Resolution No.      14-593

Introduced:      April 4, 2000   

Adopted:      July 11, 2000   

County Council

For Montgomery County, Maryland

    By:  Council President at the Request of the County Executive

SUBJECT:   Approval of transfer of County cable television franchise

Background

1.       On November 16, 1999, Prime Communications‑Potomac, L.L.C. (Prime‑Potomac), which holds the  Cable Television Montgomery franchise, applied to the County for approval to transfer the franchise to Comcast Cable of Maryland, Inc. (Comcast), an affiliate of Comcast Corporation of Philadelphia, Pennsylvania.

2.       The Council approved the last franchise transfer, from SBC-Media Ventures Partnership to Prime-Potomac on July 1, 1998.

3.       The Executive held a public hearing on February 15, 2000.

4.       On March 30, 2000, the Council received the County Executive’s recommendation to approve the transfer of the cable television franchise to Comcast and a proposed transfer agreement between the County, Prime‑Potomac, and Comcast.

5.       The Executive’s authority to approve a transfer of the cable television franchise is subject to Council approval under sections 8A‑23 and 8A‑29(c) of the County Code. Under section 8A‑23(e), the County must consider the legal, financial, technical, and character qualifications of the proposed transferee to operate the system and whether operation by the proposed transferee would adversely affect cable services to subscribers or otherwise be contrary to the public interest. Under section 8A‑23(a), the County must not approve a transfer of a franchise when the transferor has held the franchise less than 3 years unless the County finds that the transfer is necessary and in the best interests of the County and its residents.

6.  Section 3(b) of the current franchise states that “[f]ollowing the Transfer of the Franchise to Prime Communications-Potomac, LLC… the Franchise shall not subsequently be transferred prior to the Franchisee’s Completion of the System Rebuild… unless the County and Participating Municipalities find, in their sole discretion, that the Transfer is necessary and in the best interests of the County and Participating Municipalities, and their residents.” This requirement will continue to apply to any successor of Prime-Potomac.

7.       The system rebuild is not complete.

8.       The Council held a public hearing on the proposed transfer on April 25, 2000, and the Management and Fiscal Policy Committee held worksessions on April 28, June 5, June 19, July 7, and July 11, 2000. The Committee recommended that the Council disapprove the Executive’s proposed approval of the franchise transfer under section 3(b) of the franchise because the system rebuild is not complete and the transfer as proposed by the Executive would not be necessary or in the best interests of the County and its residents. The Committee recommended a combination of additional requirements that collectively would make the transfer necessary and in the best interests of the County and its residents, such that the Council should exercise the County’s sole discretion to approve the transfer.

9.       The Council finds that the transfer as proposed by the Executive is not necessary and is not in the best interests of the County and its residents, but would be if Prime-Potomac and Comcast agreed to the following:

a.       The Council finds that the liquidated damages provided by section 14(g) of the franchise have not adequately compensated for the costs of substandard customer service provided by the current and previous franchisees and that section 14(g)(7) of the franchise will be amended to read:

“(7)  (A)  Beginning six months after the closing date of the sale of the Franchise by Prime-Potomac, LLC, for a violation of any customer service standard measured quarterly:  $500 for the first violation; $5,000 for any violation within 18 months after the first; and $10,000 for any violation within 18 months after the second or any subsequent violation ($500, $1,000, and $2,500, respectively, after the Franchisee has provided data demonstrating compliance with each quarterly customer service standard for six consecutive quarters following completion of the System Rebuild); and

“(B)  For any other violation of a customer service standard:  $200 per violation;”

b.       The transfer agreement will require the franchisee to:

i.  increase customer service representatives to 135;

ii.  add backup communications links to each call center serving the County;

iii.  implement a comprehensive training program for all call center personnel serving the County;

iv.  increase the number of supervisors in each call center serving the County to better support first-line personnel;

v.  establish procedures to handle customer issues referred by County agencies, including establishing a special telephone line;

vi.  improve tools, test sets, and equipment to Comcast standards;

vii.  implement an ongoing preventative maintenance program focused on improving network integrity and performance;

viii.  implement a 5-point Upgrade Customer Communication Plan that includes:

A.  30-second commercials explaining upcoming construction phases;

B.  60-day advance letter to each customer;

C.  10-day advance letter to each customer;

D.  72 hours before construction, place door hangers and sandwich boards in the construction area; and

E.  post-upgrade information phone calls and surveys to ensure quality.

c.       Section 11 of the franchise will be amended:

i.  In subsection (d):

A.  by amending the first sentence before the colon to read as follows:

“Special Reports.  Unless this requirement is waived in whole or in part by the County, the Franchisee shall deliver the following reports to the County (including, unless waived, a separate copy delivered to the County Council):”; and

B.  by adding a new paragraph (4) as follows:

“(4)  The Franchisee must submit to the County any additional information required to determine the Franchisee’s compliance with each customer service standard in Section 9, including the raw data required to calculate any standard that is measured as a periodic average.”;

ii.  In subsection (f), by adding a new paragraph (1)(G) as follows:

“(G)  All additional records of data necessary to determine the Franchisee’s compliance with the customer service standards in Section 9.”

iii.  In subsection (j), to read as follows:

“(j)  Waiver of Reporting Requirements.  The County may, at its discretion after notice to the County Council, waive in writing the requirement of any particular report specified in this Section.”

d.       The first sentence of section 7(h)(5) of the franchise will be amended to read as follows:

“(5)  Concurrent with the installation of fiber optic capacity during the System Rebuild, in addition to commitments in any other paragraph in this subsection, the Franchisee shall complete construction of an Institutional Network at no cost to the County to the locations listed in Exhibit B, as an extension of the County’s existing FiberNet. The Franchisee shall cooperate with the County Council in any review of the Franchisee’s obligations under the Franchise Agreement regarding FiberNet and the Institutional Network.”

e.       County approval of the transfer is granted in reliance on the following representations by Comcast:

i.  Comcast has no intention to enter into any exclusive programming agreement, as described in County Code Section 8A‑15(c)(1).

ii.  Because Comcast is upgrading the County cable system to current industry standards, Comcast believes that this system will be able to accommodate the cable industry technical solution for multiple Internet Service Provider access without any further significant construction on the outside plant.

iii.  The franchisee will continue to specifically identify each Montgomery County public, educational, and government (PEG) channel in any on-screen program guide.

iv.  Comcast has no intention to change the structure of subscriber bills.

v.  In addition to any other data requirement under the franchise, the franchisee will provide as-built engineering drawings of the system in a form compatible with the County’s Geographic Information System (GIS), as required by the franchise.

vi.  The franchisee will provide free cable modem equipment, service, and training to County schools and libraries, as described in the June 19, 2000, letter from Jaye Gamble to the Chair of the Management and Fiscal Policy Committee, and, if available in the County, will make additional and higher-capacity services (such as Comcast Commercial Internet Service) available to the County at the lowest cost extended (consistent with any volume requirement that applied to any discount extended) to a public school or library in any other Comcast cable franchise area.

f.       The transfer agreement proposed by the Executive will be amended to add the following requirement:

“The Franchisee shall sponsor a pilot project generally as described in the memorandum dated July 11, 2000, from Jaye Gamble to Councilmember Marilyn J. Praisner (“Re: County Issues - Comcast Responses”), in at least three locations in the County, to evaluate the effects of providing broadband Internet access to low-income residents through community facilities. The Franchisee and the County Council must agree on the project plan within 6 months after the Transfer.”

g.  The County believes that the testimony at the public hearing and additional information presented to the Council demonstrate that the current franchisee has provided substandard customer service. Prime‑Potomac will pay liquidated damages to the County of $17,600. The County should credit this amount against the total liquidated damages that the County may impose under section 14(g)(7) of the franchise for a violation of the customer service standards in section 9(c)(3)(A) and (B), and (d)(1)-(6) of the franchise that occurred between July 1, 1998, and the closing date of the sale of the franchise by Prime-Potomac.

h.       The Franchisee will comply with the written policy described in paragraph 10 of the County Council resolution approving the transfer.

10.     Not later than 60 days after the transfer, the County cable administrator, after consulting with the County Council, must issue a written policy governing the placement and appearance of pedestals, equipment covers, and other above-ground cable equipment and facilities.

11.     The Council finds that:

a.       failure to monitor and enforce customer service standards in a cable franchise encourages substandard cable service to County residents;

b.       the County should strictly enforce the liquidated damages provisions of every cable franchise; and

c.       the Executive should report to the Council quarterly on each cable franchisee’s compliance or noncompliance with customer service standards during the preceding quarter.

12.     a.       The Council finds that consumers should be able to choose among multiple Internet service providers (ISPs) on all delivery platforms, including broadband cable, without having to subscribe to any other ISP, and that the owner of the delivery platform should provide access that does not discriminate against ISPs that are not affiliated with the owner.

b.       The County finds it unnecessary to require nondiscriminatory access as a condition to approving this transfer because:

i.  Comcast has assured the County that the system upgrade will allow nondiscriminatory access by multiple, nonaffiliated ISPs solely by adding equipment at a headend, without any need to install or reconstruct any cable or other facilities in any other part of the upgraded system;

ii.  the County has the authority to amend the County Code to require cable and telecommunications companies subject to the County’s franchising authority to provide nondiscriminatory access to multiple ISPs, to the extent not precluded by federal or state law; and

iii.  Comcast has agreed in the transfer agreement that “[t]he Franchisee hereby accepts, acknowledges and agrees that, after the Transfer, it shall continue to be bound by all the commitments, duties, and obligations, past, present, continuing and future, embodied in… the Cable Law…."

13.     The Council encourages each cable franchisee in the County to conduct a trial that allows multiple, nonaffiliated Internet service providers (ISPs), including at least one ISP whose principal office is in the County, to provide high-speed Internet service directly to customers over the cable system.

14.     The Council will review with the Executive the design and implementation of the Institutional Network described in the cable franchise and the County FiberNet.

Action

The County Council for Montgomery County, Maryland, approves the following resolution:

  If Prime‑Potomac and Comcast agree to all of the provisions of paragraph 9 above by July 21, 2000, the County Council approves the transfer of the cable television franchise from Prime Communications—Potomac, L.L.C., to Comcast Cable of Maryland, Inc., under the attached amended transfer agreement and the franchise agreement, as amended by the transfer agreement. If Comcast or Prime-Potomac does not agree by that date, the transfer as proposed by the County Executive is disapproved without further action by the Council.

This is a correct copy of Council action.

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Elda Dodson, Acting Clerk of the Council                   Date