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HomeMy WebLinkAboutMin - CC - 1980.12.10BUPII\IGAYIE CrTY COUI\ICIL SPECIAL MEETI\'IG December 10, 1980 CALL TO ORDER A special meeting of the Burlingame Cityorder blz Mayor R. David. Martj-n at 8:05 p in the City Ha1l Council Chambers. Council was ca11ed.m. on December 10, to 1980 PLEDGE OF ALLEGIANCE The pledge of alleqiance to the flag was led by City Attorney Jerome F. Coleman. P.OLL CALL Councilmembers present : Councilmembers absent : CABLE TELEVISION AMSTF.UP, BARTON, CR,OSBY, MANGII\II , MARTIN NONE Mayor lt{artin announced the meeting was noticed as a public meetingfor consideration of applications for a Burlingame cable televisioninstallation. Aoplicants would be permitted ten minutes for pre- sentations in seguence deterrrined by drawing names; councilmemberswould then address questions to applicants; statements and questions from the public would be received; and thereafter aoplicants wouldbe permitted a five minute rebuttal in reverse order of the pre-liminary statements. 1. APPLICANT PRESENTATIONS American Television of California, Inc: TED KRUTTSCHNfTT of400 Burlingame Avenue sEateE tEEt oanla Carr and he are the Iocali-ndi-viduals involved as shareholders of the ATC venture. Localreoutations are on the line to see that ATC promises are carriedout. He introduced Fred Dressler, Vj_ce-president of ATC. FRED DRESSLER, 160 Inverness Drive West, Englewood, Colorado,said that Americars parent company has been recognized as theleader in the industry with the reputation of excellent serviceto communities and assured Council Burlinsame would receive topprioritv in the bui1dingl of a system. ATC has built more cable systems than any of the applicants; in fact has its own con-struction company founded specifically to meet the needs of com-munities they serve in building entire systems, future extensions and keeoing systems modern. Local partners' reputations areadditional assurance of performance. He said the anticipatedmerger of Teleprompter and tr'Testinqhouse makes its ability to per- form questionable, and Capital Cities' exoerience in cable con-struction and operation is virtually non-existent. DAVID CARR, 216 Park P.oad, emphasized the need to look beyondpromises in applications to ability to perform and at ATCrs sur:erior scope of proposed loca1 Drogramming. 2. Burlingame Tele-Corqmunicat_ions , Inc. : BAR.RY MARSHALL, District I4anagei in tIe tr s the resident 1ocal repre-sentitive of the company and will negotiate the franchise, build + and operate the cable syst.em if it is awarded to Tele-Communciations, and in that capacity he insisted nothing be promised that cannot bedelivered. With regard to rates, several of the applicants who operate in the Bay Area have bid rates lower than rates they are now charginq 1oca11y. TCI has bid rates that are realisti-c, valid and they can live with. A11 of TCI's franchises in the Bav Area are ourchases of existingtroubled franchises. In those cases they have formulated workablesolutions to problems mutually beneficial to the city and the company. 1' r46 L47 In Millbrae they were allowed a $14.95 rate and 3 years to com.pletechanges and are using a $10 rate and finished the system in rgmonths. The San Mateo franchise j-s derequlated as to rates which theyhave fixed at $10; they have added 10 or 12 new servi-ces and completed135 miles of new plant, double what will be required for Burlingame.Burlingame conforms to the criteria that their company bid only forfranchises they are able to perform technically and physically. Company is not diluted with franchises across the country. Because head end is located in l,Iillbrae they will able to complete instal-lation more speedily than any other aoplicant. The market placewill determine the product mix and majority of customers are notinterested in extended services; what they want is diversity of pro-duct at a competitive rate, and quality service. In response to Council questions Mr. Marshall stated that his company operates the Sunnyvale franchise, an acquired system that was ex-perimental and did not work well and which it has just completed re-building. TCI also operates franchises in Fremont, Richmond, Berkeley,Pacifica, Daly City, Brisbane, l{iIlbrae, San }4ateo, Belmont, San Carlos, Redwood City and portj-ons of unincorporated San Mateo County. United Cable Television Corp_o.qation of Burlingame: ItilARK VAN LOUCKS,Vice President of Marketinq and Subscriber Services, referred topress clippings supplied to Council on the track record of some ofthe applicants. He took issue with the consultant's evaluation andthe criteria used in ratings. The same prooosal submitted with some of same aoplicants resulted in highest rating and award to United b1z Cupertino recently. Although 1oca1 involvement in company is listed, 202 of company is reserved for broad baseri 1oca1 participation after franchise is granted, with 5Z reserved for Ken Daniels. He cited installation of a 54 channel systern in Cupertino des;r-:ite acceptance of 36 channel proposal as criticism of a lower rating in that category. He took issue with the methodology of assigning points and with their weighting for relative importance, which he contended should be a function of Council. Comparable construction scheclules resulted in different ratings. He asked Council to consider carefully the press clippings on the performance of ATC, Tele-Communications and Teleprompter. He pointed out there is no major difference between the applicants; all purchase the same equipment, all have the same capacity, all are proposing comparable rates, and all are financially able to build the system. The imoortant factor is past performance, and United is the best in the Bay Area. Storer Cable TV, Inc.: JEFF EDAN, Franchise Representative, B8B rd,Thousandoaks,statedthatStorer'sproposa1 contains no frills and no extra funds for local programming because they feel such programs tax the subscribers. He took issue with the consultant's penalty for estimating 30 homes per miIe, the proposal's intention being to include all homes which r+ish the service. The intent of the use of the word "institutions" in the proposal in con- nection with free connections is to include all public services. He believes Council should base its decision not only on the evaluation of the consultant, but on the performance record of the comoanies. Storer Cable TV, as a subsidiary of Storer Broadcasting, does not operate cable television in any area where it lcroadcasts TV. Capital Cities Peninsula Cab1e, Inc.; stated that Burlingame is an important who brought its president from the East introduced the company's co-counse1, E. E. DAY CARMAN called attention to 49 CFR, Section 76.501 (which pro- vides that no cable TV system shall convey a signal of any TV broad- cast station if the CATV system is in common ownership with the TV broadcast station whose Grade B Contour overlaps the service area of such system) as it affects the application of Teleprompter which is in the process of merger with Westinghouse, owner of Channel 5 in San Francisco. He believes TelepromDter is therefore precluded as an applicant. JOEL SMITH, L6T6 the consultant's perience, he has I^TILLIAM R. SINKUNAS, TaTSanA, community to Capital Cit-ies Coast for this meeting. He Day Carman. Walnut Street, Philadelphia, Pennsylvania, considersreport good. with respect to Capital Cities' ex- been involved in cable television since 1957 when r'--r48 he started in Yreka, California. Manlz of Capital's team has beenin cable TV longer than he. The company has recently acquired a subsidiarlz with long-term experience and over a million subscribers. He feels they are the best applicant. Councilman Mangini asked whether Capital Cities has actually builta system. I,{r. Smith replied that one in Flint, Michigan, has beencompleted. He and others in the organization have built many overthe years, and the wholly-owned subsidiary, Cable-Comp General hasbuilt many systems. Teleprompter of Burlingame, Ilc.: NORVAL REECE, Vice-President, 888 7th AVenue, []ew York,suggested that the City should beginnegotiations with the applicant recommended by the consultant.Teleprompter is the oldest cable TV comoany, pioneered technology now standard in the ind.ustry, and is the first company engaged i;-transmission of TV l:y domestic satellite. He believes the companytrack record is outstanding; they operate in 460 communities in thecountrv and have never had a franchise renewal refused. The proposed merger with Westinghouse mav not eventuate. The cross-ownership regulaLj-ons are under close review by the Federal Com-munications Commission; the trend has been toward deregulation; thePresident Elect will continue that trend. If the merger is approved,the rules are not changed, and in 2, 3 or 4 years in the futuredivestiture were forced, the city wourd have the right to approveof the franchise change or the City itself could take over operation. They are the only company which guarantees a definite date to completconstruction of the system. The schedule begins on the day of awardinstead of upon issuance of licenses or from the beginning of con-struction. They have several construction companies and would supplya construction bond. Therefore, in the event of forced divestiture,it would be years after the system began operation. In response toCouncil question, he stated the companlz is the largest single operatoin California. Dick Waterman listed Oakland, Santa Clara, Newark,I{ilpitas, Pi-edmont, santa cruz and severar systems in southernCalifornia. IvIr. Reece explained the philosophy behind the PCC requlation pro-hibiting cross-ownership is to prevent a monopoly of the communj--cations slzsterns in a given area. tr^Iaivers malr be granted. However,ownership of Chanel 5 and 103 of the cable systems in the Balz Areawould not seem to him to constitute a monopoly of communications.The rule is being seriously reviewed by the FCC. 2 QUESTIONS AND COI.,LNIENTS FROM THE PUBLIC CYRUS McMfLLAN, representing Tele-Communications, objected to thesubmission of materj-al to Council by United and asked to be advisedof its contents. MF.S. I{ATALIE LANAM of 1369 Columbus Street, stated that she doespublic relations work for Easter Seal. ATC is the only applicant which contacted her to solicit information as how best that organi-zation can be served by cable TV. They are interested in communi-cations for homes of people who cannot get out. She commentedfavorably on the local resident oarticipation in the corporatestructure of ATC and the citizen sharing of gross revenues. RICHARD SAROYAN, 2231 Adeline, expressed appreciation that cabletelevision is finally under consideration. Although the applicants have outlined what services are available to the citizens of Burli-nqame, no one has asked the citizens what type of services theywould 1ike, nor do the citizens know what is offered. At Mayor Martin's request Consultant Page explained that all the compani-es are offering just about everything available in entertai-n- ment, all the required area stations because that is rnandated by the FCC, just about all the services available off the satellite, multiptr-.e paid TV offerings (Home Box Office, Showtime, etc.) rand a fu11 spectrum of local access origin facilities. Although each proposal is not the same, when the franchj-se document is written the best of all offerings r,vilI be worked into the franchise, if possible. e r a II 149 Public input is welcome. There has been a variance of offeringsof institutional services and system. An institutional system thatserves all of the facilities of the City will be sought, in effecta band width equal to 17 to 2L channels in each direction. Thebasic service charqe is between $0 and $10 a month, with Showtj-me and Box Office $Z to $10 in addition. DON SPENCER, representing the Burlingame Chamber of Commerce reported three of the applicants had inquired of the Chamber whomthey should talk to regarding loca1 distribution of their channels. GENE HERN, 82J" EI Cannino Real, said he was contacted by one or more of the applicants. He has seen all of the proposals. After a franchise is granted, can it be purchased by merger with Westinghouse or any other group. City Attorney Jerome F. Coleman responded that any of the applicants might be in a situation similar to that Tele- prompter has with Westinghouse, but the franchise transfer wot'.Id require approval by the City 3. REBUTTAL Teleprompter: waived rebuttal. Capital Cities: WILLIAM SINKUNAS said he and the President of Capital Cities have more lrears of cable te levision experience than anyonepresent, and he has personally construcLed more urban television systems in California and the United States. He constructed San Carlos, the fj-rst completely underground system, Be1mont, Redwood City and San Gabriel Va11ey. Experienced cable people, not corporate entities, build cable systems. No cahle operator can promise that a system will com- mence on award of franchise and be completed in 12 months. The power and telephone companies influence the period of construction as does the permit process. He called attention to the difficulty a municipality would have in calling a performance bond. He mentioned the newspaper announcements by Westinghouse that cable television properties will be divested because the corporation would not give up broadcasting stations. Mayor Martin questj-on the cash flow of Capital Cities in the light of its short corporate life and the fact that they have 12 systems cur- rently under construction. I1r. Sinkunas assured him that all could be financed with internal capital flow from within Capital Cities and without outside indebtedness. In response to Council questions regarding performance bonds, Mr. Sinkunas recommended a cash construction bond Storer: Mr. Edan thanked Council and waived rebuttal. United Cable: MR. VAN LOUCKS repeated the request that Council con- ilAer-Ee published records of pe rformance submitted earlier in the meeting. Three additionat copies were include d for other applicants. key issue in consider- rved for local partners, He explained the reason A company 's sustained track record should be a ation. H e confirmed that 202 of stock is rese 52 of which would be available to Ken Daniels. for the FCC divestiture regulation is to avoid several large conglomer- ates controlling communications in the future. He considers it a good regulation and urged Council to honor it even if the FCC abandonsir. Mr. Van Loucks recapitulated that United has proposed the most sophisticated technical design (54 megahertz, similar to a system currently under construction by them in Cupertino), a good 1oca1 origi-nation and public access program that j-s operable compared with alleged loca1 access programs in the Bay Area, and reasonable rates. He referred to the company's track record in the area and entire country. Local operations are Hayward, San Lorenzo (purchased from TCI), Foster City (which had 4 previous operators), and Hayward. In resoonse to Council guestions Mr. Van Loucks discussed the difficulty of purbuing a performanCe bond, partially because of the difficulty of a city proving monetary :damages, i.e., damage is loss of franchise fee which- is not provable until an operable cable system is in service. A more valid protection he advised, is a cash bond, to be released after the system is comPleted. -.-I l ! r50 Burlingame Tele-Communications: CYRLIS I{cMILLANI has represented the company for 3 or 4 lzears. The comDany is involved only in cabletelevision, and is the third larqest in the country with 200+ systems,including Millbrae and San I{ateo. There were problems j-n the develop- ment of the San Mateo installation, but it is now operating well with an excellent market penetration. Tele-Communications is familiarwith loca1 problems, conditions and construction, and its neighboring systems would make future expansion to Burlingame Hil1s and Hillsborough more feasible. American Television of California Inc.: FRED DRESSLER stated that l_ts su s s l-on to Counc at ay was compliance with the directionof disclosure of agreements with l-ocaI individuals involved in theapplicant companlz. His company has pride of performance; it strivesfor perfection, but that is not always achieved; their record isbetter than anyone's in the business. He calIed attention that nonegative reports of its own performance were submitted by United.They will be haooy to orovide Council with information about any oftheir operations across the countrlz which will show that problems have been solved successfully. He pointed out that Mr. Si-nkunas isnot a full-time employee of Capital Cities and has in the past week made a presentati-on for another cable television company as itsemployee. He identified the FCC press release of Westinghouse'scable systemsr ds having been published in the I.7ALL STREET,TOURNALof October 76,1980. 4. COI\MENTS BY CONSULTA}iT GEORGF L. PAGE made the following comments: per- A. In discussion of performance bond.s, there was no mention ofsecuritlr fund, more common now, which involves a strict penaltvconstruction is not compreted within a specified time. ft isnecessary to recognize the element of cooperation required from Dower companies and assistance of the cities in connection withformance schedules. a if I FI I t B. Two companies came out lowest in rank because poor applicati-onswere submitted that were contradictory and had lapses. Both comoanies have fine performance records in the industryr or theywould have been discarded as non-responsive. C. He cannot in good conscience recommend that the franchise be awarded to a company that will have to divest in 2 or 3 lzears. Thenext two companies in the rating are very close; he would not rec- ommend going beyond that at this time. It should be made clear thatany unnecessary delays in negotiating the franchise will cause theCity to go to the next ranked applicant. D. Upon selection by Council, Mr. page wil_l prepare, as ouickly aspossible, a franchise agreement, rrorking with the city Manager, cityAttorney, and whomever is selected, and come to an agreement onspecifications. He will take the best parts of all the applications and try to bring them toqether into a franchise. E. Mr. Page described the problem of the telephone cornpany havingto make room on its poles for cable television installations which may sometimes involve delay; however he is informed that the timedelay situation in this area has improved. 5. COUNCIL DTSCUSSION Council expressed concern because a surVey indicated United andStorer's reputation for performance was most favorable, whereas., because their applications were poor, the consultant had ranked them lowest of the applicants. Council questioned why those ap-plicants were not asked to amolify their pror:osals. Mr. page re- sponded that the two apolications were submitted at the last minute and obviously were not individualized for the Burlingame area. Heagreed that performance should be considered as well as his analysis.Nevertheless, in his evaluation it would not be fair to all theapplicants to consider information subsequentty solicited. Theevaluation was based strictly on the proposals. He commented that some of the companies which have had problems in the past have now improved their methods of operation and their image. The prooosal 151 is only one factor in selection, and performance is another key factor. Councilwoman Barton pointed out that aII of the aoplicants are capable of supollyinq all the services listed in the proposals andtherefore it seemed that track record is very important. She questioned whether the rankings would be the same if past record were considered. Mr. Page indicated he would like more infor.nation on performance before he would consider it above the proposals. The performance j-nformatj-on available was based on a smalI sample. The difficulty in obtaininq statistics on local track record will be caused by different numbers of systems for individual companies.Additionally, comments will reflect the individual arrangement between the city and operator and misunderstandings of interpretationof franchise agreements. Performance information should be used as an indicator, not an absolute. Most of the companies have good performance records; the key is in the writing of the franchise to include both penalties and motj-vations so there are mutual benefits. Council asked if a questionnaire could be prepared. Mr. Page saidit could, but he felt it would not add to the information available. The first three ranked applicants are extremely reputable, and he would not recommend a selection made from the lowest ranked. Council members indicated they are primarily interested in making theselection that is best for the City. Mr. Sinkunas of Capital Cities confirmed that he has been employed by the company for about four months, working approximately one-third time on a salary basis; that he has made cable presentations for another operator; and that he pursues cable television for his own enterprise. United Cable clarified that Ken Daniels, whose office is in Saratoga, is the major owner of Video Engineeri.g, a television operator inthe Bay Area. One of his franchises and some of the assets of his company were purchased a few years ago, and, pursuant to the terms of the agreement, he has an ownership in any United franchise in the Bay Area. The Teleprompter representative stated there is nothing secret about the proposed merger with Idestinghouse. Tnlestinghouse reguested per- mission from the FCC to acquire more than one percent of Teleprompter's stock and was required to file information about what would be donewith cable systems. There is no assurance that the merger will be consummated, but if it is and the regulations remain, these are the slzstems proposed for divestiture. I,tayor Martin clarified that Council 1. Select a company with which 2 Ask the consultant and City information on performance Consider the matter further Do nothing. He indicated that he would like moreinformation on hand further. at the meeting could: to negotiate a franchise; Manager to obtain more record i at a study meetingi or information and to study the 3 4 Councilman l\mstrup stated he would like cable TV to move forward as rapidly as possible, but he also rtrouId like more i-nformation about performance, wants time to consider information at hand, and perhaos make a selection at the next meeting. Councilwoman Barton asked for a wider survey on performance. Mr. Page indicated it would take from a month to six weeks. He said a sampling process will be loaded against the larger operators and he feels the results will not significantly differ from those already available. It is a difficult comparison because of the difference of numbers of systems owned by each company. J L52 Councilman Crosby indicated he would like to have information with comments on performance to include whether the operator built the system or acquired it. Councilman Mangini questioned the ability to obtaj-n an evaluationthat is just to all the apolicants. The majority of Council reguested that a questionnaire be prepared. and mailed out. If responses are not received, telephone foIlow- ups should be made urging return of the questionnaire. Mr. Page pointed out that if one of the companies which was ranked lowest receives the highest performance rating and is selected, it will be ver17 difficult to negotiate a good franchise because its original proposal did not offer much. The result might be a con- siderable time delay in negotiation to bring them up to the services in the higher ranked proposals. He repeated that a quality system will depend upon the franchise aqreement. The proposals were ranked by the services offered Mr. Page ancl Mr. Schwalm were directed to cooperate on the method to obtain information of performance by the end of the year. The meeting adjourned at 11:15 p.m. a ' t ''Y / Y/ 7/ t't"L4..-7i_.,/y. /WAL- EVELYNI/H. HILL City Clerk cw@ -1