Staff recommends repeal of Article 7-900, BMCC, and declaring the same null and void, and further providing that Billings, Montana City Code be amended by adding a new Article 7-900, BMCC, establishing  the renewal of a nonexclusive cable system franchise with Spectrum Pacific West, LLC, locally known as Charter Communications. Inc. ("Charter").

A cable system franchise is the right to construct and operate a cable television system over public rights-of-way for one-way video programming to multiple subscribers within a community.  A franchising authority is a state or local governmental body responsible for awarding cable system franchises.  A cable system operator may not offer cable television service without a franchise and may be required to pay up to a maximum of 5% of the annual gross revenues derived from the operation of its cable system within a local service area to a franchising authority; this is called a "franchise fee". 

In 2008, the City granted a nonexclusive cable system franchise to Bresnan Communications, presently set forth in Article 7-900, BMCC.  In 2013, the City authorized Charter Communications Operating, LLC, to assume control of Bresnan and extended its cable system franchise through July 2017. Since 2017, the City has annually extended this franchise in anticipation of negotiating a renewal franchise ordinance; presently, this franchise expires December 31, 2021. 

Charter Communications Operating LLC now operates as Spectrum Pacific West, LLC, locally known as Charter Communications, Inc. ("Charter").  Charter is a leading broadband connectivity company and cable operator headquartered in Stamford, Connecticut.  It is the second-largest cable system operator in the United States by subscribers and also provides broadband, voice, video, and mobile services under the brand name Spectrum to more than 31 million customers across 41 states.   Between 2016-2020, as one of the leading mass communication companies, Charter invested nearly $40 billion infrastructure and technology to the US economy.

Closer to home, Charter employs 610 people and serves 55 communities in Montana; its largest employment centers are housed in Billings, Missoula, and Bozeman. Charter serves approximately 248,000 Montana customers and extended its broadband access network to reach an additional 8,000 homes and small businesses in 2020 alone.   

In October 2020, new entrant cable system operator, TDS Metrocom, LLC, ("TDS"), made application to the City for the grant of a nonexclusive cable system franchise which was granted in April 2021 and is set forth in Article 7-1800, BMCC.   Based on federal law, a cable franchising authority may not grant exclusive cable franchises nor unreasonably refuse to grant additional competitive cable franchises.  Also, competitive cable system franchises should be governed by "substantially equitable" terms and conditions to promote fairness. Accordingly, the terms of the proposed renewal cable system franchise with Charter materially comport with those of the newly-adopted TDS franchise, including 1) definitions of franchise terminology; 2) franchise terms; 3) standards of service; 4) maximum payment of franchise fee, 5) equal collection of Public, Educational, and Governmental (PEG) support fee amounts; 6) provision of two (2) PEG High Definition Channels; 7) providing and maintaining fiber links to and from City Hall, the Stillwater Building, and the Community Seven Playback Center located at Lincoln Center; 8) and providing publicly available rates and services on a non-discriminatory basis. 

Finally, Staff submits that Charter meets the renewal threshold criteria, including:  1) Charter has complied with applicable law and the material terms of its existing cable system franchise; 2) Charter's past service under its existing cable system franchise has been reasonable in light of community needs and interests; 3) Charter has the financial, technical, and legal qualifications to continue to hold a cable system franchise; 4) Charter satisfies minimum cable system requirements to meet the community's future cable-related needs and interests; 5) Charter is willing to provide adequate PEG use capacity, facilities, and financial support; 6) renewal will not result in discrimination in the provision of services or grant an unfair competitive advantage; and 7) renewal will not eliminate or reduce competition in the delivery of cable services.  Thus, the City should grant Charter the proposed renewal franchise.




 

City and Charter Communications, Inc. ("Charter")

City Council may:

• Approve; or,
• Not Approve
• Should City Council Not Approve the adoption of the new proposed Article 7-900, BMCC, City Council shall issue a written decision explaining its denial; a refusal may not be unreasonably withheld.

Charter has submitted and paid a $5,000.00 (five thousand dollars) renewal application fee.  The City will continue to receive an annual 5% (maximum allowed under federal law) of the gross revenues derived from Charter's Billings cable system operations; this is called a "franchise fee".  During the past two fiscal years, Charter paid franchise fees in the following amounts:
FY 2020, $1,300,175;
FY 2021, $1,475, 204.

Article 7-900, BMCC, sets forth the grant of a cable system franchise to Bresnan Communications, LLC, now doing business as Charter.  This franchise has been in existence since 2008 and will expire at the end of 2021.  This year, City Administration has engaged in negotiations with Charter and proposes to repeal and replace Article 7-900, BMCC, to provide substantially equitable franchise terms and conditions with competitor TDS Metrocom, LLC.  City Staff submits that Charter meets the following renewal threshold criteria: 
1) Charter has complied with applicable law and the material terms of its existing cable system franchise;
2) Charter's past service under its existing cable system franchise has been reasonable in light of community needs and interests;
3) Charter has the financial, technical, and legal qualifications to continue to hold a cable system franchise;
4) Charter satisfies minimum cable system requirements to meet the community's future cable-related needs and interests;
5) Charter is willing to provide adequate PEG use capacity, facilities, and financial support
6) renewal will not result in discrimination in the provision of services or grant an unfair competitive advantage; and
7) renewal will not eliminate or reduce competition in the delivery of cable services. 

Should the City Council agree, then the City should repeal the expiring Bresnan/Charter franchise set forth in Article 7-900, BMCC, and adopt proposed new Article 7-900, BMCC, granting Spectrum Pacific West, LLC, doing business locally as Charter Communications, Inc. (Charter) a renewal cable system franchise. 
Please note:  A renewal may not be unreasonably refused, and should the City deny the renewal, the City shall issue a written decision explaining its denial.