06-11-2014 Council Agenda - Laserfiche WebLink

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May 23, 2014 Page 15 Formal franchise renewal The ].-Net is another issue mentioned in the Supplemental Staff Report. The NSCC's original report and the RI:RP do not provide information showing current usage, expected needs, or community interest in an I-Net—it just demands it and asks for capital funding for the network paid by Comcast subscribers. Federal law, meanwhile, treats demands for in-kind goods and services as franchise fees that count toward the 5% -franchise -fee limitation. Comcast proposed to provide an I -Net comparable to that under the current franchise, and offers the portion of rhe network used for PEG - purposes for no charge to the NSCC. But if the NSCC wants to use the I -Net for more than that—for example, for interact and data services, for telephone—and if the City of Roseville leverages (as it does) the 1 -Net into data services that it provides to nongovernmental entities for a charge, then Comcast should be able to seek fair -market value for that portion. If the cities refuse to pay fair -market value, filen the law provides that Comcast can offset that in-kind value against franchise -fees. The NSCC's attorney and consultants like to say that because Comcast "recouped" the cost of building the I -Net, it cannot charge for the fair -market value to use the 1 -Net. But the I -Net is Comcast's property and this is a bizarre economic argument, in any context: The NSCC's argument is premised on the belief that when a private business has recouped the cost of building something, the government can use that property any way it wants, for free, even for its own commercial gain. It would be interesting to hear if the member cities agree with this economic principle if it were to be applied to other business operations in their cities. This flawed argument should not be adopted by the cities. For the reasons stated above, and as explained in Comcast's proposal, a denial of Comcast's cable franchise would be unwarranted and unreasonable. III. The NSCC's process against Comcast 'l'he NSCC has not handled these proceedings as a neutral decision - maker in a proper quasi-judicial process. Since the beginning of these proceedings, the NSCC's executive director has (1) acted with the apparent purpose of maximizing PEG -related demands benefiting the NSAC and (2) taken an antagonistic posture toward Comcast. The executive director appears to take the view that the threat of franchise denial through the formal process can be used as leverage to compel Comcast to provide PEG operational funding.'l'he executive director, in Comcast's view, has provided skewed facts to the Commission, always in a negative light against Comcast.