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Memo- Cable Franchise RenewalDepartment of Administration Memorandum To: Hopkins City Council From: Jim Genellie Date: January 18, 2011 Subject: Cable Franchise Renewal The current cable franchise with Comcast expires on December 31, 2011. The five cities that form the Southwest Suburban Cable Commission (SWSCC) have begun negotiations on a new franchise with Comcast. A cable franchise is required for a cable company to. operate in Minnesota. The franchise deals with subjects such as construction standards and maintenance; system performance; customer service; and public, education and government (PEG) access. The franchise does not give cities the ability to control rates or channel alignments. The SWSCC has a proposed a new franchise agreement very similar to the existing franchise. It would preserve franchise fees, which are payments to the cities for the use of the right-of-way. It would also preserve the PEG access channels, which are currently channels 14, 15, 16, and 17. The proposed franchise agreement would reallocate PEG access fees away from supporting the Eden Prairie studio. The access fees would instead be directed to the five cities. The cities in turn would have to use this money to support communication activities, which could include equipment purchases and upgrades. Hopkins, for example, could use this money to automate playback on the government channel. Comcast would no longer have to schedule our meeting playbacks. Other digital programming could also be added. In addition, these funds could support video streaming of our public meetings on our website. The SWSCC commissioned a report on PEG activities. I have attached the Executive Summary. The report indicates that the current studio, which is located in Eden Prairie, is not being used very much. While there are a couple of shows that originate from there, more and more PEG programming is done with inexpensive digital equipment. The report also indicated that the five cities have equipment needs which need to be addressed if the cities are to continue to originate programming. However, the draft franchise also has a provision to ensure that the public can continue to submit programming for the public access channel. The report envisions that in the future this would be done electronically. Comcast has not yet responded to the Commission's proposal. \Franchise Renewal.doc EXECUTIVE SUMMARY Consultant Holly Hansen performed a needs assessment (Assessment) regarding the needs and interests of the Southwest Cable Communications Commission (SW Commission) related to local Public, Educational and Governmental (PEG) access programming and to assist the SW Commission in preparing for its franchise renewal with Comcast Communications (Comcast). During this Assessment, the consultant met with the city managers, assistant city mangers, communications managers, and media staff from the five SW Commission member cities - Eden Prairie, Edina, Hopkins, Minnetonka, and Richfield. The consultant also interviewed communications managers, media staff, and one superintendent from the six SW school districts - Eden Prairie, Edina, Hopkins, Minnetonka, Richfield, and Wayzata. An interview with Comcast's studio manager and the Director of Government Affairs was conducted in conjunction with a studio/facility review of Comcast's Eden Prairie access facility. All entities interviewed completed questionnaires and provided additional information and documents including programming information and statistics, policies, budgets, and equipment inventories. A review of the existing SW franchise PEG requirements was also conducted; no franchise compliance issues were noted concerning PEG. The Assessment focused on the SW PEG channels, equipment, facilities, and the use and cost of public access. Additional information was gathered regarding other franchise issues, including complimentary drops to public buildings, subscriber -related issues such as cost for cable service, and city web sites. No analysis was performed on these non -PEG issues as this was beyond the scope of service for which Consultant was retained. Overview of PEG Needs and Interests Based on the work performed the following needs and interests where ascertained for the SW Commission: • Maintain existing Public, Educational, and Government access channels.I o Options for continuing public access vary from maintaining the existing studio in Eden Prairie, relocating it, or eliminating the studio. • Enhance playback services for programs on Public Channel 15. • Enhance playback services for Educational Channels 14 and 17. • Ensure that cable subscribers are receiving a fair value for the PEG fee they are paying. ' The City of Minnetonka expressed concern that internet based video content may displace the need for some or all of the PEG channels over time and the City should have the flexibility to adjust its PEG channel franchise obligations based upon the needs of the City over the life of the next franchise. This may include the option to migrate PEG programming to web -based delivery in lieu of traditional PEG cable channels. This may or may not impact capital funding obligations associated with the provision of PEG programming, particularly for governmental and public access programming. PEG Needs Assessment — SW Cable Communications Commission — May 2,,5, 2010 Holly Hansen Consulting 2 • Utilize new cable technologies such as HD and Video on Demand for Government and Educational Access. • Allow the school districts to participate in developing policies governing the use and programming of the Educational Channels. • Ensure that schools continue to receive complimentary cable services and not be required to purchase digital television sets, converter boxes, or other devices in order to receive the cable services they are now receiving. Public Access Programming During the interviews, the SW Commission member cities voiced concerns about the use, cost, and effectiveness of the Eden Prairie access facility. At the Eden Prairie public access facility Comcast provides: 1) facilities and equipment, 2) training, and 3) playback of programming. In 2009 Comcast trained 15 people and 13 producers made 164 programs for Channel 15. There was an average of one equipment check out per week and the editing equipment and studio were used an average of 13 hours per week. Based on this information, it is apparent that the Eden Prairie access facility is underutilized. However, it should be noted that there is an interest in providing outside programming for Public Channel 15. The number of outside programs sponsored by local residents (954 programs in 2009) has been steadily increasing as the amount of locally produced programming has been decreasing (164 in 2009). Educational Access Programming Comcast also provides playback services for Educational Channels 14 and 17. The six school districts (Eden Prairie, Edina, Hopkins, Minnetonka, Richfield, and Wayzata) have expressed a need for this service to continue. The Educational Channels and the Public channel are all underutilized in terms of hours of programming per day. This is due to Comcast's rules governing access to the Educational and Public access channels, which state "Playback hours are 3 pm to 11 pm Monday — Friday and 10 am to 11 pm on weekends."Z The Minnetonka and Wayzata school districts have verbally asked for more time on the Educational access channels but have not received it. Under the existing franchises, the Educational channels exist for the benefit of the educational institutions and these institutions should have a voice in how they are operated. In other systems, educational institutions often operate their own channels, much as the SW Commission member cities do with their government channels. In fact, the Wayzata school district operates an educational channel/program service called Ed's TV for a consortium of school districts on a 24x7 in the NW Suburbs cable system which is also served by Comcast. PEG Subscriber Fee Comcast collects $0.25 per subscriber per month fee to support the PEG services described above (Eden Prairie access facility and equipment access, training, and Z COMCAST TWIN CITIES REGION RULES GOVERNING ACCESS TO THE SOUTHWEST COMMUNITY TELEVISION EDUCATIONAL ACCESS CHANNELS, p.3 COMCAST TWIN CITIES REGION RULES GOVERNING ACCESS TO THE SOUTHWEST COMMUNITY TELEVISION PUBLIC ACCESS CHANNEL p.3 PEG Needs Assessment — SW Cable Communications Commission — May 2,, 2010 Holly Hansen Consulting playback). According to public records, Comcast will spend approximately $200,000 in FY 2010 on PEG. Based on the usage numbers above, public access in its current state is underutilized and subscribers are not receiving sufficient value for the fee they are paying. Although there is a limited amount of local programming being produced, local residents and organizations are bringing in pre -produced (outside) programming and there continues to be a need for a Public access channel. PEG Needs Assessment — SW Cable Communications Commission —May 25, 2010 Holly Hansen Consulting