Article II — SPECIAL RULES APPLICABLE TO CABLE SYSTEMS

(a)

Application required. An application must be filed for an initial or renewal cable system franchise, or for approval of a transfer. A request for renewal filed under 47 U.S.C. § 546(h) need not contain the information required by section 9A.2.1(b)(1), (2).

(b)

Application contents.

(1)

The city manager may specify the information that must be provided in connection with an application, and the form in which the information is to be provided.

(2)

At a minimum each application must identify the applicant, show that the applicant is financially, technically and legally qualified to construct, maintain and operate the cable system, contain a pro forma showing capital expenditures and expected income and expenses for the first five (5) years the applicant is to hold the franchise, and show that the applicant is willing to comply unconditionally with its franchise obligations. In addition, any application for an initial or renewal franchise must describe in detail the cable system that the applicant proposes to build, show where it will be located, set out the system construction schedule, and show that the applicant will provide adequate channels, facilities and other support for public,

educational and governmental use (including institutional network use) of the cable system. To be accepted for filing, an original and six (6) copies of a complete application must be submitted. All applications shall include the names and addresses of persons authorized to act on behalf of the applicant with respect to the application.

(3)

An applicant (and the transferor and transferee, in the case of a transfer) shall respond to any request for information from the city, consistent with applicable law, by the time specified by the city.

(c)

Incomplete applications. An application may be rejected if it is incomplete, or if the response to requests for information is not timely and complete.

(Ord. No. 01-56-1, § 2(2.1.1—2.1.3), 2-7-01)

(a)

Scope. This section establishes additional provisions that apply to an application for an initial franchise, or a renewal franchise application that is not governed by 47 U.S.C. § 546(a)—(h).

(b)

Process. Any person may apply for an initial or renewal franchise by submitting an application therefore on that person's own initiative, or in response to a request for proposals issued by the city. If the city receives an unsolicited application, it may choose to issue a request for additional proposals, and require the applicant to amend its proposal to respond thereto. The city shall promptly conduct such investigations as are necessary to act on an application.

(c)

Consideration of application. In determining whether to grant a franchise, the city may consider:

(1)

The extent to which an applicant for renewal has substantially complied with the applicable law and the material terms of any existing cable franchise;

(2)

Whether an applicant for renewal's quality of service under its existing franchise, including signal quality, response to customer complaints, billing practices, and the like has been reasonable in light of the needs of the community;

(3)

Where the applicant has not previously held a cable system franchise in the city, whether the applicant's record in other communities indicates that it can be relied upon to provide high-quality service throughout any franchise term;

(4)

Whether the applicant has the financial, legal, and technical ability to provide the services, facilities, and equipment set forth in an application, and to satisfy any minimum requirements established by the city;

(5)

Whether the applicant's application is reasonable to meet the future cable-related needs and interests of the city, taking into account the cost of meeting such needs and interests;

(6)

Whether issuance of a franchise is warranted in the public interest considering the immediate and future effect on streets, public property, and private property that will be used by the applicant's cable system;

(7)

Whether issuance of the franchise would reduce competition in the provision of cable service in the city; and

(8)

Such other matters as the city is authorized or required to consider.

(d)

Issuance of franchise. If the city determines that issuance of a franchise would be in the public interest considering the factors described above, it may proffer a franchise agreement to the applicant. No franchise shall become effective until the franchise is unconditionally accepted by the applicant, and the franchise agreement is signed.

(Ord. No. 01-56-1, § 2(2.2.1—2.2.4), 2-7-01)

Sec. 9A.2.3. - Application for renewal franchise filed pursuant to 47 U.S.C. § 546.

(a)

Scope. This section establishes additional provisions that apply to applications for renewal governed by 47 U.S.C. § 546(a)—(g).

(b)

Process. A franchisee that intends to exercise rights under 47 U.S.C. § 546(a)—(g) shall submit a notice in writing to the city in a timely manner as required by the Cable Act clearly stating that it is activating the procedures set forth in those sections. The city shall thereafter commence any proceedings that may be required under federal law, and upon completion of those proceedings, the city may issue a request for

proposals and an application may be submitted for renewal. The city may preliminarily deny the application by resolution, and if the application is preliminarily denied, the city will conduct such proceedings and by resolution establish such procedures and appoint such individuals as may be necessary to conduct any proceedings to review the application.

(Ord. No. 01-56-1, § 2(2.3.1, 2.3.2), 2-7-01)

(a)

Scope. This section establishes additional provisions that apply to applications for transfer approval.

(b)

Information. An application for transfer must contain all the information required by the city manager, as set forth in section 9A.2.4(c) herein.

(c)

Contents of application.

A.

Unless otherwise waived by the city manager, the grantee's application requesting consent to a transfer or assignment of the franchise, or to a change of control of the grantee, shall include:

A fully completed FCC Form 394.

A copy of any subscriber complaint records the grantee is required to maintain pursuant to this chapter.

A copy of the most current financial statements (as of the application date) showing the financial condition of the Oceanside Cable System. To the extent certified and/or audited financial statements exist, they should be provided. The grantee shall also agree to submit, if requested, within ninety (90) days after the date of the closing of the transaction, certified financial statements showing the financial condition of the Oceanside Cable System as of the closing. Provided, however, that if the grantee's financial books and records are not maintained in a manner that allows for the preparation of financial statements at the Oceanside Cable System level, then the grantee shall present pro forma financial statements for the Oceanside Cable System (as of the application date and closing), identifying all assumptions used in making allocations to create the pro forma financial statements for the Oceanside Cable System and the factual basis for those assumptions, as well as a copy of the financial statements from which the Oceanside Cable System-level pro forma financial statements have been created.

Any additional information reasonably requested by the city manager to clarify information submitted pursuant to this section 9A.2.4(c).

B.

Unless otherwise waived by the city manager, the transferee's application (or the application of the person or entity that seeks to acquire control of the grantee) shall include:

A fully completed FCC Form 394.

To the extent not included with the completed FCC Form 394, the following information concerning the applicant:

a.

A statement identifying the corporate or business entity organization (e.g., partnership; corporation) of transferee (or the person or entity that seeks to acquire control of the grantee), and copies of corporate or business formation papers of the same (e.g., limited partnership agreement; articles of incorporation and by-laws). In the event of a transfer or assignment of the franchise, evidence that the transferee is authorized to transact business in the State of California. The applicant should include the names and addresses of any parent or subsidiary of transferee (or the person or entity that seeks to acquire control of the grantee), and any other business entity (a) that owns or controls more than fifty (50) percent interest in applicant, or (b) in which the applicant owns or controls more than a fifty (50) percent interest.

b.

A summary of the prior business history of the transferee (or the person or entity that seeks to acquire control of the grantee) setting forth the expertise of the applicant in the cable television field.

c.

A list (by name and principal business address) of all persons or entities who own or control ten (10) percent or more of the stock (or other ownership interest) of the transferee (or the person or entity that seeks to acquire control of the grantee), and the percentage of stock (or other ownership interest) owned or controlled by each.

d.

A list of the officers of transferee (or the person or entity that seeks to acquire control of the grantee), together with a description of the education and business background of each officer.

e.

Specific information regarding whether the transferee (or other person or entity that seeks to acquire control of the grantee), or any of its officers, or any other cable television operator owned and/or controlled by the transferee (or the person or entity that seeks to acquire control of the grantee):

i.

Within the past seven (7) years has been found guilty in a criminal proceeding (felony or misdemeanor) of any of the following offenses: fraud, embezzlement, tax evasion, bribery, extortion, jury tampering, obstruction of justice (or other misconduct affecting public or judicial officers in the performance of their duties), perjury, antitrust violations (state or federal), or conspiracy to commit any of the foregoing. If so, provide a statement describing the date and circumstances of each such conviction.

ii.

Within the past seven (7) years has been a party to a civil proceeding in which he, she or it was held liable for any of the following, or is now a party to any such proceeding: antitrust violations (state or federal), violations of securities laws (state or federal), or violations of FCC regulations. If so, provide a statement describing the date and circumstances of each such civil adjudication of liability. Where such civil proceedings are ongoing, provide a detailed explanation of the circumstances surrounding the claim and the name, address and telephone number of the attorney who initiated the proceeding.

iii.

Within the past three (3) years it has been determined by a court of competent jurisdiction that the transferee has failed to comply with the material requirements of a cable television franchise. If so, provide a copy of such order or judgment and the circumstances of the same.

iv.

Within the past three (3) years had any cable television franchise revoked or not renewed for cause. If so, identify the franchising authority involved and the date and circumstances of such revocation or non- renewal.

v.

To the extent affirmative information is provided under subsections (i) through (iv) above, the applicant is invited to provide with its application information showing that the application should, nonetheless, be approved by virtue of the circumstances surrounding the matter and the steps taken by the applicant to cure all harms flowing therefrom and to prevent their recurrence, the lack of involvement of the principals and/or the remoteness of the matter from the operation of the cable system. In acting on the application, the city shall reasonably consider all such information.

The following financial information:

a.

Accurate financial statements of the applicant for the past three (3) years and such other information and data, including, without limitation, sources, identification and description of capital, as will demonstrate that (a) the applicant has the financial resources necessary to complete the proposed transaction, and (b) following the closing of the transaction that the transferee (or the person or entity that seeks to acquire control of the grantee) has the financial resources to comply fully with the terms and conditions of the

franchise, including making such improvements and additions in services and facilities as may be required under the franchise, such as extensions of service.

b.

A narrative statement describing the applicant's plan for financing or otherwise funding (a) the transaction that will result in the transfer or change of control, and (b) the operation and maintenance of the cable system consistent with the obligations of the franchise.

The following other information:

a.

A summary of the plans and commitments, if any, by the transferee (or the person or entity that seeks to acquire control of the grantee) to remedy specific material defaults and/or violations, if any, in the historical operations of the grantee under the franchise.

b.

An express written acceptance by the transferee (or the person or entity that seeks to acquire control of the grantee) of the lawful terms and conditions of the franchise, conditioned only upon (1) the city's approval of the transfer or change of control, and (2) the closing of the transaction that will result in the transfer or change of control. The acceptance must be signed by a duly authorized representative of the transferee (or the person or entity that seeks to acquire control of the grantee), whose signature shall be acknowledged by a notary.

C.

In the case of a transfer or assignment of the franchise, within thirty (30) days after the closing of the transaction that results in the transfer, the transferee shall provide the city with any performance bond, letter of credit and/or surety fund required by this franchise, together with evidence of insurance required by this chapter.

(d)

Consideration of application. In determining whether a transfer application should be granted, denied, or granted subject to conditions, the city may consider the legal, financial, and technical qualifications of the proposed transferee to operate the cable system; any potential impact of the transfer on subscriber rates or services; whether the incumbent cable operator is in compliance with its franchise; whether the proposed transferee owns or controls any other cable system in the city, whether operation by the proposed transferee may eliminate or reduce competition in the delivery of cable service in the city; and whether operation by the proposed transferee or approval of the transfer would otherwise adversely affect subscribers, the public, or the city's interest under this chapter, the franchise, or other applicable law. Each party shall bear any costs and expenses incurred by such party in preparing, submitting, reviewing and/or evaluating the applications.

(e)

Minimum conditions. In order to obtain approval of a transfer, an applicant must show, at a minimum that: the proposed transferee is qualified; the transfer will not adversely affect the interests of subscribers, the public, or the city; and that non-compliance issues have been or will be resolved. No application shall be granted unless the transferee agrees in writing that it will abide by and accept all terms of this chapter and the franchise, and that it will assume the obligations, liabilities, and responsibility for all acts and omissions, known and unknown, of the previous franchisee for all purposes.

(f)

Waiver of requirements. Any request for a waiver of any of the requirements set forth in this section 9A.2.4. must be in writing setting forth the specific requirement sought to be waived and the justification for such request. Any grant of a waiver of the requirements set forth in this section must be in writing signed by the city manager, setting forth the specific requirement that is being waived, including any conditions thereto.

(Ord. No. 01-56-1, § 2(2.4.1—2.4.4), 2-7-01; Ord. No. 02-OR499-1, §§ 3—6, 7-10-02)

(a)

Standards.

(1)

The applicant must be willing to comply with the provisions of this chapter and applicable laws, and to comply with such requirements of a franchise as the city may lawfully require.

(2)

The applicant must not have had any cable system or OVS franchise validly revoked, (including any appeals) by the city within three (3) years preceding the submission of the application.

(3)

The applicant may not have had an application to the city for an initial or renewal cable system franchise denied on the ground that the applicant failed to propose a cable system meeting the cable-related needs and interests of the community, or as to which any challenges to such franchising decision were finally resolved (including any appeals) adversely to the applicant, within three (3) years preceding the submission of the application; and may not have had an application for an initial or renewal OVS franchise denied on any ground within three (3) years of the application.

(4)

The applicant shall not be issued a franchise if, at any time during the ten (10) years preceding the submission of the application, applicant was convicted of fraud, racketeering, anti-competitive actions, unfair trade practices or other conduct of such character that the applicant cannot be relied upon to deal truthfully with the city and the subscribers, or to substantially comply with its obligations.

(5)

Applicant must have the necessary authority under California and federal law to operate a cable system, or show that it is in a position to obtain that authority.

(6)

The applicant shall not be issued a franchise if it files materially misleading information in its application or intentionally withholds information that the applicant lawfully is required to provide.

(7)

For purposes of section 2.5.1(2)—(4), the term applicant includes any affiliate of applicant.

(b)

Exception. Notwithstanding section 9A.2.5(a), an applicant shall be provided a reasonable opportunity to show that a franchise should issue even if the requirements of section 9A.2.5(a)(3), (4) are not satisfied, in consideration of the circumstances surrounding the matter and the steps taken by the applicant to cure all harms flowing therefrom and prevent their recurrence, the lack of involvement of the applicant's principals, or the remoteness of the matter from the operation of a cable system.

(Ord. No. 01-56-1, § 2(2.5.1—2.5.2), 2-7-01)

A cable operator shall pay to the city a franchise fee in an amount equal to five (5) percent of gross revenues, or such other amount as may be specified in the franchise; provided, however, that if the franchise specifies an amount, that amount shall be subject to increase should federal limits on fee payments be eliminated or changed and other cable operators are subject to a higher fee.

(Ord. No. 01-56-1, § 2(2.6), 2-7-01)

A franchisee may not require a subscriber or a building owner or manager to enter into an exclusive contract as a condition of providing or continuing service. However, nothing herein prevents a franchisee from entering into an otherwise lawful, mutually desired exclusive arrangement with a building owner or manager of a multiple dwelling unit or commercial subscriber.

(Ord. No. 01-56-1, § 2(2.7), 2-7-01)

In addition to satisfying such additional or stricter conditions as the city finds necessary based on its investigations, the following elements shall be required in every franchise.

(1)

System design. Each franchisee shall provide a cable system that uses, at a minimum, seven hundred fifty (750) megahertz equipment of high quality and reliability. At a minimum, each franchisee shall install and activate the return portion of the cable system.

(2)

Public, educational and governmental use of the system.

a.

A franchisee shall provide a minimum of three (3) channels for PEG access to each subscriber

b.

Each franchisee shall install, maintain, and replace as necessary, a dedicated, bi-directional fiber optic link between its headend and each of the following locations:

Mira Costa Community College;

The location designated by the city as the primary access center (which on the effective date of this chapter was that of Oceanside Community TV) and;

City Hall. A franchisee shall, if required, relocate, install and activate these return lines once during the duration of the franchise.

c.

Each franchisee shall install, maintain, and replace activated two-way cable plant and all headend, cable plant, and node equipment required to make it operable so that the city, schools, and all designated PEG access centers and access facilities located within the franchise area will be able to send and receive signals (video, audio, and data) using the activated two-way cable plant.

d.

Each franchisee shall ensure that technically adequate signal quality, routing systems, and switching and/or processing equipment are initially and continuously provided for all PEG access interconnections both within franchisee's cable system and with other cable systems within the franchise area throughout the duration of its franchise.

e.

In the event a franchisee makes any change in the cable system and related equipment and facilities or in the franchisee's signal delivery technology which directly or indirectly substantially affects the signal quality or transmission of PEG access programming, the franchisee shall at its expense take necessary steps or provide necessary technical assistance, including the acquisition of all necessary equipment, to ensure that the capabilities of access programmers are not diminished or adversely affected by such change.

f.

A franchisee shall maintain all access channels (both upstream channels and downstream channels) and all interconnections of access channels at the same level of technical quality and reliability as the best commercial channels carried on the system.

g.

Notwithstanding anything in this chapter to the contrary, institutional networks shall not be deemed to be a minimum condition of this chapter and shall be subject to negotiation between the city and the franchisee.

(3)

Service to franchise area. It is the policy of the city to ensure that every cable system provides service in its franchise area upon request to any person or any government building. Each franchisee shall extend service upon request within its franchise area, provided that, a franchise may permit a franchisee to require a potential subscriber to contribute a fair share of the capital costs of installation or extension as a condition of extension or installation in cases where such extension or installation may be unduly expensive. Service must be provided within time limits specified in section 9A.2.8(d).

a.

Line extension policy. A franchisee shall extend its trunk and distribution from the nearest existing cable system plant to any adjacent area located within the franchise area having a density of twenty-five (25) homes per mile as measured from the nearest existing cable system plant at no charge other than the then- prevailing normal installation charge and/or the long drop charge (for drops of more one hundred fifty (150) feet), unless the grantee demonstrates to the city's satisfaction that extraordinary circumstances justify a waiver of this requirement.

b.

Cost sharing. In the event that the new subscriber requesting service is not located within two hundred fifty (250) feet or the equivalent of twenty-five (25) homes per mile of the nearest existing cable system plant, the grantee will extend its cable system on request based upon the following cost-sharing formula:

i. Total Cost to Construct Extension1 = Cost Per Cable Mile of Extension Cable Miles of Extension

ii. Cost Per Cable Mile of Extension = Grantee's Share of Cost Per Subscriber Unit 25

iii. Grantee's Share of Cost Per Subscriber Unit = Grantee's Share of Total Cost of Extension Times Number of Subscriber Units Passed

iv. Total Cost to Construct Extension Minus = Total Subscriber's Share Grantee's Share of Total

v. Total Subscriber Share = Cost Per Subscriber Number of Subscribers Requesting Service

1 "Total Cost to Construct Extension" is defined as the actual turnkey cost to construct the entire extension including electronics, pole make-ready charges, and labor, but not the cost of the subscriber

drop.

(4)

Time for extension. Except as a franchise otherwise provides, service must be extended upon request to any person or to any government building in a franchisee's franchise area

a.

Within seven (7) days of the request, where service can be provided by activating or installing a drop;

b.

Within ninety (90) days of the request where an extension of one-half (½) mile or less is required; or

c.

Within six (6) months where an extension of one-half (½) mile or more is required.

(5)

Technical standards. A cable system within the city shall meet or exceed the technical standards set forth in 47 C.F.R. § 76.601 and any other applicable technical standards.

(6)

Testing. Each cable operator shall perform at its expense such tests as may be necessary to show whether or not the franchisee is in compliance with its obligations under applicable FCC standards, this chapter or a franchise.

(7)

Interconnection. Upon request of the city, every cable system shall be required to interconnect with every other cable system within the city, or adjacent to the city, on fair and reasonable terms for purposes of providing PEG and I-Net services.

(8)

Continuity of service. Each franchisee shall, during the term of the franchise, ensure that subscribers are able to receive continuous service. In the event the franchise is revoked or terminated, the franchisee may be required to continue to provide service for a reasonable period to assure an orderly transition of service from the franchisee to another entity. A franchise may establish more particular requirements under which these obligations will be satisfied.

(Ord. No. 01-56-1, § 2(2.8.1—2.8.8), 2-7-01; Ord. No. 02-OR499-1, § 7, 7-10-02)

(a)

All rates subject to regulation. The city may regulate any of the cable operator's rates and charges, except to the extent it is prohibited from doing so by law. The city will regulate rates in accordance with FCC rules and regulations, where applicable. Except to the extent FCC rules provide otherwise, all rates and charges that are subject to regulation, and changes in those rates or charges must be approved in advance. The city manager may take any required steps to file complaints, to toll rate changes, issue accounting orders or take any other steps required to comply with FCC regulations. The city council shall be responsible for issuing rate orders that establish rates or order refunds.

(b)

No rate discrimination. Except to the extent the city may not lawfully enforce such a requirement, a cable operator is prohibited from discriminating in its rates or charges or from granting undue preferences to any subscriber, potential subscriber, or group of subscribers or potential subscribers; provided, however, that a franchisee may offer temporary, bona fide promotional discounts in order to attract or maintain subscribers, so long as such discounts are offered on a non-discriminatory basis to similar classes of subscribers throughout the franchise area; and a franchisee may offer discounts for the elderly, the disabled, or the economically disadvantaged; and such other discounts as it is expressly entitled to provide under federal law, if such discounts are applied in a uniform and consistent manner.

(c)

Redlining prohibited. A cable operator shall not deny access or charge different rates to any group of subscribers or potential subscribers because of the income of the residents of the local area in which such group resides.

(d)

Customer service.

(1)

Each cable operator must satisfy FCC, state and city cable customer service standards or consumer protection standards. City cable customer service standards may be adopted by resolution. In the case of a conflict among standards, the stricter standard shall apply.

(2)

For violation of cable customer service standards, penalties will be imposed as follows:

a.

Two hundred dollars ($200.00) for each day of each material breach, not to exceed six hundred dollars ($600.00) for each occurrence of material breach.

b.

If there is a subsequent material breach of the same provision within twelve (12) months, four hundred ($400.00) for each day of each material breach, not to exceed twelve hundred dollars ($1,200.00) for each occurrence of the material breach.

c.

If there is a third or additional material breach of the same provision within twelve (12) months of the first, one thousand dollars ($1,000.00) for each day of each material breach, not to exceed three thousand dollars ($3,000.00) for each occurrence of the material breach.

(3)

Any penalty assessed under this section will be reduced dollar-for-dollar to the extent any liquidated damage provision of a franchise imposes a monetary obligation on a franchisee for the same customer service failures, and no other monetary damages may be assessed. The city will provide notice, and impose penalties, under this section pursuant to the procedures established by California Government Code § 53088.2(r).

(Ord. No. 01-56-1, § 2(2.9.1—2.9.4), 2-7-01)