Chapter 14.12


14.12.010    Additional definitions.

14.12.020    Applications for grant or renewal of franchises.

14.12.030    Transfers.

14.12.040    Minimum requirements.

14.12.050    Special termination rules.

14.12.060    Rate regulation.

14.12.070    Fee in lieu of franchise fee.

14.12.080    Exclusive contracts.

14.12.010 Additional definitions.

“OVS agreement” means a contract entered into in accordance with the provisions of this title between the city and an OVS franchisee setting forth the terms and conditions under which the franchise will be exercised. (Ord. 04-646 § 1 (3.1)).

14.12.020 Applications for grant or renewal of franchises.

A. Initial and Renewal Franchise Application.

1. A written application shall be filed with the city for grant of an initial or renewal franchise.

2. To be acceptable for filing, a signed original of the application shall be submitted together with six copies. The application must conform to any applicable request for proposals, and contain all information required under subsection (B) of this section. All applications shall include the names and addresses of persons authorized to act on behalf of the applicant with respect to the application.

B. Contents of Applications. The city manager may specify the information that must be provided in connection with a request for proposals or an application for an initial or renewal franchise (see Appendix B). At a minimum, each application must: identify the applicant, where it plans to construct its system, and the system construction schedule; show that the applicant will provide adequate channels, facilities and other support for public, educational and government use (including institutional network use) of the OVS; and show that the applicant is financially, technically and legally qualified to construct and operate the OVS. The application must contain the following information:

1. Identity of the applicant; the persons who exercise working control over the applicant; and the persons who control those persons, to the ultimate parent.

2. A proposal for construction of the open video system that includes at least the following:

a. A description of the services that are to be provided over the facility.

b. Identification of the area of the city to be served by the proposed system, including a description of the proposed franchise area’s boundaries.

c. The location of the proposed facility and facility design, including a description of the miles of plant to be installed, and a description of the size of equipment cabinets, shielding and electronics that will be installed along the plant route, the power sources that will be used and a description of the noise, exhaust and pollutants, if any, that will be generated by the operation of the same.

d. A map of the route the facility will follow; a designation of the portions of the system that will be placed above ground and the portions that will be placed underground, and the construction techniques that the operator proposes to use in installing the system above ground and underground; a schedule for construction of the facility, describing when and where construction will begin, how it will proceed, benchmarks for completion of phases, and when it will be completed; and the expected effect on right-of-way usage, including information on the ability of the public rights-of-way to accommodate the proposed system, including, as appropriate given the system proposed, an estimate of the availability of space in conduits and an estimate of the cost of any necessary rearrangement of existing facilities.

e. A description, where appropriate, of how services will be converted from existing facilities to new facilities, and what will be done with existing facilities.

3. Evidence satisfactory to the city that the applicant has the financial resources to complete the proposed project, and to construct, operate and repair the proposed facility over the franchise term. It is not the intent of the city to require an applicant to prove that the services it proposed to offer will succeed in the marketplace.

4. Evidence satisfactory to the city that the applicant is technically qualified to construct, operate and repair the proposed facility. At a minimum, the applicant must show that it has experience or resources to ensure that work is to be performed adequately, and can respond to emergencies during and after construction is complete.

5. Evidence satisfactory to the city that the applicant is legally qualified, which proof must include a demonstration that the applicant:

a. Has received, or is in a position to receive, necessary authorizations from state and federal authorities;

b. Has not engaged in conduct (fraud, racketeering, violation of antitrust laws, consumer protection laws, or similar laws) that allows city to conclude the applicant cannot be relied upon to comply with requirements of franchise, or provisions of this title;

c. Is willing to enter into a franchise, to pay required compensation and to abide by the provisions of applicable law, including those relating to the construction, operation or maintenance of its facilities, and has not entered into any agreement that would prevent it from doing so;

6. An affidavit or declaration of the applicant or authorized officer thereof certifying the truth and accuracy of the information in the application, and certifying that the application meets all requirements of applicable law.

7. An applicant may show that it would be inappropriate to deny it a franchise by virtue of the particular circumstances surrounding the acts or omissions at issue; the steps taken by the applicant to cure all harms flowing therefrom and to prevent their recurrence; and the lack of involvement of the applicant’s principals, or the remoteness of the acts or omissions from the operation of open video system facilities.

8. To the extent that the applicant is in any respect relying on the financial or technical resources of another person, including another affiliate, the proofs should be provided for that person. An applicant will be presumed to have the requisite financial, or technical or legal qualifications to the extent such qualifications have been reviewed and approved by a state agency of competent jurisdiction; or if the applicant is a holder of a franchise in the city for a cable system or open video system, and conduct under such other franchise provides no basis for additional investigation.

C. Procedure for Applying for Grant of a Franchise.

1. A person may apply for an initial or renewal franchise on its own initiative or in response to a request for proposals. Upon receipt of an application the city shall promptly proffer the applicant a proposed OVS agreement, which shall be mailed to the person requesting its issuance and made available to any other interested party. The city may request such additional information as it deems appropriate.

2. An applicant shall respond to requests for information completely, and within the time directed by the city, and must strictly comply with procedures, instructions, and requirements the city may establish.

3. An application may be rejected if it is incomplete or the applicant fails to follow procedures or respond fully to information requests.

D. Evaluation. In evaluating a franchise application, the city may consider the following:

1. The extent to which the applicant has substantially complied with the applicable law and the material terms of any existing city OVS franchise;

2. Whether the applicant has the financial, technical, and legal qualifications to hold an OVS franchise;

3. Whether the application satisfies any minimum requirements established by the city for, or will otherwise provide adequate public, educational, and governmental use capacity, facilities, or financial support (including with respect to institutional networks);

4. Whether issuance of a franchise would require replacement of property or involve disruption of property, public services, or use of the public rights-of-way;

5. Whether the approval of the application may eliminate or reduce competition in the delivery of cable service in the city.

E. Issuance. If the city finds that it is in the public interest to issue a franchise considering the factors above, and such other matters as it is required or entitled to consider, and subject to the applicant’s entry into an appropriate OVS agreement, it shall issue a franchise. Prior to deciding whether or not to issue a franchise, the city may hold one or more public hearings or implement other procedures under which comments from the public on an application may be received.

F. Legal Qualifications. In order to be legally qualified:

1. The applicant must be willing to comply with the provisions of this title and applicable laws, and to comply with such requirements of an OVS agreement as the city may lawfully require.

2. The applicant must not hold a cable system franchise, or have pending an application for a cable system franchise.

3. The applicant must not have had any cable system or OVS franchise validly revoked (including any appeals) by the city within three years preceding the submission of the application.

4. The applicant may not have had an application for an initial or renewal cable system franchise to the city denied on the ground that the applicant failed to propose a cable system meeting the cable-related needs and interests of the community, or as to which any challenges to such franchising decision were finally resolved (including any appeals) adversely to the applicant, within three years preceding the submission of the application.

5. The applicant may not have had an application for an initial or renewal OVS franchise denied on any grounds within three years of the application.

6. The applicant shall not be issued a franchise if, at any time during the 10 years preceding the submission of the application, the applicant was convicted of fraud, racketeering, anticompetitive actions, unfair trade practices or other conduct of such character that the applicant cannot be relied upon to deal truthfully with the city and the subscribers or to substantially comply with its obligations.

7. The applicant must have the necessary authority under California and federal law to operate an OVS, and must be certified by the FCC under Section 653 of the Cable Act.

8. The applicant shall not be issued a franchise if it files materially misleading information in its application or intentionally withholds information that the applicant lawfully is required to provide.

9. For purposes of subsections (F)(2) through (5) of this section, the term “applicant” includes any affiliate of applicant.

G. Exception. Notwithstanding subsection (F) of this section, an applicant shall be provided a reasonable opportunity to show that a franchise should be issued even if the requirements of subsections (F)(4) and (5) of this section are not satisfied, by virtue of the circumstances surrounding the matter and the steps taken by the applicant to cure all harms flowing therefrom and prevent their recurrence, the lack of involvement of the applicant’s principals, or the remoteness of the matter from the operation of a cable system. (Ord. 04-646 § 1 (3.2)).

14.12.030 Transfers.

A. City of Fortuna Approval Required. No transfer shall occur without prior written notice to and approval of the city.

B. Application.

1. A franchisee shall promptly notify the city of any proposed transfer, and submit an application for its approval.

2. The city manager may specify information that must be provided in connection with a transfer application. At a minimum, an application must: describe the entities involved in the transaction and the entity that will hold the franchise; describe the chain of ownership before and after the proposed transaction; show that the entity that will hold the franchise will be legally, financially, and technically qualified to do so; attach complete information on the proposed transaction, including the contracts or other documents that relate to the proposed transaction, and all documents, schedules, exhibits, or the like referred to therein; and attach any shareholder reports or filings with the Securities and Exchange Commission (“SEC”) that discuss the transaction.

3. For the purposes of determining whether it shall consent to a transfer, the city or its agents may inquire into all qualifications of the prospective transferee and such other matters as the city may deem necessary to determine whether the transfer is in the public interest and should be approved, denied, or conditioned. If the transferee or franchisee refuse to provide information, or provide incomplete information, the request for transfer may be denied.

C. Determination by the City.

1. In deciding whether a transfer application should be granted, denied or granted subject to conditions, the city may consider the legal, financial, and technical qualifications of the transferee to operate the OVS; whether the incumbent OVS operator is in compliance with its OVS agreement and this title and, if not, the proposed transferee’s commitment to cure such noncompliance; whether the transferee owns or controls any other OVS or cable system in the city, and whether operation by the transferee may eliminate or reduce competition in the delivery of cable service in the city; and whether operation by the transferee or approval of the transfer would adversely affect subscribers, the public, or the city’s interest under this title, the OVS agreement, or other applicable law.

2. In order to obtain approval of a transfer, an applicant must show, at a minimum, that: the transferee is qualified; the transfer will not adversely affect the interests of subscribers, the public, or the city; and that noncompliance issues have been resolved. No application shall be granted unless the transferee agrees in writing that it will abide by and accept all terms of this title and the franchise, and that it will assume the obligations, liabilities, and responsibility for all acts and omissions, known and unknown, of the previous franchisee for all purposes. The proposed transferee shall pay all reasonable costs incurred by the city in reviewing and evaluating the applications. (Ord. 04-646 § 1 (3.3)).

14.12.040 Minimum requirements.

A. PEG Access. No OVS operator shall be issued a franchise, or may commence construction of an OVS system, until (1) it agrees to match in all respects the highest PEG obligations borne by any cable operator in the city; or (2) it agrees to PEG obligations acceptable to the city.

B. Institutional Network. Any OVS operator that constructs an I-Net must match in all respects the highest I-Net obligations borne by any cable operator in the city, unless it agrees to alternative I-Net obligations acceptable to the city.

C. Construction Provisions. Every OVS agreement shall specify the construction schedule that will apply to any required construction, upgrade, or rebuilding of the OVS. The schedule shall provide for prompt completion of the project, considering the amount and type of construction required.

D. Testing. Each OVS operator shall perform at its expense such tests as may be necessary to show whether or not the franchisee is in compliance with its obligations under this title or a franchise.

E. Consumer Protection Provisions. Every franchisee must satisfy customer service consumer protection requirements established from time to time under state or local law and applicable to OVS. (Ord. 04-646 § 1 (3.4)).

14.12.050 Special termination rules.

If a franchisee’s FCC certification is revoked or otherwise terminates as a result of the passage of time or as a matter of law, the city may revoke the OVS franchise after a hearing. The OVS franchise may also be revoked if federal regulations or statutory provisions governing OVS are declared invalid or unenforceable, or are repealed. (Ord. 04-646 § 1 (3.5)).

14.12.060 Rate regulation.

The city may regulate a franchisee’s rates and charges except as prohibited by law, and may do so by amendment to this title, separate ordinance, by amendment to an OVS agreement, or in any other lawful manner. (Ord. 04-646 § 1 (3.6)).

14.12.070 Fee in lieu of franchise fee.

A. OVS Operators. In lieu of the franchise fee required by Chapter 14.08 FMC, an OVS franchisee shall pay a fee of five percent of the gross revenues of the franchisee, its affiliates or any OVS operator of the OVS.

B. Persons Leasing OVS Capacity.

1. A person leasing capacity from an OVS operator, other than a person whose revenues are included in the payment made under subsection (A) of this section shall pay the city a fee, in lieu of the franchise fee required by Chapter 14.08 FMC, of five percent of the gross revenues of such person.

2. Notwithstanding the foregoing, where franchisee charges a person, other than an affiliate, to use its OVS (the “use payments”); and that person recovers those use payments through charges to its subscribers that are included in that person’s gross revenues; and that person fully recovers the use payments through the charges to its subscribers and pays a fee on those charges pursuant to subsection (A) of this section, then the franchisee may deduct from its gross revenues the use payments it receives from that person. (Ord. 04-646 § 1 (3.7)).

14.12.080 Exclusive contracts.

A franchisee may not require a subscriber or a building owner or manager to enter into an exclusive contract as a condition of providing or continuing service, nor may a franchisee enter into any arrangement that would effectively prevent other persons from using the OVS to compete in the delivery of cable services with a franchisee or its affiliates. (Ord. 04-646 § 1 (3.8)).