05-08-2013 Council Agenda - Laserfiche WebLink

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5. The PEG Fee, Franchise Fees and Institutional Network = rent for use of the public rights - of -way The public right -of -way is essentially a strip of and that was acquired by the city from every property owner for utilities like water, sewer, electricity and telephone. Because cable television operators desire to utilize scarce and valuable public rights -of -way for private business purposes, they are required by federal and state law to obtain franchises from the member cities, which own, manage and maintain the public rights -of -way on behalf of their citizens. In return for the franchise, the cable company pays "rent," in the form of franchise fees (capped by federal law at 5% of the company's gross revenues from cable television service), channels and financial support for public, education and government (PEG) access programming, and Institutional Networks. A common analogy is the local public park. The city would not permit a privately owned coffee shop to operate in a public park or city hall without charging rent. The issue is no different for the public rights -of -way. Since the current franchise was granted in 1998, the cable company, currently Comcast, has added Internet access and telephone to its portfolio of services. Unfortunately, federal and state law prevents our cities from collecting any rent from these increasingly lucrative services. So, cable companies get free use of the public rights -of -way to provide these services. At the same time, Comcast's current proposal to the NSCC would essentially de -value the public rights -of -way by cutting its compensation to the Cities by more than half while requiring them to pay for the Institutional Network fiber that subscribers paid for after the 1998 franchise renewal.