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HomeMy WebLinkAboutResolution No. 2015-132 Granting Century Link Cable TV Franchise CITY OF EDINA, MINNESOTA RESOLUTION NO. 2015-132 • Regarding an Ordinance Granting a Competitive Cable Franchise for Qwest Broadband Services, Inc., d/b/a CenturyLink RECITALS: WHEREAS, the City of Edina, Minnesota makes the following FINDINGS OF FACT: I. In October 2014, Qwest Broadband Services, Inc., d/b/a CenturyLink, Inc. ("CenturyLink") requested that the City of Edina, Minnesota ("City") initiate proceedings to consider awarding it a franchise to provide cable communications services in the City ("Service Territory"). 2. Comcast of Arkansas/Florida/Louisiana/Minnesota/Mississippi/Tennessee, Inc. ("Comcast") holds a non-exclusive cable communications franchise for the Service Territory ("Comcast Franchise"). 3. The Comcast Franchise, which the City last renewed in August 2012, is currently the only cable communications franchise for the Service Territory. 4. The monopoly held by a sole cable communication provider in a particular market is a barrier to entryfor additional providers, which does not have a captive market but must instead "win" P � P every subscriber.' 5. The presence of a second cable operator in a market improves the quality of service offerings and drives down prices by approximately 15%.2 • 6. On April 9 and April 16, 2015, the City published a Notice of Intent to Franchise a Cable Communications System ("Notice") in the Sun Current, a newspaper of general circulation in the Service Territory. 7. The Notice indicated that the City was soliciting franchise applications and provided information regarding the application process, including that applications were required to be submitted on or before April 30, 2015 and that a public hearing to hear proposals from applicants would be held May 6, 2015 at 7:00 PM. 8. The City also mailed copies of the Notice and application materials to CenturyLink and Comcast.3 9. On April 30, 2015, the City received an application from CenturyLink (the "CenturyLink Application"). The City did not receive any other applications. 10. As provided by the Notice, on May 6, 2015 the City held a public hearing during the City Council's regularly scheduled meeting to consider CenturyLink's application and qualifications. 11. On May 4, 2015, Comcast submitted a letter to the City setting forth its position regarding the CenturyLink Application ("Comcast Letter").4 I In the Matter of Section 621(a)(1) of the Cable Communications Policy Act of 1984 as amended by the Cable • Television Consumer Protection and Competition Act of 1992, Report and Order and Further Notice of Proposed Rulemaking,MB Docket No.05-311,at¶ 138(Rel.Mar. 5,2007)("621 Order"). 21d. at¶¶2,50. 3 Notice by the City of Edina, Minnesota of Its Intent to Consider An Application for a Franchise and Request for Proposals-Official Application Form 1 12. The Comcast Letter expresses concern about how CenturyLink's proposal compared to particular provisions of the existing Comcast Franchise.5 • 13. The Comcast Letter also summarizes Comcast's position regarding build-out requirements and other proposed terms related to competition in the cable industry.6 14. During the hearing, CenturyLink presented its proposal and all other interested parties were provided an opportunity to speak and present information to the City Council regarding the CenturyLink Application. 15. Following the hearing, the law firm of Moss & Barnett, a Professional Association prepared a report, dated June I, 2015 ("Franchise Report"), reviewing and analyzing the City's franchising procedures, the CenturyLink Application and other information provided by CenturyLink in connection with the May 6, 2015 public hearing.? 16. The Franchise Report identifies and discusses federal and state legal requirements relevant to the City's consideration of the CenturyLink Application, including laws pertaining to franchising procedures and competition between providers.8 17. The Franchise Report also analyzes information provided by CenturyLink to establish its qualifications to operate a cable communications franchise in the Service Territory.9 18. At its meeting on October 28, 2015, the Southwest Suburban Cable Commission ("Commission") considered the Franchise Report along with the information and documentation it had received regarding the CenturyLink Application, and adopted Resolution 2015-1 finding and concluding that the CenturyLink Application complied with the requirements of Minn. Stat. § 238.081 and that CenturyLink is legally, technically, and financially qualified to operate a cable • communications system within the Service Territory. 19. In Minnesota, both State and federal law govern the terms and conditions of an additional cable communications franchise in an already-franchised service area.10 20. The franchising authority may not grant an exclusive franchise or unreasonably refuse to award an additional competitive franchise.'1 21. The franchising authority must allow an applicant reasonable time to become capable of providing cable service to all households in the service area.12 22. The franchising authority may grant an additional franchise in an already-franchised service area if the terms and conditions of the additional franchise are not "more favorable or less 4See May 4, 2015 letter from Emmett Coleman to Brian Grogan, Franchise Administrator of the Southwest Suburban Cable Commission regarding CenturyLink Video Franchise Application. 5 Id. at 2. 6 Id. at 1-2. 7 Report to the Southwest Suburban Cable Commission Regarding Qwest Broadband Services, Inc. d/b/a/ CenturyLink—Proposal for a Cable Communication Franchise,June 1,2015. 8 Franchise Report at 2-9. • 9Id. at 11-12. 10 See 47 U.S.C. § 541(a)(1);Minn. Stat. §§238.08, .084;see also Franchise Report at 2-8. 11 47 U.S.C. § 541(a)(1). 12 47 U.S.C. §541(a)(4). 2 burdensome than those in the existing franchise" regarding the area served, the PEG access requirements, and franchise fees.13 • 23. The additional franchise must also include, among other things, "a schedule showing . . . that the construction throughout the authorized franchise area must be substantially completed within five years of the granting of the franchise."14 24. In order to ensure that any additional franchise granted to CenturyLink would contain substantially similar service area, PEG access requirements, and franchise fees to the Comcast Franchise, the City used the Comcast Franchise as the base document for its negotiations. 25. On December 10, 2015, the City Council gave notice that it intended to introduce an ordinance granting a cable communications franchise to CenturyLink. 26. On December 15, 2015, the City Council introduced Ordinance No. 2015-26, an Ordinance of the City of Edina Granting a Cable Communications Franchise to Qwest Broadband Services, Inc. d/b/a CenturyLink ("CenturyLink Franchise"). 27. Copies of the CenturyLink Franchise were made available to the public, including Comcast, on December 11, 2015 28. The CenturyLink Franchise encompasses the same Service Territory encompassed by the Comcast Franchise.15 29. The franchise fees required by the CenturyLink Franchise are identical to those required by the Comcast Franchise. 16 • 30. The PEG access requirements in the CenturyLink Franchise mandate certain obligations, such as HD channel capacity for all PEG channels that go beyond the commitments made in the Comcast franchise.17 31. The City recognizes that CenturyLink, which currently offers no cable communications services in the Service Territory, cannot justify a large initial deployment because it "realistically cannot count on acquiring a share of the market similar to Comcast's share . . . [and] must begin offering service within a smaller area to determine whether it can reasonably ensure a return on its investment before expanding."18 32. The CenturyLink Franchise therefore requires CenturyLink's initial deployment to be capable of serving at least 15%of the living units in the Service Territory within two years. 33. The CenturyLink Franchise permits the City to monitor CenturyLink's progress and compliance with build-out requirements via quarterly meeting and accelerates the build-out schedule if CenturyLink has market success, with the goal and expectation that build-out will be substantially complete before the CenturyLink Franchise's five-year term expires.19 13 Minn. Stat. §238.08,subd. 1(b). 14 Minn. Stat. §23 8.84,subd. 1(m). 15 CenturyLink Franchise §2.4;Comcast Franchise § 2.4. • 16 CenturyLink Franchise § 16.1;Comcast Franchise§ 16.1. 17 CenturyLink Franchise §7;Comcast Franchise §7. 18 621 Order at¶35. 19 CenturyLink Franchise §2.6. 3 34. During its regularly scheduled meeting on December 15, 2015 the City Council will hold a public hearing at which all interested parties are provided an opportunity to speak and present • information regarding the proposed CenturyLink Franchise. WHEREAS, the City has considered these facts and the cable-related needs and interests of the community: NOW THEREFORE, the City Council for the City of Edina, Minnesota hereby resolves as follows: I. The foregoing findings are adopted as the official findings of the City Council and made a part of the official record. 2. The City has authority to adopt an ordinance granting a cable communications franchise to CenturyLink for the Service Territory. 3. The City may not unreasonably refuse to award a competitive cable communications franchise to CenturyLink. 4. The City and its residents will benefit from adoption of the CenturyLink Franchise, which will introduce facilities-based competition into the cable communications market in the Service Territory and thereby reduce costs to consumers and increase the quality and availability of services. 5. CenturyLink is legally, technically, and financially qualified to operate a cable communications system in the Service Territory and has complied with all application requirements. • 6. The City has complied with all franchise application requirements imposed by State and federal law, including those identified herein or in the Franchise Report. 7. The terms and conditions of the CenturyLink Franchise pertaining to service area, a PEG access requirement, and franchise fees are not more favorable or less burdensome than the corollary terms of the Comcast Franchise. 8. The CenturyLink Franchise's initial deployment requirement of 15% within two years and 5-year timeline for substantially completing build-out provides a reasonable period of time for CenturyLink to become capable of reaching full deployment and is therefore consistent with both State and federal law. 9. The Ordinance Granting a Cable Communications Franchise for Qwest Broadband Services, Inc., d/b/a CenturyLink is formally and finally adopted. 10. The City finds and concludes that its actions are appropriate, reasonable, and consistent in all respects with the mandates set forth in Chapter 238 of Minnes to Statutes and applicable provisions of federal law, including 47 U.S.C. § 541(a). PASSED AND ADOPTED in regular session of the City Council of the it of Edina, Minnesota this 15th day of December, 2015 • Attest: 1 k4 Ad, Debra A. Mange , Ci Jerk James B. Hovland, Mayor 4 STATE OF MINNESOTA) • COUNTY OF HENNEPIN) SS CITY OF EDINA ) CERTIFICATE OF CITY CLERK 1, the undersigned duly appointed and acting City Clerk for the City of Edina do hereby certify that the attached and foregoing Resolution was duly adopted by the Edina City Council at its Regular Meeting of December 15, 2015, and as recorded in the Minutes of said Regular Meeting. WITNESS my hand and seal of said City this �J day of C)P—CC-'fv-, • • 5