HomeMy WebLinkAbout7.1 Digital Infrastructr Report~//
19 ~ ~~$z STAFF REPORT CITY C L E R K
~` ~ ~ DUBLIN CITY COUNCIL File # 0®[~®-QD
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DATE: March 16, 2010
TO: Honorable Mayor and City Councilmembers
FROM: Joni Pattillo, City Manager
SUBJEC Report on the Digital Infrastructure and Video Competition Act (DIVCA)
Prepared By: Roger Bradley, Administrative Analyst 11
EXECUTIVE SUMMARY:
The City Council will receive a report on the Digital Infrastructure and Video Competition Act of
2006 (DIVCA) and its impact on local access programming within the City of Dublin. In addition,
the City Council will be informed about federal legislation being considered that will affect the
provision of local cable television programming.
FINANCIAL IMPACT:
None.
RECOMMENDATION:
Staff recommends that the City Council receive the report.
~.~~
Submitted By
Administrative Analyst II
Assistant~t#y Manager
Page 1 of 4 ITEM NO.
~.I
DESCRIPTION:
Local entities within the State of California have traditionally had the authority to regulate, in
accordance with federal, state and local law, certain aspects of the provision of video service,
including the authority to award franchises. In 2006, the California State Legislature adopted the
Digital Infrastructure and Video Competition Act of 2006 ("DIVCA"), which became effective
January 1, 2007. The purpose of DIVCA was to streamline the franchising process for video
service providers and to provide for the convergence of technologies. For instance, telephone
companies-such as AT&T- developed integrated products that use existing telephone
networks to provide cable-like services, and cable companies-like Comcast-are using their
networks to provide telephone services. This technology allows telephone, cellular phone,
audio, Internet, and video services to be provided by one company. To facilitate the provision of
such integrated services, the Legislature enacted DIVCA.
DIVCA substantially changed California law by establishing a statewide franchising process for
video service providers to be administered by the California Public Utilities Commission
("CPUC"). DIVCA established that the CPUC is the sole authority to award franchises for the
provision of video services, which preempts local franchising authority. Further, DIVCA
established limited authority for local entities to exercise control over State franchise holders.
Consequently, the City is now prohibited by DIVCA from awarding new local franchises or
regulating State franchise holders, except to the extent permitted by DIVCA, which amounts to
monitoring and enforcing customer service standards.
Presently, there are two State franchise holders operating within the City of Dublin: Comcast
and AT&T. AT&T received a State franchise on March 30, 2007, and began offering its U-Verse
service pursuant to that State franchise sometime after March 30, 2007. The City's incumbent
cable provider, Comcast, which operated pursuant to a franchise agreement with the City for
many years, received a State franchise on January 2, 2008; under DIVCA, Comcast was
entitled to seek the State franchise beginning as of January 2, 2008 due to AT&T's entry into
the video programming market in Dublin. Comcast's State franchise became effective in Dublin,
and the franchise agreement .between the City and Comcast was terminated when Comcast
notified the City that it began providing video service in Dublin under the State franchise. The
City received this notice from Comcast on January 14, 2008.
While DIVCA constituted a sea change relative to local involvement in the regulation of video
programming, it does contain a number of provisions designed to maintain operational and
financial support for franchising agencies like the City of Dublin. Thus, the City will continue to
receive equivalent franchise fees from State franchise holders as it received under the local
agreement, which amounts to five percent of gross revenues received for services provided
within the City of Dublin. The amount of franchise fees estimated for FY 2009-10 from these
service providers is $615,000, and those funds are General Fund revenues. State franchise
holders are also required to provide public, educational and governmental channel access and
support. In addition, DIVCA contains provisions designed to ensure that neighborhoods are not
discriminated against on the basis of household income.
DIVCA's Impact on Tri-Valley Community Television (TV30)
As part of the now-expired franchise agreement with Comcast, the City of Dublin received a
public, education, and governmental ("PEG") fee in the amount of $0.50 per Dublin subscriber.
The revenues from that fee were passed on to TV30, which used the revenues to fund capital
and operating expenses incurred by the station in producing locally-focused programming for
Page 2 of 4
the Tri-Valley communities of Dublin, Livermore, Pleasanton, and San Ramon. While DIVCA
allowed Comcast to opt out of its agreement with the City, it did not allow Comcast to abrogate
its responsibility to pay PEG fees. Specifically, DIVCA requires that incumbent cable operators
that chose to opt out of a local agreement, as well as any subsequent providers that choose to
provide service under a State franchise, to pay any and all PEG fees negotiated as part of the
local franchise agreement until the expiration date of the local agreement. The City of Dublin's
agreement with Comcast would have expired on June 1, 2011. Comcast and AT&T are required
to pay the $0.50 per month per subscriber fee until this date. Thus, the City is passing on this
per-subscriber fee ($74,000 in FY 2009-10) to TV30 to fund local cable operations, which
include the airing of City Council meetings.
For jurisdictions that did not have a PEG fee in place as part of a local franchise agreement,
DIVCA allows a local jurisdiction to adopt a PEG fee to fund local access programming in an
amount of one percent of gross revenues received by the cable operator. Additionally, this fee
can be adopted by jurisdictions that had a fee in place but have passed the date when the local
franchise agreement would have expired. Previously, the City Council adopted a one percent
fee for use after June 1, 2011. As a result, PEG fees will continue to flow to TV30 after what
would have been the expiration date of the local agreement originally negotiated with Comcast.
It is important to note that a fee of one percent of gross revenues would increase the amount of
funding available for pass through to TV30. Staff estimates that it would increase this revenue
by approximately 50%. While this may be a favorable situation for TV 30 operations, there is a
problem with the eligible use of funds under DIVCA. While the now-expired franchise
agreement with Comcast was explicitly negotiated to allow PEG fees to be used for operating
and capital expenses, PEG fees under DIVCA are only allowed to be used in accordance with
the Federal Communications Commission's ("FCC") guidelines, which limits the use of PEG
fees to only capital expenses. At the current time, approximately 75% of TV30's annual budget
($595,960) is funded by PEG fees received from the member agencies of Dublin, Livermore,
Pleasanton, and San Ramon. As a result, TV30 will have to find a funding mechanism, other
than PEG fees, for a significant majority of its budget after June 1, 2011.
Prior to the local franchise agreement with Comcast, TV30 made annual requests to the Tri-
Valley cities for general fund support. If the rules for PEG fee use are not adjusted prior to June
2011, the City Council can expect to receive a similar request as part of the Fiscal Year 2011-
2012 budget cycle. Given the current economic times, the City Council may find itself in a
difficult situation as it will be forced to weigh the importance of TV30's services against other
General Fund services provided by the City. Currently, there is federal legislation being
proposed, known as the Community Access Preservation Act of 2009 ("CAP", H.R. 3745), to
change the FCC rule, allowing the use of PEG fees for operating expenses, which, if passed,
would remove the need for a future general fund request from TV30.
An additional difficulty with DIVCA has been experienced by subscribers of AT&T's U-Verse
service. On January 27, 2009, AT&T began offering access to TV30 programming as part of its
U-Verse service platform. In order to get access to TV30 programs on the U-Verse service,
subscribers must navigate through a web application that is available on U-Verse channel 99.
Viewers then have to select the City of Dublin -Tri-Valley Community Television link, after
which they will be able to select the. channel of preference or the Comcast equivalent of 28, 29,
and 30. Unfortunately, as this is a web application service, viewers are unable to utilize DVR
services to record TV30 programming. Questions have arisen about whether the provision of
local access channels through a web application complies with State and federal laws and
regulations. The CAP Act would clarify that such is not the case.
Page 3 of 4
Community Access Preservation Act of 2009
The Community Access Preservation Act of 2009 has been introduced in the United States
House of Representatives, and if enacted, would provide for the carriage and display of PEG
channels in a manner consistent with local or cable commercial channels. Current federal law
and many states' laws do not mandate even the most basic requirements for PEG broadcasts,
nor do they require dedicated funding for PEG programming beyond an "adequate assurance of
financial support." The CAP Act seeks to close and remove many of the loopholes and
obstacles that exist to preserve the future of access to PEG programming.
Historically, funding for PEG broadcasts has been negotiated as part of local franchise
agreements between cable companies and local franchise authorities as was accomplished
with the now-expired local franchise agreement with Comcast. However, more than half of the
states have enacted telecommunications laws that shift the franchising authority to the state
level. As a result, due to a lack of adequate federal protection, these new statewide agreements
create significant broadcast and funding obstacles for some PEG channels, and have created
the problems mentioned above with DIVCA.
Furthermore, the transition to digital television has allowed some franchised cable companies to
carry PEG channels differently than commercial channels, whether broadcasting them in
reduced resolution, displaying them in menu-only format, or simply moving them to a digital-only
tier, rendering them inaccessible to the average cable customer. In the worst case, customers
are now required to pay extra fees to access PEG channels, or operators refuse to broadcast
closed captioning for PEG channels unless a special request is made. The end result is an
undervalued broadcast that does not benefit the public as is the intention of PEG programming.
Specifically, the CAP Act would address the immediate issues facing PEG channels by:
• Allowing PEG fees to be used for any PEG-related purposes;
• Requiring PEG channels to be carried in the same manner as local broadcast channels;
• Requiring the FCC to study the effect state video franchise laws have had on PEG
channels, and requiring operators to provide the greater of the support required under
state laws, or the support historically provided for PEG; and
• Making cable television-related laws and regulations applicable to all landline video
providers.
The important point to note is that the CAP Act does not assume a "one-size-fits-all" solution for
the issue of PEG broadcasts. Rather, the decisions about PEG broadcasting is left to
_, negotiations between franchising authorities and the local communities they serve. Letters
urging support for the CAP Act were sent to the Tri-Valley's Congressional Representatives by
the Tri-Valley Mayors of Dublin, Danville, Livermore, Pleasanton, and San Ramon in October
and November of 2009 (Attachment 1- 3).
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
None.
ATTACHMENTS:
1. Letter of Support for CAP Act (November 2009) -Congressman Garamendi
2. Letter of Support for CAP Act (October 2009) -Congressman McNerney
3. Letter of Support for CAP Act (October 2009) -Congressman Stark
Page 4 of 4
/66
November 18, 2009
The Honorable John Garamendi
U.S. House of Representatives
2459 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Garamendi:
We write to you today to express our support for°the Community Access Preservation Act of
2009 (CAP, H.R. 3745), as introduced in the House of Representatives by Rep. Tammy Baldwin
(D-Wisc.). If enacted, this bill would provide for the carriage and display of public, educational,
and government (PEG) channels in a manner consistent with local or cable commercial
channels.
PEG stations and channels are locally funded, produced, and viewed. Current federal law and
many states' laws do not mandate even the most basic requirements for PEG broadcasts, nor
do they require dedicated funding for PEG programming beyond an "adequate assurance of
financial support."
Historically, funding for PEG broadcasts has been negotiated as part of local franchise
agreements between cable companies and local franchise authorities. However, twenty-three
states have enacted recently new telecommunication laws that shift franchise :authorities to the
state level. As a result, due`to a lack of adequate federal protection, these new state-wide
agreements create significant broadcast and funding obstacles for some PEG channels.
Furthermore, the transition to digital television has allowed some.. franchised cable companies to
carry PEG channels differently than commercial channels, whether broadcasting them in
reduced resolution, displaying them in menu-only format, or simply moving them to a digital-only
tier, rendering them inaccessible to analog cable customers. In the worst case, customers are
now required to pay extra fees to access PEG channels, or operators refuse to broadcast
closed captioning for PEG channels unless a special request is made. The end result is an
undervalued broadcast that does not benefit the public.
Specifically, the CAP Act would address the immediate issues facing PEG channels by:
• Allowing PEG fees to be used for any PEG-related purposes;
• Requiring PEG channels to be carried in the same manner as local broadcast channels;
• Requiring the FCC to study the effect state video franchise laws have had on PEG
channels, and requiring operators to provide the greater of the support. required under
state laws, or the support historically provided for PEG; and
• Making cable television-related laws and regulations applicable to all landline video
providers.
The important point to note is that the CAP Act does not assume a "one-size-fits-all" solution for
the issue of PEG broadcasts. Rather, the decisions about PEG broadcasting is left to
negotiations between franchising authorities and the local communities they serve.
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Attachment 1
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We encourage you to examine the provisions of this bill and consider signing on as a co-
sponsor. Preserving the arts, educational, and informational broadcasts provided by PEG
broadcasts is important to our community and the residents we serve. We thank you for your
time and consideration in this matter.
Sincerely,
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October 26, 2009
The Honorable Jerry McNerney
U.S. House of Representatives
312 Cannon House Office Building
Washington, D.C. 20515
Dear Congressman McNerney:
We write to you today to express our support for the Community Access Preservation Act of
2009 (CAP, H.R. 3745), as introduced in the House of Representatives by Rep. Tammy Baldwin
(D-Wisc.). If enacted, this bill would provide for the carriage and display of public, educational,
and government (PEG) channels in a manner consistent with local or cable commercial
channels.
PEG stations and channels are locally funded, produced., and viewed. Current federal law and
many states' laws do not mandate even the most basic requirements for PEG broadcasts, nor
do they require dedicated funding for PEG programming beyond an "adequate assurance of
financial support."
Historically, fundingfor P'EG broadcasts has been negotiated as part of local franchise
agreements between cable companies and local franchise 'authorities. However, twenty-three
states have enacted recently new telecommunication laws that shift franchise authorities to the
state level. As a result, due to a lack of adequate federal protection, these new,state-wide
agreements create significant broadcast and funding obstacles for some PEG channels.
Furthermore, the transition to digital television has allowed some franchised cable companies to
carry PEG channeis.differently than commercial channels, whether broadcasting them in
reduced resolution, displaying them in menu-only format, or simply moving them to a digital-only
tier, rendering them inaccessible to analog cable customers. In the worst case, customers are
now required to pay extra fees to access PEG channels, or operators refuse to broadcast
closed captioning for PEG channels unless a special request is made. The end result is an
undervalued broadcast that does not benefit the public.
Specifical-y, the CAP Act would address the immediate issues facing PEG channels by:
• Allowing PEG fees to be used for any PEG-related purposes;
• Requiring PEG channels to be carried in the same manner as local broadcast channels;
• Requiring the FCC to study the effect state video franchise laws have had on PEG
channels, ahd requiring operators to provide the greater of the support required under
state laws; or the support historically provided for PEG; and
• Making cable television-related laws and regulations applicable to all landline video
providers.
The important point to note is that the CAP Act does not assume a "one-size-fits-all" solution for
the issue of PEG broadcasts. Rather, the decisions about PEG broadcasting is left to
negotiations between franchising authorities and the local communities they serve.
Attachment 2
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We encourage you to examine the provisions of this bill and consider signing on as a co-
sponsor. Preserving the arts, educational, and informational broadcasts provided by PEG
broadcasts is important to our community and the residents we serve. We thank you for your
time and consideration in this matter.
Sincerely,
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October 26, 2009
The Honorable Fortney "Pete" Stark
U.S. House of Representatives
239 Cannon House Office Building
Washington, D.C. 20515
Dear Congressman Stark
We write to you today to express our support for the Community Access Preservation Act of
2009 (CAP, H.R. 3745), as introduced in the House of Representatives by Rep. Tammy Baldwin
(D-Wisc.). If enacted, this bill would provide for the carriage and display of public, educational,
and government (PEG) channels in a manner consistent with local or cable commercial
channels.
PEG stations and channels are locally'funded, produced, and viewed. Current federal law and
many states' laws do not mandate even the most basic_requirements for PEG broadcasts, nor
do they require dedicated funding for PEG programming beyond an "adequate assurance of
financial support."
Historically, funding for PEG broadcasts has been negotiated as part of local franchise
agreements between cable companies and local franchise authorities. `However, twenty-three
states have enacted. recently new telecommunication laws that shift franchise authorities to the
state level. As-a result, due to a lack of adequate federal protection, these new state-wide
agreements create. significant broadcast and funding obstacles for some PEG channels.
Furthermore, the transition to digital television has allowed some franchised cable companies to
carry PEG channeis differently than commercial channels, whether broadcasting them in
reduced resolution, displaying them in menu-only format, or simply moving them to a digital-only
tier, rendering them inaccessible to analog cable customers. In the worst case, customers are
now required to pay extra fees to access PEG channels, or operators refuse to broadcast
closed captioning for PEG channels unless a special request is made. The end result is an
undervalued broadcast that does not benefit the public.
Specificaiiy, the CAP Act would address the immediate issues facing PEG channels by:
• Allowing PEG fees to be used for any PEG-related purposes;
• Requiring PEG channels to be carried in the same manner as local broadcast channels;
• Requiring the FCC to study the effect state video franchise laws have had on PEG
channels,`and requiring operators to provide the greater of the support required under
state aws, or the support historically provided for PEG; and
• Making cable television-related laws and regulations applicable to all landline video
providers.
The important point to note is that the CAP Act does not assume a "one-size-fits-all" solution for
the issue of PEG broadcasts. Rather, the decisions about PEG broadcasting is left to
negotiations between franchising authorities and the local communities they serve.
A-it~chrnent 3
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We encourage you to examine the provisions of this bill and consider signing on as a co-
sponsor. Preserving the arts, educational, and informational broadcasts provided by PEG
broadcasts is important to our community and the residents we serve. We thank you for your
time and consideration in this matter.
Sincerely,
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