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Executive Summary FRC's Review of Comcast's Formal Renewal Proposal Analog Spectrum The current franchise agreement with Comcast allows the NSCC to use/program eight (8) analog channels on the basic tier. 11 When Comcast converted all of the analog channels to a digital format last year, Comcast was able to re -capture a significant amount of bandwidth on the system. According to the 2014 FCC Form 1240 filed with the NSCC, the Basic service tier contains thirty-two (32) channels. If you assume conservatively that six (6) digital channels can be place in the space of one analog channel, Comcast was able to recapture approximately twenty-six (26) analog channels with this digital conversion. This allows Comcast to reprogram these re -captured twenty-six channels and with an assumed six digital channels for each analog channel re -captured, Comcast would be able to add one hundred and fifty-six (156) new digital services. The programming value of those new channels is quite significant. Additionally, Comcast might be able to use this re -captured analog spectrum to provide faster Internet speeds by bonding channels together and/or offer new services like home security services. Additionally and more importantly, the re -captured analog spectrum assigned to the eight (8) PEG channels has potentially violated the current franchise agreements in the franchise area. Assuming a reasonable valuation technique, FRC has estimated that the value of these lost analog PEG channels has a value to Comcast of approximately $1,250,000 annually. Comcast in its proposal has not considered the lost value of these re -captured analog PEG channels. Without this consideration,. Comcast will be unfairly able to enrich its profits from the current system by not compensating the NSCC for this franchise violation. Operatlncg, Deserves Comcast hasro osed that the NSCC/NSAC use some of its current reserves to offset capital p p and operating eratin costs on a going forward basis. The E -Consulting Group Report (ECG 12- completely mischaracterizes the reserves held by the NSCC and NSAC. ECG improperly lumps p y the NSCC and NSAC's reserves together. The NSCC's reserves are generated solely by operating reserves funded by the franchise fees provided by the member cities, not any reserves generated from PEG funding and therefore should not be used to fund NSAC needs. From the $2.1 million discussed in the ECG Report, over $400,000 pertains to the NSCC, leaving a balance of over $1.7 million for the NSAC.13 Again improperly suggesting, ECG would have -the NSAC use these reserves to fund future capital purchases without recognizing that approximately $100,000 of that so called NSAC reserve in the NSAC's checking account used to pay it monthly bills which should not be depleted under any reasonable theory. Also included in the so called reserves is a required deposit that the NSAC must maintain in the bank as part of its lease letter c Front Range Consulting, Inc. Page O g