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HomeMy WebLinkAbout15 - Cable Franchise Negotiations - Statement of Minimum GoalsCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 15 April 8, 2003 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, Assistant City Manager Marilee Jackson, Public Information Officer 949/644 -3002 or x3031 or dkiff@ or mvjackson @city.newport- beach.ca.us SUBJECT: Statement of Minimum Goals - Cable Franchise Negotiations ISSUE: Should the City Council direct its cable franchise negotiator to negotiate with Adelphia and Cox based on the attached Statement of Minimum Goals? RECOMMENDATION: Adopt the Statement of Minimum Goals and direct the City's franchise negotiator, Mr. William Marticorena of Rutan and Tucker, to begin discussions with Adelphia and Cox based on the Statement. DISCUSSION: Cable television is an industry that has seen more changes in recent years than possibly any other industry. Cable providers, which have merged and swapped customers on a huge scale in recent years, can do much more than just cable TV. They can provide high -speed data (Internet), pay - per -view and movies -on- demand, telephone service, and hundreds of channel choices (all at a price). When Congress passed the Telecommunications Act of 1996, it declared the cable television industry would be subject to "effective competition" from satellite dish services. In passing this Act, Congress thus deregulated rates and as a result, rate increases have been steady, especially where the digital tier of services is offered in addition to analog channels. Cities no longer have any control over the setting of most cable rates. Newport Beach holds two "non- exclusive" franchise agreements with its two cable companies -- Adelphia (formerly Comcast) and Cox Communications. Adelphia Statement of Minimum Goals April 8, 2003 Page 2 currently serves approximately 17,000 TV subscribers and Cox has approximately 10,000 TV subscribers. These numbers do not include high -speed Internet services. The Agreements allow the cable companies access to city rights -of -way; but importantly, the cable companies themselves own and maintain the cable lines. Adelphia has about 55% of the city — from Old Corona del Mar coastward of 5th Avenue and then west of Jamboree. Cox has the remainder, including the Newport Coast, Fashion Island, Bonita Canyon and Newport North. The non - exclusivity means that any cable television service is free to obtain a Cable Television Franchise from the City and lay their own cable on top of or adjacent to existing provider -owned cable lines. The costs of digging up streets and laying fiber optic cable in most cases is significant, so this "overbuilding" is not being done except in a few cities typically where the existing provider has not upgraded to fiber optic. Satellite services are competing but in some ways are still not as attractive to viewers as cable technology. The City's two franchise agreements expire January 27, 2004. As part of the negotiation process, the City's cable franchise agreement will also be updated to conform to changes in federal and state law. As part of the franchise review and renewal process, the City Council created the Telecommunications Ad Hoc Committee on November 28, 2000 and charged it with the following tasks: A. Ordinance(s) Update — Work with City staff to update the City's Cable Television Ordinance and to create a separate Telecommunications ordinance (addressing wireless services, street encroachment fees, City infrastructure use fees, and antenna siting). B. Community Needs Assessment — Develop and conduct (with staff or expert assistance) a Community Needs Assessment. C. Public Information -- Assist with explanation and community understanding City's regulatory ability (or lack thereof) regarding Cable Television. D. Council Policy on Use of City Facilities for Telecommunications -- Develop a Council Policy relating to the manner in which the City reviews and approves requests for telecommunications infrastructure easements. The Committee (consisting of Council Members Heffernan and Nichols and two residents, Ms. Leslie Daigle and Mr. Don Boortz) has been at work on these tasks since 2000. City staff members Dave Kiff, Marilee Jackson, Robin Clauson, and Helen Wick Statement of Minimum Goals April 8, 2003 Page 3 have aided the Committee in their effort. Special Counsel Bill Marticorena of Rutan and Tucker has been with us as well. The Community Needs Assessment. This Agenda Item is a result of Task B -- the Community Needs Assessment. A Community Needs Assessment — sometimes called an Ascertainment — is a process described in federal law but not mandated. Since the City had never done an Assessment in the City's history, the Committee believed it important to complete one as the franchise agreements near expiration — especially since significant technological advancements have developed in cable and Internet operations. What is a Community Needs Assessment? A community needs assessment attempts to determine the community's satisfaction (or lack thereof) with its cable providers. It also attempts to determine the kinds of cable services that our community expects — more or less community programming, better government access, a different menu of channels. and much more. The City Council, in January 2001, authorized the hiring of The Buske Group of Sacramento (for about $38,000) to complete the Assessment. The Buske Group's proposal included: A statistically -valid telephone survey of cable subscribers Structured focus groups of cable user communities — government, education, business, community groups, and the general public Coordination of existing strategic telecommunications and communications plans of businesses, government, and schools Special meetings, including at least one public hearing before the City Council Personal interviews with key and interested people in the community; and A written final report to be presented to the Telecom Committee. The Community Needs Assessment began in May 2002. It included a series of community cable focus group workshops addressing future cable service needs in Newport Beach. The weeklong meetings focused on government agencies, education and schools, environmental organizations, businesses and business organizations, arts, culture and heritage groups, sports and recreation organizations and community and civic organizations. The Assessment also included an extensive Community Needs & Interests Questionnaire that obtained information to help identify changes that might be made to meet future cable - related needs. Additionally, during the period of April 14 -April 24, 2002, Group W Communications conducted and completed a statistically valid telephone survey of 400 completed interviews. Group W conducted the interviews utilizing a random sample from active Statement of Minimum Goals April 8, 2003 Page 4 residential telephone listings in both Adelphia and Cox subscriber areas. Cross tabulation analysis was also conducted utilizing demographic information provided by respondents. Analysis was also performed to determine significant differences in responses of Adelphia and Cox subscribers. Further, the City Council held a publicly noticed meeting in August 2002 to provide the public with another opportunity to put its comments on the public record. Finally, the Telecom Committee took public comment about the Assessment and the draft Statement of Minimum Goals at two separate public meetings (February 10, 2003 and March 31, 2003). Attachment A is the executive summary of the draft Assessment. At the February 10, 2003 meeting, representatives of the two cable providers spoke at some length as to the results of the Assessment. Their comments asserted that: • The Assessment was not an accurate reflection of the community's needs; • The Assessment did not specifically ask if subscribers were willing to pay higher cable bills to accommodate some of the identified programs in the Assessment; Portions of the questionnaire were flawed. Both companies later provided written comments that were directed to the Committee. Ms. Sue Buske of the Buske Group and Mr. Marticorena defended the Assessment and its methodology by stating that: The Assessment's questions were standard to many other questionnaires and assessments that have been supported in court; Research shows that cable companies do not have to -- nor do they in many cases -- pass on the costs of community programming to the subscriber in competitive environments. Both Buske and Marticorena emphasized that "you can compare two different cities with dramatically different community programming requirements -- with one city's system being far more expensive to maintain than another's -- and the cable bill to the subscriber is virtually identical." At its meeting in February 2003, the Committee directed Mr. Marticorena to prepare a Statement of Minimum Goals (SMG) based on his analysis of the results of the Assessment. The SMG is a document that incorporates the needs of the community into the negotiating process. The Committee approved this SMG at its meeting on March 31, 2003 (see Attachment B). Importantly, the Needs Assessment and the resulting SMG do NOT guarantee that a cable provider will fully comply with the recommendations of the Assessment. Indeed, the Assessment's main value is to provide support to the City Council with data to document the City's negotiating position. Statement of Minimum Goals April 8, 2003 Page 5 What the SMG Says. The SMG suggests that the Assessment has identified the following (selected) issues as cable - related needs of the community: Upgrading cable systems to 860 Mhz; An active Emergency Access System (EAS); An institutional broadband network ( "I- Net ") between government facilities and schools; Full compliance with the FCC's subscriber service standards; Support for Public, Educational, and Government (PEG) Access channels; A minimum of three PEG channels, with additional channels added as growth dictates; Development of and support for a Community Media Center for community programming; Cable connections for remote housing facilities serving homebound seniors; Remote- controlled cable equipment for the Council Chambers plus ongoing support and replacement capacity; Live broadcasting of City Council meetings, Planning Commission meetings, and NMUSD Board meetings; Full compliance with FCC regulations, the municipal code, and franchise fee obligations. Negotiations Come Next. If the Council approves the SMG and this Agenda Item, Mr. Marticorena will commence negotiations with Adelphia and Cox for new franchise agreements. Depending upon the complexity of the negotiations, new agreements may be ready for Council action late this year. However, because Adelphia is in bankruptcy and the City is in the unusual position of having to negotiate with two different providers, the process could take longer. Committee Action: At its meeting on Monday, March 31, 2003, the Telecommunications Ad Hoc Committee passed unanimously a recommendation that the City Council approve the attached SMG. Environmental Review: The City Council's approval of this Agenda Item does not require environmental review. Public Notice: This agenda item may be noticed according to the Ralph M. Brown Act (72 hours in advance of the public meeting at which the City Council considers the item). Funding Availability: Not applicable. Submitted by: t,,-1� � j Dave K ff Assistan ity Manager Statement of Minimum Goals April 8, 2003 Page 6 Marilee Jackson ' Public Information Officer Attachments: A-- Executive Summary of Draft Community Needs Assessment B -- Statement of Minimum Goals CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 15 April 8, 2003 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, Assistant City Manager Marilee Jackson, Public Information Officer 949/644 -3002 or x3031 or dkiff@ or mvjackson @clty.newport - beach.ca.us SUBJECT: Statement of Minimum Goals - Cable Franchise Negotiations ISSUE: Should the City Council direct its cable franchise negotiator to negotiate with Adelphia and Cox based on the attached Statement of Minimum Goals? RECOMMENDATION: Adopt the Statement of Minimum Goals and direct the City's franchise negotiator, Mr. William Marticorena of Rutan and Tucker, to begin discussions with Adelphia and Cox based on the Statement. DISCUSSION: Cable television is an industry that has seen more changes in recent years than possibly any other industry. Cable providers, which have merged and swapped customers on a huge scale in recent years, can do much more than just cable TV. They can provide high -speed data (Internet), pay - per -view and movies -on- demand, telephone service, and hundreds of channel choices (ail at a price). When Congress passed the Telecommunications Act of 1996, it declared the cable television industry would be subject to "effective competition" from satellite dish services. In passing this Act, Congress thus deregulated rates and as a result, rate increases have been steady, especially where the digital tier of services is offered in addition to analog channels. Cities no longer have any control over the setting of most cable rates. Newport Beach holds two "non- exclusive" franchise agreements with its two cable companies -- Adelphia (formerly Comcast) and Cox Communications. Adelphia Statement of Minimum Goals April 8, 2003 Page 2 currently serves approximately 17,000 TV subscribers and Cox has approximately 10,000 TV subscribers. These numbers do not include high -speed Internet services. The Agreements allow the cable companies access to city rights -of -way; but importantly, the cable companies themselves own and maintain the cable lines. Adelphia has about 55% of the city — from Old Corona del Mar coastward of 5t' Avenue and then west of Jamboree. Cox has the remainder, including the Newport Coast, Fashion Island, Bonita Canyon and Newport North. The non - exclusivity means that any cable television service is free to come into Newport Beach and lay their own cable on top of or adjacent to existing provider -owned cable lines. The costs of digging up streets and laying fiber optic cable in most cases is significant, so this "overbuilding" is not being done except in a few cities typically where the existing provider has not upgraded to fiber optic. Satellite services are competing but in some ways are still not as attractive to viewers as cable technology. The City's two franchise agreements expire January 27, 2004. Both agreements are extremely dated and contain information and requirements dating back to 1966. Federal law supersedes much of the text of the Agreements. As part of the franchise review and renewal process, the City Council created the Telecommunications Ad Hoc Committee on November 28, 2000 and charged it with the following tasks: A. Ordinance(s) Update — Work with City staff to update the City's Cable Television Ordinance and to create a separate Telecommunications ordinance (addressing wireless services, street encroachment fees, City infrastructure use fees, and antenna siting). B. Community Needs Assessment — Develop and conduct (with staff or expert assistance) a Community Needs Assessment. C. Public Information -- Assist with explanation and community understanding City's regulatory ability (or lack thereof) regarding Cable Television. D. Council Policy on Use of City Facilities for Telecommunications -- Develop a Council Policy relating to the manner in which the City reviews and approves requests for telecommunications infrastructure easements. The Committee (consisting of Council Members Heffernan and Nichols and two residents, Ms. Leslie Daigle and Mr. Don Boortz) has been at work on these tasks since 2000. City staff members Dave Kiff, Marilee Jackson, Robin Clauson, and Helen Wick have aided the Committee in their effort. Special Counsel Bill Marticorena of Rutan and Tucker has been with us as well. Statement of Minimum Goals April 8, 2003 Page 3 The Community Needs Assessment. This Agenda Item is a result of Task B -- the Community Needs Assessment. A Community Needs Assessment — sometimes called an Ascertainment — is a process described in federal law but not mandated. Since the City had never done an Assessment in the City's history, the Committee believed it important to complete one as the franchise agreements near expiration — especially since significant technological advancements have developed in cable and Internet operations. What is a Community Needs Assessment? A community needs assessment attempts to determine the community's satisfaction (or lack thereof) with its cable providers. It also attempts to determine the kinds of telecommunications and cable services that our community expects — more or less community programming, better government access, a different menu of channels, and much more. The City Council, in January 2001, authorized the hiring of The Buske Group of Sacramento (for about $38,000) to complete the Assessment. The Buske Group's proposal included: • A statistically -valid telephone survey of cable subscribers • Structured focus groups of cable user communities — government, education, business, community groups, and the general public • Coordination of existing strategic telecommunications and communications plans of businesses, government, and schools Special meetings, including at least one public hearing before the City Council Personal interviews with key and interested people in the community; and • A written final report to be presented to the Telecom Committee. The Community Needs Assessment began in May 2002. It included a series of community cable focus group workshops addressing future cable service needs in Newport Beach. The weeklong meetings focused on government agencies, education and schools, environmental organizations, businesses and business organizations, arts, culture and heritage groups, sports and recreation organizations and community and civic organizations. The Assessment also included an extensive Community Needs & Interests Questionnaire that obtained information to help identify changes that might be made to meet future cable - related needs. Additionally, during the period of April 14 -April 24, 2002, Group W Communications conducted and completed a statistically valid telephone survey of 400 completed interviews. Group W conducted the interviews utilizing a random sample from active residential telephone listings in both Adelphia and Cox subscriber areas. Cross tabulation analysis was also conducted utilizing demographic information provided by Statement of Minimum Goals April 8, 2003 Page 4 respondents. Analysis was also performed to determine significant differences in responses of Adelphia and Cox subscribers. Further, the City Council held a publicly noticed meeting in August 2002 to provide the public with another opportunity to put its comments on the public record. Finally, the Telecom Committee took public comment about the Assessment and the draft Statement of Minimum Goals at two separate public meetings (February 10, 2003 and March 31, 2003). Attachment A is the executive summary of the draft Assessment. At the February 10, 2003 meeting, representatives of the two cable providers spoke at some length as to the results of the Assessment. Their comments asserted that: • The Assessment was not an accurate reflection of the community's needs; • The Assessment did not specifically ask if subscribers were willing to pay higher cable bills to accommodate some of the identified programs in the Assessment; • Portions of the questionnaire were flawed. Both companies later provided written comments that were directed to the Committee. Ms. Sue Buske of the Buske Group and Mr. Marticorena defended the Assessment and its methodology by stating that: • The Assessment's questions were standard to many other questionnaires and assessments that have been supported in court; • Research shows that cable companies do not have to -- nor do they in many cases -- pass on the costs of community programming to the subscriber in competitive environments. Both Buske and Marticorena emphasized that "you can compare two different cities with dramatically different community programming requirements -- with one city's system being far more expensive to maintain than another's -- and the cable bill to the subscriber is virtually identical." At its meeting in February 2003, the Committee directed Mr. Marticorena to prepare a Statement of Minimum Goals (SMG) based on his analysis of the results of the Assessment. The SMG is a document that incorporates the needs of the community into the negotiating process. The Committee approved this SMG at its meeting on March 31, 2003 (see Attachment 13). Importantly, the Needs Assessment and the resulting SMG do NOT guarantee that a cable provider will fully comply with the recommendations of the Assessment. Indeed, the Assessment's main value is to arm the City Council with data enough to defend the City's negotiating position. The possibility always exists that a cable provider may disregard the wishes of the Council and the community and yet receive a new franchise anyway. Statement of Minimum Goals April 8, 2003 Page 5 What the SMG Says. The SMG suggests that the Assessment has identified the following (selected) issues as cable - related needs of the community: Upgrading cable systems to 860 Mhz; An active Emergency Access System (EAS); An institutional broadband network ( "I- Net ") between government facilities and schools; Full compliance with the FCC's subscriber service standards; • Support for Public, Educational, and Government (PEG) Access channels; • A minimum of three PEG channels, with additional channels added as growth dictates; • Development of and support for a Community Media Center for community programming; • Cable connections for remote housing facilities serving homebound seniors; • Remote - controlled cable equipment for the Council Chambers plus ongoing support and replacement capacity; • Live broadcasting of City Council meetings, Planning Commission meetings, and NMUSD Board meetings; • Full compliance with FCC regulations, the municipal code, and franchise fee obligations. Negotiations Come Next. If the Council approves the SMG and this Agenda Item, Mr. Marticorena will commence negotiations with Adelphia and Cox for new franchise agreements. Depending upon the complexity of the negotiations, new agreements may be ready for Council action late this year. Committee Action: At its meeting on Monday, March 31, 2003, the Telecommunications Ad Hoc Committee passed unanimously a recommendation that the City Council approve the attached SMG. Environmental Review: The City Council's approval of this Agenda Item does not require environmental review. Public Notice: This agenda item may be noticed according to the Ralph M. Brown Act (72 hours in advance of the public meeting at which the City Council considers the item). Funding Availability: Not applicable. Submitted by: Dav Ki Assistant City Manager Statement of Minimum Goals April 8, 2003 Page 6 Marilee Jackson Public Information Offieer Attachments: A Executive Summary of Draft Community Needs Assessment B -- Statement of Minimum Goals DRAFT EXECUTIVE SUMMARY COMMUNITY NEEDS ASSESSMENT ASCERTAINMENT AND RECOMMENDATIONS REGARDING COMMUNITY CABLE - RELATED NEEDS AND INTERESTS FOR NEWPORT BEACH, CALIFORNIA INTRODUCTION The Buske Group was retained by the City of Newport Beach to conduct a community needs assessment as a part of the cable franchise renewal process. This needs assessment was conducted to identify current and future community cable - related needs and interests. As a matter of federal law, the City's cable - related needs and interests are protected in part through the franchising process. During renewal proceedings, the City may identify basic requirements for cable system capacity, functionality, and customer service, and require the cable operator to provide facilities, equipment and channels for community use. To identify cable - related needs and interests in Newport Beach, the consultant: • conducted a telephone survey of Newport Beach cable subscribers; • conducted a series of eight community leader focus group workshops, attended by 100 people affiliated with 66 area organizations and institutions; • distributed questionnaires for completion by focus group participants; • reviewed strategic plans and other materials submitted by representatives of local government, educational institutions, and other groups; and • analyzed all data gathered and prepared this report. It is wise to use a variety of informational - gathering tools when conducting a needs assessment in any subject area. However, it is critical to use such a variety of tools when dealing with an arena driven by future - oriented technology, such as cable communications. The major findings and primary recommendations that arose from the research and analysis activities conducted by the consultant are provided in the following sections of this Executive Summary. A more detailed presentation of the analysis and recommendations is contained in the full Community Needs Assessment report and the telephone survey report. The City of Newport Beach has previously awarded cable television franchises to two companies that provide cable service within the city limits: Adelphia and Cox Communications ( "Cox "). Separate and distinct areas within the City are served by each company, and no areas have head -to -head competition. Therefore, each household is limited to the service offered by only one of these companies. Approximately 26,300 households in Newport Beach currently subscribe to one of the cable service providers. About two- thirds of the cable subscribers in Newport Beach (roughly 18,000 households) are served by the Adelphia system, with the other third (about 8,300 households) are served by Cox. This represents a market penetration rate (the number of basic subscribers divided by the number of homes passed by the cable company) of about 65% for Adelphia and about 78% for Cox. II. SUMMARY OF MAJOR FINDINGS General conclusions from responses to a questionnaire returned by focus group workshop participants: • Nearly all of focus group cable subscribers answered either "Yes" (59 %) or "Maybe" (37 %) when asked if the Adelphia or Cox cable TV service should offer more channels. Programming types that, they most often said should be more readily available included local news and activities, educational, and arts /cultural. Over two- thirds (68 %) of these respondents said " Maybe " or "Yes" when asked if they would be willing to pay extra to channels devoted to these types of programs. C DRAFT Nearly all (93 %) of the focus group questionnaire respondents said that they have a home computer, and 99% of them said that it is equipped with a modem. Just over one -third (35 %) subscribe to the high -speed Internet connection service that is available through their cable company. Twenty percent of the respondents who have a home computer and an online connection said they had used it to create a personal or business "Web site ". • Of the focus group questionnaire respondents who expressed an interest in receiving one or more special services via cable (with "movies on demand" and "two -way video teleconferencing" garnering the most interest), 44% said they would and 28% said they might be willing to pay extra for these services. • When provided a list of services which could be received through their TV or home computer, the following percentages of focus group survey respondents indicated that obtaining these services was `Important' or "Very Important" to them: * 93% - Access to Library resources (card catalog, magazine articles, etc.) * 91 % - Access to public safety information (e.g., from police /fire departments) * 89% - Access to government information (meeting agendas, reports, etc.) * 85% - Ability to vote, renew driver's license, obtain government permits from home • Nearly all of the focus group cable subscribers answered either "Yes" (84 %) or "Maybe" (14 %) when asked if they had seen or would be interested in seeing local cable TV programs about Newport Beach citizens, organizations, community events, schools, or local government. • Nearly all (92 %) of the focus group respondents who subscribe to the Cox cable service said they had watched local origination programs on "Cox Channel 3 ". Of this group, 84% said they had watched this channel between one and five times during the previous month. When asked if they had watched Newport Beach City Council meetings on PEG Access cable channel 30, nearly two- thirds (62 %) of the Cox subscriber - respondents said that they had, and half of this group said they had watched the meeting coverage more than five times this year. DRAFT • All of the focus group respondents who subscribe to the Adelphia cable service said they had watched PEG Access cable channel 3, where coverage of Newport Beach City Council meetings and other local programs can be seen. Of this group, 58% said they had watched this channel between one and five times, and another 28% said they had watched it more than 10 times during the previous month. When asked how often they had watched Newport Beach City Council meetings on cable channel 3, nearly all (93 %) of the Adelphia subscriber - respondents said that they had watched at least once, and 55% said they had watched the meeting coverage more than five times this year. • Local programming topics that focus group respondents who subscribe to either the Adelphia or Cox cable TV service most often selected as ones they were "Very Interested" or "Interested" in seeing included: • Senior citizen activities and concerns (87 %) • Information regarding public emergencies (85 %) • Programs about Newport Beach arts, history and culture (85 %) • Programs about issues facing City government (85 %) • Environmental programs (84 %) • City government meetings (83 %) • Informational programs about local organizations and clubs (80 %) • Programs about City government services (80 %) • When the Adelphia and Cox subscriber - respondents were asked to indicate what part of their monthly cable bill should be set aside to support the development of local programming, the average of all responses was $2.38. Over three - fourths of them (80 %) said two to four dollars per month. • When all of the focus group survey respondents were asked how important it was to have cable TV channels that feature programs about Newport Beach residents, organizations, events, schools, and government, 95% of them felt it was "Very Important" (74 %) or "Important' (21 %). • Nearly all (96 %) of the focus group participants said that the organizations that they are involved with would be interested in having programs about their services and activities appear on a local cable TV channel. iv 11,04_121 • A very large majority (84 %) of the focus group participants indicated an interest in learning how to make a program to show on a local cable TV channel, using equipment provided free of charge. During the brainstorming portion of the focus group sessions, participants identified the following community needs, interests, and concerns: • When asked to identify the key issues facing Newport Beach, most often mentioned were concerns relating to: * Energy /Environment (water quality, parks development, preservation of open space, litter, noise, condition of beaches, improving quality of life) Infrastructure /Traffic/Transportation (airport issues, aging infrastructure, traffic congestion, parking, regional cooperation, highway beautification) Technology /Communications (delivery of information to community, keeping up with technology, connectivity to other communities, internet safety issues) Growth (growth and development, business flight because of slow growth, overcrowding) Education and Services for Youth /Seniors (school deterioration, adolescent/ teen issues, alcohol abuse, pregnancy, keeping baby boomers' minds active) • Public Safety /Crime (homeland security, emergency safety, crime) • Economic Development/Cost of Living (business development, cost of water, tourism) • Demographic Changes (aging population, language barriers) • Health & Health Services (breast cancer and other health issues) • When asked about the key challenges faced by public sector agencies, community organizations, and schools in communicating with their constituencies, the leading areas identified were: Apathy, logistics, insufficient time, no collaboration Better oversight and planning for effective use of media Lack of effective media outlets v DRAFT • When asked how their organizations or agencies could use cable or PEG Access to communicate, dozens of program types and concepts were identified. Included among them were after school programs, beach and surf information, community forums on local issues, distance learning, emergency information, fire fighter training, health care education, local sports, community theatre, local history, parades and community events, public safety programs, and volunteer recruitment. • When asked what would make it easier for their organization or agency to use PEG Access or the cable system to communicate, the top categories of need were: Bandwidth, infrastructure & system design (e.g., I -Net to connect local institutions, interconnection, improvements in cable wiring and applications for schools, ability to transmit "live" programming from various locations in City) PEG Access Equipment, Facilities and Channels (e.g., better PEG Access equipment, a community media center, studio, PEG Access channels, a mobile production van) PEG Access Staffing, Policies & Procedures, and Funding (e.g., staff to provide assistance and expertise, responsive nonprofit PEG Access management entity with visionary leadership, adequate funding to support PEG Access) * Outreach and Promotion (e.g., establish a program schedule; promote programs via listings on program guide channel, newspaper, and other cable channels; show programs on same channel and time on both cable systems) The primary findings of the telephone survey are as follows: • Approximately 80% of the respondents who subscribe to either the Cox or Adelphia cable service rate the quality of the picture and sound, providing bills that are accurate and easy to understand and providing cable service with few or no interruptions as "good" or "very good." However, less than half of these respondents with an opinion gave a "good" or "very good" rating to the overall value of the cable TV service. • Adelphia cable subscribers are generally less satisfied than Cox Communications subscribers with many quality and services measures. Questions pertaining to the quality of customer service contacts and communications coming from the cable company appear to elicit the greatest level of disparity between cable providers. vi A DRAFT • Of the respondents who subscribe to either the Cox or Adelphia cable service and said they had telephoned their cable company during the year prior to the survey and were put on hold, only about 10% said they were put on hold for less than 30 seconds. Since such a high percentage of affected respondents said they were kept on hold for longer than 30 seconds (thereby exceeding the FCC's standards), further investigation of this matter is warranted. • A little over four out of 10 Cox subscribers report having watched both Cox Channel 3 (local origination) and PEG Access cable channel 30. Of those Cox subscribers who have watched Cox Channel 3, about 15% said they tuned in at least weekly during the past month and three - fourths said they tuned in at least once during the past month. • About eight out of 10 Adelphia subscribers report having watched PEG Access cable channel 3. Of those Adelphia subscribers who have watched cable channel 3, almost three out of 10 said they tuned in at least weekly during the past month and well over eight out of 10 said they tuned in at least once during the past month. • Just over two - thirds of all subscribers believe it is either "important" or "very important" to have local cable N channels that feature programs about Newport Beach residents, organizations, events, schools, government and community issues. When they were asked how much of their monthly cable bill should go to support such programming, the average of all responses was $1.68. • About three - fourths of all respondents in the city of Newport Beach said that they had a computer in their home. Of those respondents with a home computer, about nine out of 10 use it to access the Internet. • About two - thirds of all respondents rated the ability to have electronic access to public safety information as "important" or "very important." Electronic access from home to government information and the ability to vote, renew a license or obtain permits were both rated as "important" or "very important" by over half of them. • A little under one -third of Newport Beach subscribers rated movies on demand as "important" or `very important' and about two out of 10 rated video teleconferencing as "important" or "very important." Of those who believe these services to be important or very important, just under one -third are willing to pay extra to receive them. vii DRAFT Findings based upon review of strategic plans and other materials: • Documents provided by the City of Newport Beach included the following items of particular relevance to the Community Needs Assessment: • The City is especially concerned about and encourages its residents to get actively involved in the process of envisioning the future of the City. • Concerns voiced in the City's reports about land /water use, housing development, tourist accommodation, business growth, and use of natural resources were also raised by participants of the focus group workshops conducted by The Buske Group. • At neighborhood workshops conducted by the City, traffic congestion and safety, water quality, and preservation of neighborhood character were mentioned frequently. • City residents describe Newport Beach as first a "beach town," second a "residential town" and third as a "tourist destination." • The Newport Beach Public Library's goal is to become the preeminent library of its size in terms of community resources and state -of- the -art technological resources. It has made progress on developing funding sources, increasing the functionality of the Library website, and improving the computers available for public use, and is currently working with the City to evaluate the connection between the libraries and the City network. • The Corona Del Mar Business Improvement District is working to strengthen the "village" atmosphere of Corona Del Mar while revitalizing its business district. • The Newport -Mesa Unified School District uses technology in the classroom to enhance traditional curriculum areas (i.e., providing access to distant information resources); preparing students to meet the technological demands of the community and workplace; allowing more students access through virtual /online classrooms; streamlining record - keeping and assessment tasks; and improving school -home communication. The school district must meet state guidelines for student to computer /modern multimedia ratios, provide adequate computer repair services, network/hardware /software support, staffing, technology security measures and electronic (web /Internet) resources. VIII DRAFT • The Surfrider Foundation -- a group concerned with activism, education, and preservation efforts related to coastal waters and surfing areas -- emphasizes the need to use all available media technology to perform research and educate the public and local governing agencies. • The Newport Beach Arts Commission supports the arts in the community through the provision of grant funding, public art exhibitions and performances, and art education. It is also in the early stage of developing an arts and education center for Newport Beach. • Ballet Pacifica, Orange County's professional ballet dance company,, is interested in participating in public access television and notes that it is a very productive way to increase public awareness of the performing arts. Ballet Pacifica supports the idea of expanded public access capabilities in the City of Newport Beach — space, equipment and support staff for public access programming, the capability of streaming public channels live over the Internet via the City's web site, and the archiving of past programs. • The League of Women Voters of Orange Coast favors effective local governmental regulation of cable television. The League supports and encourages the appointment of citizens' advisory groups and the development of community- approved guidelines for use of cable TV public access channels. ix DRAFT III. PRIMARY RECOMMENDATIONS REGARDING CURRENT AND FUTURE COMMUNITY CABLE - RELATED NEEDS AND INTERESTS A. CABLE PLANT AND HEADEND 1. The cable systems should be upgraded to a minimum 860 MHz configuration using a combination of fiber optic and coaxial technology, and provide two -way activated capacity, allowing deployment of services like high -speed data transport. 2. The architecture of each cable system should provide fiber to the neighborhood nodes, with 500 or fewer subscribers served from any node. 3. The cable systems should include features typically included in state -of- the -art systems. The Franchise documents should include reasonable standards for further upgrades during the Franchise term. 4. The upgrade of the cable systems should include spectrum set aside as an Institutional Network (1-Net"). The I -Net should include spectrum and any necessary equipment at the headend and node locations to permit video, voice, and data to be originated and received on a point -to -point and point -to- multi -point basis at the following locations: (a) City government facilities; (b) K -12 public schools; (c) public library facilities; (d) PEG Access Community Media Center; and (e) PEG Access origination sites. 5. The cable systems should have sufficient return capability and capacity to accommodate current and future PEG Access activities and deliver a high quality signal from any PEG Access Community Media Center or facility the City designates. To accomplish this objective, each cable operator should provide, replace when necessary, and maintain a multi- channel bi- directional link utilizing optical fiber or other equivalent technology between each PEG Access origination site and their headend. 6. Live origination points should be installed at locations from which live programming would likely occur (e.g., sporting event sites, parade route streets, etc.). x 116. DRAFT 7. Each cable operator should provide one free cable drop, free monthly cable service for the most popular service tier (including all PEG Access, educational, public affairs, and news channels), cable modem service, and all necessary equipment (converter, modem, etc.) to each school, government building, and PEG Access facility within their respective franchise areas. The management entity at these locations must be allowed to extend their drops to provide service to other points, at their cost, without additional service fees. 8. Switching capability and equipment should be in place locally to permit a PEG Access master control /playback system to deliver multiple signals (i.e., for each of the PEG Access channels) to all Newport Beach cable subscribers. 9. The Newport Beach cable systems should be interconnected with other contiguous cable systems and all cable communication service providers in the City. B. SUBSCRIBER SERVICES AND CUSTOMER SATISFACTION 1. The cable systems should be upgraded to offer more programming services to Newport Beach subscribers. 2. The cable operators should offer a variety of interactive services to both residential and business customers that include, but are not limited to, movies on demand and two -way video teleconferencing. 3. The City should adopt and enforce customer service standards that meet or exceed the minimum obligations established by the Federal Communications Commission (FCC). Special attention should be given to the issue of telephone response time by the cable operators. 4. Adequate Institutional Network (I -Net) spectrum (plus necessary equipment) should be provided by the cable companies to City departments, schools and libraries. 5. The cable operators should make adequate PEG Access spectrum available on their subscriber networks. xi 91:7-11 C. PEG ACCESS 1. Based upon input received during the needs assessment process and the experience with PEG Access in other communities, Newport Beach should consider the establishment of an independent nonprofit organization whose primary function would be to manage the PEG Access channels, equipment, and facilities. 2. The Newport Beach Franchise Agreement should include provisions that: a. specify requirements to fund and provide in -kind resources and support for an independent nonprofit PEG Access management organization that would make its services and resources available to: (1) all residents, and (2) households that subscribe to all cable or other multi - channel programming service providers in the City; and b. mandate that all City areas shall receive PEG Access programming via interconnection of all cable and other multi - channel service providers in the City. 3. Initially, the cable operator should provide a minimum of three channels for PEG Access on its Basic Tier, including one (1) channel for Government Access, one (1) channel for Public Access, and one (1) channel for Educational Access. Additional spectrum /channels should be available to be activated for future PEG Access purposes. 4. PEG Access capacity must be converted to digital when a Basic Tier is converted to a digital format. The cost of digital conversion of PEG Access spectrum must be the responsibility of each cable operator. 5. Each Public Access, Government Access, and Educational Access programming service should be given the same channel location on each cable company's system in the City of Newport Beach. 6. All PEG Access channels /spectrum must be provided free of charge to the PEG Access management entity and users. xii L/ DRAFT 7. A Community Media Center (PEG Access facility) should be provided to help meet local cable - related needs and interests. a. The Community Media Center should comprise at least 6,000 square feet, include adequate and appropriate equipment, and house the PEG Access staff. It could be leased or owned by the PEG Access management organization or located in space provided free or for a nominal amount by the City, school district, or other local institution. b. Adelphia and Cox should each provide sufficient funding to pay all costs associated with the construction and /or renovation of building space that would house the Community Media Center. If donated space from the City or an educational institution is not available for the Community Media Center, Adelphia and Cox should each provide either a one -time major grant or a series of annual facilities grants in amounts necessary to pay the costs for the Community Media Center space throughout the life of any new Franchise Agreement. This facility should include areas for: • Production Studio and Control Room • Program Playback/Master Control Room • Video Editing Suites • Training and Multi- Purpose Meeting Room • "Hot- Line" Studio • Computer /Internet Lab • Office Space for Staff • Portable Equipment Check -in and Check -out Area • Equipment Maintenance • Videotape, Equipment, and Set Materials Storage C. Upon signing any new Franchise Agreement, Adelphia and Cox should each provide a grant to purchase appropriate PEG Access equipment for Newport Beach. In addition, each Franchise Agreement should require Adelphia and Cox to provide periodic equipment replacement grants. The following equipment packages should be provided: xiii DRAFT STATEMENT OF MINIMUM GOALS REGARDING CURRENT AND FUTURE COMMUNITY CABLE - RELATED NEEDS AND INTERESTS The following constitutes the Statement of Minimum Goals (the "SMG ") adopted by the City Council of the City of Newport Beach, California (the "City "). The SMG is based on, among other things, that "Community Needs Assessment — Ascertainment and Recommendation Regarding Community Cable- Related Needs and Interests for the City of Newport Beach, California ", dated December 13, 2002 prepared by the Buske Group (the "Assessment Report"), citizen input, Telcom Ad Hoc Committee input, Staff input, consultant input, and City Council input. The purpose of the SMG is to provide the City Council's general direction to its negotiating team in attempting to achieve a mutually - acceptable franchise renewal agreement with the City's two cable operators, Adelphia Communications Corporation ( "Adelphia ") and Cox Communications, Inc. ( "Cox "). The SMG is intended to be a fluid and dynamic document and is not intended to establish rigid or inflexible parameters for any franchise negotiation. Rather, the SMG constitutes a statement of the City Council's goals and desires in achieving a franchise renewal. Those goals and desires are expected to be accomplished either by way of the mechanisms set forth in the SMG or through functionally equivalent alternative mechanisms as recommended by the Negotiating Team. In attempting to implement any and/or all of the provisions of the SMG, the Negotiating Team is hereby specifically directed to take into account the costs of meeting any of the directives set forth in the SMG prior to making a recommendation for a finding of nonresponsiveness. The SMG is intended to comply, in all material respects, with the Cable Communications Policy Act of 1984, as amended (the "Cable Act "). To the extent that any conflict, expressed or implied, exists between the provisions of the SMG and the Cable Act, the Cable Act shall, in all cases, prevail and the provisions of the SMG shall be read in that context. A. CABLE PLANT AND HEADEND 1. The cable systems should be upgraded to a minimum 860 MHz configuration or greater during the term of any renewed franchise, utilizing a combination of fiber optic and coaxial technology, and provide two -way activated capacity, allowing deployment of services like high -speed data transport or greater during the terms of any renewed Franchise. 2. The architecture of each cable system should provide fiber to the neighborhood nodes with 500 or fewer subscribers served from any node. 3. The cable systems should include features typically included in state -of -the -art systems. The Franchise documents should include reasonable standards for further upgrades during the Franchise term. 4. The upgrade of the cable systems should possess sufficient bandwidth to allow spectrum set aside as an Institutional Network ( "I- Net "). Any required I -Net should include spectrum and any necessary equipment at the headend and node locations to permit video, voice, 123/066751 -0049 378732.02 a03 /01/03 i and data to be originated and received on a point -to -point and point -to- multi -point basis at the following locations: (a) City government facilities; (b) City Council Chamber; (c) Newport-Mesa Unified School District (the "District ") Board Meeting room; (d) K- 12 public schools; (e) public library facilities; (f) PEG Access Community Media Center; and (g) PEG Access origination sites. 5. The cable systems should have sufficient return capability and capacity to accommodate current and future PEG Access activities and deliver a high quality signal from any PEG Access Community Media Center or facility the City designates. To accomplish this objective, each cable operator should provide, replace when necessary, and maintain a multi- channel bi- directional link utilizing optical fiber or other equivalent technology between each PEG Access origination site and their headend. 6. Live origination points should be installed at locations from which live programming would likely occur (e.g., sporting event sites, community centers, public buildings, etc.). 7. Each cable operator should provide one free cable drop, free monthly cable service for the most popular tier (including all PEG Access, educational, public affairs, and news channels), cable model service, and all necessary equipment (converter, modem, etc.) to each school, government building, and PEG Access facility within their respective franchise areas. The management entity at these locations must be allowed to extend their drops to provide service to other points, at their cost, without additional services fees. 8. Switching capability and equipment should be in place locally to permit a PEG Access master control/playback system to deliver multiple signals (i.e., for each of the PEG Access channels) to all Newport Beach cable subscribers. 9. All residents residing in any structure located in the Service Area should be provided access to cable service at normal and non - discriminatory rates. 10. The Cable Systems should be fiber interconnected with other contiguous cable systems and all cable communication service providers in the City. 11. The Cable Systems should provide secure Emergency Alert Systems made available to the City which will allow the City to preempt all programming and insert audio programming on all channels for distribution only to Newport Beach subscribers. B. SUBSCRIBER SERVICES AND CUSTOMER SATISFACTION 1. The cable systems should be upgraded over the Franchise term to offer more programming services to Newport Beach subscribers. 2. The cable operators should offer a variety of interactive services to both residential and business customers that include, but are not limited to, movies on demand and two -way video conferencing. 124 066751 -0049 778772.02 a0 101,07 -2- l 3. The City should adopt and enforce customer service standards and meet or exceed the minimum obligations established by the Federal Communications Commission ( "FCC "). Special attention should be given to the issue of telephone response time by the cable operators. 4. Adequate and secure Institutional Network ( "I- Net ") bandwidth capable of supporting voice, video, and data transmission (plus necessary equipment), or the functional equivalent, should be provided at no or substantially reduced cost by the cable companies to City departments, schools and libraries and, at a minimum, include the following sites: i. City Hall ii. Police Department/Fire Station 3 iii. Utilities Department Corporate Yard iv. General Services' Department Corporate Yard V. Central Library (1000 Avocado) vi. Balboa Branch Library/Fire Station 1 vii. Corona Del Mar Branch Library/Fire Station 5 viii. Mariners Branch Library/Fire Station 6 ix. Lifeguard Headquarters X. Fire Station 4 (Balboa Island) xi. Fire Station 7 (Airport) xii. Fire Station 8 (Newport Coast) xiii. OASIS Senior Center xiv. Grant Howald Park/Neighborhood Center xv. West Newport Community Center /15th Street xvi. Big Canyon Reservoir xvii. Harbor Resources Division at the Balboa Yacht Basin xviii. Hoag Hospital xix. Newport Beach Police Helicopter Base at John Wayne Airport xx. City Hall Fire Station (FS #2) 5. The cable operators should make adequate PEG Access spectrum available on their subscriber networks. All PEG Access channel capacity spectrum should be provided free of charge. 6. Need -based rate discounts for qualifying low- income seniors are encouraged for the broadcast basic tier. C. PEG ACCESS 1. The Franchise Agreement should include provisions that: a. Specify requirements to fund and provide in -kind resources and support for independent nonprofit PEG Access management organization that would make its services and resources available to all residents. b. Mandate that all City areas shall receive PEG Access programming via interconnection of all cable providers in the City. 1231066751 -0069 378732.02 a03/01/03 -3- 2. Initially, the cable operators should provide a minimum of three downstream analog channels (18 MHz of spectrum) for PEG Access on its Basic Tier, including (1) channel for Government Access, one (1) channel for Public Access, and one (1) channel for Educational Access. Additional spectrum/channels should be available to be activated for future PEG Access purposes. 3. PEG Access capacity (18 MHz of spectrum) must be converted to digital when the Basic Tier is converted to a digital format. The cost of digital conversion of PEG Access spectrum must be the responsibility of each cable operator. 4. Each Public Access, Government Access, and Educational Access programming service should be given the same channel location on each cable company's system in the City of Newport Beach. 5. All PEG Access channels /spectrum must be provided free of charge to the PEG Access management entity and users. 6. A Community Media Center (PEG Access facility), or its functional equivalent, should be provided to help meet local cable- related needs and interests. a. The Community Media Center should comprise at least 6,000 square feet, include adequate and appropriate equipment, and house the PEG Access staff. b. Adelphia and Cox should each provide sufficient funding to pay all costs associated with the construction and/or renovation of building space that would house the Community Media Center. If donated space from the City or an educational institution is not available for the Community Media Center, Adelphia and Cox should each provide either a one- time major grant or a series of annual facilities grants in amounts necessary to pay the costs for the Community Media Center space throughout the life of any new Franchise Agreement. This facility should include areas for: 1241066751 -0049 378732,02 a04 /01 /03 ♦ Production Studio and Control Room ♦ Program Playback/Master Control Room ♦ Video Editing Suites ♦ Training and Multi- Purpose Meeting Room ♦ "Hot- Line" Studio ♦ Computer/Intemet Lab ♦ Office Space for Staff ♦ Portable Equipment Check -in and Check -out Area ♦ Equipment Maintenance 0 J ♦ Videotape, Equipment, and Set Materials Storage C. Upon signing any new Franchise Agreement, Adelphia and Cox should each provide a grant to purchase appropriate PEG Access equipment for Newport Beach. In addition, each Franchise Agreement should require Adelphia and Cox to provide periodic equipment replacement grants. The following equipment packages should be provided: ♦ Single Camera Field Production Packages Editing/Post Production/Dubbing Packages ♦ A Mobile Multiple - Camera Production System ♦ A Three- Camera Studio Production Package ♦ A "Hot- Line" Studio Equipment Package ♦ Remote Controlled City Council Chambers Package ♦ A Computer /Internet Access Equipment Package ♦ Test Equipment and Tools for Equipment Maintenance ♦ Office Equipment and Furniture. ♦ City Council Chambers fixed multi -media presentation equipment with direct input feeds to master control system. 7. Each cable operator and the City should provide adequate annual funding to permit the delivery of PEG Access services. 8. To promote PEG Access programming to Newport Beach residents and cable subscribers more effectively, Adelphia and Cox should each provide the following: a. Courtesy promotion of the PEG Access channels and program listings in all print and electronic program guides for their Newport Beach subscribers. b. Free promotional spots for the PEG Access channels and programming on the cable satellite services that make times available for local advertising insertions. C. Free periodic inclusion of PEG Access promotional and informational items in the Newport Beach cable subscriber bills, as permitted by applicable law. 9. Live broadcast of the meetings of the City Council, Planning Commission, and the Newport-Mesa Unified School Board on PEG Channels and/or through Intemet video streaming. 124/066751 -0049 378732.02 a04101/03 -5- 10. Connection of all instructional rooms of each currently unwired District school sites to cable system and the provision of free video programming and Internet services. D. COMPLIANCE 1. Adelphia and Cox shall bring themselves into compliance with all applicable franchise requirements, minimum customer service requirements of the Federal Communications Commission, state law, the municipal code, City regulations, and City orders. 2. Adelphia and Cox shall remit to the City any and all franchise fee deficits, with interest and penalties, prior to any franchise renewal. 124/066751 -0049 378732.02 a04/0V03 G.➢ J DRAFT STATEMENT OF MINIMUM GOALS REGARDING CURRENT AND FUTURE COMMUNITY CABLE - RELATED NEEDS AND INTERESTS The following constitutes the Statement of Minimum Goals (the "SMG ") adopted by the City Council of the City of Newport Beach, California (the "City "). The SMG is based on, among other things, that "Community Needs Assessment — Ascertainment and Recommendation Regarding Community Cable- Related Needs and Interests for the City of Newport Beach, California", dated December 13, 2002 prepared by the Buske Group (the "Assessment Report"), citizen input, Telcom Ad Hoc Committee input, Staff input, consultant input, and City Council input. The purpose of the SMG is to provide the City Council's general direction to its negotiating team in attempting to achieve a mutually - acceptable franchise renewal agreement with the City's two cable operators, Adelphia Communications Corporation ( "Adelphia ") and Cox Communications, Inc. ( "Cox "). The SMG is intended to be a fluid and dynamic document and is not intended to establish rigid or inflexible parameters for any franchise negotiation. Rather, the SMG constitutes a statement of the City Council's goals and desires in achieving a franchise renewal. Those goals and desires are expected to be accomplished either by way of the mechanisms set forth in the SMG or through functionally equivalent alternative mechanisms as recommended by the Negotiating Team. In attempting to implement any and/or all of the provisions of the SMG, the Negotiating Team is hereby specifically directed to take into account the costs of meeting any of the directives set forth in the SMG prior to making a recommendation for a finding of nonresponsiveness. The SMG is intended to comply, in all material respects, with the Cable Communications Policy Act of 1984, as amended (the "Cable Act "). To the extent that any conflict, expressed or implied, exists between the provisions of the SMG and the Cable Act, the Cable Act shall, in all cases, prevail and the provisions of the SMG shall be read in that context. A. CABLE PLANT AND HEADEND 1. The cable systems should be upgraded to a minimum 860 MHz configuration or greater during the term of any renewed franchise, utilizing a combination of fiber optic and coaxial technology, and provide two -way activated capacity, allowing deployment of services like high -speed data transport or greater during the terms of any renewed Franchise. 2. The architecture of each cable system should provide fiber to the neighborhood nodes with 500 or fewer subscribers served from any node. 3. The cable systems should include features typically included in state -of -the -art systems. The Franchise documents should include reasonable standards for further upgrades during the Franchise term. 4. The upgrade of the cable systems should possess sufficient bandwidth to allow spectrum set aside as an Institutional Network ( "I- Net "). Any required I -Net should include spectrum and any necessary equipment at the headend and node locations to permit video, voice, 124/066761 -0049 378732.02 a04 /01/03 a io and data to be originated and received on a point -to -point and point -to- multi -point basis at the following locations: (a) City government facilities; (b) City Council Chamber; (c) Newport-Mesa Unified School District (the "District ") Board Meeting room; (d) K -12 public schools; (e) public library facilities; (f) PEG Access Community Media Center; and (g) PEG Access origination sites. 5. The cable systems should have sufficient return capability and capacity to accommodate current and future PEG Access activities and deliver a high quality signal from any PEG Access Community Media Center or facility the City designates. To accomplish this objective, each cable operator should provide, replace when necessary, and maintain a multi- channel bi- directional link utilizing optical fiber or other equivalent technology between each PEG Access origination site and their headend. 6. Live origination points should be installed at locations from which live programming would likely occur (e.g., sporting event sites, community centers, public buildings, etc.). 7. Each cable operator should provide one free cable drop, free monthly cable service for the most popular tier (including all PEG Access, educational, public affairs, and news channels), cable model service, and all necessary equipment (converter, modem, etc.) to each school, government building, and PEG Access facility within their respective franchise areas. The management entity at these locations must be allowed to extend their drops to provide service to other points, at their cost, without additional services fees. 8. Switching capability and equipment should be in place locally to permit a PEG Access master control/playback system to deliver multiple signals (i.e., for each of the PEG Access channels) to all Newport Beach cable subscribers. 9. All residents residing in any structure located in the Service Area should be provided access to cable service at normal and non - discriminatory rates. 10. The Cable Systems should be fiber interconnected with other contiguous cable systems and all cable communication service providers in the City. 11. The Cable Systems should provide secure Emergency Alert Systems made available to the City which will allow the City to preempt all programming and insert audio programming on all channels for distribution only to Newport Beach subscribers. B. SUBSCRIBER SERVICES AND CUSTOMER SATISFACTION 1. The cable systems should be upgraded over the Franchise term to offer more programming services to Newport Beach subscribers. 2. The cable operators should offer a variety of interactive services to both residential and business customers that include, but are not limited to, movies on demand and two -way video conferencing. 126066751 -0069 179712.02 a04UM —2— a0 3. The City should adopt and enforce customer service standards and meet or exceed the minimum obligations established by the Federal Communications Commission ( "FCC "). Special attention should be given to the issue of telephone response time by the cable operators. 4. Adequate and secure Institutional Network ( "I- Net ") bandwidth capable of supporting voice, video, and data transmission (plus necessary equipment), or the functional equivalent, should be provided at no or substantially reduced cost by the cable companies to City departments, schools and libraries and, at a minimum, include the following sites: i. City Hall ii. Police Department/Fire Station 3 iii. Utilities Department Corporate Yard iv. General Services' Department Corporate Yard V. Central Library (1000 Avocado) vi. Balboa Branch Library/Fire Station 1 vii. Corona Del Mar Branch Library/Fire Station 5 viii. Mariners Branch Library/Fire Station 6 ix. Lifeguard Headquarters X. Fire Station 4 (Balboa Island) xi. Fire Station 7 (Airport) xii. Fire Station 8 (Newport Coast) xiii. OASIS Senior Center xiv. Grant Howald Park/Neighborhood Center xv. West Newport Community Center /15th Street xvi. Big Canyon Reservoir xvii. Harbor Resources Division at the Balboa Yacht Basin xviii. Hoag Hospital xix. Newport Beach Police Helicopter Base at John Wayne Airport xx. City Hall Fire Station (FS #2) 5. The cable operators should make adequate PEG Access spectrum available on their subscriber networks. All PEG Access channel capacity spectrum should be provided free of charge. 6. Need -based rate discounts for qualifying low- income seniors are encouraged for the broadcast basic tier. C. PEG ACCESS 1. The Franchise Agreement should include provisions that: a. Specify requirements to fund and provide in -kind resources and support for independent nonprofit PEG Access management organization that would make its services and resources available to all residents. b. Mandate that all City areas shall receive PEG Access programming via interconnection of all cable providers in the City. 124/066751-0049 378732.02 a04/01/03 -3- 2. Initially, the cable operators should provide a minimum of three downstream analog channels (18 MHz of spectrum) for PEG Access on its Basic Tier, including (1) channel for Government Access, one (1) channel for Public Access, and one (1) channel for Educational Access. Additional spectrum /channels should be available to be activated for future PEG Access purposes. 3. PEG Access capacity (18 MHz of spectrum) must be converted to digital when the Basic Tier is converted to a digital format. The cost of digital conversion of PEG Access spectrum must be the responsibility of each cable operator. 4. Each Public Access, Government Access, and Educational Access programming service should be given the same channel location on each cable company's system in the City of Newport Beach. 5. All PEG Access channels /spectrum must be provided free of charge to the PEG Access management entity and users. 6. A Community Media Center (PEG Access facility), or its functional equivalent, should be provided to help meet local cable - related needs and interests. a. The Community Media Center should comprise at least 6,000 square feet, include adequate and appropriate equipment, and house the PEG Access staff. b. Adelphia and Cox should each provide sufficient funding to pay all costs associated with the construction and/or renovation of building space that would house the Community Media Center. If donated space from the City or an educational institution is not available for the Community Media Center, Adelphia and Cox should each provide either a one- time major grant or a series of annual facilities grants in amounts necessary to pay the costs for the Community Media Center space throughout the life of any new Franchise Agreement. This facility should include areas for: 124,066751 -0049 378732.02 a04.01,03 Production Studio and Control Room ♦ Program Playback/Master Control Room ♦ Video Editing Suites ♦ Training and Multi- Purpose Meeting Room ♦ "Hot- Line" Studio ♦ Computer/Intemet Lab ♦ Office Space for Staff ♦ Portable Equipment Check -in and Check -out Area Equipment Maintenance 0 17 ♦ Videotape, Equipment, and Set Materials Storage C. Upon signing any new Franchise Agreement, Adelphia and Cox should each provide a grant to purchase appropriate PEG Access equipment for Newport Beach. In addition, each Franchise Agreement should require Adelphia and Cox to provide periodic equipment replacement grants. The following equipment packages should be provided: ♦ Single Camera Field Production Packages ♦ Editing/Post Production/Dubbing Packages ♦ A Mobile Multiple- Camera Production System ♦ A Three- Camera Studio Production Package ♦ A "Hot- Line" Studio Equipment Package ♦ Remote Controlled City Council Chambers Package ♦ A Computer/Intemet Access Equipment Package ♦ Test Equipment and Tools for Equipment Maintenance ♦ Office Equipment and Furniture. ♦ City Council Chambers fixed multi -media presentation equipment with direct input feeds to master control system. 7. Each cable operator and the City should provide adequate annual funding to permit the delivery of PEG Access services. 8. To promote PEG Access programming to Newport Beach residents and cable subscribers more effectively, Adelphia and Cox should each provide the following: a. Courtesy promotion of the PEG Access channels and program listings in all print and electronic program guides for their Newport Beach subscribers. b. Free promotional spots for the PEG Access channels and programming on the cable satellite services that make times available for local advertising insertions. C. Free periodic inclusion of PEG Access promotional and informational items in the Newport Beach cable subscriber bills, as permitted by applicable law. 9. Live broadcast of the meetings of the City Council, Planning Commission, and the Newport-Mesa Unified School Board on PEG Channels and/or through Internet video streaming. 1'_4/066751 -0049 378732.02 a04 /01/03 —5— .S0 10. Connection of all instructional rooms of each currently unwired District school sites to cable system and the provision of free video programming and Internet services. D. COMPLIANCE 1. Adelphia and Cox shall bring themselves into compliance with all applicable franchise requirements, minimum customer service requirements of the Federal Communications Commission, state law, the municipal code, City regulations, and City orders. 2. Adelphia and Cox shall remit to the City any and all franchise fee deficits, with interest and penalties, prior to any franchise renewal. 124,066751 -0049 378732.02 a04;M03 Gil IS