Phoenix masters cable negotiations

After the federal government issued new standards regarding the licensing and franchising of cable television, Phoenix, Ariz., successfully renegotiated its license/franchise agreement. Negotiations took several months and resulted in a modem license for Phoenix.

The city entered into the renewal process with four goals: Negotiate for a state-of-the-art cable system, assure all citizens access to cable television, assure the city and its citizens access to the information superhighway and maintain or enhance the city’s revenue stream from the cable operator.

Phoenix and its operator, Dimension Cable Services, began the renewal process by conducting a community needs assessment. More than 7,000 residents, both cable customers and nonsubscribers, were surveyed, representatives from all city departments were interviewed, and focus meetings were held with health care providers, retailers, educators and financial institutions.

City staff surveyed 32 cities about the major provisions of their cable television franchises in preparation for negotiations. They found that most cities receive franchise fees ranging from 3 to 5 percent of gross revenues; the number of public, educational and government access channels ranged from three to 17; and most cities received free basic cable at city facilities.

A negotiations team consisting of the deputy public works director, the public works contracts administrator, a cable communications engineer and an assistant city attorney was formed to handle matters for the city.

The new, 15-year license was approved in June 1994 and stipulates that the existing system will be rebuilt with a hybrid fiber optic/coaxial cable, featuring a minimum of 75 channels and some two-way capability. The rebuild has an estimated value of more than $100 million and is expected to improve picture quality and service reliability.

The agreement also includes an improved line extension policy calling for the cable operator to provide cable service to any area with 25 homes per mile of cable, down from the previous rule of 40 homes per mile. There is also a line extension policy for commercial establishments.

A license fee of 5 percent of gross revenues was agreed upon with the city receiving an additional $1 million as a capital grant to provide connections to the system or to access equipment. Hookups will be provided to all police and fire facilities, libraries, community facilities, major city offices and service complexes within 200 feet of the cable. Free basic cable service will be provided to all city facilities.

e number of Public Educational Government channels will more than double when the system is rebuilt. Two public access channels, two educational access channels, two government access channels and one secured public safety channel will be provided. Three to four additional channels will be provided in the future based upon a usage formula.

Public access became a major issue when a citizens’ group lobbied for a nonprofit organization to operate public access rather than the cable company. A citizen’s committee recommended no changes be made in the remaining years of the license but that the new license provide for an independent manager to operate public access. Public access will receive $100,000 annually out of franchise fees plus a one-time capital grant of $ 100,000.

The license allows the cable operator to provide alternate fiber services to long distance telephone carriers, and the parties agreed to discuss amending the license if changes in federal or state laws permit new competitors to enter the marketplace.