AgdaPkt 2004-09-13 - Laserfiche WebLink

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� I CI REPOR T � To the Honorable Mayor and City Council From the City Manager September 13, 2004 Subject Amend RCN Franchise Agreement Recommendation It is recommended that the City Council, introduce an ordinance, approving an amendment to the franchise agreement with RCN Telecom Services for the primary purpose of amending the language determining the franchise expiration date. Background In August 2000 the City Council approved a franchise agreement with RCN Telecom Services (RCN) to provide cable television services and high-speed Internet access to residences and businesses in Redwood City. One of the benefits of RCN entering Redwood City is the competition this introduced to a market that had long been served by only one cable television operator. Currently, the other cable television operation is Comcast, the successor to several previous cable television operators including AT&T and TCI. Since 2000 RCN has constructed a telecommunications system that passes over 10,687 (or 51 %) residences in Redwood City and provides services to 2,113 of these residences. The original franchise agreement was for an 11 year term expiring in 2011 and also called for RCN to pass by and provide access to all residences by 2006. In 2002 RCN halted most of its construction activities across the nation due to the difficulties they began experiencing in raising capital to finance the construction of their systems. RCN's parent company, the RCN Corporation, filed for reorganization under the Chapter 11 bankruptcy proceedings in May 2004. Under a Chapter 11 bankruptcy, a business typically attempts to reorganize their activities and restructure their liabilities so that it will be able continue its operations. Shortly before filing for bankruptcy, RCN notified staff that the bankruptcy filing would be forthcoming and that certain amendments to the existing franchise agreements in all jurisdictions in which RCN had franchises would be needed. RCN advised that it is essential to the successful reorganization of RCN and its emergence from bankruptcythat the "build-out" requirements in all of the subsidiary corporation's franchise agreements be eliminated or removed. Categorically eliminating or removing the "build-out" provisions in the City's franchise agreement is not advisable as it could place the City in violation of State law by not treating both cable operators serving the community on a competitively neutral basis. Doing so would also effectively allow RCN never to have to provide service to other areas of the City. At staff's request, RCN agreed to provide funds to Redwood City and other cities in San