Res 2016- 23 Regarding an Ord Granting Cable Franchise to CenturyLinkCITY OF MENDOTA HEIGHTS, MINNESOTA
RESOLUTION NO. 2016-23
Regarding an Ordinance Granting a Competitive Cable Franchise
to Qwest Broadband Services, Inc., d/b/a CenturyLink
RECITALS:
WHEREAS, the City of Mendota Heights, Minnesota makes the following
FINDINGS OF FACT:
1. In February 2015, Qwest Broadband Services, Inc., d/b/a CenturyLink, Inc.
("CenturyLink") requested that the City of Mendota Heights, Minnesota ("City")
initiate proceedings to consider awarding it a franchise to provide cable
communications services in the City ("Service Territory").
2. Comcast of St. Paul, Inc. ("Comcast") holds a non-exclusive cable communications
franchise for the Service Territory ("Comcast Franchise").
3. The Comcast Franchise, which the City last renewed on or about April 1, 2000, is
currently the only cable communications franchise for the Service Territory.
4. The monopoly held by a sole cable communication provider in a particular market
is a barrier to entry for additional providers, which does not have a captive market
but must instead "win" every subscriber.'
5. 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
6. On March 8, 2015 and March 15, 2015, the Northern Dakota County Cable
Communications Commission ("Commission"), which the City is a member of,
published a Notice of Intent to Franchise a Cable Communications System
("Notice") in the South-West Review, a newspaper of general circulation in the
Service Territory.
7. The Notice indicated that the Commission was soliciting franchise applications and
provided information regarding the application process, including that applications
were required to be submitted on or before March 31, 2015 and that a public
hearing to hear proposals from applicants would be held by the Commission on
April 15, 2015 at 7:00 PM.
1 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 ¶ 138 (Rel. Mar. 5, 2007) ("621 Order").
2 Id at IN 2, 50.
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8. The Commission also mailed copies of the Notice and application materials to
CenturyLink and Comcast.3
9. On March 31, 2015, the Commission received an application from CenturyLink
(the "CenturyLink Application"). The Commission did not receive any other
applications.
10. As provided by the Notice, on April 15, 2015 the Commission held a public hearing
during the Commission's regularly scheduled meeting to consider CenturyLink's
application and qualifications.
11. On April 15, 2015, Comcast submitted a letter to the City setting forth its position
regarding the CenturyLink Application ("Comcast Letter").4
12. The Comcast Letter expresses concern about CenturyLink's proposal and how
CenturyLink will be held to particular provisions of the existing Comcast
Franchise.5
13. The Comcast Letter also summarizes Comcast's position regarding build -out
requirements and other proposed terms related to competition in the cable industry.6
14. During the April 15, 2015 hearing, CenturyLink presented its proposal and all other
interested parties were provided an opportunity to speak and present information to
the Commission regarding the CenturyLink Application.
15. Following the hearing, the law firm of Moss & Barnett, a Professional Association
prepared a report, dated May 29, 2015 ("Franchise Report"), reviewing and
analyzing the applicable franchising procedures, the CenturyLink Application and
other information provided by CenturyLink in connection with the April 15, 2015
public hearing.
16. The Franchise Report identifies and discusses federal and state legal requirements
relevant to the City's consideration of the CenturyLink Application, including laws
pertaining to franchising procedures and competition between providers.8
3 Notice by the Northern Dakota County Cable Communications Commission of Its Intent to Consider An
Application for a Franchise and Request for Proposals - Official Application Form.
4See, April 15, 2015 letter from Emmett V. Coleman to Jodie Miller, Executive Director for the Commission,
regarding CenturyLink Video Franchise Application.
5 Id. at 2.
6 I at 1-2.
7 Report to the Northern Dakota County Cable Communications Commission Regarding Qwest Broadband
Services, Inc. d/b/a/ CenturyLink — Proposal for a Cable Communication Franchise, May 29, 2015.
8 Franchise Report at 2-9.
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17. The Franchise Report also analyzes information provided by CenturyLink to
establish its qualifications to operate a cable communications franchise in the
Service Territory.9
18. At its meeting on June 3, 2015, the Commission considered the Franchise Report,
along with the information and documentation it had received regarding the
CenturyLink Application, and adopted a resolution finding and concluding that the
CenturyLink Application complied with the requirements of Minn. Stat. § 238.081
and that CenturyLink is legally, technically, and financially qualified to operate a
cable communications system within the Service Territory.
19. As a result of its determination that CenturyLink complied with all application
requirements and is a qualified applicant, the Commission authorized Commission
staff to negotiate with CenturyLink to attempt to reach mutually acceptable terms
for such a franchise.
20. On February 23, 2016 the Commission considered and recommended an ordinance
granting a cable communications franchise to CenturyLink and authorized
Commission staff to provide the recommended franchise to the Commission's
Member Cities for consideration and action.
21. In Minnesota, both State and federal law govern the terms and conditions of an
additional cable communications franchise in an already -franchised service area.10
22. The franchising authority may not grant an exclusive franchise or unreasonably
refuse to award an additional competitive franchise."
23. The franchising authority must allow an applicant reasonable time to become
capable of providing cable service to all households in the service area.12
24. 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.13
25. The additional franchise must also include, among other things, "a schedule
showing ... that the construction throughout the authorized franchise area must be
substantially completed within five years of the granting of the franchise."14
26. In order to ensure that any additional franchise granted to CenturyLink would
contain substantially similar service area, PEG access requirements, and franchise
9Id. at 11-12.
10 See 47 U.S.C. § 541(a)(1); Minn. Stat. §§ 238.08, .084; see also Franchise Report at 2-8.
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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fees to the Comcast Franchise, the Commission used the Comcast Franchise as the
base document for its negotiations.
27. On February 28, 2016 the City Council gave notice that it intended to introduce an
ordinance granting a cable communications franchise to CenturyLink.
28. Copies of the CenturyLink Franchise were made available to the public on
February 29, 2016, and to Comcast, on February 26, 2016.
29. On March 15, 2016, the City Council introduced Ordinance No. 493 an Ordinance
of the City of Mendota Heights, Minnesota Granting a Cable Communications
Franchise to Qwest Broadband Services, Inc. d/b/a CenturyLink ("CenturyLink
Franchise").
30. The CenturyLink Franchise encompasses the same Service Territory encompassed
by the Comcast Franchise.15
31. The franchise fee percentage required by the CenturyLink Franchise is identical to
that required by the Comcast Franchise.16
32. The PEG access requirements in the CenturyLink Franchise mandate certain
obligations, such as HD channel capacity for all PEG channels that go beyond the
commitments made in the Comcast franchise.17
33. The City recognizes that CenturyLink, which currently offers no cable
communications services in the Service Territory, cannot justify a large initial
deployment because it "realistically cannot count on acquiring a share of the market
similar to Comcast's share ... [and] must begin offering service within a smaller
area to determine whether it can reasonably ensure a return on its investment before
expanding."18
34. The CenturyLink Franchise therefore requires CenturyLink's initial deployment to
be capable of serving at least fifteen percent (15%) of the living units in the Service
Territory within two (2) years. CenturyLink is further required to commit a
significant portion of its initial investment to areas below the median income within
the City.19
35. The CenturyLink Franchise permits the City to monitor CenturyLink's progress
and compliance with build -out requirements via quarterly meeting and accelerates
the build -out schedule if CenturyLink has market success, with the goal and
15 CenturyLink Franchise §2.7; Comcast Franchise § 2.8.
16 CenturyLink Franchise §8.3; Comcast Franchise § 8.3.
17 CenturyLink Franchise §6 and Exhibit A; Comcast Franchise § 6 and Exhibit B.
18 621 Order at ¶ 35.
19 CenturyLink Franchise §2.8.
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expectation that build -out will be substantially complete before the CenturyLink
Franchise's five (5) year term expires.20
36. During its regularly scheduled meeting on March 15, 2016, the City Council held a
public hearing at which all interested parties are provided an opportunity to speak
and present information regarding the proposed CenturyLink 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 Mendota Heights, 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 CenturyLink for the Service Territory.
3. The City may not unreasonably refuse to award a competitive cable
communications franchise to CenturyLink.
4. The City and its residents will benefit from adoption of the CenturyLink 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.
5. CenturyLink is legally, technically, and financially qualified to operate a cable
communications system in the Service Territory and has complied with all
application requirements.
6. The City has complied with all franchise application requirements imposed by State
and federal law, including those identified herein or in the Franchise Report.
7. The terms and conditions of the CenturyLink Franchise pertaining to service area,
a PEG access requirement, and franchise fees are not more favorable or less
burdensome than the corollary terms of the Comcast Franchise.
8. The CenturyLink Franchise's initial deployment requirement of fifteen percent
(15%) within two (2) years and five (5) year timeline for substantially completing
build -out provides a reasonable period of time for CenturyLink to become capable
of reaching full deployment and is therefore consistent with both State and federal
law.
20 CenturyLink Franchise §2.9- 2.10.
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9. The Ordinance Granting a Cable Communications Franchise for Qwest Broadband
Services, Inc., d/b/a CenturyLink 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).
PASSED AND ADOPTED in regular session of the City Council of the City of Mendota
Heights, Minnesota this 15th day of March, 2016.
ATTEST
City Clerk
Lorri Smith
Mayor of the City of Mendota Heights, Minnesota
Sandra Krebsbach
Printed Name
Printed Name
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