FRANCHISE RENEWAL 2011: Overview of Franchise Renewals Recent Trends in PEG Negotiations Alliance...

FRANCHISE RENEWAL 2011: FRANCHISE RENEWAL 2011:

Overview of Franchise RenewalsOverview of Franchise Renewals

Recent Trends in PEG Recent Trends in PEG

NegotiationsNegotiations

Alliance for Community MediaAlliance for Community Media2011 Annual Conference2011 Annual Conference

INNOVATEINNOVATEMarriott Starr Pass ResortMarriott Starr Pass Resort

July 27-30, 2011July 27-30, 2011

There are now about 60,000,000 cable subscribers in There are now about 60,000,000 cable subscribers in U.S.U.S.

Deregulation of cable at the state level since 2005 Deregulation of cable at the state level since 2005 has caused the loss of a large number of access has caused the loss of a large number of access facilities managed by cable companies and many facilities managed by cable companies and many nonprofit Community Media Centers nationwidenonprofit Community Media Centers nationwide

Meanwhile, cable company revenues have grown Meanwhile, cable company revenues have grown significantly, despite the economic downturnsignificantly, despite the economic downturn

1996: $27.1 billion1996: $27.1 billion 2005: $65.7 billion2005: $65.7 billion 2010: $93.7 billion2010: $93.7 billion

Data and telephony are integral parts of the cable Data and telephony are integral parts of the cable industry business plansindustry business plans

Cable Communications Cable Communications Systems Recent TrendsSystems Recent Trends

U.S. cable operator revenues continue to U.S. cable operator revenues continue to increase, increase, despite a loss of over 5 million basic subscribers despite a loss of over 5 million basic subscribers since 2006:since 2006:

Basic SubscribersBasic Subscribers Total RevenueTotal Revenue2006 65.4 million2006 65.4 million $71.9 billion $71.9 billion ($ ($ 91.58/sub/mo)91.58/sub/mo)2008 63.7 million2008 63.7 million $85.3 billion $85.3 billion($111.53/sub/mo)($111.53/sub/mo)2010 59.8 million 2010 59.8 million $93.7 billion $93.7 billion ($130.57/sub/mo)($130.57/sub/mo)

Cable operators are eliminating analog tiersCable operators are eliminating analog tiers More bandwidth for HD and other new servicesMore bandwidth for HD and other new services

Cable operators are providing support for PEG and I-Cable operators are providing support for PEG and I-Nets -- in addition to 5% franchise fees -- where Nets -- in addition to 5% franchise fees -- where franchising authorities negotiate aggressively to franchising authorities negotiate aggressively to represent community needs and interestsrepresent community needs and interests

Cable Communications Cable Communications Systems Recent TrendsSystems Recent Trends

LAYING THE GROUNDWORK LAYING THE GROUNDWORK FOR RENEWALFOR RENEWAL

Critical Role of a Citizens’ Franchise Renewal Task Critical Role of a Citizens’ Franchise Renewal Task ForceForce– CMC should be a vital and active partner with the City in the CMC should be a vital and active partner with the City in the

franchise renewal processfranchise renewal process

Budget Planning (start a renewal fund 5 years before Budget Planning (start a renewal fund 5 years before franchise expiration)franchise expiration)

Government recognition that it needs help to Government recognition that it needs help to successfully undertake the renewal processsuccessfully undertake the renewal process

Government staff/officials who commit time and are Government staff/officials who commit time and are REALLY interested in technology, community, citizen REALLY interested in technology, community, citizen involvement and communications = Quality Outcomeinvolvement and communications = Quality Outcome

Recognize that the franchise renewal process is going Recognize that the franchise renewal process is going to take time – three or more years!to take time – three or more years!


Develop a good understanding of the franchise Develop a good understanding of the franchise renewal process and what a quality outcome renewal process and what a quality outcome looks like – GET SMART!!looks like – GET SMART!!

– Task ForceTask Force

– Community LeadersCommunity Leaders

– Government StaffGovernment Staff

– Elected OfficialsElected Officials

Conduct the renewal process “by the book,” as Conduct the renewal process “by the book,” as if you were preparing to deny the cable if you were preparing to deny the cable operator’s request for renewal.operator’s request for renewal.


Recognize that there are Recognize that there are threethree documents to documents to address:address:– Franchise -- negotiated agreementFranchise -- negotiated agreement– Enabling Ordinance/Government Code -- “Rules of the Enabling Ordinance/Government Code -- “Rules of the

Road” and minimum standards for all cable operatorsRoad” and minimum standards for all cable operators– Customer Service Standards -- apply to all cable Customer Service Standards -- apply to all cable

operatorsoperators

Conduct and maintain open communications on the Conduct and maintain open communications on the status of the renewal process status of the renewal process – Study sessionsStudy sessions– Staff reportsStaff reports– One-to-one briefingsOne-to-one briefings

PAST PERFORMANCE/PAST PERFORMANCE/COMPLIANCE REVIEWCOMPLIANCE REVIEW

Past Performance Review activities might Past Performance Review activities might include: include: – Financial review of cable operator to determine Financial review of cable operator to determine

general financial condition of the cable systemgeneral financial condition of the cable system

– Detailed franchise compliance reviewDetailed franchise compliance review

– Technical/engineering review of the cable Technical/engineering review of the cable system to determine:system to determine:

• Condition of current cable plantCondition of current cable plant• How well the system has been maintainedHow well the system has been maintained

– Statistically valid telephone survey of cable Statistically valid telephone survey of cable subscriberssubscribers

NEEDS ASSESSMENT PROCESS NEEDS ASSESSMENT PROCESS ACTIVITIESACTIVITIES

Needs Assessment activities might include:Needs Assessment activities might include: – Statistically valid telephone surveyStatistically valid telephone survey

– Focus group workshopsFocus group workshops

– Completion of questionnaire by Completion of questionnaire by representatives of community groups, representatives of community groups, organizations, institutions, and government organizations, institutions, and government agenciesagencies

– On-line surveyOn-line survey

NEEDS ASSESSMENT PROCESS NEEDS ASSESSMENT PROCESS ACTIVITIESACTIVITIES

Needs Assessment activities might include:Needs Assessment activities might include: – Technology assessment (I-Net study)Technology assessment (I-Net study)

– Community interviewsCommunity interviews– Review of current PEG Access facilities and Review of current PEG Access facilities and

operationsoperations

– Public hearingsPublic hearings– Compilation of all data in a Needs Compilation of all data in a Needs

Assessment ReportAssessment Report

KEY PEG FRANCHISE KEY PEG FRANCHISE PROVISIONSPROVISIONS

PEG Access Capacity (Channel Capacity)PEG Access Capacity (Channel Capacity)– PEG access capacity represented as PEG access capacity represented as bandwidthbandwidth

rather than number of channelsrather than number of channels• If PEG capacity is represented as analog channels, If PEG capacity is represented as analog channels,

include a digital conversion formulainclude a digital conversion formula• PEG with same capacity and functionality as local PEG with same capacity and functionality as local

network affiliates and PBS channelsnetwork affiliates and PBS channels• Signal transport issuesSignal transport issues

• ““what goes in is what comes out”what goes in is what comes out”• Free PEG Video-on-DemandFree PEG Video-on-Demand

– PEG access capacity to be converted to digital when PEG access capacity to be converted to digital when all basic channels are converted to digital formatall basic channels are converted to digital format• Cost of conversion to be responsibility of cable Cost of conversion to be responsibility of cable

operatoroperator


PEG Access Capacity (Channel Capacity)PEG Access Capacity (Channel Capacity)– PEG access capacity to be located and handled in PEG access capacity to be located and handled in

the same way as local network and PBS affiliates.the same way as local network and PBS affiliates.• On both lowest cost tier of cable service & HD TierOn both lowest cost tier of cable service & HD Tier

– PEG spectrum (channels) located in a consecutive PEG spectrum (channels) located in a consecutive or near consecutive “run” of channelsor near consecutive “run” of channels

– PEG numerical channel allocation cannot be PEG numerical channel allocation cannot be changed without local approval, and then only for changed without local approval, and then only for “must-carry” or technical reasons“must-carry” or technical reasons

• If change occurs, provision for advance notification, If change occurs, provision for advance notification, payment of fee to cover costs incurred by access payment of fee to cover costs incurred by access management entity(ies)management entity(ies)


PEG Access Capacity (Channel Capacity)PEG Access Capacity (Channel Capacity)– PEG spectrum can be used for any PEG purpose, PEG spectrum can be used for any PEG purpose,

regardless of the form of the information/programregardless of the form of the information/program

– Access channels in the same numerical location on Access channels in the same numerical location on all cable systems serving the City/County all cable systems serving the City/County

– Trigger for additional PEG spectrum beyond that Trigger for additional PEG spectrum beyond that initially requiredinitially required

– PEG spectrum to be available free of charge to PEG PEG spectrum to be available free of charge to PEG access management entity(ies) and usersaccess management entity(ies) and users

PEG content shown on Interactive Program Guide PEG content shown on Interactive Program Guide in same manner as commercial and PBS channelsin same manner as commercial and PBS channels


PEG – Cable System Design and FunctionalityPEG – Cable System Design and Functionality

– Two-way activated, bi-directional links between Two-way activated, bi-directional links between PEG Access facilities and headendPEG Access facilities and headend

– Two-way activated, bi-directional links between Two-way activated, bi-directional links between primary government meeting locations and PEG primary government meeting locations and PEG Access facilities and headendAccess facilities and headend

– Remote Origination Sites -- I-NetRemote Origination Sites -- I-Net

• PEG Facility as I-Net HeadendPEG Facility as I-Net Headend


InterconnectionInterconnection– Interconnection between:Interconnection between:

• All cable operators serving the communityAll cable operators serving the community• Adjacent cable systemsAdjacent cable systems• Open Video SystemsOpen Video Systems

– PEG Facility(ies) as “Interconnection” PointPEG Facility(ies) as “Interconnection” Point Institutional NetworkInstitutional Network

– PEG Facility(ies) as I-Net “Headend”PEG Facility(ies) as I-Net “Headend”

– Community Media Center as I-Net Training and Community Media Center as I-Net Training and Development CenterDevelopment Center


Funding for PEG equipment, facilities, and Funding for PEG equipment, facilities, and

supportsupport– Initial facilities and equipmentInitial facilities and equipment– Replacement facilities & equipment over life of Replacement facilities & equipment over life of

franchisefranchise– Annual PEG support (for access services)Annual PEG support (for access services)

Franchise can specify:Franchise can specify:– Amount and form of PEG support Amount and form of PEG support – Timing and conditionsTiming and conditions– Vehicles for routing paymentVehicles for routing payment


Vehicles for PEG support from cable operatorVehicles for PEG support from cable operator– % of gross revenues (over and above franchise fees)% of gross revenues (over and above franchise fees)– One-time paymentOne-time payment– Regular payments based upon number of Regular payments based upon number of

subscriberssubscribers– Regular payments based upon a fixed amount, with Regular payments based upon a fixed amount, with

annual CPI-linked adjustmentannual CPI-linked adjustment– Payments directly to PEG/CMC organization rather Payments directly to PEG/CMC organization rather

than through local government to PEG/CMC than through local government to PEG/CMC organizationorganization

– Restricted vs. Unrestricted use of fundsRestricted vs. Unrestricted use of funds


Vehicles for PEG support from Franchising Vehicles for PEG support from Franchising AuthorityAuthority– Portion of franchise feePortion of franchise fee– One-time or periodic payments of specified One-time or periodic payments of specified

amountsamounts– Contract for serviceContract for service– Other creative arrangementsOther creative arrangements


Free cable drops to all public buildings, Free cable drops to all public buildings, schools, and PEG facilitiesschools, and PEG facilities

Free Internet service and cable modems for Free Internet service and cable modems for PEG facilities, schools, etc.PEG facilities, schools, etc.

PromotionPromotion– Free ad available time for PEG spotsFree ad available time for PEG spots– Listing of PEG program schedules in all print Listing of PEG program schedules in all print

and electronic guidesand electronic guides– Ability to insert a billstuffer in subscriber bills Ability to insert a billstuffer in subscriber bills

at least annuallyat least annually

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