Item #04
Date: August 16, 2022
To: Mayor and City Council
From: Jim Schaad, City Manager
Subject: State Digital Infrastructure & Video Competition Act (“DIVCA”) Recommendation:
Pass a Motion to 1) adopt Ordinance 1442 to Implement Provisions of the Digital Infrastructure and Video Competition Act of 2006 by deleting Chapter 5.40 “Cable Television Systems,” and adding a new Chapter
5.40 “State Video Service Franchises,” to Title 5 of the Municipal Code, by title only and 2) waive the second reading of Ordinance 1442 amending title 5.40 the Marysville Municipal Code.
Background:
Effective on January 1, 2007, DIVCA created a regulatory structure in which the California Public Utility Commission is the sole franchising authority such that video service providers (e.g. AT&T, the City’s incumbent cable/video operator) seek a franchise from the state prior to operation in the City. However, the City can continue to retain certain local control such as administration and implementation of customer service penalties and other provisions.
Discussion & Analysis:
In order to retain local control, DIVCA requires that the City adopt an ordinance to provide for customer service penalties and to collect Public, Educational and Governmental (PEG) fees. DIVCA also provides that (i) franchise fees remain at 5% (unless the City passes an ordinance implementing a lower fee), (ii) cities have the power to audit the State franchise holders, (iii) generally a state franchisee must match the number of PEG channels provided by the incumbent and (iv) State franchise holders must comply with existing State mandated customer service standards.
The proposed ordinance permits the City to enforce customer service standards by collecting the State established penalties and memorializes the City’s intention to continue collecting the 5% franchise fee. In addition, the proposed ordinance seeks to recoup a 1% PEG fee to support PEG channel facilities should the City ever want to collect PEG fees for the purposes of obtaining the providing a PEG channel via cable services to the community.
With respect to video providers customer service standards, DIVCA and the proposed ordinance give the City the authority to impose monetary penalties for material breaches of these standards. These penalties start at $500 per day ($1,500 maximum per occurrence), with the ability to increase to $1,000 per Item #04
day/$3,000 per occurrence and $2,500 per day/$7,500 per occurrence in the event of second and third material breaches, respectively, within a 12-month period.
In essence, the proposed ordinance: 1) requires State franchise holders to pay the City a franchise fee equal to 5% of its gross revenues, 2) establishes a 1% fee to support Public, Education and Governmental (PEG) facilities, 3) establishes the City’s right to annually audit the franchise holder’s business records, 4) clarifies that the franchise holder’s facilities are subject to the City’s existing undergrounding requirements, and 5) requires the franchise holder provide the City with copies of its CPUC application seeking to operate within the City.
Alignment with City Council Goal(s):
Goal #3: Improve Infrastructure
Attachment:
1) Ordinance 1442