Without a title

June 6, 1996

Honorable William L. Gordon

Presiding Judge

Santa Barbara County Superior Court

1100 Anacapa Street

Santa Barbara, CA 93121

Re: Response to Santa Barbara County Grand Jury Interim Final Report Regarding Cable TV Franchise Renewal

Dear Judge Gordon:

At the City Council meeting of June 4, 1996, the Council voted to receive the Santa Barbara County Grand Jury 1995-96 Interim Final Report on Santa Barbara City Cable TV Franchise Renewal dated April 15, 1996 pursuant to Penal Code SS933.

First of all, I would like to thank the members of the Grand Jury for the conscientious and thoughtful analysis reflected in the report. The cable franchise renewal is considered to be an important responsibility and a focus of City attention during the next eighteen months.

The City's responses to the specific findings and recommendations as requested by the Grand Jury are as follows:

FINDING 1: The County of Santa Barbara has franchises coming up for renewal within the next five years. All cities in the county except Guadalupe have a cable franchise that will have to be renewed during that time period.

RECOMMENDATION 1: The County of Santa Barbara and its cities should start now to plan for their franchise renewals by studying available technological information and selecting the best qualified staff to head such important telecommunications review.

RESPONSE: The responsibility for administration of the cable franchise resides in the City Administrator's Office in recognition of its importance to the organization and the community. In addition, other City staff can be called upon as needed to assist in specific areas such as permitting the usage of public right-of-way, zoning issues and the like.

In response to the upcoming franchise renewal, the City has recently contracted with Telecommunications Management Corporation (TMC) who specializes in cable television franchising. In addition, the City has retained the services of legal counsel who specialize in cable law. Both firms are nationally recognized for their knowledge and expertise in cable franchising and both have principals assigned to this project possessing experience in representing franchising authorities in negotiations with Cox Communications.

FINDING 2: Because of the rapidly changing telecommunications technology, the County of Santa Barbara and its cities need to work together to develop a common plan for telecommunications needs and services in the county.

RECOMMENDATION 2: The County of Santa Barbara and its cities should explore establishing a joint powers authority to develop regional telecommunications policies and long-term strategies.

RESPONSE: In 1994, City staff initiated discussions with staff members of the County of Santa Barbara and City of Carpinteria to explore establishing a South Coast Cable Television Authority. The Joint Powers Authority (JPA) would have had responsibility for cable television in the South County area served by Cox Communications. The theory was that a JPA could result in advantages to both subscribers and to each of the three agencies. A great deal of time and effort was expended; however, City staff came to the eventual conclusion that participation in a cable JPA was not in our best interest at the time for the following reasons:


* Due to economic limitations, both the County and Carpinteria felt that in order to fund a JPA it would be necessary to pass the cost on to subscribers. City staff felt it would be difficult to increase cable rates by $75,000 to $100,000 per year to fund a JPA.


* The staff who would then assume administrative responsibility would then have to explain to the public a rate increase due to the desire to consolidate government regulation and become more efficient.


* An unwillingness for the City to commit to a 15-year franchise term as a means to chronologically align the three franchises for a JPA. In the City's view, one of the most important franchise provisions to negotiate is the term of any new franchise.

Therefore, given the City's recent exploration of the feasibility of a cable JPA, the City is proceeding with franchise renewal with Cox Communications separately. However, should a different opportunity present itself to consider a JPA, the City is willing to reconsider the concept.

In order to transition from the current environment of single providers for individual services to one of multiple providers competing with one another in voice, data and video services will require careful analysis and review. The City is willing to consider the concept of developing regional telecommunications policies and long-term strategies in attempting to address this changing environment.

FINDING 3: The member of President Clinton's National Information Infrastructure Advisory Council (NIIAC) representing cities and counties, and the Chairman of the NATOA FCC Liaison Committee are based in Southern California. These persons have expertise and experience and have offered to share technical, governmental and industry information with local authorities, including Santa Barbara.

RECOMMENDATION 3: The Santa Barbara City Council, city management and the outside consultant should avail themselves of all available resources, especially these local telecommunications experts.

RESPONSE: The City intends to avail itself of all potential resources during the upcoming cable franchise renewal. The City has retained the services of Telecommunications Management Corporation (TMC) who specialize in assisting franchising authorities in the renewal process. They have been contracted to conduct an engineering study, an assessment of community needs and interests, a review of public, education and government (PEG) access, and provide overall expertise and assistance throughout franchise renewal including negotiations. The City has also secured the services of a legal firm that specializes in cable television law.

City staff will establish contact with the Southern California area representatives referred to in the Grand Jury report to determine the extent of assistance they may be able to provide.

FINDING 4: The City of Santa Barbara's time table for renewal is very brief, especially considering the changes made by the recent Telecommunications Act.

RECOMMENDATION 4: The City of Santa Barbara should consider giving a limited extension of its present franchise agreement to Cox; it should continue to negotiate the franchise renewal during that extension so as to take full advantage of the opportunities available to cities.

RESPONSE: The City has extended the Cox franchise for one year or through September 14, 1997 for several reasons. They include:


* Cox Communications staff, after having reviewed the City's franchise renewal timeline, requested sixty days to respond to the City's proposal for renewal once received. In order to accommodate their request, a franchise extension became necessary.


* During selection interviews for a cable consultant, it became apparent that it was in the City's best interest to extend the franchise for an additional time period to address issues such as term, franchise fees, and public, education and government (PEG) access support. It also provides additional time to carefully scrutinize the future cable-related needs of the community given today's changing telecommunications environment.


* A franchise extension provides time for the Federal Communications Commission (FCC) rulemakings to occur implementing the intent of the Telecommunications Act of 1996. Any effect of the rulemakings can then be incorporated into a new franchise agreement.


* The recommendation by the Santa Barbara County Grand Jury.

City staff have initiated the franchise renewal process and intend to utilize the time provided by the franchise extension to negotiate a new cable franchise with Cox Communications.

FINDING 6: The City of Santa Barbara should plan for future technological changes that will be brought about through the competition created by the Telecommunications Act and new FCC rulings.

RECOMMENDATION 6a: The City of Santa Barbara should send Requests for Information to telecommunications providers who might be interested in developing telecommunications, infrastructure and services for the City of Santa Barbara.

RECOMMENDATION 6b: The City of Santa Barbara should consider developing new telecommunications policies and a long-term strategy for telecommunications based on the Telecommunications Act and on FCC rulings that will be forthcoming.

RESPONSE: The City is currently taking steps to address the 1996 Telecommunications Act. Internal discussions relative to the potential effects of the 1996 Telecommunications Act on existing public right-of-way, zoning regulations, franchise fees, franchising of providers, an institutional network, and telephone services in a competitive market have been initiated.

City staff will need to refocus their thinking from the current environment of single providers to one of multiple providers competing with one another in voice, data and video services. The needs of the community and those of the City as a large user of telecommunications services will need to be considered at the same time balancing the rights of providers to utilize the public rights-of-way in a fair and non-discriminatory manner.

FINDING 7: More companies may be providing communications within the City of Santa Barbara and will need access to install infrastructure and use the public rights of way.

RECOMMENDATION 7: The city should set equal standards for all providers, manage the finite resources of the public infrastructure, and apply consistent policies to all users of the public rights of way.

RESPONSE: Cities are being encouraged by the League of California Cities, the National League of Cities and professional organizations to consider several issues including those identified by the Grand Jury. We agree with the Grand Jury that the City should set equal standards for all providers, manage the finite resources of the public infrastructure, and apply consistent policies to all users of the public rights-of-way. As mentioned as part of the response to Finding 6, Recommendations 6a and b, City staff have already begun discussing the potential impacts of the new telecommunications environment on existing regulations and franchising requirements.

In addition, the cable TV franchise awarded to Cox Communications is a non-exclusive franchise. This provides the City the flexibility to issue multiple cable TV franchises, should the opportunity arise.

FINDING 8: Some areas in the city, including parts of the downtown area, do not have cable television service.

RECOMMENDATION 8a: During the ascertainment portion of the renewal process, the city and Cox should get input from affected businesses to discern which sources are desired and would be valuable to the business community.

RECOMMENDATION 8b: The City of Santa Barbara and Cox should negotiate the provision for cable service to all areas of the city.

RESPONSE: The professional services agreement with Telecom-munications Management Corporation (TMC) includes conducting a complete community needs assessment, including businesses, regarding the existing level of services provided and the desirability/willingness to pay for future programming and services. This needs assessment will include meetings and/or interviews with business leaders in the community. In addition, an evaluation of the areas within the City's jurisdiction without access to cable and the ability to provide cable or other alternative services are also included as part of the proposed ascertainment proceedings.

In closing, I would once again like to thank the members of the Grand Jury for the conscientious and thoughtful analysis regarding the City's upcoming cable TV franchise renewal in particular and the growing market of telecommunications in general.

Sincerely,

Elinor G.A. Langer

Mayor Pro Tempore

HM/PKW/slw

cc: Spencer Boise, Grand Jury Foreman

Sandra E. Lizarraga, City Administrator

Peter K. Wilson, Deputy City Administrator

Tracey Pirie, Administrative Analyst


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