AgdaPkt 2012-02-27 - Laserfiche WebLink

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8.A. - Page 2 Under DIVCA, new entrants into a market that are not operating under a franchise issued by a local government are permitted to obtain a state franchise at any time. Incumbent cable operators, such as Comcast and Astound, were required to continue to operate under their local franchises until either their local franchise expired or a new provider, such as AT &T or Verizon, begins offering services under a state franchise, at which point an incumbent may elect to terminate its local franchise and obtain a state franchise. AT &T obtained a state franchise from the CPUC to serve the City effective March 30, 2007 and thereafter began offering video services in the City under this state franchise. As a result, Comcast and Astound both opted out of their local franchises with the City and began operating under state franchises effective January 2, 2008, and November 9, 2009, respectively. Had they not opted to switch to a state franchise, Comcast's local franchise would have remained fully in force until 2021. Astound's local franchise has expired on its own terms. Accordingly, Comcast, Astound and AT &T all serve the City under state video franchises. While DIVCA shifts much of the regulatory authority over video providers to the CPUC, it does preserve some local government regulatory authority. For example, DIVCA allows local authorities: (i) to continue to collect franchise fees subject to a 5% cap; (ii) to continue to collect PEG fees subject to certain limitations; (iii) to enforce customer service standards imposed under state and federal law; and (iv) to continue to impose right -of -way management and permitting requirements, subject to certain restrictions imposed by DIVCA. The purpose of the proposed ordinance presented to the Council is to allow the City to implement and enforce its local authority preserved under DIVCA, as follows: 1) DIVCA allows local governments to assess a franchise fee on holders of state franchises in an amount not to exceed what is being charged to incumbent providers and in any case not to exceed 5% of gross revenues. The proposed ordinance is designed to implement the regulatory authority that has been preserved to the City under DIVCA. The ordinance imposes a 5% franchise fee, the same as was imposed on incumbent cable companies under local franchises, and the maximum permitted under DIVCA. The ordinance also imposes the maximum late charge allowed under DIVCA. 2) DIVCA allows local governments to establish a fee by ordinance to support public, educational and government (PEG) channel facilities, subject to certain limitations. The PEG fee may be between 1% and 3% of gross revenues, depending on the fee a local government was charging an incumbent cable provider as of December 31, 2006. If a PEG fee under a franchise agreement was less than 1%, the City can charge 1%, but if greater than that, it cannot charge more than what the operator was paying and in any case no more than 3 %.