Article III — OPEN VIDEO SYSTEMS

"OVS agreement" means a contract entered into in accordance with the provisions of this chapter between the city and an OVS franchisee setting forth the terms and conditions under which the franchise will be exercised.

(Ord. No. 01-56-1, § 2(3.1), 2-7-01)

(a)

Initial and renewal franchise: application.

(1)

A written application shall be filed with the city for grant of an initial or renewal franchise.

(2)

To be acceptable for filing, a signed original of the application shall be submitted together with six (6) copies. The application must conform to any applicable request for proposals, and contain all information required under section 9A.3.2(b). All applications shall include the names and addresses of persons authorized to act on behalf of the applicant with respect to the application.

(b)

Contents of applications. The city manager may specify the information that must be provided in connection with a request for proposals or an application for an initial or renewal franchise. At a minimum, each application must: identify the applicant, where it plans to construct its system, and the system construction schedule; show that the applicant will provide adequate channels, facilities and other support

for public, educational and government use (including institutional network use) of the OVS; and show that the applicant is financially, technically and legally qualified to construct and operate the OVS.

(c)

Procedure for applying for grant of a franchise.

(1)

A person may apply for an initial or renewal franchise on its own initiative or in response to a request for proposals. Upon receipt of an application the city shall promptly proffer the applicant a proposed OVS agreement, which shall be mailed to the person requesting its issuance and made available to any other interested party. The city may request such additional information as it deems appropriate.

(2)

An applicant shall respond to requests for information completely, and within the time directed by the city, and must strictly comply with procedures, instructions, and requirements the city may establish.

(3)

An application may be rejected if it is incomplete or the applicant fails to follow procedures or respond fully to information requests.

(d)

Evaluation. In evaluating a franchise application, the city may consider the following:

(1)

The extent to which the applicant has substantially complied with the applicable law and the material terms of any existing city OVS franchise;

(2)

Whether the applicant has the financial, technical, and legal qualifications to hold an OVS franchise;

(3)

Whether the application satisfies any minimum requirements established by the city for, or will otherwise provide, adequate public, educational, and governmental use capacity, facilities, or financial support (including with respect to institutional networks);

(4)

Whether issuance of a franchise would require replacement of property or involve disruption of property, public services, or use of the public rights-of-way;

(5)

Whether the approval of the application may eliminate or reduce competition in the delivery of cable service in the city.

(e)

Issuance. If the city finds that it is in the public interest to issue a franchise considering the factors above, and such other matters as it is required or entitled to consider, and subject to the applicant's entry into an appropriate OVS agreement, it shall issue a franchise. Prior to deciding whether or not to issue a franchise, the city may hold one or more public hearings or implement other procedures under which comments from the public on an application may be received.

(f)

Legal qualifications. In order to be legally qualified:

(1)

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

(2)

The applicant must not hold a cable system franchise, or have pending an application for a cable system franchise.

(3)

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.

(4)

The applicant may not have had an application for an initial or renewal cable system franchise to the city 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 immediately preceding the submission of the application.

(5)

The applicant may not have had an application for an initial or renewal OVS franchise denied on any grounds within three (3) years of the applications.

(6)

The applicant shall not be issued a franchise if, at any time during the ten (10) years immediately preceding the submission of the application, the 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 subscribers, or to substantially comply with its obligations.

(7)

The applicant must have the necessary authority under California and federal law to operate an OVS, and must be certified by the FCC under Section 653 of the Cable Act.

(8)

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.

(9)

For purposes of section 9A.3.2(f)(2) through (5), the term applicant includes any affiliate of applicant.

(g)

Exception. Notwithstanding section 9A.3.2(f), an applicant shall be provided a reasonable opportunity to show that, a franchise should issue even if the requirements of section 9A.3.2.(f)(4), (5) are not satisfied, because of

(1)

Relevant circumstances,

(2)

Steps taken by the applicant to cure all matters and to prevent their recurrence,

(3)

The lack of involvement of the applicant's principals,

(4)

Or the remoteness of the matter from the operation of a cable system.

(Ord. No. 01-56-1, § 2(3.2.1—3.2.7), 2-7-01)

(a)

City approval required. No transfer shall occur without prior written notice to and approval of the city council.

(b)

Application.

(1)

A franchisee shall promptly notify the city of any proposed transfer, and submit an application for its approval.

(2)

The city manager may specify information that must be provided in connection with a transfer application. At a minimum, an application shall include the information set forth in section 9A.2.4.(c), and shall include the following information: describe the entities involved in the transaction and the entity that will hold the franchise; describe the chain of ownership before and after the proposed transaction; show that the entity that will hold the franchise will be legally, financially, and technically qualified to do so; attach complete information on the proposed transaction, including the contracts or other documents that relate to the proposed transaction, and all documents, schedules, exhibits, or the like referred to therein; and attach any shareholder reports or filings with the Securities and Exchange Commission ("SEC") that discuss the transaction.

(3)

For the purposes of determining whether it shall consent to a transfer, the city or its agents may inquire into all qualifications of the prospective transferee and such other matters as the city may deem necessary to determine whether the transfer is in the public interest and should be approved, denied, or conditioned. If the proposed transferee or franchisee refuse to provide information, or provide incomplete information, the request for transfer may be denied.

(c)

Determination by city.

(1)

In deciding 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 OVS; whether the incumbent OVS operator is in compliance with its OVS agreement and this chapter and, if not, the proposed transferee's commitment to cure such noncompliance; whether the proposed transferee owns or controls any other OVS or cable system in the city, and 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 adversely affect subscribers, the public, or the city's interest under this chapter, the OVS agreement, or other applicable law.

(2)

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 resolved. No application shall be granted unless the proposed 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. The proposed transferee shall pay all reasonable costs incurred by the city in reviewing and evaluating the applications.

(Ord. No. 01-56-1, § 2(3.3.1—3.3.3), 2-7-01; Ord. No. 02-OR499-1, § 8, 7-10-02)

(a)

PEG access. No OVS operator shall be issued a franchise, or may commence construction of an OVS system, until

(1)

It agrees to match in all respects the highest PEG obligations borne by any cable operator in the city; or

(2)

It agrees to equivalent PEG obligations otherwise acceptable to the city.

(b)

Institutional network. Any OVS operator that constructs an I-Net must match in all respects the highest I- Net obligations borne by any cable operator in the city, unless it agrees to alternative equivalent I-Net obligations acceptable to the city.

(c)

Construction provisions. Every OVS agreement shall specify the construction schedule that will apply to any required construction, upgrade, or rebuild of the OVS. The schedule shall provide for prompt completion of the project, considering the amount and type of construction required.

(d)

Testing. Each OVS 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 this chapter or a franchise.

(e)

Consumer protection provisions. Every franchisee must satisfy customer service consumer protection requirements established from time to time under state or local law and applicable to OVS.

(Ord. No. 01-56-1, § 2(3.4.1—3.4.5), 2-7-01)

If a franchisee's FCC certification is revoked or otherwise terminates as a result of the passage of time or as a matter of law, the city may revoke the OVS franchise after a hearing. The OVS franchise may also be revoked if federal regulations or statutory provisions governing OVS are declared invalid or unenforceable, or are repealed.

(Ord. No. 01-56-1, § 2(3.5), 2-7-01)

The city may regulate a franchisee's rates and charges except as prohibited by law, and may do so by amendment to this chapter, separate ordinance, by amendment to an OVS agreement, or in any other lawful manner.

(Ord. No. 01-56-1, § 2(3.6), 2-7-01)

(a)

OVS operators. In lieu of the franchise fee required by Chapter 2, an OVS franchisee shall pay a fee equal to the maximum amount permitted by law of the gross revenues of the franchisee, its affiliates or any OVS operator of the OVS.

(b)

Persons leasing OVS capacity.

(1)

A person leasing capacity from an OVS operator, other than a person whose revenues are included in the payment made under section 9A.3.7(a) shall pay the city a fee in lieu of the franchise fee required by section 9A.2.6 of five (5) percent of the gross revenues of such person.

(2)

Notwithstanding the foregoing, where franchisee charges a person, other than an affiliate, to use its OVS (the "use payments"); and that person recovers those use payments through charges to its subscribers that are included in that person's gross revenues; and that person fully recovers the use payments through the charges to its subscribers and pays a fee on those charges pursuant to section 9A.3.7(b)(1) the franchisee may deduct from its gross revenues the use payments it receives from that person.

(Ord. No. 01-56-1, § 2(3.7.1, 3.7.2), 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, nor may a franchisee enter into any arrangement that would effectively prevent other persons from using the OVS to compete in the delivery of cable services with a franchisee or its affiliates. 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(3.8), 2-7-01)