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HomeMy WebLinkAbout03/01/1999 Y { • • Telecommunications Advisory Committee City of Apple Valley March 1, 1999 7:00 P.M. City Hall Minutes 1. Call to Order The meeting was called to order at 7:00 p.m. by Chairperson Bible. Members Present: Rollin Bible, Jerry Brown, Scott Hugstad-Vaa, John Magnusson, Dale Rodell, David Westbrook, Members Absent: Others Present: Charles Grawe, Dennis LaComb, Rob Roeder Thomas Creighton 2. A��roval of Minutes of Se�tember 14, 1 98; October 13, 1998• and November 23 199g The minutes of September 14, 1998; October 13, 1998, and November 23, 1998 were approved unanimous (motion by Mr. Westbrook, second by Mr. Magnusson). 3. Fr�nchise Renewal Undate Mr. Creighton presented a brief summary of the franchise renewal agreernent. He explained much of the discussion was over the initiai and annual capital grants. The three cities proposed grants which would be absorbed by the cable cornpany wi#hin its rate structure, while the cable company insisted any grants would either be on a separate line item ariributed to the cities or levied by the cities through the PEG fee. By law, the cities do not have the power to require the company absorb the cost within its rates. The company is also allowed by law to use a separate line item on the bill. T'he compromise is as follows: The company agreed to initial capital "grants" of $90,000 for Apple Valley, $60,000 for Farmington, and $60,000 for Rosemount. The three cities will each have a PEG fee of $.25 initially, capped at $1.25 with a 3% cost o€living factor. The company will recover the money for the grants by adding $.25 to the PEG fee over four years time. The additional $.25 will not be counted against the cities' cap, nor will it be line-itemized to attribute the cost to the cities. After four yeazs, the cities can opt to either eliminate the additional $.25 or use it as an annual capital grant. This amount would more than off-set the annual capital grants proposed by the three cities. The cities can not raise the PEG fee by more than $.25 in any given year and must provide the company notice of an increase by September 30 of the previous year. The agreement will contain the same language as the Lakeville franchise relating to institutional networks. T'he company aiso agreed to other franchise language requested by the cities, including the reimbursement of expenses > , • • for a transfer of ownership. Mr. Creighton said the company has agreed to use the same agreement used between Fiberlink and the City of Lakeville. The franchise will allow the Cities of Apple Valley, Fannington, and Rosemount to sign similar agreements. Mr. Creighton said the new franchise will take effect from the time it is signed, not from the expiration of the previous franchise. Mr. Creighton said the public access channel will remain available for public programming, but the cities will need to address the production facilities. He advised the cities consider discussing the joint powers agreement, the expenditure of the PEG fees, and the future of PEG programming in a meeting in the near future. He noted PEG fees are dedicated for particular use, but the law allows flexibility in the use of the fees. There was brief discussion about how other cities provide PEG programming. Mr. Westbrook asked if the franchise fee will include revenues from internet access. Mr. Creighton said it will be included if the cable system is used to provide internet access. Mr. Westbrook asked how the City will be notified when the initial grant amount has been recaptured by Marcus through their PEG fee. Mr. Creighton advised the City be proactive in monitoring the recoupment of costs of the initial grant. The committee voted unanimous to meet on March 15, 1999 to consider the franchise renewal. Motion by Mr. Westbrook, second by Mr. Rodell. � 4. Recommendation on An�roval of Transfer of Ownershi� Mr. Creighton gave a presentation on his analysis of transfer of ownership to Vulcan and subsequently to Charter Communications. He went over a questionnaire he sent to both companies and explained the ownership analysis. In particular, the analysis centered around two concerns. First, since Marcus will have no assets except the actual systems, the Cities need some corporate performance guarantee from both Vulcan and Charter. Mr. Creighton noted the City can't hold up the franchise unreasonably and from a legal perspective, everything is satisfactory. From a technical perspective, the current local managers know how to operate the system. While there is concern over Paul Allen owning the company exclusively when he has no background in cable systems, Charter �i has a long history of good management of cable systems. Therefore, Mr. Creighton I concluded there is no technical reason to deny the transfer. � �� The second concern is that the buyer has adequate funding to purchase the system. Mr. '�, Creighton noted the system is already in the late stages of the rebuild, so there are no ', immediate concerns over the company's ability to provide capital for the system. Mr. � Creighton said he believes Vulcan has sufficient resources to guarantee the performance ' of the franchise. He said Charter won't provide guarantees because it will affect it's cash flow situation as its bank sets aside reserve funds for the guarantee. However he ' said Charter provided satisfactory compromise language to provide assurance that it can fund the system. Mr. Creighton explained the line items in the City Council resolution. <. • • • Mr. Westbrook moved, second by Mr. Brown to recommend the Apple Valley City Council adopt the prepared resolution approving the transfer of ownership. Motion passed unanimous. 5. A�proval of 199$ Cable Television Annual Re� Mr. Grawe distributed the City and Public Access portions of the annual report. Mr. Roeder distributed the Marcus portion. Mr. Grawe noted the higher than usual number of complaints due to the system rebuild. Mr. Bible asked the report be amended to . include sentences indicating the high number of complaints was due to the upgrade, the complaints have been resolved, and the Committee expects a reduction in the number of complaints in the future. Mr. Westbrook moved, second by Mr. Magnusson to approve the 1998 Cable Television Annual Report with the amendment specified by Mr. Bible. Motion passed unanimous. 6. Review 1999 First Quarter Compliant og The Committee reviewed two complaints filed in 1999. • 7. Marcus Presentation on New Cable Technologi� a. Digital Cable Mr. Roeder explained Mazcus began Alpha testing for internet access services. The service provides 500 kbps in both directions at a cost of $34.85 per month, with an additional $14.95 per month modem rental. The service includes a 5 Mg web site with an ISP. This is about $5 more per month than Media One charges, but doesn't require a separate telephone connection and has faster download speeds. Mr. Roeder explained the service also allows business to ramp up service at an increased fee. Comp USA will do the installation of the modems in beta test sites. Marcus currently has about 900 beta test sites which will receive the service for one month at no cost. Marcus is currently waiting for its T-1 lines to be connected to the T-3 line. There was brief discussion about the roll-out of the service. b. Cable Modems Mr. Roeder announced Marcus will launch a digital cable tiered service which will include 53 pay services, on-screen navigation, 33 pay-per-view channels, 40 music choice stations, and a total of 193 channels. This service will be a direct competitor with DBS. The price for the service will be $19.95 for the first tier and about $26 for 55 channels. He explained the challenges of selecting channels based on their ability to share satellites. He said he expects basic proa arnmin�: to be offered in digital fnrmat by November or December and noted M,arcus is ti�e first system in the region to use digital cablecasting. • • * 8. Ad' urn Mr. Westbrook moved, seconded by Mr. Rodell to adjourn the meeting. Motion carried unanimous. The meeting was adjourned at 8:38 P.M..