To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Kristin Read, Assistant Town Manager
Title
Ordinance Approving the Grant of a Cable Franchise to Comcast Colorado IX, LLC, and Authorizing the Execution of a Cable Franchise Agreement Between Comcast Colorado IX, LLC, and the Town of Castle Rock (Second Reading - Approved on First Reading on October 1, 2024, by a vote 7-0)
Body
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Executive Summary
This request is to approve a renewed cable franchise agreement with Comcast for 10 years, until November 13, 2034.
Discussion
A cable franchise is a contract between a local government and a cable operator that allows the operator to use the government’s rights of way to provide cable service
within the community. The cable operator must, in turn, meet requirements - including adherence to customer service standards; payments of franchise fees; and provision
of public, education and government access channels.
The Town had a franchise agreement with Comcast that expired on June 30, 2024. Comcast has continued operating within Castle Rock under that agreement, pending Council’s approval of this renewed agreement. Staff is not recommending any changes to the customer service standards that were approved along with the Town’s 2014 agreement with Comcast.
The proposed 10-year renewal agreement is a “model” agreement used by cities and towns throughout the metro area in cooperation through the Colorado Communications and Utility Alliance (CCUA), of which the Town is a member. The proposed franchise is largely similar to the previous agreement between the Town and Comcast. Two areas of substantive changes in which Council and the community may have an interest relate to: 1) current federal laws and 2) the approach to the Public, Educational, and Governmental (PEG) fees the Town receives as a result of the franchise.
The bulk of the changes between the Town’s 2014 agreement with Comcast and the one being presented tonight are to bring the agreement into conformance with current federal law. Staff from multiple Town departments worked with expert law firm Wilson Williams Fellman Dittman over several months to ensure the agreement is as favorable to the Town as possible while conforming to changes in Federal Communications Commission regulations that have occurred over the last decade.
One area where the Town’s position is improved from the previous franchise is in regard to the PEG fees the Town will receive related to the agreement. The previous agreement set that fee at 50 cents per month per residential subscriber. Like other municipalities, the Town has seen this fee decline - from over $66,000 in 2019 to roughly $53,500 in 2023 - as customers have pursued telecommunication options other than cable. The proposed agreement instead sets the PEG fee as a percentage of Comcast’s gross revenues, roughly equivalent to what the Town has been receiving through this fee in recent years, which should lessen the impact on the Town from this decline. Other than this minimal modification, the proposed agreement would present very little change to the Town or its residents.
Budget Impact
This renewed franchise agreement would result in little change to Town revenue or expenses. By enacting this renewal, the Town will continue to receive from Comcast the existing 5% franchise fee, which is expected to generate roughly $800,000 for the Town in 2025. (It should be noted that the cable franchises apply only to cable service, and not to broadband or telephone services.) In addition, the Town would receive 0.45% of Comcast’s gross revenue per month to cover costs related to the Town’s programming on Comcast Channel 22. This revenue is expected to total about $53,500 in 2025.
Staff Recommendation
Staff recommends that Council approve the franchise agreement as presented.
Proposed Motion
“I move to approve Ordinance No. 2024-XX as introduced by title.”
Attachments
Attachment A: Ordinance
Exhibit 1: Cable Franchise Agreement