HomeMy WebLinkAboutItem 25 Telecommunications Ordinance Update
AGENDA ITEM SUMMARY Meeting Date:
Meeting Type:
Department:
Staff Contact:
S P R I N G FIE L D StatTPhone No:
C I T Y C 0 U N C I L Estimated Time:
ITEM TITLE: TELECOMMUNICATIONS ORDINANCE UPDATE
July 16, 2007
~~~~ari:rs~s:on ~
Len Goodwi /lib) tS .
726-3685 "(TT
15 minutes
ACTION
REQUESTED:
Conduct a second reading and approve or reject AN ORDINANCE
AMENDING ARTICLE 4 OF THE SPRINGFIELD MUNICIPAL CODE
TO PROVIDE FOR LICENSING OF UTILITIES, AMENDING
SECTIONS 4.600, 4.602, 4.604, 4.606, 4.608 4.610, 4.612, 4.614, 4.616,
4.618, 4.620, 4.622, 4.624, 4.700, 4.702, 4.704, 4.706, 4.708, 4.710, 4.712,
4.714 AND 4.716, DELETING SECTIONS 4.626 AND 4.628, AND
SETTING AN EFFECTIVE DATE.
ISSUE
STATEMENT:
The City's current telecommunications ordinance, which reverted to its 1997
form when the Utility Tax was repealed, is in need of updating. In addition,
it is appropriate to modify the ordinance to account for the recent decision of
the Federal Communications decision on franchising of competitive cable
television.providers.
ATTACHMENTS: . A':
B:: .
C.
D.:
E.:
F.:
G.:
:C6uncil Briefmg Memorandum.
Draft Ordinance.
. Comments filed by Qwest Communications.
. Comments filed by Comcast.
Supplemental Comments filed by Qwest.
Alternative Draft Ordinance.
Staff Response to Industry Comments.
DISCUSSION/
FINANCIAL
IMPACT:
It is timely to make housekeeping revisions to the City's telecommunications
ordinance to assure that it continues to comply with recent interpretations of
Section 253 of the Telecommunications Act of 1996. In addition, it is timely
to modify the ordinance to accommodate the actions of the Federal
Communications Commission in providing alternative cable television
providers an accelerated path to access to public rights of way to provide
their services. At the public hearing on June 18, a representative of Comcast
testified and was granted leave to submit additional comments in writing.
Those comments, as well as comments received from Qwest
Communications, and a staff response to each set of comments are attached.
In light of these comments, a second version of the proposed ordinance has
been prepared. This Alternative Draft Ordinance makes ONLY the minimum
changes necessary to conform the City's Code to what we understand to be
the current state of the law and is presented in legislative format to make it
easier to see the changes proposed.
MEMORANDUM
City of Springfield
Date:
To:
July 10,2007
Gino Grimaldi, City Manager
Len Goodwin, Assistant Public W J
Director 71
Telecommunications Ordinance Update
From:
COUNCIL
BRIEFING
MEMORANDUM
Subject:
ISSUE: Council is considering an update of the City's ordinances relating to
telecommunications. This memorandum will comment on recent information supplied by two
members of the industry whose activities in the public rights of way are covered by these
provisions of the Municipal Code.
BACKGROUND: On June 18 the Council conducted a fIrst reading and public hearing on a
proposed ordinance to update the provisions of the Springfield Municipal Code relating to the
conduct of utility business within the City and the use by such businesses of public rights of
way. At the public hearing, a representative of Comcast testified and was offered an opportunity
to file additional written comments. The company has done so, as has Qwest Communications.
Those comments, and are attached to the memorandum which provides staff responses. In
addition, staff met with representatives of Qwest on June 29 and with a Comcast representative
on July 6. In this memorandum, staff will describe the changes requested by the industry and
provide responses to those suggestions. In addition, staff has prepared an alternative version of
the ordinance, which is limited to those housekeeping changes necessary to improve" .
,- conformance with recent decisions on the meaning of various provisions of the
Telecommunications Act of 1996.
DISCUSSION:
we discuss in detail the comments received from the industry in Attchment G. In addition to
those comments, at meetings with industry representatives we explored specific changes that
might be made to the ordinance. In some cases, staff does not recommend making the changes
sought by industry. In other cases the suggestions seem appropriate and modifications to the
draft have been made. For example, Qwest noted that in Section 4.600(6), defIning gross
revenues, the language as written excludes from gross revenue inter-utility sales only in the case
of electricity and natural gas. That narrow exclusion was not intended, and the provision has
been redrafted to exclude all inter-utility sales where the purchasing utility is not the ultimate
consumer. While Qwest continues to believe the definition of gross revenues is overbroad, staff
believes that it is appropriate to insure that the fee is not eroded by future technological change,
as have been current franchise fees.
In addition, Qwest expressed concern about the language in Section 4.608(4) which obliges a
competitive cable provider to file and comply with a plan for service to all residential customers
within a reasonable time. Qwest noted that when an existing service porivder has made service
available to substantially all of the market it is extremely improbable that a competitor would be
in a position to duplicate that full level of service penetration. As a result staff have modifIed
the language to require that the plan filed under that section contemplate serving a reasonable
proportion of residential customers, giving the City and the provider flexibility to reach an
Attachment A, Page 1 of 2
agreement that makes sense.
Comcast expressed concern that application of the ordinance was not clear with respect to
existing franchises. They expressed concern that the changes effected in the ordinance might
alter the franchise they now have if it is enacted before the City completes negotiations which
are now underway to grant Comcast an additional term and renew the franchise. While Comcast
prefers that language in the Municipal Code make it clear that franchise are not subject to
changes in law, staff is concerned that including such language in the Municipal Code could
have future unintended consequences. As the City transitions away from contractually based
franchise to licenses and permits, those licenses and permits would be subject to changes in
general laws of the City. To assure that this ability to continue to amend general laws is not lost
with respect to utility activities in the right of way, staff believes it would be more appropriate
to address Comcast's concerns by modifying Section 4 of the ordinance to make it clear that the
Code changes that are made do not affect existing franchises, or those that are renewals, without
an interruption, of existing franchises. That change is now included in Section 4.
Comcast has also suggested that the requirement that a separate license be issued for each type
of service should be changed to provide that a licensee could provide additional services simply
by providing notice, with securing an additional license or paying an additional fee. In part they
point to the cost burden ofthat additional licensee fee (presently set at $1250), as well as the
need to pay the annual administrative fee of$600. They also note that these figures are subject
to unilateral change by the Council. From a staff perspective the fees are a minimal cost, and
necessary to assure that the City recovers the cost of processing the license application and
administetingthe program. We continue to believe that there should be some formality attached '
to granting a utility the privilege of using a valuable asset of the citizens.
RECOMMENDED ACTION: Staff recommends that the Council adopted the original
version of the proposed ordinance, with the modifications discussed in this memorandum which
were made in light of industry comments on the original draft.
Attachment A, Page 2 of 2.
ORDINANCE NO.
AN ORDINANCE AMENDING ARTICLE 4 OF THE SPRINGFIELD MUNICIPAL CODE TO
PROVIDE FOR LICENSING OF UTILITIES, AMENDING SECTIONS 4.600, 4.602, 4.604,
4.606,4.6084.610, 4.612, 4.614, 4.616, 4.618, 4.620, 4.622, 4.624, 4.700, 4.702, 4.704, 4.706,
4.708,4.710,4.712, 4.714 AND 4.716, DELETING SECTIONS 4.626 AND 4.628, AND
SETTING AN EFFECTIVE DATE
THE COMMON COUNCIL OF THE CITY OF SPRINGFIELD ORDAINS AS FOLLOWS:
Section 1. Findings,
A. The 2001 Springfield Charter grants to the City all powers that the constitutions, statutes
and common law of the United States and of the State of Oregon now or hereafter
expressly or impliedly grant or allow.
B. Among the powers granted to the City is the power to collect fees for use ofthe public
ways within the City.
C. The State of Oregon has established limits on the amount of compensation that the City is
authorized to receive in consideration of allowing certain uses of the public ways. In
particular ORS 221.515 limits the amount of compensation the City may receive from
certain defined telecommunications carriers, and Section 221.450 limits the amount of
compensation the City may receive from certain other utilities if not franchised.
Section 2. Sections 4.626 and 4.628, Article 4, of the Springfield Municipal Code are hereby
deleted.
Section 3. Sections 4.600, 4.602, 4.604, 4.606, 4.608 4.610, 4.612, 4.614, 4.616, 4.618, 4.620,
4.622,4.624,4.700,4.702,4.704,4.706,4.708,4.710, 4.712, 4.714 and 4.716, Article 4 of the
Springfield Municipal Code, are amended to read as follows:
"UTILITY LICENSE
4.600 Definitions, Terms used in this Chapter shall have the following meanings:
(1) Affiliate: A person that (directly or indirectly) owns or controls, is owned or
controlled by, or is under common ownership or control with another person.
Attachment B, Page I of 8
(2)Cable Acts: The Cable Communications Policy Act of 1984, as amended by the Cable
Television Consumer Protection and Competition Act of 1992, as amended by The
Telecommunications Act of 1996 and as hereafter amended.
(3) Cable operator: An entity providing or offering to provide "cable service" within the
City as that term is defined in the Cable Acts.
. (4) Cable service: Shall have the same meaning as defined in the Cable Acts.
(5) FCC or Federal Communications Commission: The Federal administrative agency, or
lawful successor, authorized to regulate and oversee telecommunications carriers, services and
providers on a national level.
(6) Gross Revenue: gross revenue shall mean all inflows or enhancements of assets or
settlements of its liabilities (or a combination of both) of whatsoever kind and nature derived by
the utility and, any affiliates, subsidiaries or parent of the utility on account of goods or services
from the utility's ongoing operations within the City, including any and all subsidies, discounts,
rebates or other considerations or forbearances by the utility associated with the delivery of such
goods and services within the City, but excluding gross revenues earned in interstate commerce
or on the business of the United States Government and proceeds from the sale of bonds,
mortgages, or other evidence of indebtedness, securities, or stocks, or sales at wholesale by one
utility to another when the utility purchasing is not the ultimate consumer.
(7 Licensee: Any entity required to be licensed hereunder, whether or not granted a
license.
(8) Person: Any individual or entity engaging in activities regulated by this Chapter.
(9) Public street: Any highway, street, alley or other public right-of-way dedicated for
motor vehicle travel under the jurisdiction and control of the City.
(10) Public Utility easement: Any easement granted to the City, acquired, established,
dedicated or devoted for access for public utility facilities for construction, operations, and
maintenance purposes.
(11) Public way: Includes all public streets owned by the City and public utility easements
granted to the City, as those terms are defined herein, but only to the extent of the City's right,
title, interest or authority to grant permission to occupy and use such streets and easements.
(12) Tax Administrator: the Finance Director of the City or designee.
(13) Telecommunications carrier: Includes every person that directly or indirectly owns,
controls, operates or manages plant, equipment or property within the City, used or to be used for
the purpose of offering telecommunications service.
(14) Telecommunications facilities or system: The plant, equipment and property
including, but not limited to, cables, wires, conduits, ducts, pedestals, antennae, electronics and
other appurtenances used or to be used to transmit, receive, distribute, provide or offer telec-
ommunications service.
(15) Telecommunications provider: Includes every person who provides
telecommunications service over telecommunications facilities.
(16) Telecommunications service: The providing or offering for rent, sale or lease, or in
exchange for other value received, of the transmittal of voice, data, image, graphic and video
programming or any other information between or among points by wire, cable, fiber optics,
Attachment B, Page 2 of 8
laser, microwave, radio, satellite or similar facilities, with or without benefit of any closed
transmission medium and without regard to the nature of the transmission protocol employed.
(17) Utility: any public utility as defined in ORS 757.005(1), excluding a municipal
utility, any telecommunications utility as defined in ORS 759.005(1), any telecommunications
carrier, telecommunications provider or other entity providing telecommunications, electricity or
heating services.
(18) Utility facilities: The plant, equipment and property including, but not limited to, the
poles, pipes, mains, conduits, ducts, cables, wires, plant and equipment located under, on or
above the surface of the groundwithin the public ways of the City and used or to be used for the
purpose of providing utility services. The term shall include all such things owned by the utility
and all such things as the utility shall have a property interest in, including things held by the
utility or on its behalf under a lease, rental agreement or indefeasible right of use for a term of
years.
(19) Utility services: All services provided by a utility to customers located within the
city limits of the City of Springfield or provided to customers wherever located using facilities
physically located within the city limits of the City of Springfield.
4,602 Utility License Required. A utility license shall be required of any utility who desires to
provide service to persons in the City or to persons or areas outside the City using facilities
located in the City. No utility shall provide services within the City nor shall such utility provide
services outside the City using facilities located within the City unless licensed as provided
herein. Any violation of the provisions of this Chapter shall be a civil infraction as defined in
Springfield Municipal Code Section 5.602 subject to enforcement in accordance with Chapter V
of this Code. Carriers who utilize facilities of another licensed carrier for the distribution of their
services shall be required to have a separate license. The purpose of licensing is to:
(1) provide the City with accurate and current information concerning the utilities who
offer utility services within the City, or that own or operate utility facilities within the City;
(2) assist the City in enforcement of this Chapter;
(3) assist the City in the collection and enforcement of any municipal taxes, franchise
fees, license, permit or other fees or charges that may be due the City;
(4) assist the City in monitoring compliance with local, and, to the extent authorized by
law, with State and Federal laws.
4.604 License Application. Any utility that is required to have a utility license shall file an
application, using the form provided for such purpose, with the Public Works Department which
shall include the following information:
(1) The identity of the license applicant, including all affiliates of the applicant.
(2) A description of the utility services that are or will be offered or provided by licensee.
(3) Information to establish that the applicant has obtained or has applied for all other
governmental approvals and permits to construct and operate the facilities and to offer or provide
the services. Such approvals include, without limitation, any land use decisions. In the event any
other required government approval is not obtained any' license granted hereunder shall be
subject to modification to reflect the absence of such approval.
Attachment B, Page 3 of 8
(4) All fees, deposits or charges required pursuant to this Chapter.
4.606 Determination by the City. Within 90 days after receiving a complete application under
Section 4.604 hereof, the Public Works Director shall, if the application conforms with the
requirements of this Code, issue the license. If the application is denied, ~he denial shall be in
writing and state the reasons for denial.
4.608 Utility License, (1 )The license granted hereunder shall authorize and permit the licensee,
subject to the provisions of the Springfield Municipal Code, and other applicable provisions of
state or federal law, to operate the utility and provide the utility services covered by the license.
The license shall authorize the licensee to place facilities in, and occupy, the public ways of the
City for so long as the licensee shall comply with the provisions of this code, and continue to
hold any and all licences and permits required by state or federal law for the provision of such
services as covered by this license; provided, however that all work, construction, placement or
operation of such facilities shall be in complIance with this code. Nothing in such license shall
authorize the licensee to provide other or different services than those authorized by the license
or to use the facilities or propeliy of the City other than public ways, or the facilities or property
of another, including agencies such as the Springfield Utility Board, which use, if any shall be
subject to agreement with the owner of such facility or property and any applicable provisions of
law. Nothing in such license shall operate or be construed as an approval of such business or a
regulation of the practices of such business.
(2) The City reserves the right, in every event, without limitation, to:
(a) construct, install; maintain and operate any public improvement, work or
facility in, on, over or under the public ways;
(b) perform or authorize or direct the performance of any work that the City
may find desirable or convenient in, on, over or under any public way; or
(c) vacate, alter, or close any public way; provided, however, that no vacation
shall obligate a utility to remove or abandon any facility located within such
public way; or
(d) require, in the public interest, the removal or relocation, temporarily or
permanently, of facilities maintained by the utility in the public ways of the City,
pursuant to the provisions of Chapter 3 of this Code.
(3) Whenever the City shall perform or cause or permit to be performed, any work in the
public way or the vicinity of the public way where such work may disturb or interfere with a
utility's facilities, the City shall, or shall require its permittee, to notify, in writing, the utility
sufficiently in advance of such contemplated work to enable utility to take such measures,
including removal or relocation of such facilities, as may be deemed necessary to protect such
facilities, at its own expense.
(4) Cable Service.
(a) Any licensee providing cable service shall provide public, educational and
governmental channel capacity as provided in the Cable Acts. Unless otherwise provided in a
Public Way Use Agreement, such channel capacity shall be substantially equivalent to that
Attachment B, Page 4 of 8
provided in the community by any other provider of cable service at the time the license is
granted.
(b) Any licensee providing cable service shall, unless otherwise provided in a
Public Way Use Agreement, as a condition of its license, file and comply with a plan for making
service available to a reasonable proportion of all residential addresses within the City within a
reasonable time of the commencement of service.
4.610 Nonexclusive Grant. No license granted hereunder shall confer any exclusive right,
privilege, license or franchise to occupy or use the public ways of the City for delivery of utility
services or any other purposes.
4,612 Rights Granted. No license granted hereunder shall convey any right, title or interest in
the public ways, but shall be deemed a license only to provide utility services and use and occupy
the public ways for the limited purposes and term stated in the grant. Further, no license shall be
construed as any warranty of title.
4.614 Term of Grant. A license granted hereunder shall be in effect for a term of five (5) years.
4.616 Coordination of Activities. All holders of a License shall be obliged to coordinate their
activities affecting the public ways and shall be obliged to participate in coordination meetings to
be held by the City not less than annually for the purpose of facilitating such cooperation and
coordination.
4,618 Amendment of Grant. A new license application and grant shall be required of any
utility that desires to extend additional or different services in the City which are not included in
a license previously granted under this Chapter.
4.620 Renewal Applications. A licensee that desires to renew its license shall, not more than
180 days nor less than 90 days before expiration of the current license, file an application with
the City for renewal of its license which shall include the information required pursuant to
Section 4.604.
4.622 Renewal Determinations. Within 90 days after receiving a complete application under
Section 4.620 hereof, the Public Works Director shall issue a written determination applying the
following standards, as applicable, and, if the application conforms with the requirements of this
Code, grant the application:
(1) Compliance with requirements of applicable State and federal laws and regulations.
(2) The applicant's compliance with the requirements of this Chapter and any Public Way
Use Agreement. If the renewal application is denied, the written determination shall include the
reasons for non-renewal.
4.624 Obli~ation to Cure As a Condition of Renewal. No license shall be renewed until any
existing violations or defaults in the licensee's performance of the requirements of this Chapter,
Attachment B, Page 5 of 8
have been cured, or a plan detailing the corrective action to be taken by the licensee has been
approved by the City.
UTILITY LICENSE - FEES AND COMPENSATION
4.700 Purpose. It is the purpose of Sections 4.700 through 4.714 to provide for the payment
and recovery of all direct and indirect costs and expenses of the City related to the enforcement
and administration of this Chapter.
4.702 Application and Review Fee.
(1) Any applicant for a license, including a renewal or amendment of an existing license,
shall pay a fee fixed by resolution of the Council.
(2) The application and review fee shall be deposited with the City as part of the
application filed.
(3) An applicant whose license or franchise application has been withdrawn, abandoned
or denied within sixty (60) days of its application and review fee written request, shall be
refunded the balance of its deposit under this section, less:
(i) the non-refundable portion of the application and review fee, as fixed by
resolution of the Council, or
(ii) All ascertainable costs and expenses incurred by the City in connection
with the application, whichever is greater.
4.704 Other City Costs. In addition to the application and review fee, all license or franchise
grantees shall, within thirty (30) days after written demand therefor, reimburse the City, to the
extent permitted by law, for all direct and indirect costs and expenses incurred by the City in
connection with any issuance, modification, amendment, renewal or transfer of the license or
franchise or any license or franchise agreement.
4.706 Fee for use of Public Ways,
(1) (a) All persons not parties to a franchise or Public Way Use Agreement and occupying
the public ways for delivery of utility service shall pay to the City of Springfield a Utility Fee in
the amount of 5 percent of gross revenues, as herein defined, subject to limitations in other state
or federal laws.
(b) All persons not parties to a franchise or Public Way Use Agreement and occupying
the public ways for placement of utility facilities but not providing utility service within the City
shall pay a fee, in an amount fixed by resolution of the Council for each foot or portion thereof
occupied, subject to limitations in other state or federal laws.
(2) This fee shall be in addition, and not in lieu of any fees or charges provided under this
Municipal Code.
(3) unless otherwise agreed such fee shall be paid quarterly, on or before the 45th day
following the end of the calendar quarter.
Attachment B, Page 6 of 8
4.708 Annual Fees. Each license grantee shall pay an annual license fee to the City in an
amount fixed by Council resolution as reimbursement for the City's costs in administering this
chapter and in connection with reviewing, inspecting and supervising the use and occupancy of
the public ways on behalf of the public and existing or future users.
4.710 Compensation for City Property. lfthe right is granted, by lease, license, franchise or
other manner, to use and occupy City property other than the public ways for the installation of
facilities, the compensation to be paid shall be fixed by the City and shall be separate and distinct
from any fees imposed n sections 4,702-4.708.
4.712 Regulatory Fees and Compensation Not a Tax. The regulatory fees and costs provided
for in Sections 4.700 through 4.714, and any compensation charged and paid for City property
provided for in Section 4.710, are separate from, and additional to, any and all federal, state, local
and City taxes as may be levied, imposed or due from a utility, its customers or subscribers, or on
account of the lease, sale, delivery or transmission of utility services.
4,714 Penalties and Interest for Late Payment. If any fee provided for herein shall not be
timely paid, a penalty in the amount of 10 percent of such fee shall be assessed and due as of the
date the underlying fee was due. Intereston fees and penalties shall accrue at the rate of 1.5
percent per month, commencing with the fifteenth day after the fee or penalty shall be due.
~
4,716 Audits. The City may examiue the books and records ofthe utility to verify the amounts
due under a franchise, Public Way Use agreement or fee in lieu thereof as provided in Section
4.706. The utility shall either maintain such books and records at a location within the State of
Oregon or, in the alternative, shall provide them to the City when requested, at no expense to the
City. In the event such examination discloses an underpayment in the amount due to the city of
more than five percent, the City may impose a penalty of 10 percent of the additional amount
due, plus costs of the audit, and interest as provided herein from the original date due."
Section 3. Severability. Should any court of competent jurisdiction determine that a section or
part of a section of this ordinance is invalid, such invalidity shall not impair the effect or validity
of the remaining sections or parts of sections.
Section 4. Effective Date. This ordinance shall become effective on August 17,2007. Any
utility required to be licensed pursuant to Section 4.602 and occupying the public ways as of such
effective date pursuant to a franchise or Public Way Use Agreement shall be deemed to have
complied with the provisions of Section 4.602 during the term of such franchise or Public Way
Use Agreement including any renewal thereof without interruption. The provisions of such
Franchise or Public Way Use Agreementshall not be altered by operation of this ordinance.
ADOPTED by the Common Council of the City of Springfield this _ day of
2007, by a vote of _ for and _ against.
Attachment B, Page 7 of 8
APPROVED by the Mayor of the City of Springfield this_day of
,2007.
Mayor
ATTEST:
Amy Sowa, being first duly sworn, deposes and says that Sidney W. Leiken, to me
personally known and known by me to be the person described in the foregoing instrument did
sign this ordinance with his hand in my presence this _ day of , 2007.
CITY RECORDER
REV!EWED & APPROVED
A~FOR[\/j
","'" '\ \ ~A \-\"'1
DATE:
OFFICE OF CITY ATTORNEY
Attachment B, Page 8 of 8
June 25, 2007
Qwest Comments on Proposed Amendments to Springfield's
Telecommunication Ordinance
Several provisions of the proposed Springfield ordinance are unlawful
or awkwardly worded and confusing. The ordinance should not be acted
upon by the City Council in its present form. Because of the extent of the
changes required, we did not redline the existing proposal. Rather, by way of
example and not intended to be a comprehensive review of every provision of
the proposed ordinance, we offer the following comments for consideration
and further discussion.
Defmitions
Several definitions in the ordinance are problematic. This may be
due, in part, to the fact that the ordinance attempts to address both
telecommunications and cable franchising under a single scheme. At a
minimum, the proposed ordinance should be divided to address these services
separately, as the regulation of them is, iri turn, subject to separate laws.
· "Gross Revenue" includes "all inflows or enhancements of assets. .
. derived by the utility and, any affiliates, subsidiaries or parent of the
utility on account of goods or services from the utility's ongoing
operations within the City. .." This definition is very broad and the
use of the term "utility," is awkward and vague. For example, Title I
cable modem service revenues should be excluded from the assessable
revenues under the Brand X and City of Portland cable decisions.
Also, it raises questions as to how and what revenues will be included
with respect to Qwest's Title VI and Title II affiliates. There are also
issues concerning double-payment and parity (e.g., will Comcast pay
both as a cable and voice provider?). Will this definition even operate
on entities that have a franchise agreement or Public Way Use
Agreement with the City? The use of "utility" in the definition of
"gross revenues" blurs or eliminates important defmitional boundaries
between cable and telecommunications operators, particularly given
that it also includes "affiliates" in the definition. On the cable side, to
the extent that this is an attempt to reach anything other than 5% of
the gross revenues generated from cable services provided over the
cable system, it contradicts, and is preempted by, federal law.
· "Telecommunications Carrier," "Telecommunications Facilities or
System" and "Telecommunications Service" are also inconsistent with
the defmitions in the Communications Act of 1934 (as amended by
the Telecommunications Act of 1996). See Section 3(43) - 3(46) in
the federal act, for instance. By way of example, the definition of
"Telecommunications Service" includes the providing/offering of the
Attachment C, Page 1 of 4
June 25, 2007
transmittal of both "data" and "video programming," and "without
regard to the nature of the transmission protocol employed." That is
inconsistent with the defmition in the federal act, where protocol used
(or at least a change in protocol, or the "form or content of the
information sent and received") is critical in determining whether a
communication is a Title II Telecommunication Service or a Title I
information service. It is, in fact, the dividing line between the two.
On its face, the defmition in this ordinance arguably would sweep
both Title I Information Services (data) and Title VI Cable Services
(video program.ming).into the definition of "Telecommunications
Service," in contradiction with federal law.
Penalties
Section 4.602 provides that any violation of the ordinance "shall be a
civil infraction" enforceable under the Municipal Code, section 4.714
imposes a 10% penalty (plus interest at a rate of 1.5% per month) for failure
to make timely payments, and section 4.716 allows the City to impose a 10%
penalty plus interest and the cost of the audit in the event that the audit
(unlawful in and of itself) discloses underpayment offees.
Such civil penalties for violating an ordinance are preempted under
City of Auburn. 260 F 3d at 1170, 1176 (9th Cir. 2001) (recognizing that
threat of criminal and civil penalties for failure to obtain franchise was found
to constitute prohibition within meaning of section 253(a)).
Cable Build-Out Requirements
Section 4.608(4)(b) is problematic and likely illegal, as it would
require a cable licensee-- unless otherwise provided in a Public Way Use
Agreement-- to file a universal service plan for providing service to all
residential customers "within a reasonable amount of time from the
commencement of service," A flat requirement to provide a plan to serve all
customers within a reasonable amount of time, without any reference to
benchmarks, density, market share, and other factors discussed in the FCC
Franchising Order, is inconsistent with that Order. The Order states that an
LF A cannot refuse to grant a franchise on the basis of unreasonable build-out
mandates.
Fees
The proposed ordinance would impose four specific fees, in addition
to any other fees provides under the Municipal Code (4.706(2)), and in
addition to any City taxes that may be levied on account of the provision of
utility services. 4.712.
Attachment C, Page 2 of 4
June 25, 2007
The four fees are:
. Application and review fee. 4.702.
. Reimbursement of City expenses. 4.704.
. Annual fee. 4.708
. Fee for use of Public Ways. 4.706.
· The application and review fee in section 4.702 is not defmed, and
apparently will be set at the Council's discretion. However, if Section
4.702(1) would impose an application fee for a Cable
franchise/license that would exceed the reasonable cost of processing
the application, Qwest's cable affiliate would be entitled under the
FCC Franchising Order to offset that payment against its required
franchise fee payment (FCC Order, Paragraph 104).
· Section 4.704 regarding reimbursement provides that the City can
demand reimbursement "to the extent permitted by law" for all "direct
and indirect" costs and expenses the City incurs in connection with
the issuance, renewal, etc., of licenses. Direct and indirect costs are
not defined. Moreover, the reimbursement demands are in addition to
the application and review fee, so even when the latter fee is
determined, it will not be determinative. Additionally, as referenced
above, Paragraph 104 of the FCC Franchising Order states that an
LF A can certainly require various payments, but if the required
payments are "non-incidental" to the cable provider, then the cable
provider is entitled to offset these payments against its required
franchise fee payment.
· The annual fee in section 4.708, like the application fee, is not defined
and apparently will be set at the Council's discretion. The purpose of
the fee is ostensibly to reimburse the City's costs in administering
''this chapter" and for "reviewing, inspecting and supervising the use
and occupancy of the public ways." To the extent this fee is imposed
for the privilege of using the public right-of-way, it would appear to
be in addition to the 7 percent cap recognized in US West Commc'ns,
Inc. v. City of Eugene, 3360r. 181, 187,81 P.3d 702, 705 (2003).
Additionally, this fee appears to be duplicative of both the application
fee and the "other costs" (direct and indirect) in section 4.704,
. discussed above.
· The fee for use of Public Ways is the only fee defined-being equal to
5 percent of gross revenues. 4.706(1)(a).
. Gross revenue includes revenue derived from local exchange access
services, but also revenue derived from nearly all goods and services
provided to nearly all ultimate consumers within the state. As stated above,
this definition is extremely broad. Moreover, it is not clear whether this fee is
intended to apply to Qwest. If, however, the City intends that Qwest
Corporation should pay this fee, this would violate the limitation recognized
in City of Eugene, because 5 percent of gross revenue as defmed in the
Attachment C, Page 3 of 4
June 25,2007
proposed ordinance would be greater than 7 percent of revenue derived from
local exchange access services.
Audit Provision
Section 4.716 permits the City to examine Qwest's books and records.
Similar regulations granting cities the authority to examine a carrier's
books and records have been found to be onerous and prohibitory under
section 253. See. e.g., Aub.!!ffi, 260 F.3d at 1178 ("Regulations requiring 'the
applicant [to] submit proof of its fmancial, technical, and legal qualifications'
do not regulate the public rights-of-way." (citation omitted; brackets in
original)); Berkeley, 433 F.3d at 1259 (finding that provisions that require
carriers to submit detailed reports and records, and that allowed city to
inspect books, records, and other data arising from provision of .
telecoinmunications services, are not protected by section 253(c)); XO Mo..
Inc. v. City of Md. Heights, 256 F. Supp. 2d 966,997 (B.D. Mo. 2002)
(holding that provision requiring telecommunications company to provide
copies of records upon city's request, even when such request was '''directly
or indirectly related to the scope of City's rights under th[e] Ordinance,''' was
completely unrelated to city's management of its rights-of-way (quoting
Ordinance)).
Attachment C, Page 4 of 4
@omcast~
Corneas! Cable
2897 Chad Drive
Ellgene, OR 97408
Toll-Free: 888.824.8264
WWW.comeastcom
June 25, 2007
VIA EMAIL (hard copy by mail)
The Honorable Sidney Leiken
Mayor
City of Springfield
225 Fifth Street
Springfield, OR 97477
RE: COMMENTS ON TELECOMMUNICATIONS ORDINANCE UPDATE,
Dear Mayor Leiken:
Please accept my thanks on behalf of Comcast for giving us the opportunity to address
our thoughts regarding the current staff proposal to "update" the City's existing
Telecommunications Ordinance. While we reserve any and all rights Comcast has or
may have regarding the proposed ordinance and the current franchise under which we are
operating, we believe that given additional time and mutual cooperation of the parties an
ordinance can be considered and passed by the City of Springfield that would be
acceptable to both parties.
Although we have serious concerns about a portion of the amendments, as to the changes
in the proposed ordinance to address purely modifications dealing with competitive entry
requirements for cable franchises Comcast will not raise an objection. We understand the
City staff's understanding of, and justification for, the need for this amendment that
would effect a change that has already occurred in some other jurisdictions within our
State. We also understand the logic as expressed by city staff as to the concern over
delays in acting wItil after the Council's summer recess on the proposed changes to deal
with the FCC's competitive entry order. However, as indicated by staff in response to
city council questions, no such exigency is present to deal. with the other changes
proposed in the ordinance that have nothing to do with the FCC's competitive entry order.
In both the June 18 and June 19,2007 memoranda to the City Council by City sta1f, the
issue statements indicate "The City's current telecommunications ordinance, which
reverted to its 1997 form when the Utility Tax was repeale<L is in need of updating. In
addition, it is appropriate to modify the ordinance to account for the recent decision of the
Federal Communications decision on franchising of competitive cable television
providers." It is therefore unfortunate to see within the memoranda, and in the proposed
Ordinance revisions in Sections 4,706 a far more problematic and disputed issue -
charges for non-regulated services that operate within the right-of-way.
IAttachment 0, Page 1 of 4 I
Letter RE: Public Hearing and Comments by Comcast
Springfield Telecommunications Ordinance Update
June 25, 2007 - Page 2
Although it is not indicated with absolute clarity in the ordinance revisions, the council
briefing memorandum indicates an intention to compel providers who have facilities
within the right-of-way and who provide non-cable/non-telecommunications services
over their existing facilities to be subject to a new array of fees and financial obligations,
Apart from the obvious negative effect that such an action would have on Comcast as a
business, as well as its implications for costs that ultimately would be borne by our
Springfield subscnbers, we believe the Council should strongly consider the many
considerations against making such changes in such a rushed manner.
A first consideration is the fact that the Federal Communications Commission (FCC) has
not yet issued a decision on its open docket as to whether IP-enabled services (i.e. Voice
over Internet services or VoIP) are subject to state and local regulation by means of a
. franchise or permit requirement. This kind of service is operated under our existing
cable facilities and uses an Internet protocol to transmit voice over the existing cable
facilities that are already in the ground or aerial lines. As you may recall during the past
decade, the FCC has previously found that High Speed Internet revenues and presence
within the right-of-way is not subject to state or local regulation as a cable service - a
decision that was upheld in 2005. As a result, some communities who held revenues
collected from such services during the time of the dispute were subject to refund
requests nationwide,
A second consideration is the fact that Corncast already pays 5 % of its franchise fees to
the City of Springfield for its cable services that are located within the city's right-of-
way. It is helpful to note that the amount of funds actually provided for franchise fees by
Comcast to Springfield amounted to over $455,000.00 for 2006 alone. This amount goes
directly to the City's general fund to be used as the City Council deems to be appropriate.
A third consideration is the fact that Comcast's use of its existing facilities within the
right-of-way for services such as digital voice and high-speed internet require no change
in our existing use of the right-of-way. No additional or different lines are needed than
are used for our cable services, and no impact upon the city's right-of-way is occurs in
any way necessitating the requirement of a separate franchise to use the same cables as
before.
A fourth consideration is that Comcast, a local and longstanding franchisee for cable
services in Springfield, should have an opportunity to work through questions and issues
of this gravity with City Staff prior to a hurried and substantial change in the way that we
do business in this great community. There are many intricacies to the changes as to
right-of-way regulation proposed in the ordinance having nothing to do with the
Competitive Entry requirements that was the sole issue indicated by staff as requiring the
Council's immediate attention. As was indicated in the work session on this matter in
your comments to the council, the City's desire to have some extended discussions to
resolve these issues is one shared by Comcast. We remain willing and open to schedule
IAttachment 0, Page 2 of 4 I
Letter RE: Public Hearing and Comments by Comcast
Springfield Telecommunications Ordinance Update
June 25, 2007 - Page 3
those discussions through the summer recess and beyond in order to seek reasonable and
mutually acceptable solutions on these issues.
Should the City not defer action on the objectionable portions of the ordinance, we wish
to note some specific points that the Council should consider as part of the public hearing
in this matter:
First, we believe that the proposed ordinance is overbroad in its definition and
consideration of telecommunications services, The ordinance defines telecommunications
services as
The providing or offering for rent, sale or lease. or in exchange for other value
received, of the transmittal of voice, data, image, graphic and Video programming
or any other information between or among points by wire, cable. fiber optics.
laser. microwave, radio. satellite or similar facilities, with or without benefit of
any closed transmission medium and without regard to the nature of the
transmission protocol employed.
This definition can easily be read to encompass Internet services, which the Supreme
Court has confirmed are information services. not telecoIIllilUnications services, and
should not be subject to local taxation. See National Cable & Telecommunications
Association et al, v, Brand X Internet Services et al, 545 U.S. 967; 125 S. Ct. 2688; 162
L. Ed, 2d 820 (2005).
Second, we respectfully object to Section 4.602 of the Ordinance requiring carners who
utilize facilities of another licensed carner for the distribution of their services to obtain a
separate license. This provision would obligate a company such as Comcast that provides
retail telephone service via different entity than the entity providing transport services, to
obtain two separate licenses, The ordinance should be amended to ensure that where a
single company supplies retail telephony service through more than one discrete
corporate entity, the service is not taxed twice.
Third, Section 4.608 (4) of the Ordinance, as it relates to cable services, is contrary to
federal law. This section requires cable operators operating in the public rights of way to
generally provision PEG capacity. First, at least in Comcast's circumstances, PEG
requirements are governed by the current franchise, and cannot be unilaterally altered by
the City. Second, under federal cable statutes, PEG programming is a negotiated item,
and cannot be dictated by one party to the negotiations. absent any showing of
community need and interest. The proposed ordinance seeks to undercut the ordinary give
and take of franchise negotiations in favor of a unilateral mandate. We believe that this
section of the ordinance directly contravenes federal law and would not be upheld in the
courts.
Fourth, the ordinance requires in several sections that Comcast and other utility service
providers pay a variety of City fees and costs associated with its services. To the extent
IAttachment D, Page 3 of 4
Letter RE: Public Hearing and Comments by Comcast
Springfield Telecommunications Ordinance Update
June 25, 2007 - Page 4
such costs ate imposed on cable services, these costs may be prohibited by the 5% cap on
cable franchise fees set by federal law. Moreover, because certain fees, such as the
annual fee referenced in Section 4.708, are to be fixed by City Council, the fee amount
will not be known in advance for the purpose of subscriber bills. This will prevent us
from assessing and passing through the fee to our subscribers, as we are authorized to do
by federal law.
Our final concern relates to the 10% penalty imposed should a provider be found to have
underpaid license fee by 5% or more. Again, with respect to the provision of cable
services, this is an area that is traditionally subj ect to negotiations between the parties,
and not unilaterally dictated by the City, With respect to the other services Comcast
provides, this provision is arbitrary and lacks due process. The ordinance should include
provisions permitting the company to appeal adverse findings, and allow for due process
should the company find itself in disagreement with the City, before this penalty is
imposed
We understand the City's desire to protect and be compensated for use of its public rights-
of-ways, but such protection should not come at an extraordinary expense to companies
doing business in the community, and should be consistent with federal law.
Again, thank you for the opportunity to provide, our comments on the proposed
ordinance. We look forward to working with the City in a mutually cooperative
manner. I look forward to being present once again at the Council meeting on the 2nd
of July to discuss our thoughts on these issues, and please feel free to contact me at
541.431.3518 if I can provide any further information as to any of these matters.
Sincerely
~C7\.~
Robert L. Schroeter
Director of Government Affairs
Comcast
Cc: Len Goodwin, City of Springfield
IAttachment D, Page 4 of 4 I
From: Atkins, Theresa [theresa.atkins@qwest.com]
Sent: Tuesday, June 26, 2007 12:31 PM
To: GOODWIN Len
Cc: Peppler, Judy; Lafave, Mary; LANG Ginny (SMTP)
Subject: RE: Proposed Amendments to City Telecommunications Ordinance
Len, thank you for that clarification. However, the stated fees are still
problematic in that they (1) do not appear to be related to the cost of managing
the rights-of-way to the extent applicable to Title II services and (2) can be
changed at any time by the Council. We also offer the following additional
comments:
We reiterate that the definition of Gross Revenues is impossibly broad and the
use of the term "utility" is impossibly broad to understand and the use of the
term "utility," is confusing. A better approach would be to base the definition
on revenues received from ongoing utility operations within the City. Note that
the issue of providing services for resale needs to be considered as otherwise
the City's scheme may impact the competitive marketplace. This appears to
eliminate the reseller exclusion in the current code. Also, we have serious
questions that the impact of ORS 221.450 as to type of services rather than
service provider has been adequately addressed. We are aware of the limits
imposed by federal law to the extent the City attempts to impose a tax against
any revenues other than 5% of the gross revenues generated from cable services
provided over the cable system. However, given the changes in the underlying
technology, Qwest does not believe it is being equally treated with all
competitors as to certain services.
Basis of Tax and Providers Taxed- The proposed ordinance imposes a tax based on
having facilities in the' public rights-of-way. This does not reach wireless
communications, a major competitor to wireline carriers whether provided over a
traditional telephone syst~m or via a cable system. If for any reason the
Internet Tax Freedom Act is not extended, this exclusion will create a serious
competitive difference as to wireless Internet access, whether provided by WiFi,
Wi-Max or other wireless technology. Also, the exclusion for services in
interstate commerce is unclear. We need clarity both to properly report and
remit any taxes and also to return taxes on a comparable basis to competitors as
to any service.
From: GOODWIN Len [mailto:lgoodwin@ci.springfield.or.us]
Sent: Monday, June 25, 2007 4:22 PM
To: Atkins, Theresa
Cc: Peppler, Judy; Lafave, Mary; Lang, Ginny
Subject: RE: Proposed Amendments to City Telecommunications Ordinance
Thanks for your comments. They will be provided as an attachment to the Council
as part of the materials for next Monday's meeting. Although I-have not reviewed
your comments in any detail, it appears that in commenting, you may not have
noted that this ordinance is an amendment to the Existing Springfield Municipal
Code. In particular, the fees you say remained to be specified have previously
been fixed by Council Resolution. The license fee is now $1,250 and the annual
administrative fee is $600. If you wish to review the existing code, and
thereupon revise you comments, you may do so as long as I get any changes by
Attachment E, Page 1 of 2
close of business Wednesday, so that I may reproduce them in time for
distribution to the Council.
Len Goodwin
From: Atkins, Theresa [mailto:theresa.atkins@qwest.com]
Sent: Monday, June 25, 2007 3:06 PM
To: GOODWIN Len
Cc: Peppler, Judy; Lafave, Mary; LANG Ginny (SMTP)
Subject: Proposed Amendments to City Telecommunications Ordinance
Importance: High
Mr. Goodwin, attached please find Qwest's comments in connection with the above
for your consideration. Thank you for the opportunity to provide the same and
we look forward to working with the City on this matter.
This communication is the property of Qwest and may contain confidential or
privileged information. Unauthorized use of this communication is strictly
prohibited and maybe unlawful. If you have received this communication in
error, please immediately notify the sender by reply e-mail and destroy all
copies of the communication and any attachments.
Attachment E, Page 2 of 2
ORDINANCE NO.
AN ORDINANCE AMENDING ARTICLE 4 OF THE SPRINGFIELD MUNICIPAL
CODE TO PROVIDE FOR LICENSING OF TELECOMMUNICATIONS
PROVIDERS, AMENDING SECTIONS 4.600, 4.602,4.604, 4.606, 4.608., 4.610, 4.612,
4.614,4.616,4.618,4.620,4.622,4.624,4.626, 4.700, 4.702, 4.704, 4.706, 4.708, 4.710,
4.712, and 4.714, DELETING SECTION 4.716, AND SETTING AN EFFECTIVE
DATE
Section 1.
Article 4 of the Springfield Municipal Code, as previously amended, is further
amended as follows:
TELECOMMUNICATIONS LICENSE
4.600 Definitions.
Terms used in this chapter shall have the following meanings:
Affiliate. A person that (directly or indirectly) owns or controls, is owned or
controlled by, or is under common ownership or control with another person.
Cable Acts. The Cable Communications Policy Act of 1984, as amended by the
Cable Television Consumer Protection and Competition Act of 1992, as amended by the
Telecommunications Act of 1996 and as hereafter amended.
,Cable Operator. An entity providing or offering to provide "cable service" within
the city as that term is defined in the Cable Acts..
Cable Service. Shall have the same meaning as defined in the Cable Acts.
Excess Capacity. The volume or capacity in any existing or future duct, conduit,
maintenance hole, handhole or other utility facility within the public way that is or will be
available for use for additional telecommunications facilities, including that portion of the
usable space on a utility pole which has the necessary clearance from other pole users, as
required by the orders and regulations of the Public Utility Commission, to allow its use
by a telecommunications carrier for a pole attachment.
FCC or Federal Communications Commission. The federal administrative agency,
or lawful successor, authorized to regulate and oversee telecommunications carriers,
services and providers on a national level.
Grantee. Encompasses both licensees and franchisees.
Overhead Facilities. Utility poles, utility facilities and telecommunications
facilities located above the surface of the ground, including the underground supports and
foundations for such facilities.
Public Street. Any highway, street, alley or other public right-of-way dedicated
for motor vehicle travel under the jurisdiction and control of the city which has been
Attachment F, Page 1 of 10
acquired, established, dedicated or devoted to highway purposes not inconsistent with
telecommunications facilities.
Public Utility Easement. Any easement to the city or others, acquired, established,
dedicated or devoted for public utility purposes.
Public Way. Includes all public streets owned by the city and public utility
easements granted to the city, as those terms are defmed in this section, but only to the
extent of the city's right, title, interest or authority to grant a license or franchise to
occupy and use such streets and easements.
Telecommunications Carrier. Includes every person that directly or indirectly
owns, controls, operates or manages plant, equipment or property within the city, used or
to be used for the purpose of offering telecommunications service, except cable service.
Telecommunications Facilities or System. The plant, equipment and property
including, but not limited to, cables, wires, conduits, ducts, pedestals, antennae,
electronics and other appurtenances used or to be used to transmit, receive, distribute,
provide or offer telecommunications service.
Telecommunications Provider. Includes every person who provides
telecommunications service over telecommunications facilities, except cable operators.
Telecommunications Service. The providing or offering for rent, sale or lease, or
in exchange for other value received, of the transmittal of voice, data, image, graphic and
video programming information between or among points by wire, cable, fiber optics,
laser, microwave, radio, satellite or similar facilities, with or without benefit of any
closed transmission medium, excluding cable service.
Underground Facilities. Utility and telecommunications facilities located under
the surface of the ground, excluding the underground foundations or supports for
overhead facilities.
Usable Space. The total distance between the top of a utility pole and the lowest
possible attachment point that provides the minimum allowable vertical clearance as
specified in the orders and regulations of the Public Utility Commission.
Utility Facilities. The plant, equipment and property including, but not limited to,
the poles, pipes, mains, conduits, ducts, cables, wires, plant and equipment located under,
on or above the surface of the ground within the public ways of the city and used or to be
used for the purpose of providing utility or telecommunications services.
4.602 Telecommunications License.
A telecommunications license shall be required of any telecommunications carrier
or cable operator who desires to provide telecommunications services or cable service to
persons in the city or to persons or areas outside the city using facilities located in the
city. Carriers who utilize facilities of another licensed carrier for the distribution of their
services shall be required to have a separate license. The purpose of licensing under this
article is to:
Attachment F, Page 2 of 10
(1) Provide the city with accurate and current information concerning the
telecommunications carriers and providers who offer or provide telecommunications
services within city, or that own or operate telecommunication facilities within the city;
(2) Assist the city ill' enforcement of this chapter;
(3) Assist the city in the collection and enforcement of any municipal taxes,
franchise fees, license fees or charges that may be due the city;
(4) Assist the city in monitoring compliance with local, state and federal
laws.
4.604 License Application.
Any person that desires a telecommunications license pursuit to this article shall
file an application, using the form provided for such purpose, with the public works
department which shall include the following information:
(1) The identity of the license applicant, including all affiliates of the
applicant;
(2) A description of the telecommunications services that are or will be
offered or provided by licensee over its telecommunications facilities;
(3) l'J.. description of the transmission medium that will be used by the licensee
to offer or provide such telecommunications services;
(1) Preliminary engineering plans, specifications and a network map of the
facilities'tobe located \~/ithin the city, all in sufficient detail to identify:
. .-. .... ....~
(a) The locution and route requested for applicant's proposed
telecommunications facilities,
(b) The location of all overhead and underground public utility,
telecommunication, cable, ......'liter, sewer drainage and other facilities in the public
'.vay '.vhich may be affected along the proposed route,
(c) The location( s), if any, for interconnection with the telecommunications
facilities of other telecommunications carriers, .
(d) The specific trees, structures, improvements, facilities and obstructions, if
any, that applicant proposes to temporarily or permanently remo'lc or relocatc;
(5) If the applicant is proposing to install overhead facilities '.vithin the public
'.vays, evidence that useable space is available for locating its telecommunications
facilities on existing utility poles along the proposed route, or a duly executed pole
attachment agreement with an ovvner of existing poles;
(6) If the applicant is proposing an underground installation in existing ducts
or conduits '.'Iithin the public ways, information in sufficient detail to identify:
(a) The excess capacity currently available in such ducts or conduits before
installation of applicant's telecommunications facilities,
(b) The excess capacity, if any, that will exist in such ducts or conduits after
installation of applicant's telecommunications facilities;
Attachment F, Page 3 of 10
(7) If the applicant is proposing an underground installation \vithin nevI ducts
or conduits to be constructed within the public \vuys:
(a) The location proposed for the nevI ducts or conduits,
(b) The excess capacity that will exist in such ducts or conduits after
installation of applicant's telecommunications facilities;
(8) A preliminary construction schedule and completion date;
(9) Financial statements prepared in accordance with generally accepted
accounting principles demonstrating the applicant's financial ability to construct, operate,
maintain, relocate and remQ',le the facilities;
(10) Information in sufficient detail to establish the applicant's technical
qualifications, experience and expertise regarding the telecommunications facilities and
services described in the application;
(11) Information to establish that the applicant has obtained or will obtain all
other governmental approvals and permits to construct and operate the facilities and to
offer or provide the telecommunications services. Such approvals include, without
limitation, any land use. In the event any other required government approval is not
obtained, any license granted hereunder shall be subiect to modification or condition to
reflect the absence of such approval;
(12) Identification of any adverse circumstances affecting the use ofthe public
way, and a description of efforts to mitigate stich circumstances;
(-81) All fees, deposits or charges required pursuant to this chapter~"
(11) .such other and further information as may be required by the public ';IOrlCS
director .
4.606 Determination by the City.
Within 120 days after receiving a complete application under section 4.604
hereof, the public works director shall apply the following standards, as applicable, and,
ifthe application conforms with the requirements oflaw, grant the application;
(1) Demonstrated financial and tech.-ucal ability of the applicant;
(2) Compliance with requirements of applicable state and federalla'.Ys and
regulations;
(3)
facilities;
(1) The capacity of the public ways to accommodate additional utility and
telecommunications facilities if the license is granted;
(5) The absence or minimization of damage or disruption of public or private
facilities, improvements, service, travel or landscaping if the license is granted;
(6) The minimization of the cost and disruption occasioned by construction
within the public '.vays;
(7) The ability of the applicant to provide services to the community and
The capacity of the public ways to accommodate the applicant's proposed
regIOn;
Attachment F, Page 4 of 10
(8) Measures taken to address any adverse effect on public health, safety and
'vvclfare if the license is grunted;
(9) The avuilability of alternate routes and/0r locutions for the proposed
facilities;
(10) Such other factors as may demonstrate that the grant to use the public
'Nays 'vVill sere the community interest.
If the application is denied, the written determination shall include the reasons for
denial.
4.608 Public Way Use Agreement.
No license granted hereunder shall be effective to authorize the applicant to
occupy or use the public ways of the city or to provide telecommunications or cable
services within the city until the applicant and the city have executed a written agreement
setting forth the particular terms and provisions under which the licensee may operate or
occupy and use public ways of the city and or provide telecommunications or cable
services. In the case of an agreement authorizing the licensee to provide service to
persons or entities within the city, such agreement may contain such provisions
regulating such service as may be appropriate and consistent with the
Telecommunications Act of 1996 or the Cable Acts, as the case may be.
4.610 Nonexclusive Grant.
"';~ -'. ~.~ ,: . - -... . . ~"' . . I. .. 8 ,
-- No license granted under this article shall confer any exclusive right, privilege; .
license or franchise to occupy or use the public ways of the city for delivery of
telecommunications services or any other purposes.
4.612 Rights Granted.
No license granted under this article shall convey any right, title or interest in the
public ways, but shall be deemed a license only to use and occupy the public ways for the
limited purposes and term stated in the grant. Further, no license shall be construed as
any warranty to title.
4.614 Term of Grant.
Unless otherwise specified in a license agreement, a telecommunications license
granted hereunder shall be in effect for a term of five years, provided, however, that no
agreement shall grant a license for any term in excess of 10 years.
4.616 License Route.
A telecommunications license granted under this article shall be limited to a grant
of specific public ways or sites and defmed portions thereof.
4.618 Coordination of Activities.
Attachment F, Page 5 of 10
All holders of a license shall be obliged to coordinate their activities affecting the
public ways and shall be obliged to participate in coordination meetings to be held by the
city not less than annually for the purpose of facilitating such cooperation and
coordination.
4.620 Compensation to City.
Each license granted under this article is subject to the city's right, which is
expressly reserved, to fix, as set forth in section 4.706, a fair and reasonable
compensation to be paid for the rights granted to the licensee; provided, however, that
nothing in this article shall prohibit the city and a licensee from agreeing to the
compensation to be paid.
4.622 Amendment of Grant.
(1) A new license application and grant shall be required of any
telecommunications carrier or cable operator that desires to extend additional or different
telecommunications services in the city which are not included in a license previously
granted under this chapter.
. (2) If ordered by the city to locate or relocate its telecommunications facilities
in public ways not included in.a previously granted license, the city shall grant a license
amendment without further application. '
4.624 Renewal Applications.
A grantee that desires to renew its license under this article shall, not more than
180 days nor less than 90 days before expiration of the current license, file an application
with the city for renewal of its license which shall include the following information:
(1) . The information required pursuant to section 4.604 of this article;
(2) Any information required pursuant to the public way use agreement or
license between the city and the grantee.
4.626 Renewal Determinations.
Within 90 days after receiving a complete application under section 4.622 hereof,
the public works director shall issue a written determination applying the following
standards, as applicable, and, ifthe application conforms with the requirements oflaw,
grant the application:
(1) Demonstrated financial and technical ability of the applicant;
(2) Compliance with requirements of applicable state and federal laws and
regulations;
(3) The continuing capacity of the public ways to accommodate the
applicant's existing facilities;
(4) The applicant's compliance with the requirements of this chapter and the
public way use agreement;
Attachment F, Page 6 of 10
(5) Such other factors as may demonstrate that the continued grant '..,-,ill serve
community interest.
If the renewal application is denied, the written determination shall include
reasons for non-renewal.
4.628 Obligation to Cure As a Condition of Renewal.
No license shall be renewed until any ongoing violations or default~ in the
licensee's performance of the public way use agreement, or of the requirements of this
chapter, have been cured, or a plan detailing the corrective action to be taken by the
grantee has been approved by the city.
TELECOMMUNICATIONS LICENSE-FEES AND COMPENSATION
4.700 Purpose.
It is the purpose of this article to provide for the payment and recovery of all
direct and indirect costs and expenses of the city related to the enforcement and
administration of this chapter.
4.702 Application and Review Free.
(1) Any applicant for a license, including a renewal or amendment of an
existing license, pursuant to article 1 of this chapter shall pay a fee fixed by resolution of
the council. . ,.
(2) The application and review fee shall be deposited with the city as part of
the application filed pursuant to article 1 of this chapter.
(3) An applicant whose license or franchise application has been withdrawn,
abandoned or altered within 60 days of its application and review fee written request,
shall be refunded the balance of its deposit under this section, less:
(a) The non-refundable portion ofthe application and review fee, as fixed by
resolution of the council; or
(b) All ascertainable costs and expenses incurred by the city in connection
with the application, whichever is greater.
4.704 Other City Costs.
In addition to the application and review fee, all license or franchise grantees
shall, with 30 days after written demand therefor, reimburse the city for all direct and
indirect costs and expenses incurred by the city in connection with any issuance,
modification, amendment, renewal or transfer of the license or franchise or any license or
franchise agreement.
4.706 Compensation for Use of Public Ways.
Any holder of a telecommunications license using any public way shall pay to the
city a fee for the use of the public way in an amount to be fixed by resolution of the
Attachment F, Page 7 of 10
council which fee shall be paid quarterly unless otherwise specified in licensee's public
way use agreement.
(1) For purposes of this section, in the event such fee is based upon gross
revenue of the licensee:
(a) For cable service, gross revenues shall include all revenue received on
account of services provided within the city;
(b) For telecommunications services, gross revenue shall include all revenues
earned on services provided by licensee as follows:
(i) Connections between interexchange services or competitive
carriers and any entity other than another interexchange carrier, competitive
carrier or a telephone company providing local exchange services,
(ii) Connections between entities other than interexchange carriers,
competitive carriers or telephone companies providing local exchange services;
(c) When both end-points of a telecommunications service are located within
the city, gross revenue shall include the revenue associated with the service;
(d) When one or both end-points of a telecommunications service are located
outside the city gross revenue shall be calculated as G(io) = R(io) X (C/T), where:
(i) (io) = service between an address inside or outside the city and an
address outside the city, or within the city ifthrough another exchange,
(ii) R = total revenues earned by licensee for that service,
(iii) C = linear feet of cable within city carrying that service,
(iv) T = total linear feet of cable carrying that service.
(2) To the extent permitted by law, the city manager is authorized to accept
. payment in.kind for such portion of the fee as the manager deems appropriate, if such
payment in kind is specifically described in the licensee's public way use agreement.
(3) Such fee shall be due on the 15th day following the beginning of each
calendar quarter, unless otherwise provided in a public way use agreement or franchise
agreement.
4.708 Compensation for City Property.
If the right is granted, by lease, license, franchise or other manner, to use and
occupy city property other than the public ways for the installation of
telecommunications facilities, the compensation to be paid shall be fixed by the city.
4.710 Annual Fees.
Unless otherwise agreed in a license or franchise grant agreement, each license or
franchise grantee shall pay an annual license fee to the city in an amount fixed by council
resolution as reimbursement for the city's costs in connection with reviewing, inspecting
and supervising the use and occupancy of the public ways in behalf of the public and
existing or future users. Such fee shall be in addition to, and not in lieu of the
compensation paid to the city for use of the public ways.
Attachment F, Page 8 of 10
4.712 Regulatory Fees and Compensation Not a Tax.
The regulatory fees and costs provided for in this article, and any compensation'
charged and paid for city property provided for in section 4.708, are separate from, and
additional to, any and all federal, state, local and city taxes as may be levied, imposed or
due from a telecommunications carrier or provider, its customers or subscribers, or on
account of the lease, sale, delivery or transmission of telecommunications services.
4.714 Penalties and Interest for Late Payment.
If any fee provided for in this chapter or in a public way use or franchise
agreement shall not be timely paid, a penalty in the amount of 10 percent of such fee shall
be assessed and due as of the date the underlying fee was due. Interest on fees and
penalties shall accrue at the rate of one and one-half percent per month, commencing
with the fifteenth day after the fee or penalty shall be due.
4.716 Most Favored Community.
In the cTv'ent that the grantee entcrs into any agreement, franchise or other
understanding vv'ith another city, town, or county in the state of Oregon and which
proT/ides terms or conditions more favomble to the city, tOTvvn, or county than those
proTlided in an agreement with the city, such as, but not limited to, rate of compcnsation
:.for use of the public way, free or reduced fce hookups, access or sCrVice, the city shall be
, ,'entitled to requcst at the city's option, and thc grantee shall be required to execute, an
amendment to the agreement vlith the city that incorporatcs thc more favorable terms and
conditions.
_Section 2. Effective Date. This ordinance shall become effective on August 17,2007.
ADOPTED by the Common Council of the City of Springfield this _ day of
,2007, by a vote of _ for and _ against.
APPROVED by the Mayor of the City of Springfield this_day of
2007.
Mayor
ATTEST:
Amy Sowa, being first duly sworn, deposes and says that Sidney W. Leiken, to
me personally known and known by me to be the person described in the foregoing
instrument did sign this ordinance with his hand in my presence this _ day of
, 2007.
Attachment F, Page 9 of 10
CITY RECORDER
Attachment F, Page 10 of 10
MEMORANDUM
To: Gino Grimaldi, CitY Manager
From: Len Goodwin, Assistant Public Works Director
Date: July 10, 2007
Subject: Industry Comments on Telecommunciations Ordinance
City of Springfield
Written comments provided by Qwest Communications and Comcast with respect to the
draft telecommunciations ordinance presented to Council on June 18,2007 are attached to
the Agenda Item Summary as Attachments C and D, respectively. In this memorandum
staff will discuss and respond to those comments.
Industry Comments on the Original Draft:
By way of introduction, many of Comcast' s concerns are similar to those raised by Qwest,
but from the opposite perspective. While Qwest raises concerns about having to pay public
way use fees on cable television service in addition to fees for its telephone service,
Comcast raises concerns about having to pay fees on telephone service it is now offering,
since it already pays fees for providing cable television service. In both cases, the implicit
assumption is that once a fee is paid based on one service, all other services may be
provided over the same facilities, with additional fees. While it is true, in each case, that no
significantly greater intrusion into the public ways accompanies the provision of the
. . additional service, it is likewise true that each company secures some competitive
advantage over the other if it were able to offer its new service, which competes with the
basic service of the other, free ofthe obligation to compensate tlia{~ity for the privilege of
using the public assets. The concept of fair and competitive neutral compensation is
explicitly recognized in the 1996 Telecommunications Act. The concept of basing that
compensation on the gross revenues of the user of the public ways is recognized in a
number of judicial decisions, including Qwest Corp. v. City of Portland, 385 F.3d 1236 (9th
Cir. 2004). Simply put, technological change has outpaced the development of the
regulatory scheme, and it is necessary for the City to respond by updating its code to assure
that compensation is based upon all uses of the public ways, not individual subsets
depending upon the particular provider. In this setting, if two companies provide both
telephone and cable television service, the City should recover fees for use of the public
ways based on the revenues from both services from both companies. For convenience, the
detailed issues in the two sets of comments will be discussed separately.
Qwest Communications
,Qwest Communications, whose comments are attached as Attachment C, raised several
objections and concerns. Qwest comments that the ordinance addresses both cable and
telecommunications under a single regulatory scheme. As discussed in a previous briefmg,
this is a choice made in light of the Ninth Circuit decision in City of Portland, which noted
that regulatory requirements of general application to all utilities might well not be covered
by the provisions of Section 253 of the Telecommunications Act of 1996, which is limited
to regulating a narrower subset of utilities.
Qwest asserts that the penalty provisions are proscribed by City of Auburn v. Qwest Corv.,
260 F.3d 1160 (9th Cir. 2001) asserting that case holds that the "...threat of criminal and
civil penalties for failure to obtain franchise was found to constitute prohibition within
Attachment G, Page 1 of 5
meaning of section 253(a)." Whether or not that analysis of Auburn is correct, the penalties
in the provisions of the ordinance are not for failure to secure a franchise or Public Way
Use Agreement but are, rather, penalties imposed for violating provisions of the Springfield
Municipal Code. As proposed to be modified, the Code recognizes the ability of a provider
to operate without a franchise or Public Way Use Agreement for services, as long as it has
. some legal right to occupy the rights of way:
Qwest alleges that the requirement for build out is "problematic and likely illegal." What
Qwest does not note is that the requirement is explicitly authorized by the Cable Act (47
U.S.C. 541(a) (4). Qwest notes that the FCC Order has a number oflimiting factors on that
build out obligation. It is not clear that the FCC has the authority to change the express
proVIsions ofthe Telecommunciations Act. Most authorities would conclude that the
FCC's power is limited to applying the satatute, not amending it. Nevertheless, there may
be some merit to the qrgument that requiring full buildoput by a competitor may be not
sound business, even if it is legally justified. For that reason, staff has modified the
ordinance to reduce the requirement to a one of providing service to a reasonable
proportion of the residences in the community. Qwest has described some of the
approaches to this problem that they are now discussing with Portland. We believe that
those approaches might be equally suitable in Springfield and could form the basis for
mutual agreement on what a build out plan might look like.
Qwest raises questions about the various fees, but has apparently overlooked the fact that
these fees are existing and clearly in amounts that are not unreasonable or burdensome. The
license application fee is presently $1,250; the annual administrative fee is $600. Finally
the reimbursement fee is limited to reasonable and actual expenses to the extent permitted'
by.law..
Nothing in the proposed amendments would change the current statutory limit on fees for
uSe of the right of way that is applicable to an incumbent local exchange carrier such as
Qwest. Under ORS 221.515 that limit is seven percent of local exchange access revenues.
If Qwest provides no service other than telephony, it would pay no additional fees. If,
however, it chose to enter another line of business, such as cable television, it would be
obliged to pay five percent of its gross revenue from such services as a right of way use
fee. If Qwest' s comments mean to suggest that it could provide cable television service
within the City without paying additional revenue, staff would suggest that such service is
not within the services for which the limit ofORS 221.515 was enacted.
Qwest's assertion that the provisions allowing the City to examine Qwest books to assure
that fee payments are accurate violate federal law is simply misplaced. Nothing in Auburn,
or any of the other cases cited can be read to suggest that the City has no right to determine
the accuracy of payments required to be made. Each of the cases cited deals with the
requirement of fmancial examination in connection with the grant of access to the right of
way. Without conceding that any of the cases can be read as broadly as Qwest suggests, it
is clear they discuss a fundamentally different point.
Qwest Additional Comments
In an email message received on June 26 Qwest reiterated some of its concerns and added
some additional comments.
Qwest suggests that "a better approach would be to base the defmition [of gross revenues]
on revenues received from ongoing operations within the city." Staff concurs and notes that
Attachment G, Page 2 of 5
section 4.600(6) does limit gross revenues to those items that are".. .on account of goods
or services from the utility's ongoing operations within the City,..."
Qwest also raises questions about the impact of ORS 221.450. That section provides:
221.450 Privilege tax on public utilities operating without
franchise. Except as provided in ORS 221.655, the city councilor
other governing body of every incorporated city may levy and
collect from every electric cooperative, people's utility district,
privately owned public utility, telecommunications carrier as
defmed in 0 RS 133: 721 or heating company operating for a
period of30 days within the city without a franchise from the city
and actually using the streets, alleys or highways, or all of them,
in such city for other than travel on such streets or highways, a
privilege tax for the use of those public streets, alleys or
highways, or all of them, in such city in an amount not exceeding
five percent of the gross revenues of the cooperative, utility,
district or company currently earned within the boundary of the
city. However, the gross revenues earned in interstate commerce
or on the business of the United States Government shall be
exempt from the provisions of this section. The privilege tax
authorized in this section shall be for each year, or part of each
year; such utility, cooperative, district or company operates
without a franchise.
Staff believes the proposed fee is fully consistent with that provision.
Lastly, in its additional cornmentsQwest'inacc~(lt~}y characterizes the fee as a tax and
notes that it does not "reach wireless comrtiunicatioris~.." Qwest suggests that this creates a
significant competitive difference, since wireless communications is a major competitor of
Qwest. The Council will no doubt recall that a broad-based tax was enacted by the Council
but subsequently rejected by the voters. This fee is not an effort to repeat that failed effort;
rather it is similar to the fees enacted by Tigard. Those fees have not met with either legal
challenge or voter objection.
Com cast
Comcast notes that the Supreme Court has determined that high speed internet services
(what has been commonly know as "cable modem" service) is not subject to local
regulation and taxation National Cable & Telecommunications Association, et al. v. Brand
X Internet Services et al. 545 U.S. 967, 125 S. Ct. 2688 (2005). The ordinance, in its
original form, as well as with the proposed amendments, does not attempt to impose a fee
based on that cable modem revenue. As Comcast also notes, the FCC is now considering
the nature of the federal regulatory environment for certain services, which happen to be
provided by a particular form of technology (packet switching through use of internet
protocols, as opposed to circuit switching which is the basis for current telephone service).
While this is true, it does not necessarily follow that the FCC will decide that such services
are "free from local or state regulation" nor does it necessarily follow that whatever
decision the FCC reaches will modify the standard of Section 253 that local governments
are entitled to receive fair and competitively neutral compensation for use of the public
rights of way.
Attachment G, Page 3 of 5
Comcast also notes that it pays a franchise fee for cable television services. It does not
note, however, that a going trend in the telecommunications industry is to provide the next
generation of these television services using the packet switching techniques now used for
high speed internet activity. This change in technology permits the offering of video on
demand, menu selection of programming and other anew and advanced features. Given its
comments with respecfto so-called "IP-enabled" services, one might reasonably expect
that as Comcast transitions to those sorts of services franchise fees will decline and
ultimately disappear, while the level of activity using the public ways stays the same or
even intensifies.
Comcast also expresses concern that certain fees (and it specifically points to the $600
annual fee) is not known in advance. As Council knows, such fees are always set by
resolution, with adequate opportunity for public notice and comment. Comcast's decision,
which is not a decision to "pass through the fee to our subscribers" but in reality a business
decision which Comcast can make for which of its expenses it will seek reimbursement
from its customers, is one that can certainly be made with full awareness of all of its costs,
at least those fees imposed by the City for the privilege of conducting a for profit business
using the public's assets.
Comcast asserts that the requirement to offer public, educational and government service is
contrary to federal law. That is not true. Section 47 D.S.C. 541(a) (4) explicitly authorizes
local franchising authorities to insist upon provision of such services.
It is unfortunate that Comcast feels that it was not afforded an opportunity in advance to
review the proposed changes. As mentioned in the work session and public hearing, much
of the need for the change has been driven by the A.pril 20 deciSIon of the FCC with respect
to competitive cable television services. A number of cities in Oregon, including most
cities in the Portland metropolitan area, have already moved forward with somewhat
sirnilar approaches: Many cities throughout the nation are also acting in a variety of ways
to protect public assets. Had the FCC been somewhat less interested in radically
restructuring the regulatory environment, it might have been possible to engage in a more
extended process with the industry.
Comparison of the two versions of the Ordinance
As mentioned above, the alternative version of the ordinance contains changes that are
limited to reflecting recent judicial decisions construing the Telecommunications Act of
1996. As a result, staff believes there are a number of deficiencies in this version.
The alternative version does not contain an explicit definition of gross revenues. Instead,
the alternative version retains the relatively complex set of formulas for
telecommunications services which the industry have advised are unworkable and, for
cable television, relies on some undefined terms. As we have seen in the past, failure to
clearly defme gross revenues has created controversy and disputes between Comcast and
its predecessors in interest with respect to amounts due under the franchise. We would
expect those controversies to continue and, in the case of new competitive entrants into the
cable television busmess, multiply.
The alternative version, at section 4.706 provides:
Any holder of a telecommunications license using any public way shall pay
to the city a fee for the use of the public way in an amount to be fixed by
Attachment G, Page 4 of 5
resolution of the council which fee shall be paid quarterly unless otherwise
specified in licensee's public way use agreement.
Staff believes that this language ought be construed to the effect that any user of the public
ways is obliged to pay a fee, even if there is no Public Way Use Agreement specifying the
fee. This construction would be consistent with ORS 221.450. Nevertheless, that .
proposition is not free from doubt. The original version of the ordinance removes that
uncertainty by specifying that such a fee is due. More importantly, perhaps, the amount of
the fee is left to be set by Council Resolution. As Council will note, one of the prime
objections raised by both Qwest and Comcast is that fees left to be fixed by Council
Resolution do not meet the statutory tests because they are unknown. Whether or not this is
accurate, the original ordinance responds to this issue by specifying that the rate will be 5
percent, consistent with the amount set forth in ORS 221.450.
The alternative version retains the limited applicability of the current code provisions to
telecommunications. As we have noted, language in the Portland decision suggests that
there may be a distinction drawn between ordinances which are of general applicability to
all utilities and those relating only to the subset of telecommunications providers. This
might mean that the alternative version is more vulnerable to claims that it is not fully
protected by the safe harbor provisions of Section 253 of the Telecommunications Act of
1996.
The other major difference between the ordinances is that the alternative does not address
the recent action of the FCC which sets sharp limits on the ability of local governments to
effectively manage the process for granting competitive franchises, nor does it address the
potential for further FCC action which will apply these limits to current franchisees. While,
in theory, the FCC order is designed to fo.ste.. r ad~itional competition, it is clear that the
. .
restraints on local government may facilitate new entrarits providing less than adequate
services or creatingsituatioIls where the '\~ompetition" is a battle between cable television
providers to gain control over the local market on terms that will be less satisfactory to
citizens than the services currently available. Staff believes this may place Springfield
citizens at risk of losing much of the breadth of offerings that are currently available and
pose the risk of price increases rather than price reductions.
Attachment G, Page 5 of 5