PROPOSED CITY OF PORTLAND CABLE
system.
The City of Portland presently is considering awarding a cable com-
munications system franchise to Cablesystems Pacific. What follows is a
general description of the proposed franchise. The general description is
not a legal document. Persons interested in the details of the proposed
franchise should review the proposed franchise itself. Copies of the
proposed franchise may be obtained from the City Auditor.
The proposed franchise also is printed in the December 31, 1980 issue of the
Daily Journal of Commerce. Any person objecting to the proDosed Iran-
chise or any part of it may file a written objection w ith the City Auditor
within 20 days after December 31, 1980. The City Council will hold a hearing
on the objections before making a final decision. There will be at least five
days notice of the hearing The City Auditor's address is 202 City Hall, Port-
land, OR 97204.
3.3. Limitations On Compensation. The City agrees to take no more than
5% of the grantee's gross revenues as a franchise fee. The grantee agrees
to cooperate in the City's efforts to obtain any legal permission required to
secure that maximum amount.
3 4 Minimum Advance Payment. The grantee agrees to pay the City
$160,000 to cover cable franchising and regulatory costs incurred prior to
grant of the franchise, and $170,000 per year at the beginning of each year
thereafter, to cover the estimated costs for City cable regulation. The an-
nua| fee esca|atos as the cost of living increases. These amounts will be
credited, by an appropriate formula, against eventual 5% franchise fee
payments by the grantee.
3 5 Quarterly Payments. Franchise fee payments must be made by the
grantee on a quarterly basis, and must be accompanied by a report showing
how amounts were arrived at.
THE NATURE OF THE FRANCHISE
The franchise is the legislative instrum ent by which the City Council
authorizes Cablesystems Pacific to construct, operate and maintain a cable
communications system in the City of Portland.
CABLESYSTEMS PACIFIC
Cablesystems Pacific is a limited Partnership in which the limited partners
are 41 Portland investors who together own 50% of the partnership equity.
The general partner owning the other 50% is U.S. Cablesystems, Inc., a
subsidiary of Canadian Cablesystems, Ltd.
TERMS OF THE FRANCHISE
The franchise is to be in effect for 15 years. It obligates the City to allow
Cablesystems Pacific to use the City's streets and public ways to construct
the cable system, and describes the powers the City has to regulate sub
scriber rates, matters of security and privacy, and all other matters in the
public interest. It describes penalities the City may impose, including
revocation of the franchise, if franchise terms are violated by Cablesystems
Pacific.
The franchise describes all the terms and conditions Cablesystems must
meet in order to do business in the City. Cablesystems must build and
operate a cable system as required in the franchise document, and as they
have promised in a proposal they made to the City on April 30, 1980. The
proposal is on file with the City Auditor.
The City's regulatory power is to be exercised with the assistance of a Cable
Regulatory Commission.
Community Access is to be coordinated through a non profit Community
Cable Corporation.
CABLE SYSTEM DESIGN AND SERVICES
Cablesystems Pacific will build a dual-cable residential subscriber network
running approximately 940 miles and serving Portland homes with up to 108
channels delivered through four separate hubs. A financially independent
institutional network will run approximately 230 miles, providing video and
data services to Portland schools, businesses, hospitals, government agen
cies and other institutions through four separate hubs.
The system must be built w ithin 3 years, must meet or exceed strict
technical standards, and must provide a variety of services - entertain
ment, community access, and two-way communications services for both
homes and institutions.
Through the Community Access Program, individuals and groups may
produce programming free of charge, with four studios, mobile and port
able equipment, technical assistance and training, and channel space all
provided by Cablesystems Pacific.
RATES
The City may regulate rates for cable service. On the residential subscriber
network, several tiers of service are available with a different rate for each
tier. A typical rate is $7.95 per month for the highest tier of basic service,
with no premium channels. A typical premium channel, such as Home Box
Office or Showtime, costs $7.50 in addition to the $7.95 basic rate. The tier
that includes capability for two-way services is $10.45 per month.
SECTION BY SECTION DESCRIPTION
OF THE PROPOSED CABLESYSTEMS PACIFIC FRANCHISE
Section 1. GRANT OF THE FRANCHISE
1.1. The grantee of the franchise is identified as Cablesystems Pacific. The
grantor is the City of Portland.
1.2. Use of Streets and Public Ways. The grantee is given permission to
use the City's streets and rights of way for building the cable system. Much
of the cable and other equipment will be attached to power company and
telephone company poles, or carried in their underground ducts. The gran
tee must show the City it has permission from the telephone and power
companies to use their facilities.
1.3 Duration and Effective Date. The franchise is granted for fifteen years.
Effective date for the franchise to begin is 60 days after the City Council
passes the ordinance authorizing the franchise. The grantee must also sign
an acceptance of the franchise.
1.4. Franchise Not Transferable. The franchise, and all the rights it
bestows, belong only to Cablesystems Pacific. They cannot be transferred
to anyone else unless the City specifically authorizes the transfer.
1.6 Change In Control. If there is a significant change of control in the
ownership of Cablesystems Pacific, or any of its parent companies, the City
must be notified, and must approve the change in order for the franchise to
remain in effect. A transfer of 10 percent of the stock of any of
Cablesystems’ parents is regarded as a significant change in control.
1.7. Charter And General Ordinances To Apply. The franchise is subject to
the Charter of the City of Portland, and also the requirements of City codes
and ordinances governing permits, fees and manner of construction.
Section 2 DEFINITIONS
Section 2 stipulates the definitions of 38 key terms used in the franchise
Section 3. COMPENSATION
3 1 The grantee will pay the City 5% of its gross revenues as a franchise
fee
3 2 Use Of Funds The City will use the franchise fee to defray the costs of
local regulation of the franchise, to support the development of the com
munity access channels, and to generally encourage development of the
3.6. Acceptance. The City retains the right to audit any amount paid by the
grantee, and to recommend a different amount. An arbitration procedure is
provided in case there is a dispute over amounts,
3.7 Tax Liability. The grantee is subject to local taxes, like any other
business, but franchise fees do replace certain utility taxes or fees.
Section 4. RATE REGULATION
4.1. Full Regulatory Power Reserved The City reserves the full authority to
regulate all rates and charges levied by the grantee for cable service to its
subscribers. The grantee may not use revenues from entertainment services
to subsidize the operation of the institutional communications network, nor
vice-versa. Financially, these two types of service must operate indepen
dently of one another.
4.2. Schedule Of Rates.
All rates must be published, and
non discriminatory. A low-cost, "lifeline” service will be provided which in
cludes basic television service for $3.95 per month, and home security ser
vice for $4.95 per month. The starting rate for tfce highest tier of basic ser
vice is $7.95 per month. The lowest rate for basic service plus one premium
move channel, such as home Box Office, is $15.45 per month. Basic service
with ,r,’eractive capability is $10.45 per month.
4.2 (Cent.) The grantee agrees not to raise its basic service rates more than
an average of 5% per year through the tenth year of the franchise.
4.3 Change in Rates. Rate increases for home subscribers may take place
only once annually. If the City does not establish other procedures, the
procedures for bringing about an increase, or denying it, is as follows. A
Cable Regulatory Commission is established. The grantee files a request for
a rate increase. Unless the Commission or the City Council requests a
review w ith in 30 days, the increase goes into e ffe c t. O therw ise, the
Regulatory Commission must specifically act to approve the increase. If the
Commission fails to act within 60 days, or if its decision is appealed to the
City Council, then the Council must specifically approve the request within
45 days in order for the increase to take effect.
M-1 or M 2 zone), south of the Columbia Slough, and north of the Colum
bia Slough in residentially zoned areas. Service can be provided to residen
ces in other areas and zones, or to institutions, for a special fee.
The institutional netw ork w ill consist of a single cable running ap
proximately 230 miles, linking schools, businesses, hospitals, government
agencies and other institutions through four separate hubs. The system will
carry voice, video and data services.
Examples of video services on the institutional network are training, tele
conferencing, education, retailing and real estate marketing; data services
include computer exchange, security alarm services, information retrieval,
com puter instruction, facsim ile transm ission, tra ffic control, fa cility
monitoring and banking. The grantee w ill introduce institutional services
w ith a marketing effort that include information dissemination, technical
assistance to users, demonstration projects and free trial offers.
Additional commitments by the grantee include the provision of a satellite
uplink for intercity teleconferencing when there is a demand for this service
and it is shown to be cost-effective; activation of the full 108-channel
system capacity after 1986; cooperation w ith the City in feasibility studies
for a Northeast area performing arts center; carrying all local UHF television
stations; provision of a lockout device so that parents may prevent the
reception of programming they find objectionable in their home; and the
expansion of community access channel capacity if the initial capacity is
used up.
Section 7. CONSTRUCTION AND EXTENSION SCHEDULES
7.1 General Provision. The grantee must meet all construction and system
extension schedules set forth in the Proposal. Detailed briefing on con
struction plans must be provided to the City before construction, and
regular progress reports must be made.
7.2. Specific Provisions. The grantee will make a capital investment of $40
million in the system - $33.6 million for entertainment services, $3.4 million
for institutional services, $1.7 million to provide home interactive services,
and $1.3 million for community access services. The system must be com
pleted w ithin three years, w ith designated areas completed in the N orth
east, Southeast and North sections of the City in each of the three years of
construction. Under certain circumstances, the grantee must expand the
institutional network.
7.3 Completion Criteria. In order for the system to be regarded as com
plete, the entire 940 miles of the residential network, the entire 230 miles of
the institutional network, all associated buildings and equipment, and all
required interconnections with other systems must be in place and actively
operating, and all required performances tests must be completed. All
proposed services must actually be available as scheduled. The grantee is
free to substitute equivalent or better techniques and equipment for those
described in the proposal.
SECTION 8J3PERATIONAL STANDARDS
Section 5. FRANCHISE AREA
8.1 General Provision. The grantee must meet or exceed all operational
standards set out in the Proposal. Any changes must be approved by the
City Council.
5.1 The franchise is for the entire City of Portland, but without specific City
Council approval, the grantee is not authorized to serve residential sub
scribers on Portland's West Side, where a cable system is currently being
operated by Liberty Com m unications, Inc. The grantee is required to
provide institutional subscriber services city-wide.
8.2. Specific Provisions. Among other commitments, the grantee agrees to
provide two satellite earth stations, utilize computerized system monitoring,
alarm m onitoring and polling services, use code-operated switches for
reverse transmissions, and substantially meet all technical standards
specified by the City as a condition of submitting an acceptable proposal.
Section 6. SERVICE REQUIREMENTS
The grantee also agrees to do initial performance testing, preventive main
tenance and routine recurring tests. Grantee will maintain an operation for
responding to customer complaints, and a complete service and repair
operation.
6.1 General Provision. The grantee is required to meet or exceed all
requirements for service contained in the franchise, and also in the gran
tee's proposal, which is on file at the City Auditor's office.
SECTION 9. REGULATORY PROVISIONS
6.2. Specific Provisions. The following are among the requirements that
must be met by the grantee:
The grantee must implement a marketing plan to ensure that subscribers
will be made aware cable service is available and advised of the terms and
conditions of receiving service from the grantee.
The grantee will hire 138 employees by the third year of the franchise, in
adm inistration and sales, technical operations and program m ing. The
payroll will be approximately $2,500,000 in that year. In the tenth year, the
payroll will be approximately $3,740,000.
The residential subscriber network w ill consist of dual cable running aD
proximately 940 miles, operating through four separate hubs. Initially, 82
channels will be activated in the forward direction, and four channels in the
reverse direction. The system has the capacity to carry 108 channels for
ward and eight reverse.
Subscribers will have a converter on top of their TV sets to select channels
for less expensive tiers of service, and a remote digital keypad for more ex
pensive tiers.
Subscribers on the residential network will have available a wide range of
entertainment services such as movies, sports and cultural programming;
locally originated com m unity program m ing such as neighborhood
meetings, local arts, environmental programs and local school events; in
formation resources such as TV listings, community bulletin board, weather
and news, and special teletex information retrieval services; all local TV
channels and three stations imported from Chicago, Oakland and Atlanta; a
variety of local and im ported FM radio stations; and special channels
showing first run uncut movies, sports and special events for an additional
charge.
The grantee will provide a main studio and three additional neighborhood
studios for producing local programming. Three mobile production vans are
also provided, as well as a variety of portable equipm ent. Technical
assistance and training in the use of the equipment will be provided at no
charge by grantee, and non commercial programming may be produced by
an individual or group at no charge. Five channels will be devoted to general
community programming under the direction of a Community Cable Cor
poration to be established by the City Council, and several additional chan
nels will be dedicated to programming on themes such as the environment.
Black Culture and local arts, with programming staff provided by the Gran
tee Channels may be leased for purposes other than non commercial
community programming.
The grantee will make available a variety of interactive services, in which
signals are generated in the home. For example: an alarm monitoring ser
vice which sends signals from fire, intrusion or medical alarms to summon
fire, police or ambulance units; opinion polling, video games and in fo r
mation retrieval, using a special keypad and interactive terminal. Other
possibilities for the future are shopping from home, banking from home,
energy management, and two way education in the home (See Section 14
of the Proposal. I
The grantee will install basic residential service for the standard installation
charge ($24 951 in any residence east of the Willamette River (except in an
1
9.1 Interconnection. The grantee is required to provide a link with Liberty's
West side Portland system, with the City's own closed circuit cable system,
and with any other cable systems within the boundaries of the Metropolitan
Service D istrict. The link must provide for both sending and receiving
programming on at least five community Channels.
9.2. Penalties for Delay in Construction. If construction is delayed, the City
may impose penalties on the grantee, including monetary penalties, reduc
tion of the term of the franchise, and complete revocation of the franchise.
9.3. Undergrounding of Cable. Placing cable underground is encouraged.
It is required where ordinances demand it, in all new subdivisions and where
utilities are already underground. Once installed in the air, cable must be
taken down and put underground if law requires, or where the telephone
company voluntarily puts its wires underground.
9 4. Emergency Requirements. There will be an emergency override that
allows the Mayor or the Emergency Communications Bureau to break into
the system with voice and video messages. A squeal alert tone gives war
ning that such messages are coming.
9.5. Emergency Power If there is a power failure in any part of the system,
emergency power will be provided to make sure that service iS*rhaintained
in the rest of the system.
9.6. Construction Codes The grantee is subject to all building and zoning
codes. Moreover, the City may require the grantee to remove any equip
ment from private or public property, if the equipment unreasonably inter
feres with anyone’s use of the property.
9.7. Construction and Use of Poles. The grantee is expected to use the
poles and conduits owned by the telephone and power companies, and to
comply with all standards of construction and maintenance applicable to
those entities, according to agreements approved by the City. If the grantee
cannot use telephone and power company poles conduits, then if any con
struct its own, but must comply with City standards for construction.
9.8 Restoration of Streets. The grantee is responsible for restoring any
streets dug up in the course of its construction, and all its work must be
done in a safe and lawful manner,
9.9. Reservation of Street Rights. The City may require the grantee to
remove or replace its facilities to allow the City to work on streets, sewers or
other public projects.
9.10 Trimming of Trees. Cablesystems Pacific will be under the same rules
regarding the cutting or trimming of trees as are the other utility companies.
9.11 The city may use the poles and underground conduits owned by the
grantee. The City takes responsibility for any damage it causes to the gran
tee's property
9.12 Street Vacation or Abandonment. If the City abandons or vacates any
street containing equipment owned by Cablesystems Pacific, the company
is responsible for cleanly removing the equipment or make special arrange
ments to leave it there.