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Home My WebLink About4B Reconsider Integra FranchiseO~ , PRIDI ti y ; 4646 Dakota Street S.E. u ~ ~ ' Prior Lake, MN 55372-1714 ~INIVESO~A CITY COUNCIL AGENDA REPORT MEETING DATE: June 29, 2009 AGENDA #: 4B PREPARED BY: Frank Boyles, City Manager ` Suesan Lea Pace, City Attorney AGENDA ITEM: CONSIDER APPROVAL OF A REQUEST TO RECONSIDER JUNE 15, 2009 ACTION TO ISSUE A CABLE TELEVISION FRANCHISE TO INTEGRA TELECOM DISCUSSION: Introduction The purpose of this agenda item is to allow the Council, should it choose, to reconsider the issuance of a cable TV franchise to Integra Telecom. History On June 15, 2009, the Prior Lake City Council approved the issuance of a cable television franchise to Integra Telecom. Mediacom and Integra, through their respective counsel addressed their respective positions on the applicable state and federal law pertaining to the city's authority to grant a franchise to Integra. A copy of the June 15, 2009, agenda report, letters from Mediacom and Integra, the resolution approving the franchise and franchise agreement itself are attached for City Council reference and information. Mediacom maintains that state law prohibits the city from granting Integra a franchise because Integra will not be serving, at least initially, the entire area that Mediacom is serving. Integra on the other hand maintains that federal law, cases and Orders of the Federal Communication Commission prohibits a Local Franchising Authority (city) from denying a franchise to a new entrant into the market because its proposed service area does not include the entire area the existing franchisee is serving. Mediacom relies on Minn. Stat. 238.08 Subd.1 (b) for the basis of its claim that the City violated state law by granting Integra a franchise that includes all of the service area it is licensed by the FCC to provide telecommunications service to; but not all of service area Mediacom is licensed by the FCC to provide cable communication service to. Mediacom is capable of providing cable service to the entire city. Integra initially is only capable of providing cable service to customers within its telecommunications service area. Minn. Stat. 238.08 Subd. 1 (b) provides in pertinent part: No municipality may grant an additional franchise for cable service for an area included in an existing franchise on terms and conditions more www. cityofpriorlake. com Phone. X52;447, 9800. /, ~Eax:.952.447.4~45 favorable or less burdensome than those in the existing franchise pertaining to: (1) the service area; (2) public, educational or governmental access requirements; or (3) franchise fees. (Emphasis added.) The underscored language "...for an area included in an existing franchise..." modify or carve out an exception in the statute. The area Integra will initially serve is within the area Mediacom serves, but does not encompass the entire Mediacom service area. It was not necessary for the legislature to include "for the area included in an existing franchise" if it did not intend to distinguish between the existing cable provider and the new entrant into the market. If the legislature intended that every cable provider must serve the entire area a competitor serves then the statute could have simple been written: No municipality shall grant an additional franchise for cable service [ ] on terms and conditions more favorable or less burdensome than those in the existing franchise pertaining to: (1) the area served; (2) public, educational or governmental access requirements; or (3) franchise fees. See also, Minn. Stat. 238.15 Subd. 3 which support the City's interpretation that Integra's service area does not need to correspond to Mediacom's service area. A "utility [can] provid[e] cable television service within a part of the service area of the utility...." If the language is interpreted as Mediacom would ask the Council to interpret it the Legislature would have essentially created a de facto monopoly for the first cable provider who installed their fiber optic transmission equipment in the right- of-way. While Mediacom's primary objection to the city granting a franchise to Integra appears to service area, it also has expressed concern about: (1)the bifurcated payment of the $77,000.00 equipment grant Integra is making to the city; and (2) language in Mediacom's contract that essentially requires the city not treat Integra "more favorably or less burdensome" than Mediacom is treated. None of these arguments are new to the Council. In addition to both companies positing their views of what is requires by state and federal law they each offered rational for why "public policy considerations mandated their position prevail." Current Circumstances On June 24, 2009, nine days after the Council's action approving a franchise with Integra, the city received a letter from Mediacom, through its counsel Jane Bremer, requesting that the City Council reconsider its decision of June 15, 2009, to grant a franchise to Integra Telecom as, "Mediacom believes that Prior Lake's decision to grant the Integra franchise violates applicable law and constitutes a breach of the franchise agreement between Mediacom and Prior Lake." Mediacom cites Minn. Stat. 14.64 as it's authority to request judicial review of the Council's action. The statute provides a procedure that first involves a formal request for reconsideration. The petition for reconsideration must be submitted, as it was in this case, within ten days of the Council's action. Thereafter, Mediacom has 30 days after the reconsideration issue is decided to file a writ of certiorari appeal with the Court of Appeals. Conclusion The Council should determine if it wishes to reconsider its action of June 15, 2009 granting Integra's application for a cable communications franchise. In order to inform the Council clearly on their respective positions the City Attorney and I propose the following format: (1) Each party is allotted 10 minutes to make a presentation to the City Council. (2) Mediacom would go first since it requested reconsideration. (3) At the conclusion of the 10 minute presentations each company will have 5 minutes for rebuttal of clarification. (4) The parties must address the Council and not each other. (5) The City Council may address questions to either side, at the conclusion of their presentations. ISSUES: Prior Lake City Council bylaws provide that the Council may reconsider previous action at its next regular meeting. Since the June 29 meeting is a special meeting and the July 6 meeting is cancelled, the next regular meeting is July 20. The Council may vote to waive its bylaws (4/5th vote) regarding the time restraint on when a matter may be reconsidered in order to reconsider the franchise item at the special June 29 meeting. The Council has received considerable input from both Mediacom and Integra during this process. Each company, through their respective counsel, Jane Bremer for Mediacom and Brian Grogan for Integra, has submitted opinion letters to support their respective client's positions. The Council has had the opportunity to consider these documents. Given this fact, the City Attorney and I did not believe that requesting additional written input From the parties would be of great assistance. The Council may feel an oral presentation by Mediacom and Integra would be helpful. You will recall that Mediacom did not make any kind of presentation at the public hearing on the franchise. We have suggested a presentation format if the Council decides to allow Mediacom and Integra to testify. Upon completion of their testimony the Council may ask specific questions of either party. The procedure we are suggesting is somewhat of an oddity, but is in the nature of a "public hearing". The fundamental issue the Council has struggled with is the inconsistency between State and Federal law and regulations regarding franchise service area. The two appear to provide dramatically different direction. The Council's decision should be made based on its application of the law, as it understands it, to the facts. There are significant public policy considerations implicated in this issue. FINANCIAL IMPACT: ALTERNATIVES: 1. Motion and second to waive the bylaws in order that this matter can be reconsidered at the June 29 Special Council meeting. 2. Motion and second to reaffirm its June 15, 2009, action; or to reverse such action including findings of fact. RECOMMENDED Alternatives 1 and 2. MOTION: