COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

 

DATE:

October 24, 2008

BOARD MEETING DATE:

November 18, 2008

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

James C. Porter, Director of Public Works

SUBJECT:

Adoption of an Ordinance Replacing the San Mateo County Ordinance Code Governing Cable Television Franchises to Conform to the California Digital Infrastructure and Video Competition Act of 2006

 

RECOMMENDATION:

Adopt an Ordinance repealing and replacing Sections 5.104.010 through 5.104.060 and adding Sections 5.104.070 through 5.104.120 to Chapter 5.104 of Title 5 of the San Mateo County Ordinance Code Governing Cable Television Franchises to Conform to the California Digital Infrastructure and Video Competition Act of 2006.

 

VISION ALIGNMENT:

Commitment: Responsive, effective, and collaborative government.

Goal 22: County and local governments effectively communicate, collaborate and develop strategic approaches to issues affecting the entire County.

 

The Ordinance is a result of collaborative efforts of the member agencies of the San Mateo County Telecommunications Authority (SAMCAT) and other cities to develop an Ordinance that defines the rights delegated to the local authorities while complying with state law.

 

BACKGROUND:

PREVIOUS BOARD ACTION:

On April 4, 2006, your Board authorized the execution of a 15-year cable franchise agreement with various Comcast companies. The franchise agreement outlines numerous requirements including payment to the County of franchise fees (5% of gross revenues) and Public, Education, and Government (PEG) access fees, as well as, customer service provisions.

 

DISCUSSION:

The Digital Infrastructure and Video Competition Act of 2006 (DIVCA) was passed by the State Legislature, signed by the Governor, and chaptered into law on September 28, 2006 (AB2987). DIVCA became effective on January 1, 2007. DIVCA provides for state-wide franchising for video providers, which is administered by the California Public Utilities Commission (CPUC) with certain rights delegated to local authorities.

 

DIVCA was initiated at the request of the telephone industry as a method to streamline their entrance into the cable television market. Cable companies have been offering “bundled” service packs to subscribers including cable service, high speed internet, and telephone service. Without cable franchises, the telephone companies were unable to provide video service in most locations and could not match this bundling package. They were concerned that negotiating individual franchise agreements with cities, counties, and other municipalities would take an inordinate amount of time and would result in further losses to both the companies and consumers. DIVCA allows for cable providers to obtain a state-wide franchise and, to date, AT&T and Comcast have successfully obtained state-wide franchises.

 

DIVCA allows for the payment of franchise fees of up to five percent (5%) of gross revenues and PEG support to the local authority, provided that the local authority enacts an ordinance establishing the PEG fee. The PEG fee is limited to the fee that was in place when DIVCA became effective (January 1, 2007). The County currently has two franchise agreements with Comcast that cover different geographical areas of the County. The PEG fees for these agreements are set at $0.88 and $0.55 per month per subscriber.

 

DIVCA allows for monitoring of customer service standards of state video franchise holders, but limits enforcement to the standards listed in DIVCA. Fines may be imposed only after a local authority enacts an ordinance establishing the fines. DIVCA also limits the amount of the fines.

 

The following requirements may be adopted by the County as provided by DIVCA and have been incorporated into the proposed Ordinance:

 
 

Ø

PEG fees to support local Public, Education and Government Programming

 
 

Ø

Penalties for enforcement of customer service standards

 
 

Ø

Right of local audit of statewide franchise holders

 
 

Ø

Notification requirement for franchise fees

 
 

The proposed Ordinance has been approved by County Counsel.

 

FISCAL IMPACT:

This Ordinance will ensure timely payment of the 5% franchise fee and PEG fees as provided by state law. The anticipated revenue is unknown as the new statewide franchise holders may attract cable customers or new customers who previously were not cable subscribers. Adoption of this Ordinance will ensure that existing franchise fees and PEG fees will not be eroded. There is no impact on the General Fund.