A. TCI's
current franchise agreement
-- which allows TCI to provide service in the City
-- expires on October 30, 1999. In advance of that date, the City
of Pittsburgh have begun discussing the renewal of the agreement.
As a part of the renewal agreement, TCI will likely agree to substantially
rebuild its cable system.
It makes economic sense to time the installation of an I-Net with the
imminent re-building of TCI's cable system. The separate strands
of the I-Net can be installed at the same time as TCI is opening the streets,
climbing utility poles and pulling the cable for its cable television system.
The City also has legal leverage at this point in time. To the
extent that there is a demonstrated need for the services of an I-Net and
the cost is not unreasonable, the City can require the construction of
the I-Net as a condition of the franchise renewal.
How rare is this opportunity?
A. Fairly rare. Franchise agreements have historically had
terms of 10 to 15 years. Companies wanted an adequate number of years
to be able to recoup their large investments. More recently, franchise
agreements have been negotiated for shorter terms in the range of 5 years.
TCI's franchise agreement with the City of Pittsburgh had a 15-year
term. It was executed on October 31, 1984 and is set to expire on
October 31, 1999.
How does the franchise renewal process work?
A. Franchise renewals can be formal (using specific steps prescribed
by federal law) or informal, where the city and the cable company negotiate
a franchise under procedures they agree to. Both processes, however,
entail three major steps. The city reviews the company's performance
under the expiring agreement and identifies the community's "future cable-related"
needs and services. The company submits a proposal which describes
its plans for the upcoming franchise period. The parties negotiate
an agreement that ensures that the community's needs are satisfied – or
the city denies the renewal.
What process is the City undergoing?
A. The City and TCI are currently negotiating informally, although they
appear to have preserved their rights to conduct formal negotiations.
Who are the players in the renewal negotiations?
A. The City has developed a negotiating team, consisting of representatives
of City Council, the Department of General Services, the Department of
Law, the Cable Communications Advisory Committee. The City has also
hired a technical consultant, Columbia
Telecommunications Corporation. The team will negotiate an agreement,
which will go to City Council for approval.
The City's negotiators, of course, will be negotiating with TCI representatives.
Does the public have the right to input in the renewal process?
A. It should. Under the formal renewal process, the public
has the right to participate in the "needs assessment" which identifies
the community's "future cable-related" needs and interests. The city
might also allow members of the public to intervene in any formal evidentiary
hearings that are held to determine the adequacy of TCI's franchise proposal.
Under the informal renewal process, the public has the right to comment
on an agreement negotiated between the City and TCI, before the agreement
becomes effective. It has other opportunities only as the City chooses
to make them available.
However, it is usually in cities' interests to encourage public participation.
Such participation provides the means to document the community's needs.
These documented needs then provide the legal leverage for establishing
requirements, such as I-Nets, in franchise agreements. Cities that
have been successful in obtaining substantial franchise requirements usually
spend a great deal of time and resources in this effort. They conduct
outreach and education and use public hearings, focus groups and surveys.
Can a city deny a renewal?
A. Yes, but only for certain specific reasons. A city can deny
a renewal on one or more of the following grounds:
(1) substantial non-compliance with the existing franchise agreement
and applicable law;
(2) unsatisfactory service;
(3) lack of financial, legal and technical ability;
(4) the failure of the company's proposal to meet the community's
future cable-related needs and interests, taking into account the cost
of meeting such needs and interests.
47 U.S.C. 546(d).
It is the last reason (4), which provides the leverage to require an
I-Net.
Does the City have the power to require TCI to install an
I-Net?
A. The City can require an I-Net if it can demonstrate the need for
it and that the costs of providing it are not unreasonable compared to
its benefits. The demonstration of need may also entail a demonstration
that the needs cannot be reasonably satisfied by other providers.
Federal law acknowledges that cities may require cable operators to
install institutional networks as a condition of the initial grant of a
franchise, a franchise renewal or a transfer of a franchise. 42 U.S.C.
531(b), 541(3)(D).
Can TCI recover the costs of an I-Net in its rates?
c
A. The parties to the franchise agreement would determine who is responsible
for the costs of the I-Net. This should include capital costs and
ongoing operation and maintenance.
