HomeMy WebLinkAbout16-119FACT:
CITY OF LAKEVILLE, MINNESOTA
RESOLUTION NO. 16-119
Regarding an Ordinance Granting a Competitive Cable Franchise
to Frontier Communications of Minnesota, Inc. ("Frontier")
RECITALS:
WHEREAS, the City of Lakeville, Minnesota makes the following FINDINGS OF
In March 2016, Frontier Communications of Minnesota, Inc. ("Frontier") requested that
the City of Lakeville, Minnesota ("City") initiate proceedings to consider awarding it a
franchise to provide cable communications services in the City ("Service Territory").
2. Charter Cable Partners, LLC ("Charter") holds a non-exclusive cable communications
franchise for the Service Territory ("Charter Franchise").
3. The Charter Franchise, which the City last renewed on or about November 2, 1998, is
currently the only cable communications franchise for the Service Territory and, absent
renewal or further extension, is set to expire on December 31, 2016.
4. The City and Charter are currently in renewal negotiations related to the Charter
Franchise.
5. The monopoly held by a sole cable communication provider in a particular market is a
barrier to entry for additional providers, which do not have a captive market but must
instead "win" every subscriber.'
6. The presence of a second cable operator in a market improves the quality of service
offerings and drives down prices by approximately fifteen percent (15%).2
7. On April 22, 2016 and April 29, 2016, the City published a Notice of Intent to Franchise
a Cable Communications System ("Notice") in the Sun Thisweek, a newspaper of general
circulation in the Service Territory.
The Notice indicated that the City was soliciting franchise applications and provided
information regarding the application process, including that applications were required
to be submitted on or before May 16, 2016 and that a public hearing to hear proposals
from applicants would be held by the City on June 6, 2016 at 7:00 PM.
' In the Matter of Section 621(a)(1) of the Cable Communications Policy Act of 1984 as amended
by the Cable Television Consumer Protection and Competition Act of 1992, Report and Order and Further
Notice of Proposed Rulemaking, MB Docket No. 05-311, at 1 138 (Rel. Mar. 5, 2007) ("621 Order'.
2 Id. at 99 2, 50.
9. The City also mailed copies of the Notice and application materials to Frontier and
Charter.'
10. On May 16, 2016, the City received an application from Frontier (the "Frontier
Application"). The City did not receive any other applications.
11. On June 6, 2016, Charter submitted a letter to the City setting forth its position regarding
the Frontier Application and a second letter from Charter's outside legal counsel to the
City's outside legal counsel ("Charter Letters").'
12. The Charter Letters express concern about Frontier's proposal and how Frontier will be
held to particular provisions of the existing Charter Franchise.'
13. The Charter Letters also summarize Charter's position regarding build -out requirements
and other proposed terms related to competition in the cable industry.'
14. As provided by the Notice, on June 6, 2016 the City held a public hearing during the
City's regularly scheduled meeting to consider Frontier's application and qualifications.
15. During the June 6, 2016 hearing, Frontier presented its proposal and all other interested
parties, including Charter, were provided an opportunity to speak and present information
to the City regarding the Frontier Application.
16. The law firm of Moss & Barnett, a Professional Association prepared a report, dated
August 4, 2016 ("Frontier Qualifications Report"), reviewing and analyzing the
applicable franchising procedures, the Frontier Application and other information
provided by Frontier in connection with the June 6, 2016 public hearing.'
17. The Frontier Qualifications Report identifies and discusses federal and state legal
requirements relevant to the City's consideration of the Frontier Application, including
laws pertaining to franchising procedures and competition between providers.
18. The Frontier Qualifications Report also analyzes information provided by Frontier to
establish its qualifications to operate a cable communications franchise in the Service
Territory.'
3 Notice by the City of Lakeville, Minnesota of Its Intent to Consider An Application for a Franchise
and Request for Proposals - Official Application Form.
4 See, June 6, 2016 letter from Tom Bordwell, Senior Director Regional Government Relations for
Charter to Mayor Matt Little and Members of the Lakeville City Council, and a letter from Gardner F.
Gillespie and J. Aaron George for Sheppard, Mullin, Richter & Hampton, LLP to Brian T. Grogan at Moss &
Barnett regarding Frontier's Video Franchise Application.
5 Id. at 2.
6 Id. at 1-2.
' August 4, 2016, Frontier Qualifications Report to the City of Lakeville, Minnesota Regarding
Frontier Communications of Minnesota, Inc. ("Frontier") - Proposal for a Cable Communication Franchise.
8 Id. at Exhibits B-E.
2
19. On August 15, 2016, the City considered the Frontier Qualifications Report, along with
the information and documentation it had received regarding the Frontier Application,
including a letter from Charter dated August 15, 2016 distributed to the Mayor and City
Council by Charter.'
20. On August 15, 2016, the City Council adopted a resolution finding and concluding that
the Frontier Application complied with the requirements of Minn. Stat. § 238.081 and
that Frontier is legally, technically, and financially qualified to operate a cable
communications system within the Service Territory.
21. As a result of its determination that Frontier complied with all application requirements
and is a qualified applicant, the City authorized staff to continue to negotiate with
Frontier to attempt to reach mutually acceptable terms for a cable communications
franchise.
22. In Minnesota, both state and federal law govern the terms and conditions of an additional
cable communications franchise in an already -franchised service area.lo
23. The franchising authority may not grant an exclusive franchise or unreasonably refuse to
award an additional competitive franchise."
24. The franchising authority must allow an applicant reasonable time to become capable of
providing cable service to all households in the service area. "
25. The franchising authority may grant an additional franchise in an already -franchised
service area if the terms and conditions of the additional franchise are not "more
favorable or less burdensome than those in the existing franchise" regarding the area
served, the PEG access requirements, and franchise fees."
26. The additional franchise must also include, among other things, "that the construction
throughout the authorized franchise area must be substantially completed within five
years of the granting of the franchise."14
27. On or about August 23, 2016, the City Council gave notice that it intended to introduce
an ordinance granting a cable communications franchise to Frontier.
28. On August 30, 2016 the City of Lakeville Cable Board reviewed and discussed the
proposed Frontier Franchise and issued a recommendation that the City Council adopt the
Frontier Franchise.
' See August 15, 2016 letter from Gary Underwood, Charter's Regional Vice President, Government
Affairs to the Honorable mayor Matt Little and members of the Lakeville City Council.
to See 47 U.S.C. § 541(a)(1); Minn. Stat. §§ 238.08, .084; see also Frontier Qualifications Report at
Exhibit A.
11 47 U.S.C. § 541(a)(1).
12 47 U.S.C. § 541(a)(4).
13 Minn. Stat. § 238.08, subd. 1(b).
14 Minn. Stat. § 238.84, subd. 1(m).
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29. On September 6, 2016, the City Council introduced Ordinance No. 969, an Ordinance of
the City of Lakeville, Minnesota Granting a Cable Communications Franchise to Frontier
Communications of Minnesota, Inc. ("Frontier Franchise").
30. The Frontier Franchise encompasses the same Service Territory encompassed by the
Charter Franchise."
31. The franchise fee percentage required by the Frontier Franchise is identical to that
required by the Charter Franchise. 16
32. The PEG access requirements in the Frontier Franchise mandate certain obligations, such
as HD channel capacity for all PEG channels that go beyond the commitments made in
the Charter franchise.17
33. The Frontier Franchise requires construction throughout the Service Territory will be
substantially complete within the five (5) year Franchise term."
34. The Frontier Franchise permits the City to monitor Frontier's progress and compliance
with the construction schedule requirements via quarterly meetings.19
35. During its regularly scheduled meeting on September 6, 2016, the City Council held a
public hearing at which all interested parties were provided an opportunity to speak and
present information regarding the proposed Frontier Franchise.
WHEREAS, the City has considered these facts and the cable -related needs and interests of the
community:
NOW THEREFORE, the City Council for the City of Lakeville, Minnesota hereby resolves as
follows:
1. The foregoing findings are adopted as the official findings of the City Council and made
a part of the official record.
2. The City has authority to adopt an ordinance granting a cable communications franchise
to Frontier for the Service Territory.
3. The City may not unreasonably refuse to award a competitive cable communications
franchise to Frontier.
4. The City and its residents will benefit from adoption of the Frontier Franchise, which will
introduce facilities -based competition into the cable communications market in the
Service Territory and thereby reduce costs to consumers and increase the quality and
availability of services.
15 Frontier Franchise §2.6.
16 Frontier Franchise §7.1.
17 Frontier Franchise §6.
18 Frontier Franchise §4.2.
19 Frontier Franchise §4.3.
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5. The City has previously determined that Frontier is legally, technically, and financially
qualified to operate a cable communications system in the Service Territory.
6. The City has complied with all franchise application requirements imposed by local, state
and federal law.
7. The terms and conditions of the Frontier Franchise pertaining to service area, PEG access
requirements, and franchise fees are not more favorable or less burdensome than the
corollary terms of the Charter Franchise.
8. The Frontier Franchise's obligation that construction throughout the Service Territory be
substantially complete within the initial five year Franchise term provides a reasonable
period of time for Frontier to become capable of reaching full deployment and is
therefore consistent with both state and federal law.
9. The Ordinance Granting a Cable Communications Franchise to Frontier Communications
of Minnesota, Inc. is formally and finally adopted.
10. The City finds and concludes that its actions are appropriate, reasonable, and consistent
in all respects with the mandates set forth in Chapter 238 of Minnesota Statutes and
applicable provisions of federal law, including 47 U.S.C. § 541(a).
ADOPTED in regular session of the City Council of the City of Lakeville, Minnesota this 6th
day of September, 2016
CITY OF LAKEVILLE, MINNESOTA
By:
Matt Little, Mayor
ATTEST:
/f
Charlene Friedges, City Clerk'