Public Hearing, Consideration and Adoption of Resolution No. 2016-39:  A resolution of the Flagstaff City Council authorizing an Interim Renewal of Cable License Agreement with NPG Cable, LLC, doing business as Suddenlink (license to use City rights-of-way for cable services/facilities)

The City has a Cable License Agreement with NPG Cable, LLC, doing business as Suddenlink.  NPG has been providing cable services to the Flagstaff community since 1995.  The current license was issued in 2007 and expires December 31, 2016.  NPG is seeking to renew the license. The license allows NPG to construct, install, operate and maintain a cable services system in City rights-of-way.  Also by virtue of federal and/or state laws, Suddenlink may use the same system to provide internet services and telecommunications services without an additional license.  NPG pays the City an annual license fee of 5% of gross revenues from cable services as consideration for use of City rights-of-way.

City staff recommends that City approve an interim renewal license with NPG for up to four (4) months, and during that time negotiate a longer term license.  Applicable laws have changed significantly since 2007, and technologies are evolving. As a result, it is appropriate to revise the license.

NPG pays the City an annual license fee of 5% of gross revenues from cable services in the Flagstaff Community. The license fee has been increasing, despite competition from internet based video services.  License fee in FY14:  $460,609;  FY15:  $479,581; FY16: $497,573.  

The proposed interim renewal license fee is also set at 5% of gross revenues.  The renewal license will have a new more limited definition of "gross revenues" per state law.  (The existing license predated the change in state law.)  In May 2016 the City asked Suddenlink to estimate how the new definition of "gross revenues" will affect the license fee.  Suddenlink estimates that in 2017, City will receive approximately $51,000 less than in 2016.  Thus, the budget impact for this fiscal year ending June 30, 2016 is expected to be approximately $25,000.

The license fee helps pay City costs for acquisition and maintenance of City rights-of-way.
 

COUNCIL GOALS:
3) Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics
8) Improve effectiveness of notification, communication, and engagement with residents, neighborhoods and businesses and about City services, programs, policies, projects and developments
9) Improve the economic quality of life for Flagstaff through economic diversification, and by fostering jobs and programs that grow wages and revenues

REGIONAL PLAN:
Policy ED.3.9.  Develop infrastructure so that the community has access to high-speed internet and telecommunications.

In 1995 the City Council issued a cable services license agreement to NPG Cable, Inc.   In 2007 the City Council issued a renewal license to NPG. NPG LLC is the current licensee as successor in interest.  In 2012 and again in 2015 the City Council approved transfer of control of the license, however the licensee remains the same. 

1.  Approve Interim Renewal of Cable License Agreement
            Pros:  Operational continuity, allows time to consider what revisions are appropriate

2. Do not approve Interim Renewal of Cable License Agreement
            Cons:  Operational uncertainty, loss of fees for use of rights-of-way, legal risk

3.  Approve longer term renewal with same terms and conditions
            Pros:  Avoid risk of future changes in state and federal laws that erode local control.
            Cons: Revisions are appropriate to conform with current laws and evolving technologies. 

4.  Approve renewal with different terms and conditions (e.g. duration, or lesser fee)
         

Suddenlink has established a cable services/telecom network throughout the City and plays an important role in the community providing entertainment and communications. 

No funds budgeted.

Inform
Consult

The City has published and posted notice of a public hearing per A.R.S. Section 9-507 regarding the proposed renewal to solicit public comments.