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Item 6 Staff Report Adopt Resoltion Extending the Cable Television Franchise Agreement with At&T Broadband from March 31, 2003 to March 31, 2004,, Revised: 2/10/03 2:12 pm COUNCIL AGENDA REPORT DATE: February 18, 2003 TO: MAYOR AND TOWN COUNCIL FROM: DEBRA J. FIGONE, TOWN MANAGER SUBJECT: MEETING DATE: 2/18/03 ITEM NO. ADOPT RESOLUTION EXTENDING THE CABLE TELEVISION FRANCHISE AGREEMENT WITH AT&T BROADBAND FROM MARCH 31, 2003 to MARCH 31, 2004 RECOMMENDATION: Adopt resolution (Attachment No. 1) extending its cable television franchise agreement with AT&T Broadband from March 31, 2003 to March 31, 2004. BACKGROUND: On March 31, 2003, the Town's cable television franchise agreement with AT&T will expire. As a result of the various transfers and extensions (as described in Attachment No. 2), the Town has never conducted a cable franchise renewal proceeding. The Town's 2003 cable television renewal process will be the Town's first official cable renewal. Over the past three years, the Town has been involved in several significant cable -related activities, some of which have slowed the cable television franchise renewal process. Below is a chronological summary of those activities. In January 1999, the Tele-Communications Incorporation (TCI) transferred its cable television agreement to AT&T Broadband (AT&T). The following year, (September 2001) AT&T initiated a discussion with the Town regarding an extension of its franchise agreement. The Town entered into negotiations with AT&T to extend the franchise agreement in exchange for a video production system that would be used to broadcast Town Council meetings. After four months of negotiations, the Town and AT&T were not able to reach a mutual agreement. PREPARED BY: JA, ADMINISTRATIVE ANALYST N MGRUHaruyama\Staff Reports \ATTextension.wpd _Reviewed by: P5 Assistant Town Manager Clf' Attorney finance Reformatted: 6/21/02 PAGE 2 SUBJECT: ADOPT RESOLUTION EXTENDING THE CABLE TELEVISION FRANCHISE AGREEMENT WITH AT&T BROADBAND FROM MARCH 31. 2003 to MARCH 31, 2004 February 18, 2003 In February 2002, the Town. in preparation of the cable television franchise renewal process, entered into an agreement with Miller and Van Eaton to provide related technical and legal services. Later in the Spring of 2002, AT&T submitted an application to the Town requesting approval of its proposed merger with Comcast Corporation. The change of control/merger process was both technical and time consuming, and was approved by Council in July 2002. During this time, activities related to the renewal process were put on hold until the Town understood the details of the merger and its potential impact on the Town and community. Upon completion and approval of the merger process, the Town re -initiated activities related to the franchise renewal process which are discussed in more detail below. DISCUSSION: The cable television franchise renewal process presents local government with an opportunity to enhance its public communications infrastructure and to advance the quality of life for the community. The outcome of the renewal process not only helps to identify and meet a community's unique cable -related needs, but can potentially influence and improve future communication abilities via voice, video and data. As indicated in the attached February 2002 staff report, the cable television franchise renewal process can result in many positive benefits through the needs assessment process. This process is designed to allow the public and franchising authority an opportunity to identify future cable -related community needs and interests and review the past performance of the cable operator. The ascertainment of these needs can be accomplished through a variety of tools, including public hearings, surveys, focus groups or interviews. In Fall 2002, as a part of the Town's contract with Miller and Van Eaton, a statistically valid telephone survey and several cable -related focus group workshops were conducted. After completing the first round of focus groups, it was recommended by the consultant that an additional series be held to further enhance the level of feedback received. It is important to note that the outcomes achieved in renewal negotiations are influenced by the depth and breath of community participation during the needs assessment process. Given the importance of this survey data, staff concurs with the consultant's recommendation and has scheduled additional focus groups for late February 2003. Staff will again explore all outreach methods to encourage community participation. An extension of the Town's existing cable television franchise agreement with AT&T is necessary to provide adequate time to complete the needs assessment process, which includes analyzing the telephone survey results; developing a draft franchise agreement; and preparing for negotiation discussions. It is recommended that the Council grant a12-month extension of the franchise agreement. If Council approves the extension, it would become effective March 31, 2003 and expire on March 31, 2004. Given that cable franchise renewal negotiations are highly technical and labor intensive, it is not uncommon for a town, city, and county to grant an extension of the franchise. As discussed in the attached staff report, the time frame for the renewal process varies, and may take as long as three years. PAGE 3 SUBJECT: ADOPT RESOLUTION EXTENDING THE CABLE TELEVISION FRANCHISE AGREEMENT WITH AT&T BROADBAND FROM MARCH 31, 2003 to MARCH 31, 2004 February 18, 2003 While staff will make every effort to conduct its negotiations efficiently, it is possible that the process could become prolonged, requiring an additional extension of the franchise agreement. Should this occur, staff will recommend that Council consider adopting another resolution extending the cable television franchise agreement. FISCAL IMPACT: There is no direct fiscal impact to the Town if an extension of the cable television franchise agreement is granted. The current year budget allocation, including carry-overs, amounts to $100,000 for the franchise agreement renewal project. However, given the technical and lengthy nature of the renewal process and potential for protracted negotiations, additional funding may be required. As the renewal project progresses, staff will evaluate the need for supplemental funding and address it during the FY 2003-2004 budget process, if necessary. CONCLUSION: It is recommended that the Council adopt the attached resolution extending the Town's cable television franchise agreement with AT&T for a period of 12 months. This extension would provide adequate time for the Town and its consultant to complete the cable -related needs assessment process and prepare for negotiations with AT&T. Attachments: Attachment No. 1: Attachment No. 2: Distribution: Resolution (Agreement is Exhibit A to the resolution) February 19, 2002 Staff Report Regarding Cable Television Renewal Process Eddie Garcia, Director Government Affairs Manager, AT&T Broadband & Internet Services 1900 South 10th St., San Jose, CA 95112 RESOLUTION NO. RESOLUTION OF THE TOWN OF LOS GATOS APPROVING AN AMENDMENT EXTENDING THE CABLE TELEVISION FRANCHISE AGREEMENT WITH AT&T BROADBAND FROM MARCH 31, 2003 to MARCH 31, 2004 WHEREAS, cable television franchise renewal process serves as an opportunity to enhance cable communications services to the community; and WHEREAS, cable television franchise renewal negotiations are highly technical, labor intensive, and require special expertise due to the complex laws that govern the renewal process; and WHEREAS, the Town of Los Gatos Cable Television Franchise Agreement with AT&T Broadband will expire on March 31, 2003; and WHEREAS, an extension of the cable television franchise agreement is necessary to allow time to complete the cable -related needs assessment process and prepare for negotiations with AT&T Broadband. RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa Clara, State of California, that the Town of Los Gatos approves an amendment extending the Cable Television Franchise Agreement with AT&T Broadband from March 3 I, 2003 to March 31, 2004 (Exhibit A) and authorizes the Town Manager to execute the amendment. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 18t day of February, 2003, by the following vote: COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAIN: SIGNED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTACHMENT 1 N:\MGR\JHaruyama\Staff Reports\cableresolutionextension.wpd AMENDMENT TO FRANCHISE ASSUMPTION AGREEMENT This Agreement is made and entered into as of the this day of , 2003 by and between the Town of Los Gatos, a municipal corporation of the State of California (hereinafter "Town") and TCI of Cleveland, Inc., a Tennessee corporation ("Grantee"), and TCI Cablevision of California, Inc., a California corporation as operator -in -fact ("Operator"), collectively doings business as AT&T Cable Services ("AT&T"). This Agreement amends that certain Franchise Assumption Agreement entered into March 20, 1996 between Town, Grantee, Operator, and Brenmor Cable Partners, L.P., a Califomia limited Partnership ("Original Assumption Agreement"). RECITALS A. The Original Assumption Agreement provided for franchise service up to and including March 31, 2003. Town and AT&T desire to extend the Original Assumption Agreement for a period of 12- months, up to and including March 31, 2004. B. AT&T represents and affirms that they are willing to perform the desired work pursuant to the Original Assumption Agreement. AGREEMENT 1. In consideration of the promises, terms and conditions of the Original Assumption Agreement, the parties agree to extend the Original Assumption Agreement up to and including March 31, 2004. 2. All other terms and conditions of the Original Assumption Agreement, and Amendment to Franchise Assumption Agreement dated March 23, 2000 will remain in full force and effect. IN WITNESS WHEREOF, the Town and AT&T Cable Services have executed this Agreement as of the date indicated on page one. Town of Los Gatos, by: AT&T, by: Debra J. Figone, Town Manager (Signature) Town of Los Gatos (Print Name) ATTEST: Clerk of the Town of Los Gatos, California Approved as to Form: Marian V. Cosgrove, Town Clerk Orry P. Korb, Town Attorney N. WTYIAT&T-Amend. wpd EXHIBIT A DATE: TO: FROM: SUBJECT: MEETING DATE: 2/19/02 ITEM NO. , COUNCIL AGENDA REPORT February 19, 2002 MAYOR AND TOWN COUNCIL DEBRA FIGONE, TOWN MANAGER .f CABLE TELEVISION FRANCHISE RENEWAL NEGOTIATION PROCESS A. CONSIDER REPORT ON CABLE TELEVISION FRANCHISE RENEWAL NEGOTIATION PROCESS B. CONSIDER ADOPTING A RESOLUTION AUTHORIZING THE TOWN MANAGER TO ENTER INTO AND EXECUTE A CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES WITH MILLER AND VAN EATON. RECOMMENDATION: 1. Consider report on cable television franchise renewal negotiation process. 2. Consider adopting a resolution authorizing Town Manager to enter into and execute a contract for cable television franchise renewal consulting services with Miller and Van Eaton. BACKGROUND: The Los Gatos cable system was originally constructed in 1969, and was comprised of three (3) separate franchises granted by the Town of Los Gatos, the City of Monte Sereno, and the County of Santa Clara. The operator of the Los Gatos cable system was Westinghouse Broadcasting and Cable, Inc. (Group W), a subsidiary of Westinghouse Electric Corporation. In 1983, Group W sold its system to Hearst Cablevision (Hearst). On March 31, 1983, the Town approved the transfer of the franchise from Group W to Hearst, and simultaneously granted an extension of the franchise for ten (10) years from the effective date of the transfer, thereby extending the franchise to March 31, 1993. In January 1990, Brenmor Cable Partners, L.P. (Brenmor) purchased Hearst. The Town approved the transfer of the franchise from Hearst to Brenmor, and simultaneously granted another ten (10) year extension of the franchise, through March 31, 2003. Brenmor subsequently transferred the system to Tele-Communications Incorporation (TCI), and in 1999, TCI transferred the franchise to PREPARED BY: JENNY HARUYAMA, ADMINISTRATIVE ANALYST't` J/I i N \MGRVHaruyhina\Staff Rerrts'•ca lets wpd Reviewed by: t L.-Attorney 4 Finance Revised: 2/14/02 2:18 pm Reformatted: 7/14/99 ATTACHMENT 2 PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORIZE TOWN MANAGER TO ENTER INTO AND EXECUTE CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES February 19, 2002 If the cable operator does not have the financial, legal and technical ability to provide the services, facilities and equipment as set forth in the cable operator's proposal. If the cable operator's proposal is not reasonable in meeting the future cable -related community needs and interests. If the franchise authority denies the renewal, the cable operator must file an appeal in federal or state court within one hundred twenty (120) days of the notice of the decision. The informal process, which is how most franchises are renewed, can be conducted at any time. Under this process, the franchising authority does not lose its ability to deny the proposed renewal. Once a successful franchise renewal has been negotiated, the franchising authority must notify the public and provide an opportunity to comment on the renewal before it is finally granted. The informal and formal processes can and should work in tandem. Under the informal process, a franchise authority can choose to incorporate all, some or none of the requirements under the formal process. After consulting with a reputable cable television legal firm, staff recommends that the Town proceed with the informal renewal process, which is how most franchises are renewed. This process should include an assessment of the community's needs and an examination of the cable operator's past performance. By taking these steps, the Town will be able to obtain the information it needs to be successful at the negotiating table, and will be in a position to comply with formal proceedings if bargaining fails. Duration of Cable Television Franchise Renewal Negotiations Cable television franchise renewal negotiations are highly technical, labor intensive, and require special expertise due to the complex laws that govern the process and the many opportunities to enhance services to the community. Understanding this, the Town provided funding in the FY 2001- 2002 Operating Budget to support the upcoming negotiations. As the Council is aware, during the months of August 2001-November 2001, Town staff explored an opportunity to extend its cable television franchise agreement with AT&T in exchange for a video production system. Unfortunately, after four months of discussion, the Town and AT&T were unable to come to an agreement regarding the terms of the proposed extension. As a result, the Town is now prepared to enter into official cable television franchise renewal negotiations with AT&T. The cable television franchise renewal process can take between twelve (12) months to three (3) years to complete. However, the average cable television franchise renewal process is eighteen (18) months. Given the Town's time frame to conduct and complete its cable television franchise renewal process, staff, with the assistance of a cable television legal firm, has developed an ambitious time line (Attachment 1) to complete the renewal process within twelve (12) months. PAGE 5 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORIZE TOWN MANAGER TO ENTER INTO AND EXECUTE CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES February l9, 2002 upgraded system which provides cable modem internet service. During the renewal process. staff will endeavor to work with AT&T to ensure future upgrades of Los Gatos system, keeping it technologically viable. In addition, franchise duration terms, customer service standards, channel capacity requirements, franchise fee requirements, and procedures for reviewing cable operator performance can be established during the renewal process. It is important to underscore that the cable operator cannot "pass through" all of the additional and/or enhanced service requests as a result of the renewal process. Cable operators are only entitled to pass through the increase in its external costs to subscribers, and although some franchise requirements, such as PEG (Public, Educational and Government) access and I -Nets are considered external costs, not all are. All renewal franchise requirements do not necessarily result in rate increases, depending in part on what was required under the prior franchise. In several recent renewals with other cities, for example, operators have agreed that only a small part of the total renewal franchise requirements are eligible for rate pass -through under Federal Communications Commission (FCC) rules. Cable Television Franchise Renewal Limitations However, there are some things that a municipality cannot require through the cable television franchise renewal process. Examples of these restrictions include the requirement of specific television programs or type of transmission technologies used by the cable operator. Additionally, franchise authorities cannot mandate service rates or franchise fee percentage requirements, other than what is required by the federal government. The franchise fee is currently 5%. It is anticipated that the Town will receive approximately $245,000 annually in franchise fee revenue for FY 2002- 2003. Cable Television Franchise Renewal Legal and Consulting Services Cable Television Franchise Renewal Legal and Consulting Contract To negotiate and bring forward a comprehensive and effective cable television franchise agreement for Council consideration, the Town will need to retain a law firm that specializes in cable television/telecommunication issues. The Town Manager's Office has identified Miller and Van Eaton as a candidate to handle the Town's cable -related legal and consulting services as described above. Miller and Van Eaton has a depth of expertise representing municipalities on telecommunications issues, including cable television franchise renewals and ordinances, public right-of-way (POW) leases, cellular towers, I -Nets and enforcement matters. Present and past clients of Miller and Van Eaton include the cities of Santa Clara, Mountain View, Campbell, Los Altos, Oakland, Union City, Palo Alto, Alameda and San Jose. PAGE 7 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORIZE TOWN MANAGER TO ENTER INTO AND EXECUTE CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES February 19, 2002 FISCAL IMPACT: Funding in the amount of $100,000 has been included in the FY 2001-2002 Operating Budget t'or the cable television franchise renewal process. Funding for additional expenses (travel, telephone, and/or additional legal research) is available through the Town Manager's Contingency Fund. and are estimated not to exceed $5,000. If unforseen issues or protracted negotiations increase the cost of the contract, additional funding is also available through the Town Manager's Contingency Fund. Attachments Attachment 1: Proposed Cable Television Franchise Renewal Time Line and Process Attachment 2: Proposal for Cable Television Franchise Legal and Consulting Services (Miller and Van Eaton) Attachment 3: Resolution Authorizing the Town Manager to Enter into and Execute a Contract for Cable Television Franchise Renewal Consulting Services with Miller and Van Eaton. Distribution List Town Department Heads George Sampson, KCAT V DRAFT CABLE TELEVISION FRANCHISE RENEWAL TIME LINE & PROCESS The Cable Television Franchise Agreement it'ith AT&T Broadband expires on .March 31. 2003. The Town now has a window of 1 year before the agreement expires. Below is a suggested time line to complete the renewal process: March 2002 Update Town Council regarding cable television renewal procedures and options. Key stakeholders should be apprized of this meeting. April - May 2002 1. Needs Assessment - Identification offuture community cable related needs and interests. Kev stakeholders, such as School Superintendents, School Principals, KCAT Board members, businesses and residents would invited to attend this meeting. Assessment may include: Focus Groups Surveys PEG Access Usage and Community Communications Planning Public Hearings 2. Review of Cable Operator's Past Performance/Technical Evaluation of Cable System. Review may include: Technical evaluation of cable plant PEG Access Review Financial Audit Customer Service and Satisfaction Survey June 2002 Consolidation of information obtained through assessment and technical review into goals for the new cable television franchise agreement. July 2002 Prepare initial draft of new franchise agreement. Update Cable Television Ordinance. �e1' IACHiMEN( I MILLER & VAN EATON L. L. P. PROPOSAL FOR CABLE FRANCHISE RENEWAL CONSULTING SERVICES THE TOWN OF LOS GATOS, CALIFORNIA Contact: William L. Lowery Miller & Van Eaton, L.L.P. 44 Montgomery Street, Suite 3085 San Francisco, CA 94104 Phone: (415) 477-3650 Fax: (415) 398-2208 wlowery@millervaneaton.com WWW.MILLERVANEATON.COM February 8, 2002 We Assist Local Government in Achieving The Full Benefits of the Communications Age for Their Communities ,11ACtilkhA 1 -2 Los Gatos, California Cellular Antennas: Miller & Van Eaton attorneys assisted the American Planning Association in preparing a national survey of local governments designed to gather information regarding cellular tower zoning issues. We have also worked with the National League of Cities, the National Association of Counties, the United States Conference of Mayors, and the National Association of Telecommunications Officers and Advisors, lobbying Congress and the FCC on municipal right-of-way and local zoning issues arising out of the Telecommunications Act of 1996. As a result, we have unmatched familiarity with these issues and how the new federal legislation might affect the authority of local governments. We have assisted several communities in Florida and Arizona with tower siting ordinances. General Telecommunications Ordinances: We have substantial experience representing cities in connection with the preparation of general telecommunications ordinances. Since the 1996 Act, we have drafted such ordinances on behalf of local municipalities in Colorado, Texas, Maryland, California, Florida and Arizona, among others. We have also assisted many communities in negotiating agreements with telecommunications carriers. FCC Regulation: We represented the leading coalitions of local govemment authorities before the FCC on open video system, cable rate regulation and franchise fee rules, helping to protect local rights -of -way and ensure that the new services will be responsive to local needs and serve in the public interest. We successfully lobbied Congress to include a provision in the 1992 Cable Act immunizing local governments from monetary damages claims for cable regulation activities. Public Rights -of -Way: We have helped create coalitions to defend local interests against FCC and Congressional initiatives that could prevent localities from regulating those who would use public rights -of -way to deliver telecommunications services. One coalition, for example, was among the lead appellants in a challenge to the FCC's video dial tone rules before the United States Court of Appeals for the District of Columbia Circuit. Telephony: The firm has expertise in telephone regulation that is unmatched by most firms that perform only municipal cable television work. Two attorneys with Miller & Van Eaton -- Mr. Miller and Mr. Malone — have been involved in all aspects of telecommunication common carrier regulation since the mid-70s. Before forming Miller & Van Eaton, they represented a range of different client interests, from large computer manufacturers to small, rural telephone companies concerned about the internal financial subsidies of telephone rates necessary to maintain service to rural areas. Today, Miller & Van Eaton continues to represent a few local and long distance telephone companies in specific regulatory matters before the FCC and the courts. Miller& Van Eaton, L.L.P. Page 2 Los Gatos, California comprehensive needs assessment usually performed during a formal renewal, however, can be quite expensive. For that reason, one of our objectives will be to minimize the expense of needs assessment unless early negotiations with the cable operator do not prove fruitful. Focus Groups on Community Needs and Interests We propose to utilize the services of The Buske Group to perform the needs assessment for the City of Los Gatos. The Buske Group, with our oversight and in coordination with City staff, will identify and review any existing information on community needs that has already been assembled. The Buske Group will then work with the City staff to identify key organizations and individuals both inside and outside the local government who may be affected by the future design and services of the cable system. The Buske Group will prepare a questionnaire for interviewing these individuals and organizations, and conduct focus groups with representative members of those groups and individuals to identify cable -related needs and interests. Such needs and interests may include potential special uses of the cable system as needed by the government, business and non-profit organizations and similar institutions. The Buske Group will also discuss additional means of gathering information and obtaining the views of the public, based on particular local circumstances. The Buske Group will specifically examine the need and interest in a public access studio and make recommendations for staffing, operating and managing such a facility. Finally, the Buske Group will visit any government and educational access facilities and assess their needs for equipment and other support, including the following: • Prepare and distribute a questionnaire to be completed by appropriate individuals regarding PEG access equipment. This questionnaire will address such items as equipment inventory and condition, funding and expenditures, original programming figures, and equipment usage. • Interview individuals responsible for the operation of any existing PEG access channels. • Conduct an on -site inspection of any existing PEG access origination sites, noting the condition of the major equipment items. • Collect and analyze all data from the questionnaire responses and interviews. • Examine any agreements between the City and the cable operator that relate to PEG access. Determine the level of compliance with the provisions of each agreement. • Evaluate the reported activity levels and original programming figures for PEG access, considering such elements as annual budget, size of the franchise area, programming formats and diversity. • Prepare and submit a report that includes a section regarding our evaluation of any current PEG access facilities, equipment and operations, and make recommendations for meeting needs going forward. Miller & Van Eaton, L.L.P. Page 4 Los Gatos, California current system. Based on information received from the operator, CTC will prepare an initial analysis of the capability of the system to meet the future cable -related needs and interests of the community, including the provision of advanced services. CTC will also make a recommendation as to whether further testing and inspection of the system are needed. Task D. Legal Assistance Regarding Cable Franchise Issues. We will provide additional legal assistance as requested by the City. Task E. Draft a new franchise agreement. Before beginning franchise negotiations we will prepare an initial draft of a franchise agreement for the City to review. This draft may not contain all of the specific terms to be negotiated, but will include the basic and general terms that typically appear in such documents. After reaching a broad understanding on the terms of renewal, we will revise the draft accordingly. The final franchise agreement would specify such matters as the term of the franchise, the operator's obligation to provide PEG access channels and financial support, any institutional network required by the City, performance guarantees, and other contractual obligations. Miller & Van Eaton, L.L.P. Page 6 Los Gatos, California 0 Second, Miller & Van Eaton will work with the negotiating team to develop a strategy for achieving the goals identified. ❑ Third, we will conduct negotiations. After each session, we will debrief the session, re- evaluate negotiating strategy, and reconsider negotiation goals as required to achieve the best results. ❑ Fourth, throughout the negotiation, other members of the Project Team will provide the technical and analytical support required to respond to proposals made by the operator. Cl Fifth, we will work with the operator to establish the principles which will provide the basis for agreement. Based on this agreement, the draft franchise agreement and ordinance will be revised to reflect the final deal. It is difficult to estimate the exact amount of time which may be required for negotiation. Negotiations with a cooperative operator can go quickly and smoothly. On the other hand, if an operator chooses to drag its feet, negotiations can be delayed interminably. The proposal to the City is based on the assumption that the City and an operator can reach an agreement in principle in three to four eight -hour negotiating sessions. The cost estimate builds in significant time for preparation outside the negotiating room — one key to efficient negotiation. Task H. Assist in preparing an updated cable television ordinance. After completing the needs assessment, our general approach is to prepare a draft cable ordinance which spells out the obligations that every cable operator must satisfy. The ordinance typically includes a procedure for submission of applications for new, renewal and transferred franchises, and states the criteria that will be used to evaluate applications. Before adoption of a new ordinance, or amendment of an existing ordinance, we typically discuss the draft with the incumbent operator(s) and resolve any potential disputes regarding ordinance language. Adopting an ordinance too soon can create serious Cable Act problems. However, the general approach does not suffice in every case. The development of a new ordinance requires proper background, careful thought and good timing. We intend to work with the City's legal counsel to provide the legal and technical assistance required to develop a good cable franchising ordinance in a timely manner, appropriate to the particular circumstances that may face the City. Task I. Engineering Assistance in Negotiations As the City proceeds with the preparation for franchise negotiations and with the negotiations themselves, CTC will assist with additional technical issues and technical negotiation support requests. Such tasks will include, for example, evaluating the operator's proposed system upgrade to determine if it will provide the desired level of functionality to subscribers. Other tasks include reviewing other draft documents, drafting technical language, and providing general technical support to Miller & Van Eaton and the City. Miller & Van Eaton, L.L.P. Page 8 Los Gatos, California Malone was Washington Vice President and an associate general counsel of GTE. Drawing on his detailed familiarity with the legislative history of the Communications Act, he has briefed appeals in the U.S. Supreme Court and seven U.S. Courts of Appeals. He has appeared in or supervised cases before over thirty state public utilities commissions. He has drafted telecommunications franchising ordinances for local governments throughout the country, based on detailed historical analyses of the applicable federal Taws and state constitutions and laws. He also represented a coalition of national educational groups in connection with the development of the school and library universal service discount program established by the 1996 Act. Mr. Malone authored National Treatment in International Transactions and Investment, a chapter of the 1991 edition of the Handbook on International Communications, published by the Federal Communications Bar Association and the chapter on Foreign Ownership of Domestic Radio Facilities in the forthcoming edition of the FCBA Handbook. He is admitted to practice in Indiana, District of Columbia, and Connecticut. He received his law degree, cum Iaude, from Harvard Law School in 1962, his A.B., cum Iaude, from Harvard College in 1958, and attended M.I.T. as a special student in electrical engineering in 1957. Frederick E. Ellrod III concentrates his practice in cable �levision issues and new communications technologies affecting local governments. He is experienced in litigation before agencies and the courts, and has represented municipalities and municipal agencies in cable television litigation, in franchise transfers and renewals, in rate regulation, in Cable Act and franchise enforcement matters, and in FCC rulemakings, including the "open video systems" proceeding. His practice is extended to include major litigation in energy, environmental law, and transportation. He participated in the drafting and analysis of contracts for communications and information systems, including government contracts, with particular reference to confidentiality issues, and in FCC licensing for communications systems. He co- authored the Environmental Law Institute's legislative history of the Superfund Amendments and Reauthorization Act of 1986, and has worked extensively with information management professionals in developing computerized support systems for litigation and legal analysis. He is admitted to practice in the District of Columbia. He received his law degree, cum Iaude, from Harvard Law School in 1986, a Ph.D. in 1979 from Boston University, and his undergraduate degree, summa cum Iaude in 1975, and master's degree, summa cum Iaude in 1976, both from Catholic University of America. He is a member of the American Bar Association and the D.C. Computer Law Forum. Matthew C. Ames specializes in cable television issues and new communications technologies affecting local governments, and in the drafting and negotiating of franchise agreements and cable television ordinances. Mr. Ames has represented a variety of public and private sector clients in FCC rulemakings, including such matters as cable rate regulation, leased access, telecommunications inside wiring, and universal service, among others. He was very active in the development of the universal service discount program for schools and libraries (or "e-rate"). He prepared comments on behalf of a national coalition of national educational groups that proved instrumental in the approach taken by the FCC in its final rules. Mr. Ames continues to advise the coalition on matters related to the implementation of the rules. He also has a broad background in corporate, commercial, and contract law, and has participated in the drafting and negotiation of cable television system purchase agreements, software licenses, television production contracts, and a wide variety of other transactions. He has also advised clients regarding the regulatory aspects of the deployment of intelligent transportation systems. Mr. Ames is fluent in Spanish and has a working knowledge of German. He is admitted to practice in Virginia and the District of Columbia. He received his law degree, cum Iaude, from Georgetown University Law Center in 1987, and his B.S. in 1980 from the College of William and Mary. Miller & Van Eaton, L.L.P. Page 10 Los Gatos, California admitted to practice in California and her application for admission to the District of Columbia Bar is currently pending. Kenneth A. Brunetti assists municipalities in cable television franchising and cable overbuilder franchising matters, as well as telecommunications right-of-way management issues. He brings to the firm's clients a specialized expertise in bankruptcy and secured transactions, critical components in establishing both enforcement and protective strategies in the new competitive telecommunications environment, which has brought a proliferation of start-up providers seeking entry to municipal rights -of - way to provide telecommunications and cable services. Prior to joining the firm, Mr. Brunetti specialized n commercial litigation and bankruptcy law. Mr. Brunetti received his law degree, magnum cum laude, from the University of California Hastings College of the Law in 1991, and his Bachelor of Arts in Psychology from University of Pennsylvania in 1986. He is admitted to practice in Califomia, and is resident in the firm's San Francisco office. REFERENCES Below is a list of communities that Miller & Van Eaton has performed similar work for, and who may be contacted on our behalf. In addition to those Cities listed below, Miller & Van Eaton is currently representing the Cities of San Jose, Oakland, Los Altos, Campbell, and a coalition of cities in Contra Costa County, in franchise renewal negotiations with AT&T, as well as several Bay Area cities in negotiations with overbuilders such as Seren and RCN for competitive cable franchises. Additional references from these cities can be provided upon request. CABLE FRANCHISE RENEWAL, TELECOMMUNICATIONS ORDINANCE, AND RATE REGULATION Montgomery County, Maryland We have recently completed a cable franchise renewal settlement for Montgomery County, and continue to work with them in the areas of franchise enforcement, rate regulation matters and development of a telecommunications ordinance. The County is a continuing client of Miller & Van Eaton; we have been assisting them for many years. Reference: Ms. Jane Lawton Cable Administrator, Montgomery County 100 Maryland Avenue Rockville, MD 20850 (240) 777-3724 CABLE FRANCHISE RENEWAL Anne Arundel County, Maryland We are currently negotiating a cable franchise renewal with Comcast in Anne Arundel County. Reference: Mr. Victor A. Sulin 2660 Riva Road P.O. Box 6675 Annapolis, MD 21401 (410) 222-4473 Miller & Van Eaton, L.L.P. Page 12 Los Gatos, California George Wood Director of Communications City of Santa Clara 1990 Walsh Avenue Santa Clara, CA 95050 (408) 984-3212 CABLE FRANCHISE RENEWAL AND TELECOMMUNICATIONS ORDINANCE City of Tucson, Arizona We have prepared a telecommunications ordinance and also represented the City in cable franchise renewal negotiations with ICI. We are also advising the City on other matters. Reference: Mr. Brad Detrick Assistant City Attorney City of Tucson 481 West Paseo Redondo Tucson, AZ 85701 (520) 791-4221 Miller & Van Eaton, L.L.P. Page 14 Los Gatos, California While employed by M,V.C.T.C. she served as the Chief Regulatory Officer for the cities and established and coordinated all aspects of public, educational and government Access operations. Ms. Buske's early years in the cable television field were spent as Director of Access and Local Origination in Dubuque, Iowa (1972-1977). Ms. Buske is widely recognized as one of the leading experts in the United States on cable policy and local cable programming issues. She has received numerous national awards including the George Stoney Award for Humanistic Communications and has an award created bearing her name, The Buske Leadership Award, which is presented annually by the Alliance for Community Media to persons providing outstanding leadership in the field of local cable programming. In 1986 she completed a book called the Access Manager's Handbook and has authored numerous articles on Access. Randy VanDalsen, Vice President of The Buske Group Randy VanDalsen has one of the longest and most successful records in the field of cable television Public Access management in the United States. He has been directly involved in the myriad of issues faced by Public Access operations on the local, regional and national levels. VanDalsen managed the "Hometown Video Festival" from 1992 - 1995 through a contract that The Buske Group received from the Alliance for Community Media. He also developed and managed the "Community Programming Index," a research project of The Buske Group from 1993 - 1999 that analyzed activities at cable Access centers throughout the United States. With over 20 years of hands-on management experience in the public Access field, VanDalsen brings a unique perspective to such issues as organizational start-up concerns, facility design, policy formation, staff and volunteer development, promotion, etc. Prior to joining The Buske Group, VanDalsen was hired in 1985 as the initial Executive Director of Access Sacramento, now widely recognized as one of the nation's most successful Public Access operations. During his six -and -a -half years there, Access Sacramento and its programming received 45 nominations as finalists and 23 First Place awards in national and regional competitions, including the prestigious "Overall Excellence in Public Access" award from the Hometown Video Festival in 1989 and 1991, and the first "Overall Commitment to Local Cable Programming" award from the Western Access Video Excellence awards competition in 1991. Before his employment with Access Sacramento, VanDalsen gained a valuable national perspective on the NFLCP staff as Director of Membership Services and Finance from 1983 - 1985. He served as a member of the NFLCP Board of Directors for three years, Treasurer for one year, Central States Regional Coordinator for one year, and a member of the original By -Laws Committee in 1978. He was a speaker at nearly every NFLCP/Alliance National Convention to date and at conferences of six different NFLCP/Alliance regions. Miller & Van Eaton, L.L.P. Page 16 Los Gatos, California Since leaving Malden, Welsh has been working as a consultant with several access centers in the United States. Her work in this area has involved board and staff development and strategic planning. Tom Wilson, Owner/Principal, Group W Communications, L.L.C. Mr. Wilson has extensive experience in the fields of public opinion polling and strategic planning for private and public corporations and organizations. He has served as Aide to the Mayor of Tucson, Arizona where his responsibilities included research, analysis and formulation of appropriate policy recommendations on all aspects of city government, economic and business development. Prior to his involvement with the City, Mr. Wilson served as Research Director for the largest full -service advertising agency in the State of Arizona. Until recently, he served as the Senior Vice President of a regional nonprofit economic development corporation where he was responsible for all marketing, business recruitment and business retention activities. Wilson has worked with The Buske Group to assess cable -related community needs, using the methodology of statistically valid subscriber surveys for Gilroy, Hollister, San Juan Bautista, San Jose, Healdsburg, Santa Barbara, Sacramento, Ventura, Lompoc, Santa Maria, Oceanside, Palo Alto, Los Altos, Union City, Monterey County, and Contra Costa County, California; Tampa, Florida; Ann Arbor, Michigan; and Montgomery County, Maryland. Below is a list of communities that The Buske Group has performed similar work for, and who may be contacted on their behalf. Mr. Fred Cohn, Deputy to the City Manager City of Monterey City Hall Monterey, CA 93940 (408) 646-3760 Scope: Cable television related needs assessment; assisted in cable franchising proceedings described above. Mr. Marc Richardson, Assistant City Manager City of Santa Rosa Post Office Box 1678 Santa Rosa, CA 95402-1678 (707) 543-3010 Scope: Cable television related needs assessment; assisted in cable franchising proceedings and rate regulation described above. Ms. Jane Lawton Montgomery County Government Office of Consumer Affairs 100 Maryland Avenue Rockville, MD 20850 (301) 217-7372 Miller & Van Eaton, L.L.P. Page 18 Los Gatos, California Columbia Telecommunications Corp. Lee Afflerbach, P.E. is a telecommunications systems engineer with over 30 years of experience serving local government clients. Mr. Afflerbach's expertise is in the field of broadband coaxial and fiber optic technology. He has been responsible for the design, testing, and planning of numerous cable and fiber optic networks for municipal government, public sector, and non-profit clients including universities. He serves as the Director of Engineering of Columbia Telecommunications Corporation (CTC) and in this position is responsible for directly overseeing all technical projects. Mr. Afflerbach is a licensed Professional Engineer in the States of Maryland and Washington, and in the District of Columbia. In addition to his responsibilities at CTC, Mr. Afflerbach has prepared training courses providing information on LAN designs, applic.:tions, and operations. The courses have been presented at George Washington University; COMNET; Amsterdam; Frankfurt; London; University of Alabama; and the National Security Agency. Broadband Cable Technology. As a consultant to local government, Mr. Afflerbach has conducted a wide range of technical studies relating to system design, implementation procedures, and field testing. Mr. Afflerbach has had thirty years of experience evaluating the design of several generations of modern broadband systems since he began his career with the MITRE Corporation in the 1970s. At CTC, Mr. Afflerbach is responsible for supporting local governments in issues relating to evaluation of cable television system operators' technical performance. He has planned and overseen numerous proof -of -performance tests for existing cable systems. He has developed computer models used to evaluate the performance of cable systems and to provide automated procedures for designing broadband coaxial networks. Under Mr. Afflerbach's direction, CTC has designed broadband local area networks for numerous municipalities, including Montgomery County, Maryland; New York City; Baltimore; Cincinnati; Tampa, Florida; and St. Paul, Minnesota. These stand-alone broadband networks employ cable technology to provide broadband voice, data, and video capability within and between municipal facilities. Mr. Afflerbach has assisted local governments in the cable franchise renewal process, providing technical expertise on state-of-the-art subscriber and fiber optic network technologies. He has presented workshops to network users on requirements analysis and system solutions. Under his direction, CTC has conducted needs assessments, prepared network designs, provided construction coordination with the cable operator, and supported network integration with existing municipal networks. Data Communications Systems. Mr. Afflerbach served as an on -site technical advisor to the West German Federal Aviation Administration in Frankfurt, West Germany, for five years in support of the ZKSD program, to develop a new high-speed flight data processing system for the Federal Republic. Support activities included feasibility studies, requirements analysis, and specification program phases. Broadcast Engineering. Mr. Afflerbach conducted feasibility analyses to support the authorization of new broadcast facilities. Activities included the study of groundwave and skywave propagation in the Miller & Van Eaton, L.L.P. Page 20 Los Gatos, California Montgomery County, MD: CTC has worked with Montgomery County since 1985 as an engineering consultant providing technical support in cable franchise enforcement and in evaluating design, construction, and system performance. CTC provides quarterly monitor testing of technical system performance standards and works closely with Cable Television Montgomery (CTM) engineers to evaluate and resolve performance deficiencies. Additionally, all FCC required proof -of -performance testing is overseen by CTC engineers. CTC also performs field inspections of in -progress construction of all aerial and underground cable to ensure that construction standards are met regarding engineering design, installation, safety, and restoration. Reports of all construction and testing activities are presented quarterly to both the Montgomery County Government and CTM. CTC also advises the County on new fiber optic design standards and emerging architectures that, as they continue to be implemented, will support new interactive services such as video -on -demand and distance learning. CTC engineering staff also worked with the cable provider's engineers to develop a practical approach to implementing the proposed system rebuild and to conduct testing of the cable system design, oversee construction of fiber, and monitor activation of fiber optic nodes. The approach approved by the County and incorporated into the franchise agreement will enable the County to monitor construction in order to ensure that the upgraded system can provide the services promised by the cable operator and will sufficiently protect the County's interests. CTC provided support to the City of Los Angeles in its evaluation of whether to require "open access" to the cable system by Internet Service Providers (ISPs) as a condition of a transfer from ICI to AT&T. CTC performed a detailed analysis of the technical circumstances under which cable systems can be opened to competing providers of Internet services. CTC prepared a detailed report for submission to the Los Angeles City Council of the means by which a cable system can be made to provide "open access This report was considered as part of the Council's analysis whether to require "open access" to the cable system in the new franchise agreement. CTC assists the City of Santa Monica in the cable franchise renewal process, reviewing submissions from the cable operator and developing plans for the Institutional Network. In Santa Clara, California, CTC provided ongoing coordination and support during negotiations with the cable operator. During controversial negotiations, CTC developed a network technology assessment to detail the effects of proposed changes by the cable operator to the subscriber cable system on I -Net capability and costs. CTC continues to support the City in relations with the cable operator. Miller & Van Eaton, L.L.P. Page 22 Los Gatos, California FEE SCHEDULE FOR PROFESSIONAL STAFF Our fees for legal services are generally based on the time we spend on the engagement. We will bill the City at our regular discounted hourly rates for municipal and non-profit clients, which currently range from $120 to $270 per hour for attorneys and $75 for paralegal time. A list of attorneys' current hourly rates is below. A review of rates is conducted at least annually and an adjustment upwards may be made. In addition, we separately charge for various expenses and other charges incurred in connection with our rendering of services. Rate 1 Rate 2 Standard Discounted Firm Municipal Matthew C. Ames 250 205 Frederick E. Ellrod III 250 205 Marci L. Frischkorn 190 155 Mitsuko R. Herrera 145 120 James R. Hobson 290 250 William L. Lowery* 210 185 William R. Malone 290 215 Nicholas P. Miller 350 270 Joseph Van Eaton 290 215 Kenneth A. Brunetti 200 175 Paralegal 75 75 *Mr. Lowery will be the primary attorney on this project, with oversight and consultation from Mr. Ames and/or Mr. Van Eaton, and assistance from Mr. Brunetti, as well as paralegal assistance, as needed. Miller & Van Eaton, L.L.P. Page 24 RESOLUTION NO. RESOLUTION OF THE TOWN OF LOS GATOS AUTHORIZING THE TOWN MANAGER TO EXECUTE A CONTRACT/AGREEMENT WITH MILLER AND VAN EATON FOR CABLE FRANCHISE RENEWAL CONSULTING SERVICES WHEREAS, on March 31, 2003 the Town of Los Gatos Cable Television Franchise Agreement with AT&T Broadband will expire; and WHEREAS, the Town of Los Gatos is prepared to enter into cable television (ranch ise renewal negotiations with AT&T Broadband; and WHEREAS, cable television franchise renewal negotiations are highly technical, Tabor intensive, and require special expertise due to the complex laws that govern the process and the many opportunities to enhance services to the community. RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa Clara, State of California, that the Town of Los Gatos enter into a contract/agreement with Miller and Van Eaton for Cable Franchise Renewal Consulting Services, and that the Town Manager is authorized, and is hereby directed, to execute said contract/agreement in the name and on behalf of the Town of Los Gatos. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the 19th day of February, 2002 by the following vote: COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAIN: SIGNED: ATTEST: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA CLERK OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTACHMEN'