Comcast Model Franchise Agreement

464 Pages·2013·7.27 MB·English

NSCC Franchise Renewal
Comcast Proposed Franchise Agreement
Dec. 20, 2013

FRANCHISE AGREEMENT
This Franchise Agreement (hereinafter, the “Agreement” or “Franchise
Agreement”) is made between [ insert LFA name ] (hereinafter, “City”) and Comcast of
Minnesota, Inc. (hereinafter, “Grantee” or “Comcast”).
The City, having determined that the financial, legal, and technical ability of the
Grantee is reasonably sufficient to provide the services, facilities, and equipment
necessary to meet the future cable-related needs of the community, desires to enter into
this Franchise Agreement with the Grantee for the construction, operation and
maintenance of a Cable System on the terms and conditions set forth herein.
Section 1: Definition of Terms
For the purpose of this Franchise Agreement, capitalized terms, phrases, words,
and abbreviations shall have the meanings ascribed to them in the Cable
Communications Policy Act of 1984, as amended from time to time, 47 U.S.C. §§ 521 et
seq. (the “Cable Act”).
1.1. “Commission” means the North Suburban Communications
Commission” or its lawful successor.
1.2 “Effective Date” means the date on which all persons necessary to sign
this Agreement in order for it to be binding on both parties have executed this
Agreement as indicated on the signature page(s), unless a specific date is otherwise
provided in the “Term” section herein.
1.3. “Franchise Area” means the present legal boundaries of the City as of the
Effective Date and shall also include any additions thereto by annexation or other legal
means upon the City providing written notice to Grantee of such addition.
1.4. ““Gross Revenues”“ means and shall be construed broadly to include all
revenues derived directly or indirectly by Comcast and/or an Affiliate that is a cable
operator of the Cable System, from the operation of Comcast’s Cable System to provide
Cable Services within the City (including cash, credits, property or other consideration
of any kind or nature). Gross revenues include, by way of illustration and not limitation:
monthly fees for Cable Services, regardless of whether such Cable Services are provided
to residential or commercial customers, including revenues derived from the provision
of all Cable Services (including but not limited to pay or premium Cable Services, digital
Cable Services, pay-per-view, pay-per-event and video-on-demand Cable Services);
installation, reconnection, downgrade, upgrade or similar charges associated with
changes in subscriber Cable Service levels; fees paid to Comcast for channels designated
for commercial/leased access use; converter, remote control, lockout device and other
Cable Service equipment rentals and/or leases or sales; advertising revenues received or
derived by Comcast and/or its Affiliates, including but not limited to, rep fees, Affiliate
fees, rebates and commissions, but excluding unaffiliated agency fees; late fees,
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Comcast Proposed Franchise Agreement
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convenience fees and administrative fees; revenues from program guides; franchise fees;
and commissions from home shopping channels and other revenue sharing
arrangements. Gross Revenues subject to franchise fees shall include revenues derived
from sales of advertising that run on Comcast’s Cable System within the City and shall
be allocated on a pro rata basis using total Cable Service subscribers reached by the
advertising. Additionally, Comcast agrees that Gross Revenues subject to franchise fees
shall include all commissions paid to National Cable Communications (“NCC”) and
Comcast Spotlight (“Spotlight”) or their successors associated with sales of advertising
on the Cable System within the City allocated according to this paragraph using total
Cable Service subscribers reached by the advertising. Gross revenues shall not include:
actual bad debt write-offs, provided, however, that all or part of any such actual bad
debt that is written off but subsequently collected shall be included in Gross Revenues in
the period collected; and any taxes on services furnished by Comcast imposed by any
municipality, state or other governmental unit, provided that franchise fees shall not be
regarded as such a tax.
(i) To the extent revenues are received by Comcast for the provision of a
discounted bundle of services which includes Cable Services and non-Cable
Services, Comcast shall calculate revenues to be included in Gross Revenues
using a methodology that allocates revenue on a pro rata basis when comparing
the bundled service price and its components to the sum of the most recent
published rate card rate for the components, except it is expressly understood
that equipment may be subject to inclusion in the bundled price at full rate card
value. This calculation shall be applied to every bundled service package
containing Cable Service from which Comcast receives or derives revenues in the
City, and must be updated within sixty (60) days of the date any rate change for
cable and/or non-cable services is implemented for a service package containing
Cable Service or the date any rate change is implemented for any service
included in a service package that contains Cable Service. The NSCC reserves its
right to review and to challenge Comcast’s calculations.
(ii) For purposes of this definition, the term “Affiliates” means any
person(s) and/or entity(ies) who own or control, are owned or controlled by or
are under common ownership or control with Comcast of Minnesota, Inc. but
does not include affiliated entities such as NBCU and Spectacor that are not
directly or indirectly involved with the programming, use, management,
operation, construction, repair and/or maintenance of Com cast Corporation’s
cable systems.
(iii) Resolution of any disputes over the classification of revenue should
first be attempted by agreement of the Parties, but should no resolution be
reached, the Parties agree that reference shall be made to generally accepted
accounting principles (““GAAP”“) as promulgated and defined by the Financial
Accounting Standards Board (““FASB”“), Emerging Issues Task Force
(““EITF”“) and/or the U.S. Securities and Exchange Commission (““SEC”“).
Notwithstanding the forgoing, the City and/or the Commission reserves its right
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to challenge Comcast’s calculation of Gross Revenues, including the use or
interpretation of GAAP as promulgated and defined by the FASB, EITF and/or
the SEC.
Section 2: Grant of Authority
2.1. The City hereby grants to Comcast a nonexclusive Franchise authorizing
the construction and operation of a Cable System in the public ways within the
Franchise Area, and for that purpose to erect, install, construct, repair, replace,
reconstruct, maintain, or retain in any public way such poles, wires, cables, conductors,
ducts, conduits, vaults, manholes, pedestals, amplifiers, appliances, attachments, and
other related property or equipment as may be necessary or appurtenant to the Cable
System, and to provide such services over the Cable System as may be lawfully allowed.
2.2. Term of Franchise. The term of the Franchise granted hereunder shall be
ten (10) years, commencing upon the Effective Date of the Franchise, unless the
Franchise is renewed or is lawfully terminated in accordance with the terms of this
Franchise Agreement and the Cable Act.
2.3. Renewal. Any renewal of this Franchise shall be governed by and comply
with the provisions of Section 626 of the Cable Act, as amended.
2.4. Reservation of Authority. Nothing in this Franchise Agreement shall (A)
abrogate the right of the City to perform any public works or public improvements of
any description, (B) be construed as a waiver of any police powers or codes or
ordinances of general applicability promulgated by the City, or (C) be construed as a
waiver or release of the rights of the City in and to the public ways. In light of the
insurance and indemnification provisions set forth in this Agreement and the
compensation paid hereunder, Comcast shall not be required to obtain any “peddler” or
similar licenses in order to market its services within the City, nor shall permits be
required for basic cable system repair work or customer connection work (such as
burying a drop to a home) that impacts less than 25 feet of the public rights-of-way.
2.5 Service Extension and Non-Discrimination. Grantee shall not be required
to extend service beyond its present Cable System boundaries unless there is a minimum
of 50 homes per cable mile for underground plant and 35 homes per cable mile for
overhead plant, within 500 feet of the present Cable System. Access to cable service shall
not be denied to any group of potential residential cable subscribers because of the
income of the residents of the area in which such group resides. Grantee shall be given a
reasonable period of time to construct and activate cable plant to service annexed or
newly developed areas but in no event to exceed twenty-four (24) months from notice
thereof by City. Customers requiring a line extension or drop greater than 150 feet may
be required to pay for the incremental costs of construction beyond the first 150 feet
from the Cable System.
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Section 3: Construction and Maintenance of the Cable System
3.1. Repair of Rights-of-Way and Property. Any and all Rights-of-Way, or public
or private property, which are disturbed or damaged during the construction, repair,
replacement, relocation, operation, maintenance, expansion, extension or reconstruction
of the Cable System shall be promptly and fully restored by Grantee, at its expense, to
the same condition as that prevailing prior to Grantee’s work. If Grantee shall fail to
promptly perform the restoration required herein, after written request of City and
reasonable opportunity to satisfy that request, City shall have the right to put the Rights-
of-Way, public, or private property back into good condition. In the event Grantee is
responsible for such disturbance or damage, Grantee shall be obligated to fully
reimburse City for such restoration.
3.2. New Grades or Lines. If the grades or lines of any public way within the
Franchise Area are lawfully changed at any time during the term of this Franchise
Agreement, then the Grantee shall, upon reasonable advance written notice from the
City (which shall not be less than thirty (30) business days) and at its own cost and
expense, protect or promptly alter or relocate the Cable System, or any part thereof, so as
to conform with any such new grades or lines. If public funds are available to any other
user of the public way for the purpose of defraying the cost of any of the foregoing, the
City shall notify Grantee of such funding and make available such funds to the Grantee.
3.3. Relocation at Request of Third Party. The Grantee shall, upon reasonable
prior written request of any Person holding a permit issued by the City to move any
structure, temporarily move its wires to permit the moving of such structure; provided
(i) the Grantee may impose a reasonable charge on any Person for the movement of its
wires, and such charge may be required to be paid in advance of the movement of its
wires; and (ii) the Grantee is given not less than thirty (30) business days advance
written notice to arrange for such temporary relocation.
3.4. Undergrounding and Beautification Projects. In the event all users of the
public way relocate aerial facilities underground as part of an undergrounding or
neighborhood beautification project, Grantee shall participate in the planning for
relocation of its aerial facilities contemporaneously with other utilities. Grantee’s
relocation costs shall be included in any computation of necessary project funding by the
municipality or private parties. Grantee shall be entitled to reimbursement of its
relocation costs from public or private funds raised for the project and made available to
other users of the public way.
3.5. Technical Standards. The technical standards used in the operation of the
Cable System shall comply, at minimum, with the applicable technical standards
promulgated by the FCC relating to Cable Systems, as may be amended or modified
from time to time. Upon the receipt of customer complaints about signal quality
problems in a number indicating a failure to meet such technical standards, the City may
initiate an inquiry into Grantee’s compliance with these technical standards, pursuant to
the requirements set forth in Section 5 herein.
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Section 4 - Customer Service Standards and Privacy Protection
4.1. Customer Service Standards. The City hereby adopts the customer service
standards set forth in Part 76, §76.309 of the FCC’s rules and regulations, as amended.
4.2. Privacy Protection. The Grantee shall comply with all applicable federal
and state privacy laws, including Section 631 of the Cable Act and regulations adopted
pursuant thereto.
Section 5 - Oversight and Regulation by Franchising Authority
5.1. Franchise Fees. The Grantee shall pay to the City a franchise fee in an
amount equal to five percent (5%) of annual Gross Revenues received from the
operation of the Cable System to provide Cable Service in the Franchise Area; provided,
however, that Grantee shall not be compelled to pay any higher percentage of franchise
fees than any other video service provider providing service in the Franchise Area. The
payment of franchise fees shall be made on a quarterly basis and shall be due forty-five
(45) days after the close of each quarter. Each franchise fee payment shall be supported
by a report prepared by a representative of the Grantee showing the basis for the
computation of the Franchise Fees paid during that period.
(i) All franchise fee amounts paid shall be subject to audit and
recomputation by the City and/or the Commission, and acceptance of any
payment shall not be construed as an accord that the amount paid is in fact the
correct amount. If an audit or review discloses an overpayment or
underpayment of franchise fees, the City and/or the Commission shall notify
Comcast of such overpayment or underpayment. The City’s/Commission’s audit
or review expenses shall be borne by the City/Commission unless the audit or
review determines that the payment to the City should be increased by more
than five percent (5%) in the audited/reviewed period, in which case the costs of
the audit/review shall be borne by Comcast, up to a cap of $25,000, as a cost
incidental to the enforcement of the Franchise. Any additional amounts due to
the City as a result of the audit or review shall be paid to the City within thirty
(30) days following written notice to Comcast by the City/Commission of the
underpayment, which notice shall include a copy of the audit/review report. If
the recomputation results in additional revenue to be paid to the City, such
amount shall be subject to a ten percent (10%) annual interest charge.
(ii) The City/Commission shall have the right to inspect and to require
Comcast to provide any and all data, documents and records maintained by
Comcast (or maintained by an Affiliate or a third-party contractor/vendor on
behalf of Comcast) reasonably related to the calculation and payment of
franchise fees. The Grantee shall maintain such records, documents and data for
a minimum of four (4) years.
(iii) Comcast shall have no less than twenty (20) business days to respond
fully and completely to any written request for data, documents and records
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issued by the City/Commission, unless an extension of time is granted by the
City/Commission in writing. Comcast may request an extension of the twenty
(20) business day deadline applicable to a written request for data, information
and documents no later than ten (10) business days after the date of such request.
Every request for an extension of time shall describe, in detail, the reasons the
extension is necessary. The City/Commission may, in its sole discretion, grant or
deny an extension request, and shall act reasonably in making such a
determination based on the scope and complexity of the information request at
issue and the facts cited by Comcast in its written extension request.
(iv) In the event any franchise fee payment or recomputation amount is
not made on or before the required date, Comcast shall pay, during the period
such unpaid amount is owed, the additional compensation and interest charges
computed from such due date, at an annual rate of ten percent (10%).
(v) Nothing in this Franchise shall be construed to limit any authority of
the City to impose any tax, fee or assessment of general applicability.
(vi) The franchise fee payments required by this Franchise shall be in
addition to any and all taxes or fees of general applicability. Comcast shall not
apply nor seek to apply all or any part of the amount of said franchise fee
payments as a deduction or other credit from or against any of said taxes or fees
of general applicability, except as expressly permitted by law. Nor shall Comcast
apply or seek to apply all or any part of the amount of any of said taxes or fees of
general applicability as a deduction or other credit from or against any of its
franchise fee obligations, except as expressly permitted by law.
(vii) Any such payment audits or reviews may take place no more
frequently than once every three years and may review no further back than the
prior three year period.
(viii) To expedite the audit process and to avoid prolonged disputes,
prior to distributing or publishing the results of an audit or review, the City shall
afford Grantee a minimum of 15 business days to review the draft results and to
respond to the findings therein so that the reviewer may take into consideration
any additional information Grantee provides.
(ix) Grantee shall be provided with advance written notice of any meeting
at which the results of the audit or review will be presented and shall be afforded
an opportunity to respond to the results in writing and in person at any such
meeting.
(x) Franchise Fee payments shall be made only to the City and not to a
designee such as the Commission.
5.2. Ancillary Fees. Comcast shall ensure that persons or entities that only
subscribe to non-cable service (e.g., persons who subscribe only to high-speed Internet
access, telephone service, alarm monitoring, or a combination of services that does not
include cable service) are not assessed cable service franchise fees on ancillary charges
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imposed by Comcast on such subscribers, including but not limited to late fees,
convenience fees and nonsufficient funds (NSF) charges, unless the imposition of cable
service franchise fees is permitted by applicable laws or regulations.
5.3. Other Information Requests. Except as provided in section 5.1 related to
franchise-fee audits, the City shall have the right to request information and records
from the Grantee to ensure compliance with the terms of this Franchise Agreement, as
follows:
(i) Grantee may be required to produce records maintained in the
ordinary course of business necessary to ascertain compliance with the terms of
this Franchise Agreement but shall not be required to produce customized
reports or analyses. Grantee promises to produce true and accurate records and
shall not be required to submit further certifications of the information provided.
Grantee shall have no less than 90 days to produce responsive information and
shall be granted additional time to respond as may be reasonably necessary.
(ii) No such information request shall be initiated unless there is a
reasonable basis for inquiring as to compliance such as customer complaints
about the subject matter of the inquiry, the failure to provide reports on the
subject matter as required by other sections of this Franchise Agreement, or
marketing or other communications from the Grantee indicating non-
compliance.
(iii) In the interests of cost savings and efficiency, prior to serving an
information request upon the Grantee, the City shall contact Grantee’s local
representative to discuss the subject matter of concern to determine whether a
prompt and informal solution is available (i.e. Grantee is able to satisfactorily
explain why there is no violation or is willing to cure the alleged non-
compliance).
(iv) To expedite the review process and to avoid prolonged disputes,
prior to distributing or publishing the results of an the review, the City shall
afford Grantee a minimum of 15 business days to review the draft results and to
respond to the findings therein so that the reviewer may take into consideration
any additional information Grantee provides.
(v) Grantee shall be provided with advance written notice of any meeting
at which the results of the audit or review will be presented and shall be afforded
an opportunity to respond to the results in writing and in person at any such
meeting.
5.4. Procedures Required to Initiate Audit/Review or Information Request.
Because audits/reviews and information requests can be time consuming and expensive
for the City and Grantee, prior to commencing a franchise fee or PEG fee audit or review
or an information request as set forth in the subsections above:
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(i) The City staff or designee wanting to initiate the audit/review or
information request shall present the proposed audit/review or information
request to the City for approval. The proposal shall include the proposed inquiry
document, the estimated costs of performing the audit or review, an explanation
of the basis for the inquiry, and a representation that an attempt to resolve the
inquiry informally with Grantee was made.
(ii) Grantee shall have advance written notice of the meeting at which the
above proposal will be presented and shall have the opportunity to address the
proposal with the City prior to approval of the audit/review or information
request.
5.5. Resolution of Disputes in Audits or Information Requests. In the event of
a dispute between the City and Grantee regarding the Grantee’s production of
responsive information or regarding the result of an audit\review or information
request, the parties agree to first attempt to resolve the dispute in a direct discussion.
Upon the failure of direct discussions, the parties shall mediate the dispute in non-
binding mediation before a jointly-selected mediator whose fee shall be split between
the parties. If mediation is unsuccessful, the parties may thereafter pursue such other
remedies and processes as may be available.
5.6 Nondisclosure Agreements. Grantee may require that the City or any
consultant or contractor for the City enter into a nondisclosure agreement to protect any
trade-secret, confidential, or sensitive information designated by Comcast and
submitted for the purpose of compliance with this agreement and the franchise.
Section 6 – Transfer of Cable System or Franchise or Control of Grantee
6.1. Neither the Grantee nor any other Person may transfer the Cable System
or the Franchise without the prior written consent of the City, which consent shall not be
unreasonably withheld or delayed. No transfer of control of the Grantee, defined as an
acquisition of 51% or greater ownership interest in Grantee, shall take place without the
prior written consent of the City, which consent shall not be unreasonably withheld or
delayed. No consent shall be required, however, for (i) a transfer in trust, by mortgage,
hypothecation, or by assignment of any rights, title, or interest of the Grantee in the
Franchise or in the Cable System in order to secure indebtedness, or (ii) a transfer to an
entity directly or indirectly owned or controlled by Comcast Corporation.
Section 7 – Public, Educational and Governmental Access Channels
7.1. Use of a channel position for public, educational and governmental
(“PEG”) access shall be provided on the most basic tier of service offered by Grantee in
accordance with the Cable Act, Section 611, and as further set forth below. “Channel
position” means a number designation on the Grantee’s channel lineup regardless of the
transmission format (analog or digital) or capacity required to transmit programming at
a given channel position. Grantee does not relinquish its ownership of or ultimate right
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of control over cable system capacity or a channel position by designating it for PEG use.
A PEG access user – whether an individual, educational or governmental user – acquires
no property or other interest by virtue of the use of a channel position so designated.
Grantee shall not exercise editorial control over any public, educational, or
governmental access use of a PEG channel position, except Grantee may refuse to
transmit any access program or portion of any access program that contains obscenity,
indecency, or nudity. The City shall indemnify Grantee for any liability, loss, or damage
it may suffer due to violation of the intellectual property rights of third parties or arising
out of the content of programming shown on any PEG channel and from claims arising
out of the City’s rules for or administration of access.
7.2. PEG Channels. Grantee shall designate 3 standard-definition channels,
and one high-definition channel according to section 7.4 below, for noncommercial
public, educational, or governmental use. Comcast will assist the NSAC in getting
detailed program listings on the digital channel guide at NSAC’s expense. Grantee
agrees to add an additional SD PEG channel pursuant to the formula set forth in
Minnesota Statutes section 238.084, subd. 1(z).
7.3. PEG Signals. The PEG channels will be provided in a manner that
delivers an acceptable signal without degradation and consistent with FCC standards.
From the viewer’s perspective, the signal quality will be materially the same as between
PEG channels and other channels on the cable system.
7.4. HD PEG Channel Position. Grantee shall designate one channel position
the City may use to provide PEG access programming in high-definition format upon
meeting the following prerequisites:
(i) Before Comcast is required to launch a PEG channel position in HD
format, the City must demonstrate that at least 50% of the locally produced, non-
repetitive, and non-character generated PEG programming to be featured on the
channel is available in HD format. In addition, there must be a minimum of 5
hours-per-day, five days-per-week of HD PEG programming. Failure to maintain
the agreed upon amount of HD programming may result in Comcast’s
reclamation of the HD channel position.
(ii) Comcast will make reasonable efforts to locate the HD PEG channel
position in reasonable proximity to HD local broadcast channels or similar public
interest HD channels, but shall not be required to relocate existing HD
programmers.
(iii) Comcast is responsible for providing the headend equipment to
receive the PEG programming from the City. The City shall bear the
responsibility for acquiring all equipment necessary to produce the
programming in HD and the equipment needed to transmit it to Comcast in HD
in the format required by Comcast. The cost of any resulting upgrades to the
video return line to the headend shall be the responsibility of the City. If any
Comcast-owned equipment used to receive PEG programming reaches end-of-
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life or obsolescence, Comcast may replace or upgrade such equipment at its
discretion. If Comcast’s replacement or upgrade of equipment necessary to
receive PEG programming requires the City to replace its PEG transmission
equipment, the City shall do so at its expense.
(iv) City acknowledges that HD programming may require special viewer
equipment and subscription to advanced service tiers and that, by agreeing to
make PEG available in HD format, Comcast shall not be required to provide free
HD equipment to customers, including complimentary municipal and
educational accounts, nor modify its equipment or pricing policies in any
manner. City acknowledges that not every customer may be able to view HD
PEG programming, nor on every TV in the home, and additional costs may be
involved in the reception of HD programming.
(v) Comcast may implement HD carriage of the PEG content in any
manner (including selection of compression, utilization of IP, and other
processing characteristics) that produces a signal quality for the consumer that is
reasonably comparable to similar commercial HD channels carried on the cable
system.
7.5. PEG Access Return Lines. Comcast will provide transport of HD PEG
programming over fiber where Comcast owned fiber facilities and capacity exist.
Comcast will provide transport for SD PEG programming over any platform or facility if
Comcast’s choosing.
7.6. PEG Access on Digital Channel Guide. To the extent the configuration of
the cable system allows for detailed program listings to be included on the digital
channel guide, Comcast will allow the City or its designee to make arrangements with
the channel guide vendor to make detailed program listings available. The City or its
designee shall be solely responsible for providing the program information to the
vendor in the format and timing required by the vendor and shall bear all costs of the
guide service.
7.7. PEG Access Capital Fee. On a quarterly basis, Comcast shall pay to each
City a PEG Access Capital Fee as set forth below to be spent by the City exclusively for
the purchase of capital equipment or facilities for producing or transmitting PEG video
programming to subscribers over the Cable System in accordance with applicable law.
All such PEG Access Capital Fee payments shall be made directly and solely to the City
for the City to use as it determines, consistent with the use restrictions on the funds set
forth in this section. Of each of the following amounts, $0.44 is for the PEG capital needs
of the NSCC/NSAC, the remainder shall be retained by the City: Arden Hills $1.87,
Falcon Heights $3.77, Lauderdale $7.91, Little Canada $1.43, Mounds View $1.80, New
Brighton $0.81, North Oaks $3.00, Roseville $0.66, Shoreview $0.81, St. Anthony $1.93.
7.8. Complimentary Cable Service. Comcast will provide complimentary
basic cable service via one drop to one outlet at each of the educational and municipal
locations listed in Attachment A. Comcast will provide three complimentary digital
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