HomeMy WebLinkAbout15-188 - ADMIN Resolution - City Council - 2015/11/16•
RESOLUTION NO. 15-188
RESOLUTION REGARDING AN ORDINANCE
GRANTING A COMPETITIVE CABLE FRANCHISE
FOR QWEST BROADBAND SERVICES, INC. D/B/A CENTURYLINK
WHEREAS, the City of St. Louis Park, Minnesota makes the following FINDINGS OF
FACT:
1. In December 2014, Qwest Broadband Services, Inc., d/b/a CenturyLink, Inc
("CenturyLink") requested that the City of St. Louis Park, 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
Temtory ("Comcast Franchise")
3 The Comcast Franchise, which the City last renewed in January, 2006, is currently the
only cable communications franchise for the Service Temtory.
4. The monopoly held by a sole cable communication provider in a particular market is a
barrier to entry for additional providers, which does not have a captive market but must
instead "win" every subscriber.'
5 The presence of a second cable operator in a market improves the quality of service
offenngs and dnves down pnces by approximately 15%.2
6. On May 14 and 21, 2015, the City published a Notice of Intent to Franchise a Cable
Communications System ("Notice") in the St. Louis Park Sun Sailor, 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 June 8, 2015 and that a public heanng to hear proposals
from applicants would be held July 6, 2015 at 7:30 PM
8 The City also mailed copies of the Notice and application materials to CenturyLink and
Comcast.3
9. On June 8, 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 July 6, 2015 the City held a public hearing dunng the City
Council's regularly scheduled meeting to consider CenturyLink's application and
qualifications
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 11138 (Rel. Mar 5, 2007) ("621 Order")
2 Id at ¶¶ 2, 50
3 Notice by the City of St Louis Park, Minnesota of Its Intent to Consider An Application for a Franchise and
Request for Proposals - Official Application Form
Resolution No. 15-188 -2-
11. On July 1, 2015, Comcast submitted a letter to the City setting forth its position regarding
the CenturyLink Application ("Comcast Letter").4
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 summanzes 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. The law firm of Moss & Barnett, a Professional Association prepared a report, dated June
24, 2015 ("Franchise Report"), reviewing and analyzing the City's franchising
procedures, the CenturyLink Application and other information provided by CenturyLink
in connection with the scheduled July 6, 2015 public heanng.7
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 Temtory 9
18. At its meeting on July 6, 2015, the City Council considered the Franchise Report, along
with the information and documentation it had received regarding the CenturyLink
Application, and adopted Resolution 15-092 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. As a result of its determination that CenturyLink complied with all application
requirements and is a qualified applicant, the City Council authonzed City staff to
negotiate with CenturyLink to attempt to reach mutually acceptable terms for such a
franchise.
20. 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
21. The franchising authonty may not grant an exclusive franchise or unreasonably refuse to
award an additional competitive franchise."
4See, July 1, 2015 letter from Emmett Coleman to Reg Dunlap regarding CenturyLink Video Franchise Application
5 Id at 2
6Id at 1-3
7 Report to the City of St Louis Park, Minnesota Regarding Qwest Broadband Services, Inc dlb/a/ CenturyLink —
Proposal for a Cable Communication Franchise, June 24, 2015
8 Franchise Report at 2-9
9Id at 11-12
1° 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)
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Resolution No. 15-188 -3-
22. The franchising authonty must allow an applicant reasonable time to become capable of
providing cable service to all households in the service area.12
23. 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 burdensome than those in the existing. franchise" regarding the area
served, the PEG access requirements, and franchise fees.'
24. The additional franchise must also include, among other things, "a schedule showing . .
that the construction throughout the authonzed franchise area must be substantially
completed within five years of the granting of the franchise "14
25. In order to ensure that any additional franchise granted to CenturyLink would contain
substantially similar service area, PEG access requirement, and franchise fees to the
Comcast Franchise, the City used the Comcast Franchise as the base document for its
negotiations.
26. On September 23, 2015, the City's Telecommunications Advisory Commission
("Commission") held a special meeting to review progress toward a CenturyLink cable
communications franchise ordinance (CenturyLink Franchise"). Staff presented an
overview of the CenturyLink Franchise and interested parties were provided an
opportunity to comment. CenturyLink answered questions posed by the Commission and
City staff. The Commission unanimously passed a motion directing City staff to finalize
the CenturyLink Franchise and recommended that the City Council adopt the
CenturyLink Franchise.
27. On October 8, 2015, the City Council gave notice that it intended to introduce an
ordinance granting a cable communications franchise to CenturyLink.
28 On November 2, 2015, the City Council introduced Ordinance No. , An Ordinance of
the City of St. Louis Park Granting a Cable Communications Franchise to Qwest
Broadband Services, Inc. d/b/a CenturyLink ("CenturyLink Franchise")
29. Copies of the CenturyLink Franchise were made available to the public, including
Comcast, in advance of the November 2, 2015 City Council meeting.
30. The CenturyLink Franchise encompasses the same Service Territory encompassed by the
Comcast Franchise.15
31. The franchise fees required by the CenturyLink Franchise are identical to those required
by the Comcast Franchise. ' 6
32 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."
12 47 U S C § 541(a)(4)
13 Mum Stat § 238 08, subd 1(b)
14 Minn Stat § 238 84, subd 1(m)
15 CenturyLink Franchise § 28-1-5, Comcast Franchise § 28-1-5
16 CenturyLink Franchise § 28-1-9, Comcast Franchise § 28-1-9
17 CenturyLink Franchise § 28-1-14, Comcast Franchise § 28-1-14
Resolution No. 15-188 -4-
33. 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 acquinng 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
34. 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.
35. 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. ' 9
36. Dunng its regularly scheduled meeting on November 2, 2015, the City Council held a
public hearing at which all interested parties were provided an opportunity to speak and
present information regarding the proposed CenturyLink Franchise.
37. On November 4, 2015, Comcast submitted a letter to The Honorable Mayor Jeff Jacobs
with copy to each City Council member setting forth Comcast's position regarding the
CenturyLink Franchise ("Comcast Letter").20
38. The Comcast Letter asserts that the CenturyLink Franchise does not impose binding and
enforceable build out requirements and does not require CenturyLink to contribute the
same amount of PEG funding required of Comcast.
39. CenturyLink was provided a copy of the Comcast Letter but CenturyLink did not provide
the City with a written reply to the Comcast Letter.
WHEREAS, the City has considered these facts and the cable -related needs and interests
of the community:
NOW THEREFORE BE IT RESOLVED, the City Council for the City of St. Louis
Park, Minnesota hereby resolves as follows:
1. 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 authonty 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
18 621 Order at 1135.
19 CenturyLink Franchise §§ 28-1-5 and 28-1-8
20See, November 4, 2015 letter from Emmett Coleman to Jeff Jacobs, Mayor, City of St Louis Park regarding the
CenturyLmk Cable TV Franchise Ordinance
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Resolution No 15-188 -5-
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 Temtory 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, PEG
access requirements, and franchise fees are not more favorable or less burdensome than
the corollary terms of the Comcast Franchise.
8. As compared to the Comcast Franchise, the CenturyLink Franchise requires an identical
per subscriber PEG fee as directed by the Federal Communications Commission.21
9. The CenturyLink Franchise's initial deployment requirement of 15% within two years
and 5 -year timeline for substantially completing build -out provides a reasonable penod of
time for CenturyLink to become capable of reaching full deployment and is therefore
consistent with both State and federal law.
10. The Ordinance Granting a Cable Communications Franchise for Qwest Broadband
Services, Inc., d/b/a CenturyLink is formally and finally adopted.
0 11 The City finds and concludes that its actions are appropriate, reasonable, and consistent
1 ' all respects with the mandates set forth in Chapter 238 of Minnesota Statutes and
ap,licable provisions of federal law, including 47 U.S.C. § 541(a).
Reviewed
City M
Attest
ministration:
Ad • : - • • y the City Council November 16, 2015
L
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City C erk (--
21 Id at 621 Order, 19120 and footnote 396