Consideration and Approval of:  Consent to Transfer of Control of Cable License Agreement; Amendment No. 1 to the Broadband Network Agreement.

Approve/Deny: 1) Consent to Transfer of Control of Cable License Agreement from Cequel Communications, LLC to Nespresso Acquisition Corporation; 2) Amendment No. 1 to Broadband Network Agreement; and 3) authorize the Mayor to execute the necessary documents.

Flagstaff City Code and the Cable License Agreement between the City and NPG Cable, LLC doing business as Suddenlink requires the City to give prior consent for transfer of control from the parent company Cequel to the new equity investor Nespresso.
               
The Broadband Network Agreement between the City and NPG Cable, Inc. should be amended to reflect that NPG Cable, Inc. has changed to NPG Cable, LLC.

No costs to the City are associated with the proposed transfer and amendment.  Staff has incurred administrative time associated reviewing the application for transfer.

Effective governance.

No.

1.   Application for Transfer of Control of the Cable Television License:
a. Approve Consent to Transfer of Control of the Cable Television License from parent company Cequel to Nespresso, based upon representations that the Licensee Suddenlink will continue to meet the legal, financial and technical qualifications for operating the cable system in the City; or
b. Take no action on the application, in which case the application shall be deemed approved; or 
c. Deny the application, if the City Council finds that transfer of control of the License will adversely affect the Licensee’s abilities to perform.

2.  Amendment No. 1 to the Broadband Network Agreement:
a. Approve Amendment No. 1, to reflect that NPG Cable, Inc. changed to NPG Cable, LLC as of April 1, 2011; or
b. Reject Amendment No. 1. 

Cable Television License Agreement
On February 5, 2007 the City issued a Cable License Agreement to NPG Cable, Inc.  The Cable License Agreement allows the licensee to use the city rights-of-way for maintenance and operation of a cable television system.    

On February 15, 2011 the City approved transfer of the Cable License Agreement from NPG Cable, Inc to NPG Cable, LLC doing business as Suddenlink.   

On or about July 26, 2012 the City received an application for transfer of control of the Cable Television License from Cequel Communications Holdings, LLC (“Cequel”), as parent company of Suddenlink, to Nespresso Acquisition Corporation (“Nespresso”).  Suddenlink will remain the actual Licensee responsible for operating the cable system in the City of Flagstaff.

The application is in Form 394 as required by the Federal Communications Commission (“FCC”).  A copy of Form 394 is on file with the City Clerk’s Office. 

City staff has reviewed the application.  The transaction will result in a substitution of equity investors.  Based on the representations contained therein, it appears that the Licensee’s legal, financial, and technical operations will not be adversely affected.  Licensee’s performance to date is satisfactory.

The process for transfer is governed by City Code Section 3-09-002-0009.  This section provides that the City shall not grant a transfer unless the applicant (Nespresso) accepts the License.  The proposed Consent to Transfer of Control requires Nespresso and License to affirm Licensee’s performance under the License and Broadband Network Agreement shall not be adversely affected by the transfer.

Pursuant to federal regulations, if the City does not act within 120 days from receipt of an application, the application is deemed approved.  Although the City Council may simply take no action on the application, formal approval of the transfer provides additional legal protections to the City.

The City Council may deny the application only if it finds that the transfer will adversely affect Licensee’s legal, financial or technical abilities to perform under the License.

Broadband Network Agreement.
On February 5, 2007, the City entered into a separate Broadband Network Agreement with NPG Cable, Inc. for construction and operation of a communications infrastructure for the City.  Any assignment requires the consent of the other party, and the agreement is binding on any person who operates the NPG cable system.  See Agreement, Section 17(g).

In 2011 when NPG Cable, Inc. was changed to NPG Cable, LLC doing business as Suddenlink, the Broadband Network Agreement was not amended to reflect the change of parties.   However, Suddenlink has assumed performance.

Amendment No. 1 to the Broadband Network Agreement serves to correctly identify the current parties and assists in records management.

The City’s primary consideration is to ensure the Licensee continues to operate and maintains its cable system in the public rights-of-way in accordance with the License and the City Code. 

The community benefits from the continued operation of a cable television business within the City.  

Inform

11/20/2012  EAB