1. FRANCHISE RENEWAL 2011: Overview of Franchise Renewals Recent Trends in PEG Negotiations Alliance for Community Media 2011 Annual Conference INNOVATE Marriott Starr Pass Resort July 27-30, 2011

2. n There are now about 60,000,000 cable subscribers in U.S. n Deregulation of cable at the state level since 2005 has caused the loss of a large number of access facilities managed by cable companies and many nonprofit Community Media Centers nationwide n Meanwhile, cable company revenues have grown significantly, despite the economic downturn n 1996: $27.1 billion n 2005: $65.7 billion n 2010: $93.7 billion n Data and telephony are integral parts of the cable industry business plans Cable Communications Systems Recent Trends

3. n U.S. cable operator revenues continue to increase, despite a loss of over 5 million basic subscribers since 2006: Basic Subscribers Total Revenue Basic Subscribers Total Revenue 2006 65.4 million $71.9 billion($ 91.58/sub/mo) 2008 63.7 million $85.3 billion($111.53/sub/mo) 2010 59.8 million $93.7 billion ($130.57/sub/mo) n Cable operators are eliminating analog tiers n More bandwidth for HD and other new services n Cable operators are providing support for PEG and I-Nets -- in addition to 5% franchise fees -- where franchising authorities negotiate aggressively to represent community needs and interests Cable Communications Systems Recent Trends

4. LAYING THE GROUNDWORK FOR RENEWAL nCritical Role of a Citizens’ Franchise Renewal Task Force –CMC should be a vital and active partner with the City in the franchise renewal process nBudget Planning (start a renewal fund 5 years before franchise expiration) nGovernment recognition that it needs help to successfully undertake the renewal process nGovernment staff/officials who commit time and are REALLY interested in technology, community, citizen involvement and communications = Quality Outcome nRecognize that the franchise renewal process is going to take time – three or more years!

5. LAYING THE GROUNDWORK FOR RENEWAL nDevelop a good understanding of the franchise renewal process and what a quality outcome looks like – GET SMART!! –Task Force –Community Leaders –Government Staff –Elected Officials nConduct the renewal process “by the book,” as if you were preparing to deny the cable operator’s request for renewal.

6. LAYING THE GROUNDWORK FOR RENEWAL nRecognize that there are three documents to address: –Franchise -- negotiated agreement –Enabling Ordinance/Government Code -- “Rules of the Road” and minimum standards for all cable operators –Customer Service Standards -- apply to all cable operators nConduct and maintain open communications on the status of the renewal process –Study sessions –Staff reports –One-to-one briefings

7. PAST PERFORMANCE/ COMPLIANCE REVIEW nPast Performance Review activities might include: –Financial review of cable operator to determine general financial condition of the cable system –Detailed franchise compliance review –Technical/engineering review of the cable system to determine: Condition of current cable plantCondition of current cable plant How well the system has been maintainedHow well the system has been maintained –Statistically valid telephone survey of cable subscribers

8. NEEDS ASSESSMENT PROCESS ACTIVITIES nNeeds Assessment activities might include: –Statistically valid telephone survey –Focus group workshops –Completion of questionnaire by representatives of community groups, organizations, institutions, and government agencies –On-line survey

9. NEEDS ASSESSMENT PROCESS ACTIVITIES nNeeds Assessment activities might include: –Technology assessment (I-Net study) –Community interviews –Review of current PEG Access facilities and operations –Public hearings –Compilation of all data in a Needs Assessment Report

10. KEY PEG FRANCHISE PROVISIONS nPEG Access Capacity (Channel Capacity) –PEG access capacity represented as bandwidth rather than number of channels If PEG capacity is represented as analog channels, include a digital conversion formulaIf PEG capacity is represented as analog channels, include a digital conversion formula PEG with same capacity and functionality as local network affiliates and PBS channelsPEG with same capacity and functionality as local network affiliates and PBS channels Signal transport issuesSignal transport issues “what goes in is what comes out”“what goes in is what comes out” Free PEG Video-on-DemandFree PEG Video-on-Demand –PEG access capacity to be converted to digital when all basic channels are converted to digital format Cost of conversion to be responsibility of cable operatorCost of conversion to be responsibility of cable operator

11. KEY PEG FRANCHISE PROVISIONS nPEG Access Capacity (Channel Capacity) –PEG access capacity to be located and handled in the same way as local network and PBS affiliates. On both lowest cost tier of cable service & HD TierOn both lowest cost tier of cable service & HD Tier –PEG spectrum (channels) located in a consecutive or near consecutive “run” of channels –PEG numerical channel allocation cannot be changed without local approval, and then only for “must-carry” or technical reasons If change occurs, provision for advance notification, payment of fee to cover costs incurred by access management entity(ies)If change occurs, provision for advance notification, payment of fee to cover costs incurred by access management entity(ies)

12. KEY PEG FRANCHISE PROVISIONS nPEG Access Capacity (Channel Capacity) –PEG spectrum can be used for any PEG purpose, regardless of the form of the information/program –Access channels in the same numerical location on all cable systems serving the City/County –Trigger for additional PEG spectrum beyond that initially required –PEG spectrum to be available free of charge to PEG access management entity(ies) and users nPEG content shown on Interactive Program Guide in same manner as commercial and PBS channels

13. KEY PEG FRANCHISE PROVISIONS nPEG – Cable System Design and Functionality –Two-way activated, bi-directional links between PEG Access facilities and headend –Two-way activated, bi-directional links between primary government meeting locations and PEG Access facilities and headend –Remote Origination Sites -- I-Net PEG Facility as I-Net HeadendPEG Facility as I-Net Headend

14. KEY PEG FRANCHISE PROVISIONS nInterconnection –Interconnection between: All cable operators serving the communityAll cable operators serving the community Adjacent cable systemsAdjacent cable systems Open Video SystemsOpen Video Systems –PEG Facility(ies) as “Interconnection” Point nInstitutional Network –PEG Facility(ies) as I-Net “Headend” –Community Media Center as I-Net Training and Development Center

15. KEY PEG FRANCHISE PROVISIONS nFunding for PEG equipment, facilities, and support –Initial facilities and equipment –Replacement facilities & equipment over life of franchise –Annual PEG support (for access services) nFranchise can specify: –Amount and form of PEG support –Timing and conditions –Vehicles for routing payment

16. KEY PEG FRANCHISE PROVISIONS nVehicles for PEG support from cable operator –% of gross revenues (over and above franchise fees) –One-time payment –Regular payments based upon number of subscribers –Regular payments based upon a fixed amount, with annual CPI-linked adjustment –Payments directly to PEG/CMC organization rather than through local government to PEG/CMC organization –Restricted vs. Unrestricted use of funds

17. KEY PEG FRANCHISE PROVISIONS nVehicles for PEG support from Franchising Authority –Portion of franchise fee –One-time or periodic payments of specified amounts –Contract for service –Other creative arrangements

18. KEY PEG FRANCHISE PROVISIONS nFree cable drops to all public buildings, schools, and PEG facilities nFree Internet service and cable modems for PEG facilities, schools, etc. nPromotion –Free ad available time for PEG spots –Listing of PEG program schedules in all print and electronic guides –Ability to insert a billstuffer in subscriber bills at least annually