
Cablesystems Miami suggests that we include "Financial Capability" as an evalu-
ation criteria on Page 12 of the RFP and we so recommend,
Dynamic Cablevision has put in writing in their attached letter what many other
Cable Companies have told us privately - that is to allow at least 90 420 days
for the preparation of proposals by the Cable Companies. Allowing this length
of time would be beneficial to the City of Miami This is, for all practical
purposes, a once -in -a -lifetime opportunity for Miami, We should allow enough
time for each bidder to complete their own demographic and ascertainment studies
of this multi -cultural community. The results of these studies could give this
city still another view of its people and their interests as well as describing
ways that Cable Communications can help pull this community closer together. I
strongly recommend that at least 90 days be allowed for the Cable Companies to
prepare their bids.
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Section 5.,_ Lieense.Pee& 'the license fee payable
by th+e icensee s aBe reasonable, and shall be in
the range of three to five percent Of the licensee's
gross subscriber revenues per year from cable television
operations in the city, tf the license fee exceeds three
percent of such revenues, the reasonableness of the ex-
cess amount is required to be approved by the €'CC on
showings; by the licensee that such fee will not interfere
with the effectuation of federal regulatory goals in the
field of cable television, and by the city that it is
appropriate in light of the planned local regulatory
program.
Explanation. This language tracks the language of FCC
Rules and Regulations Section 76.31(6)(b), which states:
"(b) The franchise fee shall be reasonable
(e.g., in the range of 3 - 5 percent of the fran-
chisee's gross subscriber revenues per year from
cable television operations in the community
(including all forms of consideration, such as
��•
initial lump sum payments)). If the franchise
fee exceeds three percent of such revenues, the
v
cable television system shall not receive Com-
mission certification until the reasonableness
a of the fee is approved by the Commission on
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showings, by the franchisee, that it will not
'
interfere with the effectuation of federal
regulatory in the field of cable televi-
goals
sion and by the franchising authority, that it
is appropriate in light of the planned local
regulatory program."
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4688 Palm Avenue ....W Hialeah, Florida NO12 — (206) 668-2112
November 10, 190b
LZ
Mrs Clark Merrill
Director of Inter -Governmental Affairs
City of Miami
City Mall
Miamit PL 33133
Mr. Merrillt
The City of Miami is now rapidly moving forward with its
cable television licensing process. As a prospective applicant
for the cable TV license# Dynamic Cablevision of Florida, Inc., a
subsidiary of Colony Communications, has followed closely the
development cf the City's licensing ordinance and the Request for
Proposal ".ocu.�ents. We support the Commission's desire to make
cable tele►ision service available to Miami residents as soon as
possible. We believe that the Commission's deliberations may be
expedited by a consideration and clarification of several important
facets of these documents. We therefore respectfully submit these
comments for your consideration.
Experience shows that the licensing ordinance and the RFP
are perhaps the most important parts of a municipal regulatory
scheme. The ordinance's provisions will govern the relationship
betwesn. the local government and the licensee for the next fifteen
years or more-- long after the selection process itself is completed.
curt:, _ ^FP will, of necessity, shape the proposals submitted;
and that proposal, when accepted, will become the only binding
commitment the City will have from the licensee. With these points
in mind, we r-ve worked closely with our consultant (Malarkey, Taylor
and Associp'(s) and our local counsel (Greenberg, Traurig, Hoffman,
Lipoff, QuE..tel & Wolff) in a careful analysis of the provisions of
these documents. We suggest, the following modifications be considered
in the adoption of a reasonable and stable regulatory framework that
clearly and fairl:► sets forth the responsibilities of all parties.
Cont 'd
A Colony Communications Company
a
Mrs Claris Merrill. ,.
Retveyhber -18 ,
Pace Two
The Ordinance
Section 8D of the proposed ordinance provides an example of
the type of regulation which pray lead to future Misunderstanding.
It states that "every change, transfer, or acquisition of control
of the "y shall make the license subject to cancellation
unless and until the City shall have consented thereto. In contrast,
the staff0a earlier draft had defined a change in control as involving
ten pereent (10%) or more of ownership interest. While we believe
this figure might be unnecessarily low, we would suggest that some
specific amount (perhaps 30%) should be referenced in the ordinance
to clearly state when City consent is required.
sensitive issue of subscriber privacy is treated in Section
24 of the ordinance. In general, we fully support paragraphs B, C
and D of this Section, which emphasize that it is the unauthorized
release of subscriber information that can amount to an invasion
of privacy. paragraph A, however, deals with procuring information
from subscribers via the "upstream" capacity of the cable system,
and states that prior written authorization is required= "said
authorization shall not have been obtained from the subscriber as
a condition of service." In fact, some modern cable systems will
use the return signals from the subscriber homes to verify use of
the system for preparing bills. Accordingly, it is important to
onsider expanding the proviso at the end of the paragraph to
include an exception for billing purposes.
In Section 39A (3), the reference to the City's acquisition of
the system should be deleted. First, this issue is covered by Section
39C which sets forth the procedure for City acquisition of the system
upon termination (pursuant to Section 39A) or expiration. Second,
the exi--i*,r, rP`P,ence appears to make a future decision by the
City to acquire th- system a grounds for termination rather than
a possible result of termination or expiration as is contemplated
by Section 39C.
Paragraph B of Section 39 makes automatic the removal of the
cable system following termination or expiration. In fact, actual
physical dismantling of the system is rarely, if ever, the desired
result. This paragraph might be amended to state that only upon
reasonable notice from the City should the licensee be required to
commence removal of the system.
0.
Mr, Clark Merrill
November 18j 1000
Page Three
The Regime pr prop gels
The proposed 1krp as prepared by the City staff is generally
excellent document, The structure of the pppj widely tested by ■
actual use in many municipalities throughout the country, should
elicit state-of-the-art proposals which will be susceptible to
fair and direct comparison. Ve are sure the City understands
that responding to this type of RPP requires a substantial effort
by all aplicants. kestrictiho the time available for preparing
the applications might will reiult in the submission of poorer -
proposals " less well thought out, more boilerplate, and less
extensive offeringa. In our experience, a major market proposal
takes at least 90-120 days to prepare. This period permits the
compilation of meaninoful demographic information and other
related data; extensive ascertainment studies to determine the
needs of subscribers and institutions that can be addressed by
the cable system; and, finally, the detailed design of the system
capable of meeting these needs and interests. For example, our
consultant, Malarkey, Taylor and Associates, has been retained
by the City of Boston to prepare a study of the many factors which
affect construction of the cable system. This study alone is
expected to take thirty days to complete.
We therefore strongly suggest that a period of time less than
90 days for the preparation of proposals will have a deleterious
effect on the long term interests of the City and its residents.
We trust that these comments will prove useful to the City
in its final deliberations concerning the ordinance and RFP. If
you have any further questions, or if we can be of assistance in
any way, please do not hesitate to contact us.
Sincerely,
Frank Kneiser
Regional Manager
rVAN-7# Alytem
m Miami
100 AN'ekell Ave., Sulte 300
Waml F'"da 33131
(sot) S5SNS28
�Si
Mr. Richard Foesman .,
City of Miami
3500 Pan American Drive
Miami, Florida 33133
November 41 1980 �
Dear Mr. Foesman:
In response to the City's request for suggested changes
regarding the cable television Request for Proposals and Or-
dinance Cablesystems Miami would like to suggest the following:
1.) Request for Proposals
page 12, Evaluation Criteria and Priorities
suggestion -addition of financial capability
to criteria list
2.) Ordinance
page 6, section 5
clarification -with reference to 5% of revenues
suggestion -change "from all sources" to "all
cable services," this language is consistent
with section 76.31 of the FCC rules.
sincerely yours,
3 LO
6 6.4 am
R. William Coleman
Director of Franchise
Development
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6eotiop4t/:. bbMO.C31'TAMi_MTfbH ! ., HtAft=
A. Any eontroversy, claim or dispute as to facts arising out
of or relating to a license or to a broach or alleged breach of any
term or ebaditioh thereof and expressly made the subject of arbi-
tration by this ordinance, fray be referred to a board of Arbitration
which shall consist of one member appointed by the Licensee, one
member appointed by the City Commission, and the third member to
be a disinterested party appointed by agreement of the other two
members. `
b. Demand for arbitration may be made by the Licensee or the
City by written notice sent certified ,mail, return receipt requested.
Notice of demand to the City shall be served on the City Manager.
Notice of demand to the Licensee shall be served upon the Licensee
corporation by mailing to the address furnished the City by the
Licensee. The demand shall state the controversy, claim or dispute
of facts.
C. Upon the failure of either party to appoint an arbitrator
within 15 days of receipt of notice of demand for arbitration, or upon
the failure of the two selected arbitrators to select a third arbi-
trator within 15 days after their appointment, either party may
apply to the American Arbitration Association for the appointment
of an arbitrator or arbitrators.
D. The Board of Arbitration shall hold a hearing on the -
controversy, claim or dispute of facts stated in the demand for
arbitration, which hearing shall be held within 30 days after
appointment of the last arbitrator, and after 15 days notice
thereof given to both parties by the arbitrators by certified
mail, return receipt requested. The hearing, if not included, may
be adjourned from time to time. The Board of Arbitration shall
consider evidence offered by the parties relevant to the controversy,
claim or disputed facts, and may -swear witnesses. Testimony shall
be taken and transcribed by a court reporter. The record of the
hearings, the decision of the Board of Arbitration, and the
dissent of any one of them shall be filed with the City Clerk.
1
t
The decision of the Board of Arbittati6h MAY be fuendeted by arty
two of them and any one of the etbittetors fftey tender A dissent,
The deeiaion and dissent fnust be iifhited to the eonttwtray or
elaifh and based on findings of fact. The decision of any two
of the atbittatota shall be the decision of the board and shall
be final and eonclusive on both parties except is May -be provided
in the rules of the American Arbitrat'ioh Association.
t:, Expenses of arbitration,'including without limitation,
costs of notices and service thereof, fees of arbitrators and
witnesses# but not of legal counsel, and the cost of taking and
transcribing testimony shall be charged against the party at
fault or proportionately between the parties as the Board of
Arbitration may deem equitable and just.
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