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Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 [email protected] www.BradleyLawMN.com

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Page 1: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Competitive Franchising Opportunities and Challenges

Mike Bradley (651) 379-0900 ext. 101

[email protected] www.BradleyLawMN.com

Page 2: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Federal Cable Laws on New Entrants

Federal Cable Act Section 621 (47 U.S.C. 541) • Award of Franchise

• “May not Unreasonably Refuse to Award an Additional Competitive Franchise.” • 621(a)(1)

• Build-Out • “Shall allow the applicant’s cable system a reasonable period of time to become capable

of providing service to all households in the franchise area” • 621(a)(4)

• Franchise Required • “a cable operator may not provide cable service without a franchise.” • 621(b)(1)

Page 3: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Federal Cable Law on New Entrants First FCC 621 Order

• Identified and Preempted Unreasonable Barriers to Entry • Build-Out Requirements • PEG and I-Net Requirements

47 C.F.R. 76.41

• Application Content Requirements • Shot Clock – Municipal Time Constraints

• 90/180 Days

Page 4: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

State and Local Laws on New Entrants

State Laws • Cable Specific Requirements • ROW • Franchise Specific Provisions • Statutory City Provisions

Local Laws • Municipal Cable Code

• Cable Applications and Process • Incumbent Cable Franchise

• Level Playing Field/Competitive Equity • Franchising Policies and Procedures • ROW Code • City Charter

Page 5: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Competitive Cable Franchising Issues Build-Out Term (incentives) Economic Redlining - Discrimination Level Playing Field

• Franchise Fees, Area Served, PEG Access Television I-Net (if any) Ownership of the System

• Applicability of Cable Franchise ROW Provisions Diverse Programming Customer Service ROW Management

Page 6: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Preparing For Negotiations with New Entrant Review Commitments of Incumbent

Review Level Playing Field

Provisions of Incumbent Franchise(s)

Assess Needs

Identify Unmet or Under-met Needs New Entrant’s Commitments in

other LFAs

“Before anything else, preparation is the key

to success.” Alexander Graham Bell

Page 7: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Listening to New Entrant

Build-Out of New Entrant

Delivery Technology of New Entrant

New Entrant’s Proposals

Challenges of New Entrants

“Most people do not listen with the intent to understand; they listen

with the intent to reply.”

Stephen R. Covey, The 7 Habits of Highly Effective People: Powerful

Lessons in Personal Change

Page 8: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Example of Reasonable Build-Out

Complete Equitable Build-Out • Goal is to Build-Out the entire

City over 5-year term

• Based on market success

• Significant investment targeted to areas below the median income in the City.

“build-out issues are one of the most contentious between LFAs and prospective new entrants, and that build-out requirements can greatly hinder the deployment of new video and broadband services.”

• 621 Order at ¶ 31.

Page 9: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Example of Reasonable Build-Out Initial Minimum Build-Out

Commitment 15% of the City over 2 years.

• Operator must make its best effort to complete the initial deployment in a shorter period of time.

• Deployment to households in every part of the City.

• Must include a significant number of households below the medium income of the City.

• Operator permitted to serve more households.

“Due to the risk associated with entering the video market, forcing new entrants to agree up front to build out an entire franchise area too quickly may be tantamount to forcing them out of -- or precluding their entry into -- the business.”

• 621 Order at ¶ 35

Page 10: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Example of Reasonable Build-Out

Quarterly Meetings • Operator must meet with the City

Quarterly • Must show to the City’s

satisfaction • Number of households capable of

being served and actually served. • Compliance with anti-redlining

requirements. • Maps and documentation “showing

exactly where within the City the Grantee is currently providing cable service.”

Page 11: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Example of Reasonable Build-Out Additional Build-Out Based

on Market Success. • Build-Out Commitment will

increase if its penetration rate is at least 27.5% in the areas that it is offering service.

• Example: If offering service to 60% of the City and Operator has penetration of 30% in that area, then the Build-Out commitment will increase 15% to 75% of the City.

• Additional Build-Out commitment continues until all households are served.

“reasonable for an LFA in establishing build-out requirements to consider the new entrant’s market penetration…and taking into account its market success”

• 621 Order at ¶ 89.

Page 12: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Negotiating PEG Commitments

PEG Channels • Match Incumbent • Account for Narrowcasting

Signal Quality • SD/HD/UHD • Degradation of Signal

Remote Cablecasting • Open Modem • Wireless Cards

“A negotiator should observe everything.

You must be part Sherlock Holmes, part

Sigmund Freud.”

Victor Kiam

Page 13: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Negotiating PEG Commitments Electronic Programming Guide

• Access to EPG Vendor • Provision of Detailed Programming Information

Video-On-Demand • Number of Hours • Quality of video – e.g. HD

PEG Origination Feeds – I-Net • Point of Delivery of Origination Feeds • No I-Net Duplication

PEG Metro-Wide Interconnection Network • Unique Program Sharing

Page 14: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Negotiating PEG Commitments PEG Funding

• Match Incumbent • Restrictions • Operational and Capital Support

Confidence Feeds • Ability to Monitor Every Channel

Complimentary Cable Feeds • Type of Service • City Halls • School Districts • Other Government Buildings • Address Multiple Providers – Home Run Wiring

Page 15: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Other Issues Addressed Term

• Tied to Build-Out Economic Redlining or Cherry Picking

• Prohibited By Law • Addressed in Current Franchises

Level Playing Field • Franchise Fees • PEG Support • Area Served

Culturally Diverse Programming • Limited Authority

Existing Incumbent Franchise • Similar in Most Respects

Page 16: Competitive Franchising Opportunities and Challenges · Competitive Franchising Opportunities and Challenges Mike Bradley (651) 379-0900 ext. 101 . ... Sigmund Freud.” Victor Kiam

Presenter Biography

Mike Bradley Bradley Hagen & Gullikson (651) 379-0900 ext. 101 [email protected] www.BradleyLawMN.com

Mike Bradley is an attorney, with over 20 years of experience, practicing in the area of cable franchising and telecommunications. He is the founding partner of Bradley Hagen & Gullikson, LLC, a law firm based in the Twin Cities and is Special Counsel to the Seattle-based law firm the Lighthouse Law Group. Mike has represented cities in cable franchise negotiations with Comcast and other competitive cable providers. His firm also acts as a cable franchise administrator, reviewing franchise compliance, and processing complaints and discount requests. Recently, Mike assisted the City of Oklahoma City in successfully defending a class action law suit challenging the City’s authority to receive a cable franchise fee. The case is now pending before the Oklahoma Supreme Court. Mike is also representing the City of Minneapolis and many other cities with CenturyLink’s applications for cable franchises. Mike is a NATOA, WATOA, and MACTA member. He serves on the Board of Directors of American Community Television (ACT), an organization that advocates for municipal franchising authority and PEG. Mike is also the past chair of the Communications Law Section of the Minnesota State Bar Association and was elected to serve on the Board of Directors for the Ramsey County Bar Association. Mike is an AV rated attorney by Martindale Hubble and has been recognized as a “Rising Star Attorney” and “Super Lawyer” by Minnesota Law and Politics.